TIDMTRI
RNS Number : 0567U
Trifast PLC
21 November 2023
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR. Upon the
publication of this announcement via the Regulatory Information
Service, this inside information is now considered to be in the
public domain.
Tuesday, 21 November 2023
TRIFAST PLC
(Trifast, Group or Company)
Leading international specialist in the design, engineering,
manufacture, and distribution
of high-quality industrial fastenings and Category 'C'
components principally to major global assembly industries
HALF-YEARLY FINANCIAL REPORT
Unaudited results for the six months ended 30 September 2023
"Self-help actions help us remain on-track to deliver full-year
results"
Iain Percival, Chief Executive Officer
Key financials
---------------------------- --------- ------- --------- ---------- ---------- ----------
CER (2) CER (2) AER (2) AER (2) AER HY2022
Underlying measures HY2024 change HY2024 change AER HY2023
---------------------------- --------- ------- --------- ---------- ---------- ----------
Revenue GBP119.1m (1.0)% GBP117.6m (2.2)% GBP120.2m GBP103.8m
Gross profit % 25.9% 130bps 25.7% 110bps 24.6% 26.3%
Underlying operating profit
(UOP)(1) GBP6.9m 11.0% GBP6.6m 6.6% GBP6.2m GBP7.4m
Underlying operating profit
%(1) 5.8% 60bps 5.6% 40bps 5.2% 7.2%
Underlying profit before
tax(1) GBP4.1m (24.2)% GBP3.9m (29.3)% GBP5.5m GBP7.0m
Underlying diluted earnings
per share(1) 2.18p (34.5)% 3.33p 4.42p
Adjusted net debt (3) GBP27.8m GBP(12.6)m GBP40.4m GBP5.1m
Return on capital employed
(ROCE)(1) 5.6% (110)bps 6.7% 8.8%
Interim dividend 0.60p (20.0)% 0.75p 0.70p
---------------------------- --------- ------- --------- ---------- ---------- ----------
GAAP measures
Operating profit GBP 4.7m 26.4% GBP3.7m GBP5.7m
Operating profit % 4.0% 90 bps 3.1% 5.5%
Profit before tax GBP 2.0m (33.8)% GBP3.0m GBP5.3m
Diluted earnings per share 1.15p (37.8)% 1.85p 3.22p
---------------------------- --------- ------- --------- ---------- ---------- ----------
1. Before separately disclosed items (see notes 2, 6 and 7)
2. "CER" being Constant Exchange Rate, calculated by translating
the HY2024 figures by the average HY2023 exchange rate and "AER"
being Average Exchange Rate
3. Adjusted net debt is presented excluding the impact of IFRS16
Leases as this is how the calculation is performed for the purposes
of the Group's banking facilities. Including right-of-use
liabilities, net debt would increase by GBP(20.0)m to GBP(47.8)m
(HY2023: net debt would increase by GBP(14.8)m to GBP(55.2)m).
Operational highlights
------------------------------------------------------------------------------------------
* Trading remained resilient despite a challenging
environment:
o Revenue down (2.2)% (CER: (1.0)% down) - reduced demand in the distribution,
general industrial and health & home sectors, offset by growth in light
and heavy vehicles
o Gross margin increases 110bps to 25.7% at AER due to focused pricing
and supplier initiatives
o Underlying PBT reduced GBP1.6m to GBP3.9m at AER - higher underlying
operating profits more than offset by increased interest costs
* Adjusted net debt reduced by GBP10.2m to GBP27.8m,
improving our leverage ratio to c.1.60x (FY2023:
2.19x)
* UK operational improvement initiative through
National Distribution Centre ('NDC'), delivers
encouraging early cost savings to date of GBP0.2m
* Key appointments at Board level completed (Chair and CEO)
Presentation of HY2024 results
-----------------------------------------------------------------------------------
1 The Group will be holding a presentation in person and virtual to analysts
today at 10.00am (UK time). Further details can be obtained by contacting
TooleyStreet Communications - details are shown below. Investor enquiries
can also be made via the Company's stockbroker, Peel Hunt LLP and its
corporate access team.
2 The Company will also be presenting the HY2024 results via the Investor
Meet Company platform today (21 November) at 11.30am (UK time). CEO Iain
Percival, CFO Darren Hayes-Powell and Chief Operating Officer Dan Jack
will host this 'live' event. To register for the session, you may follow
this link:
https://www.investormeetcompany.com/trifast-plc/register-investor
Investors who follow Trifast on the IMC platform will automatically be
invited to join the event. The webcast will be available on the Trifast
website in due course.
Enquiries please contact:
---------------------------------------------------
Trifast plc
Serena Lang, Non-Executive Chair
Iain Percival, Chief Executive Officer
Darren Hayes-Powell, Chief Financial Officer
Office: +44 (0) 1825 747630
Email: corporate.enquiries@trifast.com
Shareholders: companysecretariat@trifast.com
Peel Hunt LLP (Stockbroker & financial adviser)
Mike Bell
Tel: +44 (0)20 7418 8900
TooleyStreet Communications (IR & media relations)
Fiona Tooley
Tel : +44 (0)7785 703523
Email: fiona@tooleystreet.com
Editors' notes
--------------------------------------------------------------------------------
About Trifast plc (TR)
Founded in East Sussex in 1973, TR is a leading international specialist
in the design, engineering, manufacture, and distribution of high-quality
industrial fastenings and Category 'C' components principally to major global
assembly industries.
The Group supplies to customers in c.70 countries across a wide range of
industries, including light vehicle, heavy vehicle, health & home, energy,
tech, & infrastructure (ET&I), general industrial and distributors. As a
full service provider to multinational OEMs and Tier 1 companies spanning
several sectors, we deliver comprehensive support to our customers across
every requirement, from concept design through to technical engineering
consultancy, manufacturing, supply management and global logistics.
As an international business we are able to provide 24/7 customer support
from across key regions in the UK, Asia, Europe and North America. In addition
to our service locations we operate a number of manufacturing facilities
focused on high volume cold forged fasteners and special parts. We have
also established Technical & Innovation Centres to support R&D and customer
collaboration across the world.
For more information, visit our
Investor website: www.trifast.com
Commercial website: www.trfastenings.com
LinkedIn : www.linkedin.com/company/tr-fastenings
Twitter: www.twitter.com/trfastenings
Facebook : www.facebook.com/trfastenings
Trifast, TR and TR Fastenings are registered trademarks of the Company
LEI number: 213800WFIVE6RWK3CR22
Forward-looking statements
This announcement contains certain forward-looking statements. These reflect
the knowledge and information available to the Company during the preparation
and up to the publication of this document. By their very nature, these
statements depend upon circumstances and relate to events that may occur
in the future thereby involving a degree of uncertainty. Therefore, nothing
in this document should be construed as a profit forecast by the Company.
TRIFAST PLC
HALF-YEARLY FINANCIAL REPORT
Unaudited results for the six months ended 30 September 2023
BUSINESS REVIEW
Unless stated otherwise, current year comparisons with prior
year are calculated at constant currency (CER) and where we refer
to 'underlying', this is defined as being before separately
disclosed items (see note 2). CER calculations have been calculated
by translating the HY2024 figures by the average HY2023 exchange
rate.
The impact of foreign exchange movements has reduced our AER
revenue by 1.2%, GBP1.4m (HY2023: increased by 2.1%, GBP2.4m), our
AER underlying profit before tax by 6.6%, GBP0.3m (HY2023:
increased by 4.5%, GBP0.2m).
CER CER AER AER AER
Underlying measures HY2024 change HY2024 change AER HY2023 HY2022
---------------------------- ---------- -------- --------- -------- ----------
Revenue GBP119.1m (1.0)% GBP117.6m (2.2)% GBP120.2m GBP103.8m
Gross profit % 25.9% 130bps 25.7% 110bps 24.6% 26.3%
Underlying operating
profit (UOP)(1) GBP6.9m 11.0% GBP6.6m 6.6% GBP6.2m GBP7.4m
Underlying operating
profit %(1) 5.8% 60bps 5.6% 40bps 5.2% 7.2%
Underlying profit before
tax(1) GBP4.1m (24.2)% GBP3.9m (29.3)% GBP5.5m GBP7.0m
Underlying diluted earnings
per share(1) 2.18p (34.5)% 3.33p 4.42p
Return on capital employed
(ROCE)(1) 5.6% (110)bps 6.7% 8.8%
Interim dividend 0.60p (20.0)% 0.75p 0.70p
---------------------------- ---------- -------- --------- -------- ----------- ----------
GAAP measures
Operating profit GBP 4.7m 26.4% GBP3.7m GBP5.7m
Operating profit % 4.0% 90 bps 3.1% 5.5%
Profit before tax GBP 2.0m (33.8)% GBP3.0m GBP5.3m
Diluted earnings per
share 1.15p (37.8)% 1.85p 3.22p
---------------------------- ---------- -------- --------- -------- ----------- ----------
1. Before separately disclosed items (see notes 2, 6 and 7)
Group performance
Revenue overall decreased by 1.0% to GBP119.1m (AER: decreased
2.2% to GBP117.6m). Softer demand in distribution, general
industrial and health & home sectors, offset by growth in light
and heavy vehicles sectors. The volume decreases have also been
offset by improved pricing.
Despite the difficult market environment, the gross profit
margin of 25.9% was 130 bps (AER 110bps) above prior years margin
of 24.6%, UOP margin increased by 60bps to 5.8% (AER increase
40bps) and UOP increased by 11.0% to GBP6.9m. This reflects our
focus on the mid-term targets (purchasing/supplier focus, G200/High
yield market segmentation and operational improvement programme)
and self-help initiatives to drive sustainable and profitable
growth.
The UK operational improvement plan (via the purpose-built
National Distribution Centre) delivered earlier than expected cost
savings to date of c.GBP0.2m
Underlying profit before tax (UPBT) is down 24.2% at CER to
GBP4.1m (AER: down 29.3% to GBP3.9m, HY2023: GBP5.5m). Interest has
increased year-on-year by GBP2.0m reflecting an increase in
interest rates and higher average borrowings. Adjusted net debt
reduced to GBP27.8m from GBP38.0m at FY2023, as a part of our
continued working capital initiatives, improving our banking
covenant leverage ratio to c 1.6x (FY2023: 2.19x).
AER profit before tax has decreased to GBP2.0m (HY2023: GBP3.0m)
and includes the following one-off separately disclosed items:
Project Atlas spend GBP0.5m, acquired intangible amortisation
GBP0.9m and restructuring costs GBP0.5m (which include the set up
of the NDC).
The resultant diluted earnings per share has decreased by 37.8%
to 1.15p (HY2023: 1.85p).
In June 2023, the Group signed a new revolving credit facility
(RCF) agreement and term loans facility agreement, with the same
lenders, partially guaranteed by UK Export Finance to allow the
Group flexibility on future cash investments. The combined
agreements with a facility limit of GBP120m, provides strength and
support to enable the Group to meet its future strategic growth
plans. We have undrawn facilities of GBP58.5m (FY2023: GBP10.5m),
providing us with the security and flexibility to continue to
operate and invest in our future growth.
Revenue (CER)
Total revenue in HY2024 decreased 1.0% to GBP119.1m (AER
decreased 2.2% to GBP117.6m) as detailed below.
Europe - revenues have increased 9.5% to GBP46.2m (HY2023:
GBP42.2m) driven by the transfer of our European distribution
business from the UK to TR Kuhlmann (Germany), and by an uplift in
the light and heavy vehicle sectors in Sweden. Hungary and Italy
continue to be impacted by the current downturn in customer demand
and the ongoing Ukraine conflict.
UK - revenue reduced 10.7% to GBP38.0m (HY2023: GBP42.5m) due to
the slowdown in the distributor market demand and the transfer of
the business above to TR Kuhlmann (Germany). This has been
partially offset by increases in the light vehicle sector.
Asia - reported a 14.3% decrease in revenue to GBP27.6m (HY2023:
GBP32.2m) mainly driven by the distributor sector and the
continuing softness in the Asia market. China is still experiencing
low consumer demand following Covid shutdowns and the general
macro-economic climate. There was however a significant uplift in
the light vehicle sector in PSEP (Malaysia) and Thailand.
North America - continued growth in the light vehicle and health
& home sectors, combined with new contract wins contributed to
an increase in revenue of 5.4% to GBP14.3m (HY2023: GBP13.6m).
Note - Regional revenues include intercompany
Underlying operating profit (CER)
Region HY2024 HY2023 Movement HY2024 HY2023 Movement
(2) UOP UOP UOP margin UOP margin
Europe GBP3.7m GBP0.6m GBP3.1m 8.0% 1.4% 660bps
--------- ----------- ----------- ------------ ------------ ---------
UK GBP1.6m GBP3.0m GBP(1.4)m 4.2% 7.1% (290)bps
--------- ----------- ----------- ------------ ------------ ---------
Asia GBP4.5m GBP5.2m GBP(0.7)m 16.1% 16.0% 10bps
--------- ----------- ----------- ------------ ------------ ---------
North America GBP0.6m GBP(0.1)m GBP0.7m 4.1% (0.3)% 440bps
--------- ----------- ----------- ------------ ------------ ---------
2 :Regional operating profit exclude central costs
The underlying operating profit (UOP) has increased to GBP6.9m
(HY2023: GBP6.2m) and an UOP margin of 5.8% (HY2023: 5.2%).
In Europe, UOP margins increased 660 bps to 8.0% and operating
profit improved to GBP3.7m (HY2023:1.4% margin, GBP0.6m UOP). In
addition to the transfer of the distribution business from the UK
to TR Kuhlmann (Germany), there was higher margin in Sweden and
significant margin improvement in TR VIC (Italy) resulting from
actions last year to manage rising costs, price increases and
improved plant utilisation.
In the UK, UOP margins decreased year-on-year by 290bps to 4.2%,
and UOP fell to GBP1.6m (HY2023: 7.1%, GBP3.0m). Volume decline in
the distributor sector (impacting PTS and Lancaster) was the main
contributor, offset by some improvement in the light vehicle
sector. The lower revenue at TR Fastenings (UK) reflects the
business transfer of the European distribution business to TR
Kuhlmann (Germany), this was offset by the delivery of earlier than
expected costs savings from the NDC of c.GBP0.2m.
UOP margins in Asia have slightly increased to 16.1% due to
margin improvement initiatives and tighter overhead control but
with a reduction in UOP to GBP4.5m (HY2023: 16.0%, GBP5.2m) driven
by lower sales volume. Consumer demand in China remains low and
overall general market softness remains in the Asia region. During
the period, we also saw a significant uplift in light vehicle
activity at PSEP (Malaysia) and Thailand together with the price
increases in PSEP (Malaysia).
In North America, UOP margins have also improved by 440bps to
4.1%, and UOP returned positive at GBP0.6m from GBP(0.1)m in HY2023
driven by better revenue performance and margin improvements. There
was an increase in warehouse costs although they were offset
through stock write-backs following a drive to clear down old
inventory and operating cost savings.
Operating profit (AER)
The Group operating profit increased to GBP4.7m from GBP3.7m and
operating margin to 4.0% from 3.1%. Operating profit includes
GBP1.9m of costs not included in UOP (primarily acquired intangible
amortisation, Project Atlas costs and NDC set up costs) (HY2023:
GBP2.5m).
At a regional level, the movements at operating profit and
margins broadly follow the movements at UOP level:
Region HY2024 HY2023 Movement HY2024 HY2023 Movement
(2) Operating Operating Operating Operating
profit profit margin margin
Europe GBP3.1m GBP0.1m GBP3.0m 6.6% 0.2% 640 bps
------------ ------------ ----------- ----------- ----------- ---------
(410)
UK GBP1.0m GBP2.8m GBP(1.8)m 2.6% 6.7% bps
------------ ------------ ----------- ----------- ----------- ---------
Asia GBP4.3m GBP5.2m GBP(0.9)m 16.2% 16.0% 20 bps
------------ ------------ ----------- ----------- ----------- ---------
USA GBP0.4m GBP(0.2)m GBP0.6m 2.7% (1.8)% 450 bps
------------ ------------ ----------- ----------- ----------- ---------
2 : Regional operating profit exclude central costs
Net financing costs (AER)
Net financing costs have increased to GBP2.8m (HY2023: GBP0.7m)
mainly due to higher interest rates applied to our RCF and UKEF -
EDG facility drawdowns. This remains a focused improvement area to
reduce debt through working capital and cash management
initiatives.
Taxation (AER)
The increase in the underlying effective tax rate (UETR) to
23.7% (HY2023: 17.7%) and the effective tax rate (ETR) at 21.5%
(HY2023: 16.5%) was mainly due to the mix of profits and losses at
different tax rates and some profit shift to higher tax
jurisdictions (e.g. Germany).
Earnings per share (AER)
The decrease in underlying profit before tax and the increase in
our UETR, has reduced the underlying diluted EPS by 34.5% to 2.18p
(HY2023: 3.33p). Diluted EPS has decreased by 37.8% to 1.15p
(HY2023: 1.85p).
Dividend
The Company has declared an interim dividend of 0.60p (HY2023:
0.75p) which will be paid on 11 April 2024 to members on the
register as at 15 March 2024. We continue to consider that an
appropriate level of dividend cover is in the range of 3.0x to
4.0x.
Return on Capital Employed (AER)
As at 30 September 2023, the Group's shareholders' equity
decreased to GBP131.9m (FY2023: GBP135.9m). The GBP4.0m reduction
reflects the impact of the profit for the period of GBP1.6m, a
dividend charge of GBP(3.0)m, a net movement in share-based
payments of GBP(0.6)m and a foreign exchange reserve loss of
GBP1.9m (most notably sterling strengthening against Singapore
Dollar, Taiwan Dollar, Renminbi, Malaysian Ringgit and Euro).
Over this lower asset base and due to repayment of borrowings
during the period, our ROCE has increased to 5.6% (FY2023:
5.4%).
Adjusted net debt (AER)
The Group's adjusted net debt has decreased by GBP10.2m to
GBP27.8m (FY2023: GBP38.0m).
A strong focus on working capital management contributed
GBP9.2m, of which GBP6.5m came from inventory reduction. Working
capital management continues to be a focus in HY2, targeting to
reduce inventory levels and managing debtors accordingly. Capital
expenditure in the period amounted to GBP2.2m, including GBP0.5m on
Project Atlas charged to the Condensed consolidated interim income
statement and GBP0.2m capitalised as Intangible Assets on Project
Atlas (Also, see Project Atlas section below). Interest paid was
GBP2.1m (excluding arrangement fees and IFRS16 interest) due to
higher interest rates and higher average loan balance during the
period.
Including the impact of IFRS16 Leases, the Group's net debt
position decreased by GBP6.0m to GBP47.8m (FY2023: GBP53.8m).
IFRS16 Leases have increased to GBP20.0m (FY2023: GBP15.8m)
predominantly due to the signing of the NDC lease during the
period.
Other key balance sheet movements
Property, plant and equipment and intangibles have decreased by
GBP1.8m to GBP58.1m (FY2023: GBP59.9m) as a result of the
depreciation and amortisation charge during the period, off set by
additions and the effects of movement on foreign exchange during
the period.
Right-of-use assets have increased by GBP4.1m to GBP18.5m
(FY2023: GBP14.4m) and right-of-use liabilities increased by
GBP5.2m to GBP20.0m (FY2023: GBP15.8m), principally due to the new
lease for NDC.
Trade and other receivables decreased by GBP4.0m to GBP57.9m
(FY2023: GBP61.9m) due to lower sales and improved collections.
This, combined with the decrease in our inventory (see adjusted net
debt) has seen working capital as a % of sales decrease to 44.2%
(FY2023: 45.9%).
Other interest-bearing loans and borrowings reduced GBP9.9m to
GBP59.9m (FY2023: GBP69.8m), net of unamortised loan arrangement
fees, principally due to the working capital management initiatives
disclosed in the Adjusted net debt section above. As previously
indicated, a new RCF and UKEF-EDG facility agreements with a
facility limit of GBP120m was signed in June 2023.
Trade and other payables increased GBP1.9m to GBP37.2m (FY2023:
GBP35.3m), this movement includes the recognition of a deposit
received on 29 September 2023 for GBP1.0m for the uncompleted sale
of freehold land and therefore, presented as a creditor at the
balance sheet date.
Provisions have reduced by GBP1.3m to GBP3.0m (FY2023: GBP4.3m)
principally on account of the utilisation of the restructuring and
related charges provisions during HY2024.
Project Atlas
Project Atlas has completed the roll-out of TR Fastenings (UK)
during FY2023 and Hungary in HY2024. Atlas will close as a project
with the roll-out to the remaining in scope distribution
countries.
We have incurred direct costs of GBP0.7m in HY2024 (cumulatively
GBP18.1m), largely relating to the project team, consultancy,
localised testing and training costs. We have excluded GBP0.5m of
these costs from our underlying results, to reflect the unusual
scale and one-off nature of this project. In line with accounting
standards, we have also recognised the remaining GBP0.2m
(cumulatively GBP8.1m) as intangible assets on the balance sheet at
30 September 2023.
Acquisitions
We continue our acquisition aspirations, by exploring
opportunities for on/near-shoring manufacturing and supply chain
capabilities to help deliver economic and environmental benefits in
the future.
People
The Board would like to acknowledge and thank the teams around
the globe who, in challenging times, continue to work in
partnership with commitment and focus to deliver the quality of
service and supply that our customers expect.
Outlook
Macroeconomic environment will continue to put pressure on
short- term trading especially in Asia. However, we are confident
in our pipeline and self-help initiatives.
The contract wins in the period are up from prior period,
reflecting increased market share especially in the light vehicle
sector. We are expecting the light and heavy vehicle sector wins to
have a phased implementation with some starting production in Q4 of
this financial year.
The programme underway to improve the business model across the
UK in operational activity and group services teams is progressing
well with the NDC facility in the Midlands now operational and the
closure of existing satellite sites in motion. We remain on track
to achieve the completion and delivery of the benefits in line with
our business case.
We remain focused in reducing our working capital levels during
HY2, with leverage expected to fall below 1.50x by year-end and
continued reduction of net debt.
Our recent investment in a Joint venture set up at the end of
September with a leading Asia manufacturer will become fully
operational in the second half, and this will strengthen our
Chinese customer relationships.
In summary, Trifast's business foundations remain strong, with
significant potential to be realised through our expertise in
engineering and innovation. Our strategies for profitable growth
put us in a good position to achieve our medium-term
objectives.
RISKS AND UNCERTAINTIES
As a result of our continuous review of the risk register for
the business, the Directors have made a change to the principal
risks and uncertainties stated in the Group's Annual Report for the
year ended 31 March 2023. The following 2 principal risks have been
removed due to significant progress made in managing the risk:
-- Controls effectiveness
-- Customer-specific obsolete stock
In our annual report we also identified 6 emerging risks, and
from these 3 new principal risks and uncertainties have been
identified as detailed below:
Sustainability and climate change
We identified both climate change impact and climate change
legislation as emerging risks, and our continued analysis of these
risks has led to the recognition of sustainability and climate
change as a principal risk. We see this as a challenge across the
fastener industry in both consistency of data available, and the
development of reporting frameworks to support the introduction of
Carbon Border Adjustment Mechanisms (CBAM) in Europe and similar
reporting requirements around the world. Our supply chain teams are
engaged with our global network of suppliers to ensure that CBAM
reporting is fully understood and our Engineering team are
developing a standard model to support product carbon footprint
reporting. Further details of our climate-related risks and
opportunities can be found in our sustainability report.
Compliance infrastructure
Compliance and controls infrastructure was also reported as an
emerging risk in our annual report based on the anticipated changes
to the Corporate Governance Code. We have identified that there is
a clear opportunity in this area to develop our controls mapping
across the global business. We are developing an Integrated
Management System (IMS) for our teams across the world.
Internal culture
We identified in the annual report that our significant
restructuring activities may negatively impact the organisational
culture, and we see both risks and opportunities in this area. We
continue to focus on our people as key stakeholders through our ESG
committee.
No system can fully eliminate risk and therefore the
understanding of operational risk is central to the management
process within the Group. We continue to review and analyse both
existing and emerging risks and work with our business teams to
understand the impact of internal and external changes, and the
risks and opportunities that they present. This work is supported
by the development of our internal audit function and reviewed by
the Audit & Risk Committee meetings chaired by our Senior
Independent Non-Executive Director.
A copy of the Group's Annual Report for the year ended 31 March
2023 can be found on the website www.trifast.com.
As with all businesses, the Group faces risks, with some not
wholly within its control, which could have a material impact on
the Group, and may affect its performance with actual results
becoming materially different from both forecast and historic
results. The macroeconomic climate is still under pressure and we
continue to remain vigilant for any indications that could
adversely impact expected results going forward.
The long term success of the Group depends on the ongoing
review, assessment and management of the key business risks it
faces.
Trifast plc - responsibility statement
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared in accordance
with UK adopted International Accounting Standard 34 and the Disclosure
Guidance and Transparency Rules of the United Kingdom's Financial Conduct
Authority; and
-- the interim management report includes a fair review of the information
required by:
a. DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being
an indication of important events that have occurred during the first
six months of the financial year 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 year; and
b. DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being
related party transactions that have taken place in the first six months
of the current financial year and that have materially affected the financial
position or performance of the entity during that period; and any changes
in the related party transactions described in the last annual report
that could do so.
Iain Percival Darren Hayes-Powell
Chief Executive Officer Chief Financial Officer
20 November 2023 20 November 2023
Condensed consolidated interim income statement
Unaudited results for the six months ended 30 September 2023
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2023 2022 2023
Notes GBP000 GBP000 GBP000
--------------------------------------------- ------- ------------- ------------- ---------
Continuing operations
Revenue 3, 9 117,625 120,232 244,391
Cost of sales (87,365) (90,683) (182,462)
--------------------------------------------- ------- ------------- ------------- ---------
Gross profit 30,260 29,549 61,929
Other operating income 497 154 510
Distribution expenses (3,483) (3,171) (6,727)
--------------------------------------------- ------- ------------- ------------- ---------
Administrative expenses before separately
disclosed items (20,666) (20,333) (43,728)
Acquired intangible amortisation 2 (893) (892) (1,798)
Project Atlas 2 (500) (771) (1,722)
Restructuring and related charges 2 (477) - (4,235)
Impairment of goodwill 2 - - (2,926)
Settlement for loss of office 2 - (538) (1,050)
Aborted acquisition costs 2 - (253) (261)
Total administrative expenses (22,536) (22,787) (55,720)
--------------------------------------------- ------- ------------- ------------- ---------
Operating profit / (loss) 4,738 3,745 (8)
--------------------------------------------- ------- ------------- ------------- ---------
Financial income 60 41 158
Financial expenses (2,814) (790) (2,842)
--------------------------------------------- ------- ------------- ------------- ---------
Net financing costs 3 (2,754) (749) (2,684)
--------------------------------------------- ------- ------------- ------------- ---------
Profit / (loss) before tax 3 1,984 2,996 (2,692)
Taxation 4 (426) (496) (174)
--------------------------------------------- ------- ------------- ------------- ---------
Profit / (loss) for the period
(attributable to equity shareholders of the
Parent Company) 1,558 2,500 (2,866)
--------------------------------------------- ------- ------------- ------------- ---------
Earnings / (loss) per share
Basic 6 1.15p 1.85p (2.12)p
Diluted 6 1.15p 1.85p (2.12)p
--------------------------------------------- ------- ------------- ------------- ---------
Condensed consolidated interim statement of comprehensive
income
Unaudited results for the six months ended 30 September 2023
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2023 2022 2023
GBP000 GBP000 GBP000
---------------------------------------------------------- ------------- ------------- ---------
Profit/(loss) for the period 1,558 2,500 (2,866)
Other comprehensive (expense)/income for the period:
Items that may be reclassified subsequently to profit
or loss:
Exchange differences on translation of foreign operations (2,372) 7,413 4,053
Gain/(loss) on a hedge of a net investment taken
to equity 466 (2,429) (1,655)
---------------------------------------------------------- ------------- ------------- ---------
Other comprehensive (expense)/income recognised
for the period (1,906) 4,984 2,398
---------------------------------------------------------- ------------- ------------- ---------
Total comprehensive (expense)/income recognised
for the period
(attributable to equity shareholders of the parent
company) (348) 7,484 (468)
---------------------------------------------------------- ------------- ------------- ---------
Condensed consolidated interim statement of changes in
equity
Unaudited results for the six months ended 30 September 2023
Merger Own
Share Share reserve shares Translation Retained Total
capital premium GBP000 held reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------- -------- -------- -------- ------- ----------- --------- -------
Balance at 1 April 2023 6,805 22,530 16,328 (3,017) 14,682 78,561 135,889
Total comprehensive income
for the period:
Profit for the period - - - - - 1,558 1,558
Other comprehensive expense
for the period - - - - (1,906) - (1,906)
Total comprehensive income
for the period 6,805 22,530 16,328 (3,017) 12,776 80,119 135,541
--------------------------------- -------- -------- -------- ------- ----------- --------- -------
Transactions with owners,
recorded directly
in equity:
Share-based payment transactions
(net of tax) - - - - - (602) (602)
Movement in own shares
held - - - 698 - (698) -
Dividends (note 5) - - - - - (3,026) (3,026)
--------------------------------- -------- -------- -------- ------- ----------- --------- -------
Total transactions with
owners - - - 698 - (4,326) (3,628)
--------------------------------- -------- -------- -------- ------- ----------- --------- -------
Balance at 30 September
2023 6,805 22,530 16,328 (2,319) 12,776 75,793 131,913
--------------------------------- -------- -------- -------- ------- ----------- --------- -------
Merger Own
Share Share reserve shares Translation Retained Total
capital premium GBP000 held reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------- -------- -------- -------- ------- ----------- --------- -------
Balance at 1 April 2022 6,804 22,512 16,328 (3,487) 12,284 84,704 139,145
Total comprehensive income
for the period:
Profit for the period - - - - - 2,500 2,500
Other comprehensive income
for the year - - - - 4,984 - 4,984
Total comprehensive income
for the period - - - - 4,984 2,500 7,484
--------------------------------- -------- -------- -------- ------- ----------- --------- -------
Transactions with owners,
recorded directly
in equity:
Issue of share capital 1 17 - - - - 18
Share-based payment transactions
(net of tax) - - - - - (530) (530)
Movement in own shares - - - - - - -
held
Dividends (note 5) - - - (2,812) (2,812)
--------------------------------- -------- -------- -------- ------- ----------- --------- -------
Total transactions with
owners 1 17 - - - (3,342) (3,324)
--------------------------------- -------- -------- -------- ------- ----------- --------- -------
Balance at 30 September
2022 6,805 22,529 16,328 (3,487) 17,268 83,862 143,305
--------------------------------- -------- -------- -------- ------- ----------- --------- -------
Condensed consolidated interim statement of financial
position
Unaudited results for the six months ended 30 September 2023
30 September 30 September 31 March
2023 2022 2023
Notes GBP000 GBP000 GBP000
-------------------------------------------- ----- ------------ ------------ --------
Non-current assets
Property, plant, and equipment 18,734 21,983 19,417
Right-of-use assets 18,457 13,890 14,395
Intangible assets 39,327 44,633 40,451
Investment in joint venture 159 - -
Deferred tax assets 4,456 3,039 4,289
-------------------------------------------- ----- ------------ ------------ --------
Total non-current assets 81,133 83,545 78,552
-------------------------------------------- ----- ------------ ------------ --------
Current assets
Inventories 83,399 102,833 90,948
Trade and other receivables 57,858 65,956 61,906
Assets classified as held for sale 2,130 - 2,130
Cash and cash equivalents 7 32,026 29,023 31,798
Total current assets 175,413 197,812 186,782
-------------------------------------------- ----- ------------ ------------ --------
Total assets 3 256,546 281,357 265,334
-------------------------------------------- ----- ------------ ------------ --------
Current liabilities
Trade and other payables 37,223 45,352 35,332
Right-of-use liabilities 7 3,592 3,424 3,498
Provisions 1,499 - 2,809
Tax payable 481 2,739 2,560
Dividends payable 5 2,020 1,875 -
Total current liabilities 44,815 53,390 44,199
-------------------------------------------- ----- ------------ ------------ --------
Non-current liabilities
Other interest-bearing loans and borrowings 7, 14 59,856 69,382 69,825
Right-of-use liabilities 7 16,433 11,337 12,315
Provisions 1,546 1,088 1,443
Deferred tax liabilities 1,983 2,855 1,663
-------------------------------------------- ----- ------------ ------------ --------
Total non-current liabilities 79,818 84,662 85,246
-------------------------------------------- ----- ------------ ------------ --------
Total liabilities 3 124,633 138,052 129,445
-------------------------------------------- ----- ------------ ------------ --------
Net assets 131,913 143,305 135,889
-------------------------------------------- ----- ------------ ------------ --------
Equity
Share capital 6,805 6,805 6,805
Share premium 22,530 22,529 22,530
Merger reserve 16,328 16,328 16,328
Own shares held 8 (2,319) (3,487) (3,017)
Translation reserve 12,776 17,268 14,682
Retained earnings 75,793 83,862 78,561
-------------------------------------------- ----- ------------ ------------ --------
Total equity 131,913 143,305 135,889
-------------------------------------------- ----- ------------ ------------ --------
Condensed consolidated interim statement of cash flows
Unaudited results for the six months ended 30 September 2023
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2023 2022 2023
Notes GBP000 GBP000 GBP000
-------------------------------------------------- ----- ------------- ------------- ---------
Cash flows from operating activities
Profit / (loss) for the period 1,558 2,500 (2,866)
Adjustments for:
Depreciation, amortisation, and impairment 2,671 2,420 5,471
Right-of-use asset amortisation 2,002 1,747 3,640
Unrealised foreign currency loss/(gain) 32 (40) (50)
Financial income (60) (41) (158)
Financial expense (excluding right-of-use
liabilities) 2,488 602 2,412
Right-of-use liabilities' financial expense 326 188 430
(Gain)/loss on sale of property, plant &
equipment, intangibles (9) 127 149
Equity settled share-based payment transactions (656) (530) 24
Impairment of goodwill - - 2,926
Impairment of right-of-use assets and property,
plant and equipment on restructuring - - 1,426
Taxation charge 426 496 174
Operating cash inflow before changes in
working capital and provisions 8,778 7,469 13,578
Change in trade and other receivables 2,342 (1,793) 1,644
Change in inventories 6,537 (9,141) 215
Change in trade and other payables 1,496 (1,519) (11,739)
Change in provisions (1,206) - 2,792
Cash generated / (used) in operations 17,947 (4,984) 6,490
Tax paid (1,686) (1,795) (3,529)
-------------------------------------------------- ----- ------------- ------------- ---------
Net cash generated / (used) in operating
activities 16,261 (6,779) 2,961
-------------------------------------------------- ----- ------------- ------------- ---------
Cash flows from investing activities
Proceeds from sale of property, plant & equipment 13 1,028 42 27
Interest received 60 34 138
Investment in joint venture (159) - -
Acquisition of property, plant and equipment,
and intangibles (1,748) (2,591) (5,625)
Net cash used in investing activities (819) (2,515) (5,460)
-------------------------------------------------- ----- ------------- ------------- ---------
Cash flows from financing activities
Net proceeds from the issue of share capital - 18 19
Repayments of borrowings (98,962) - -
Proceeds from borrowings 91,414 13,924 16,423
Repayment of right-of-use liabilities (1,846) (1,913) (3,792)
Dividends paid (1,006) (937) (2,812)
Interest and charges paid (4,208) (656) (2,477)
-------------------------------------------------- ----- ------------- ------------- ---------
Net cash (used)/generated in financing activities (14,608) 10,436 7,361
-------------------------------------------------- ----- ------------- ------------- ---------
Net change in cash and cash equivalents 834 1,142 4,862
Cash and cash equivalents at 1 April 31,798 26,741 26,741
Effect of exchange rate fluctuations on cash
held (606) 1,140 195
-------------------------------------------------- ----- ------------- ------------- ---------
Cash and cash equivalents at end of period 7 32,026 29,023 31,798
-------------------------------------------------- ----- ------------- ------------- ---------
NOTES TO THE 2023 HALF-YEARLY FINANCIAL REPORT
Unaudited results for the six months ended 30 September 2023
1 . Basis of preparation
These condensed consolidated interim financial statements have
been prepared in accordance with the Disclosure and Transparency
Rules (DTR) of the Financial Conduct Authority and UK-adopted
International Accounting Standard ("IAS") 34: Interim Financial
Reporting. They do not include all the information required for
full annual financial statements, and should be read in conjunction
with the consolidated financial statements of the Group as at, and
for, the year ended 31 March 2023. The annual financial statements
of the Group are prepared in accordance with UK adopted
International Accounting Standards and with the requirements of the
Companies Act 2006 as applicable to companies reporting under those
standards.
This statement does not comprise full financial statements
within the meaning of Section 495 and 496 of the Companies Act
2006. The statement is unaudited but has been reviewed by BDO LLP
and their Report is set out at the end of this document.
The comparative figures for the financial year ended 31 March
2023 are not the Company's statutory accounts for that financial
year and have been extracted from the full Annual Report and
Accounts for that financial year. Those accounts have been reported
on by the Company's auditor and delivered to the Registrar of
Companies. The Report of the Auditors was (i) unqualified, (ii) did
not include a reference to any matters to which the auditor drew
attention by way of emphasis without qualifying their Report, and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006.
These condensed consolidated interim financial statements have
been prepared on the basis of accounting policies set out in the
full Annual Report and Accounts for the year ended 31 March 2023,
except the following amendments which apply for the first time in
HY2024, but, they do not have a material impact on these condensed
consolidated interim financial statements.
The following amendments are effective for the period beginning
1 January 2023:
* IAS 1 Presentation of Financial Statements and IFRS
Practice Statement 2 (Amendment - Disclosure of
Accounting Policies)
* IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors (Amendment - Definition of
Accounting Estimates)
* IAS 12 Income Taxes (Amendment - Deferred Tax Related
to Assets and Liabilities Arising from a Single
Transaction)
* IAS 12 Income Taxes (International Tax Reform -
Pillar Two Model Rules
Going concern
The Group's business activities, together with the factors
(including the impact of COVID-19) likely to affect its future
development, performance and position are set out in the
accompanying Business Review. The financial position of the Group,
its cash flows, liquidity position and borrowing facilities are
also described in the same report. In addition, note 26 to the
Group's previously published financial statements for the year
ended 31 March 2023 includes the Group's objectives, policies and
processes for managing its capital; its financial risk management
objectives; details of its financial instruments and hedging
activities; and its exposures to credit risk and liquidity
risk.
Current trading and forecasts show that the Group will continue
to be profitable and generate cash. The banking facilities and
covenants (leverage and interest cover) that are in place provide
appropriate headroom against forecasts based on the current
outlook. There are some headwinds in the global economic
environment including the rising interest rate environment, however
should there be adverse factors beyond expectation including
further increases in interest rates, the Directors are confident
given the low levels of leverage within the business and the
expectation that this will reduce further that these would be
mitigated. As such the Directors do not consider there to be
material uncertainties relating to events or conditions that may be
relevant to the next 12 months from signing of the half-yearly
financial report, which cast doubt on the going concern status.
This is also the case after performing sensitivity analysis,
reverse stress testing scenarios to break point for the covenants
and understanding what this would equate to either increasing net
debt or reducing EBITDA. Thus, the Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future and hence they
continue to adopt the going concern basis of accounting in
preparing the half-yearly financial report.
Estimates and judgements
The preparation of financial statements in conformity with IFRSs
requires management to make estimates, judgements and assumptions
that affect the application of policies and reported amounts of
assets and liabilities, income and expenses. The estimates and
associated assumptions take account of the circumstances and facts
at the period end, historical experience of similar situations and
other factors that are believed to be reasonable and relevant, the
results which form the basis of making the judgements about
carrying values of assets and liabilities that are not readily
available from other sources. Actual results may differ from these
estimates.
In preparing these condensed consolidated interim financial
statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty include those disclosed in the consolidated
financial statements for the year ended 31 March 2023.
A key judgement made by management relates to Project Atlas
costs meeting the capitalisation criteria under IAS 38 Intangible
Assets, also considering the March 2021 IFRS IC agenda decision
update on 'Configuration and customisation costs in a cloud
computing arrangement', allowing directly attributable costs to be
capitalised.
No other key judgements have been made, other than those
involving estimations. The key sources of estimation uncertainty
are inventory valuation and recoverability of goodwill.
The methodology for calculating the inventory provision has
remained consistent with year end. Inventories are stated at the
lower of cost and net realisable value with a provision being made
for obsolete and slow-moving items. Initially, management makes a
judgement on whether an item of inventory should be classified as
standard or customer specific. This classification then largely
determines when a provision is recognised. Management then
estimates the net realisable value of the stock for each individual
classification. In most circumstances, a provision is made earlier
for customer--specific stock (compared to standard) because it
generally carries a greater risk of becoming obsolete or slow
moving given the fastenings are designed specifically for an
individual customer.
The key sensitivity to the carrying amount of customer-specific
inventory relates to the future demand levels for specific products
stocked for individual customers. In the event that an individual
customer's demand for products specific to them unexpectedly
reduced, the Company might be required to increase the inventory
provision. Although one customer taking such action is unlikely to
result in a material adjustment, multiple customers taking such
action over a short timescale could result in a material
adjustment. The range of possible outcomes includes a write off of
the carrying amount at 30 September 2023, to a write back of the
customer-specific inventory provision at period end (HY2024:
GBP6.2m; HY2023: GBP7.0m; FY2023: GBP6.1m).
The carrying amount of goodwill as at 30 September 2023, was
GBP22.8m (HY2023: GBP26.4m; FY2023: GBP22.9m). In the 31 March 2023
consolidated financial statements, carrying value of the goodwill
in the VIC CGU of GBP2.9m was fully impaired. For the remaining
CGUs, an impairment assessment was carried out and no indicators of
impairment were identified as at 30 September 2023.
2. Underlying profit before tax and separately disclosed
items
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2023 2022 2023
GBP000 GBP000 GBP000
------------------------------------------------- ------------- ------------- ---------
Underlying profit before tax 3,854 5,450 9,300
Separately disclosed items within administrative
expenses:
Acquired intangible amortisation (893) (892) (1,798)
Project Atlas (500) (771) (1,722)
Settlement for loss of office - (538) (1,050)
Aborted acquisition costs - (253) (261)
Impairment of Goodwill - - (2,926)
Restructuring and other related charges (477) - (4,235)
Profit /(loss) before tax 1,984 2,996 (2,692)
------------------------------------------------- ------------- ------------- ---------
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2023 2022 2023
GBP000 GBP000 GBP000
Underlying EBITDA 10,388 9,474 19,297
Separately disclosed items within administrative
expenses:
Project Atlas (500) (771) (1,722)
Settlement for loss of office - (538) (1,050)
Impairment of Goodwill - - (2,926)
Aborted acquisition costs - (253) (261)
Restructuring and other related charges (477) - (4,235)
EBITDA 9,411 7,912 9,103
--------------------------------------------------- ------------- ------------- ---------
Acquired intangible amortisation (893) (892) (1,798)
Depreciation (including right-of-use depreciation)
and non-acquired amortisation (3,780) (3,275) (7,313)
--------------------------------------------------- ------------- ------------- ---------
Operating profit /(loss) 4,738 3,745 (8)
--------------------------------------------------- ------------- ------------- ---------
Consistent with prior periods, management feel it is appropriate
to remove separately disclosed items as included above to allow the
reader of the accounts to understand the underlying trading
performance of the Group. Management use judgement in assessing
which items, due to their size or incidence, should be disclosed as
separately disclosed items. This is consistent with the way
financial information is presented to the Board. Further
reconciliations of underlying measures to IFRS measures and the
cash flow impact of separately disclosed items can be found in note
7.
Event driven items
Project Atlas is a multi-year investment into our IT
infrastructure and underlying business processes. We have excluded
these costs (primarily relating to training and project team costs)
from our underlying results, to reflect the unusual scale and
one-off nature of this project. We anticipate continuing to do so
in order to provide shareholders with a better understanding of our
underlying trading performance during this period of investment.
This investment will be recorded as a combination of capital
expenditure and separately disclosed items, dependent on accounting
convention.
Restructuring and related charges of GBP4.2m in FY23 are a
result of a strategic review of operations and functions initiated
in Q4 FY2023 and approved by the Board on 28 March 2023. The
charges include costs in respect of a down-sizing of personnel
primarily within the UK due to the centralisation of multi-site
distribution centres into a national distribution centre (NDC) in
the Midlands and the closure of our UK manufacturing site in
Uckfield. These efficiency initiative results in restructuring
costs including redundancies. The charges also include impairment
of non-current assets due to the closure of certain offices and
warehouses within the UK directly related to the restructuring
programme initiative and setting up the NDC. The closure of the
offices/warehouses and redundancies would happen over the financial
year FY2024 and is planned to be completed by 31 March 2024. The
charges for HY2024 amounting to GBP0.5m primarily relate to
professional fees and other related costs incurred for setting up
the NDC in the Midlands. We have excluded these costs from our
underlying results, to reflect the size and one-off nature of this
project.
Recurring items
Acquired intangible amortisation has remained in line with
HY2023. Intangible amortisation relating to acquisitions has been
separately disclosed so as to present the trading performance of
the respective entities with a charge on a comparable basis to
other entities in the group.
3. Geographical operating segments
The Group is comprised of the following main geographical
operating segments:
-- UK
-- Europe: includes Norway, Sweden, Germany, Hungary, Ireland,
Italy, Holland, Spain and Poland
-- USA: includes USA and Mexico
-- Asia: includes Malaysia, China, Singapore, Taiwan, Thailand,
Philippines, and India
In presenting information on the basis of geographical operating
segments, segment revenue, segment underlying operating profit and
segment assets are based on the geographical location of our
entities across the world and are consolidated into the four
distinct geographical regions, which the Executive Committee uses
to monitor and assess the Group. Interest is reported on a net
basis rather than gross as this is how it is presented to the Chief
Operating Decision Maker (the Executive Committee). All material
non-current assets are located in the country the relevant Group
entity is incorporated in.
Segment revenue and results under the primary reporting format
for the six months ended 30 September 2023 and 2022 are disclosed
in the table below:
Central
costs,
assets
and
UK Europe USA Asia liabilities Total
September 2023 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------------- -------- -------- -------- -------- ------------ ---------
Revenue*
Revenue from external customers 35,667 45,269 13,884 22,805 - 117,625
Inter segment revenue 2,333 878 78 3,682 - 6,971
-------------------------------- -------- -------- -------- -------- ------------ ---------
Total revenue 38,000 46,147 13,962 26,487 - 124,596
-------------------------------- -------- -------- -------- -------- ------------ ---------
Underlying operating profit
(see note 7) 1,579 3,618 567 4,313 (3,469) 6,608
Net financing costs (236) (457) (504) 152 (1,709) (2,754)
-------------------------------- -------- -------- -------- -------- ------------ ---------
Underlying profit before
tax 1,343 3,161 63 4,465 (5,178) 3,854
Separately disclosed items
(see note 2) (1,870)
-------------------------------- -------- -------- -------- -------- ------------ ---------
Profit before tax 1,984
-------------------------------- -------- -------- -------- -------- ------------ ---------
Specific disclosure items
Depreciation and amortisation (1,189) (1,857) (420) (845) (362) (4,673)
Assets and liabilities
Non-current asset additions 6,619 829 160 200 172 7,980
Segment assets 73,350 81,356 27,096 60,494 14,250 256,546
Segment liabilities (26,833) (18,263) (3,956) (12,123) (63,460) (124,635)
-------------------------------- -------- -------- -------- -------- ------------ ---------
Central
costs,
assets
and
UK Europe USA Asia liabilities Total
September 2022 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------------- -------- -------- -------- -------- ------------ ---------
Revenue*
Revenue from external customers 38,984 40,462 13,486 27,300 - 120,232
Inter segment revenue 3,546 1,762 111 4,939 - 10,358
-------------------------------- -------- -------- -------- -------- ------------ ---------
Total revenue 42,530 42,224 13,597 32,239 - 130,590
-------------------------------- -------- -------- -------- -------- ------------ ---------
Underlying operating profit
(see note 7) 3,016 610 (42) 5,173 (2,558) 6,199
Net financing costs (108) (150) (108) (9) (374) (749)
-------------------------------- -------- -------- -------- -------- ------------ ---------
Underlying profit before
tax 2,908 460 (150) 5,164 (2,932) 5,450
Separately disclosed items
(see note 2) (2,454)
-------------------------------- -------- -------- -------- -------- ------------ ---------
Profit before tax 2,996
-------------------------------- -------- -------- -------- -------- ------------ ---------
Specific disclosure items
Depreciation and amortisation (1,063) (1,592) (436) (887) (189) (4,167)
Assets and liabilities
Non-current asset additions 377 2,959 39 1,144 524 5,043
Segment assets 78,518 86,159 28,399 76,389 11,892 281,357
Segment liabilities (26,294) (19,045) (3,643) (15,930) (73,140) (138,052)
-------------------------------- -------- -------- -------- -------- ------------ ---------
* Revenue is derived from the manufacture and logistical supply
of industrial fasteners and category 'C' components.
4. Taxation
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2023 2022 2023
GBP000 GBP000 GBP000
-------------------------------------- ------------- ------------- ---------
Current tax on income for the period
UK tax - - (91)
Foreign tax 259 1,013 2,959
Deferred tax income for the period 12 (362) (2,824)
Adjustments in respect of prior years 155 (155) 130
-------------------------------------- ------------- ------------- ---------
426 496 174
-------------------------------------- ------------- ------------- ---------
The increase in the underlying effective tax rate (UETR) to
23.7% (HY2023: 17.7%) and the effective tax rate (ETR) to 21.5%
(HY2023: 16.5%) was mainly due to the mix of profits and losses at
different tax rates and some profit shift to higher tax
jurisdictions (e.g. Germany) .
Remaining in line with FY2023, the Deferred tax asset was
GBP4.4m (FY2023: GBP4.3m) and Deferred tax liability GBP1.9m
(FY2023: GBP1.7m).
5. Dividends
The dividend payable of GBP2.0m represents the final dividend
for the year ended 31 March 2023 which was approved by Shareholders
at the AGM on 15 September 2023 and paid on 13 October 2023 to
members on the Register on 29 September 2023. The Company paid an
HY2023 interim dividend of 0.75p (HY2022: 0.70p) on 13 April 2023
totalling GBP1.0m to Shareholders on the register as at 17 March
2023. The Company has declared an HY2024 interim dividend of 0.60p
(HY2023: 0.75p) which will be paid on 11 April 2024 to Shareholders
on the Register as at 15 March 2024.
6. Earnings per share
The calculation of earnings per 5 pence ordinary share is based
on profit for the period after taxation and the weighted average
number of shares in the period of 134,930,615 (net of own shares
held) (HY2023: 134,891,184, FY2023: 134,893,523).
The calculation of the fully diluted earnings per 5 pence
ordinary share is based on profit for the period after taxation. In
accordance with IAS 33 the weighted average number of shares in the
period has been adjusted to take account of the effects of all
dilutive potential ordinary shares (net of own shares held). The
number of shares used in the calculation amount to 134,930,615
(HY2023: 134,902,422 FY2023: 134,893,523).
The underlying diluted earnings per share, which in the
Directors' opinion best reflects the underlying performance of the
Group, is detailed below:
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2023 2022 2023
GBP000 GBP000 GBP000
----------------------------------------- ------------- ------------- ---------
Profit /(loss) after tax for the period 1,558 2,500 (2,866)
Separately disclosed items:
Acquired intangible amortisation 893 892 1,798
Project Atlas 500 771 1,722
Restructuring and related charges 477 - 4,235
Impairment of goodwill - - 2,926
Settlement for loss of office - 538 1,050
Aborted acquisition costs - 253 261
Tax charge on adjusted items above (488) (468) (2,211)
Underlying profit after tax 2,940 4,486 6,915
----------------------------------------- ------------- ------------- ---------
Basic EPS 1.15p 1.85p (2.12)p
Diluted EPS 1.15p 1.85p (2.12)p
Underlying diluted EPS 2.18p 3.33p 5.13p
----------------------------------------- ------------- ------------- ---------
7. Alternative Performance Measure
The half-yearly financial report includes both IFRS measures and
Alternative Performance Measures (APMs), the latter of which are
considered by management to better allow the readers of the
accounts to understand the underlying performance of the Group. A
number of these APMs are used by management to measure the KPIs of
the business (see the Business Review) and are therefore aligned to
the Group's strategic aims. They are also used at Board level to
monitor financial performance throughout the year.
The APMs used in the half-yearly financial report (including the
basis of calculation, assumptions, use and relevance) are detailed
in note 2 (underlying profit before tax, EBITDA and underlying
EBITDA) and below .
-- Underlying figures
The Group believes that underlying measures provide additional
guidance to statutory measures to help understand the underlying
trading performance of the business during the financial period.
The term 'underlying' is not defined under Adopted IFRS. It is a
measure that is used by management to assess the underlying
performance of the business internally and is not intended to be a
substitute measure for Adopted IFRSs' GAAP measures.
It should be noted that the definitions of underlying items
being used in these financial statements are those used by the
Group and may not be comparable with the term 'underlying' as
defined by other companies within the same sector or elsewhere.
Explanations for the items removed from the underlying figures
are provided in note 2.
-- Constant Exchange Rate (CER) figures
These are used in the Business Review and give the readers a
better understanding of the performance of the Group, regions and
entities from a trading perspective. They have been calculated by
translating the HY2024 income statement results (of subsidiaries
whose presentation currency is not sterling) using HY2023 average
exchange rates to provide a comparison which removes the foreign
currency translational impact. The impact of translational gains
and losses made on non-functional currency net assets held around
the Group have not been removed.
-- Underlying diluted EPS
A key measure for the Group as it is one of the measures used to
set the Directors' variable remuneration. The calculation is
disclosed in note 6.
-- Underlying operating margin
Underlying operating margin is used in the financial review to
give the reader an understanding of the performance of the Group
and regions. It is calculated by dividing underlying operating
profit (see return on capital employed section for reconciliation
to operating profit) by revenue in the year.
-- Return on capital employed (ROCE)
Return on capital employed is a key metric used by investors to
understand how efficient the Group is with its capital employed.
The calculation is a rolling 12 month underlying EBIT divided by
average capital employed (net assets + gross debt) over this
period, multiplied by 100%. Underlying EBIT has been reconciled to
operating profit below.
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2023 2022 2023
GBP000 GBP000 GBP000
------------------------------------------------- ------------- ------------- ---------
Underlying EBIT/Underlying operating profit 6,608 6,199 11,984
Separately disclosed items within administrative
expenses:
Acquired intangible amortisation (893) (892) (1,798)
Project Atlas (500) (771) (1,722)
Restructuring and related charges (477) - (4,235)
Impairment of goodwill - - (2,926)
Settlement for loss of office - (538) (1,050)
Aborted acquisition costs - (253) (261)
Operating profit 4,738 3,745 (8)
------------------------------------------------- ------------- ------------- ---------
-- Underlying cash conversion as a percentage of underlying
EBITDA
This is another key metric used by investors to understand how
effective the Group was at converting profit into cash. Since the
underlying cash conversion is compared to underlying EBITDA, which
has removed the impact of separately disclosed items (see note 2),
the impact of these have also been removed from the underlying cash
conversion. The adjustments made to arrive at underlying cash
conversion from cash generated from operations are detailed below.
To reconcile operating profit to underlying EBITDA, see note 2.
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2023 2022 2023
GBP000 GBP000 GBP000
------------------------------------- ------------- ------------- ---------
Underlying cash conversion 20,155 (4,068) 9,435
Expensed Project Atlas costs paid (536) (853) (1,634)
Settlement for loss of office - (33) (1,050)
Aborted acquisition costs - (30) -
Acquisition costs paid - - (261)
Restructuring and related charges (1,672) - -
Cash generated /(used) in operations 17,947 (4,984) 6,490
------------------------------------- ------------- ------------- ---------
-- Underlying effective tax rate
This is used in the underlying diluted EPS calculation. It
removes the tax impact of separately disclosed items in the year to
arrive at a tax rate based on the underlying profit before tax.
Six months ended Six months ended
30 September 2023 30 September 2022
----------------------------- ----------------------- --------------------------
Profit Tax Profit
impact impact ETR impact Tax impact ETR
GBP000 GBP000 % GBP000 GBP000 %
----------------------------- ------- ------- ----- ------- ---------- -----
Profit before tax 1,984 (426) 21.5% 2,996 (496) 16.5%
Separately disclosed items 1,870 (488) 26.1% 2,454 (468) 19.1%
Underlying profit before tax 3,854 (914) 23.7% 5,450 (964) 17.7%
----------------------------- ------- ------- ----- ------- ---------- -----
-- Adjusted net debt and adjusted net debt to Underlying EBITDA
ratio
This removes the impact of IFRS16 from both net debt and
Underlying EBITDA and IFRS 2 Share-based Payments from underlying
EBITDA to better reflect the banking facility covenant
calculations. Other adjustments are made to meet the calculations
specified in the facility agreement. Underlying EBITDA is
reconciled to operating profit in note 2.
At At At
30 September 30 September 31 March
2023 2022 2023
GBP000 GBP000 GBP000
------------------------------- ------------- ------------- ---------
Net cash and cash equivalents 32,026 29,023 31,798
------------------------------- ------------- ------------- ---------
Debt due within one year (3,592) (3,424) (3,498)
Debt due after one year (76,289) (80,719) (82,140)
------------------------------- ------------- ------------- ---------
Gross debt (79,881) (84,143) (85,638)
------------------------------- ------------- ------------- ---------
Net debt (47,855) (55,120) (53,840)
------------------------------- ------------- ------------- ---------
Right-of-use lease liabilities 20,025 14,761 15,813
------------------------------- ------------- ------------- ---------
Adjusted net debt (27,830) (40,359) (38,027)
------------------------------- ------------- ------------- ---------
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2023 2022 2023
GBP000 GBP000 GBP000
--------------------------------------------------- ------------- ------------- ---------
Underlying EBITDA 10,388 9,474 19,297
IFRS2 share-based payment charge and other related
costs (645) (555) 168
Operating lease rentals (2,337) (1,996) (4,483)
--------------------------------------------------- ------------- ------------- ---------
Adjusted underlying EBITDA 7,406 6,923 14,982
--------------------------------------------------- ------------- ------------- ---------
-- Adjusted interest cover
This is adjusted EBITDA to adjusted net interest to better
reflect the banking facility covenant calculations, removing the
impact of IFRS 16 Leases. Underlying EBITDA has IFRS 16 Leases and
IFRS 2 Share-based Payments removed above and is reconciled to
operating profit in note 2.
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2023 2022 2023
GBP000 GBP000 GBP000
-------------------------------- ------------- ------------- ---------
Net Interest (2,754) (749) (2,684)
Right-of-use liability interest 326 188 430
-------------------------------- ------------- ------------- ---------
Adjusted net interest (2,428) (561) (2,254)
-------------------------------- ------------- ------------- ---------
-- Working capital as a percentage of revenue
This is calculated as current assets excluding cash, less
current liabilities excluding debt like items as a percentage of
Group revenue. It is a KPI for the Group as it remains a key focus
to ensure efficient allocation of capital on the balance sheet to
improve quality of earnings and reduce the additional investment
needed to support organic growth.
8. Own shares held
The own shares held reserve comprises the cost of the Company's
shares held by the Group. At 30 September 2023, the Group held
1,452,696 of the Company's shares (HY2023: 2,194,470; FY2023:
1,896,048).
9. Disaggregation of revenue
In line with IFRS15 Revenue from Contracts with Customers we
have included the disaggregation of external revenue by sector,
breaking this down by our geographical operating segments.
September 2023 UK Europe USA Asia Total
--------------------------------- ---- ------- ---- ----- ------
Light vehicle 7% 14% 7% 6% 34%
Health & home 2% 10% 1% 6% 19%
Distributors 8% 2% - 4% 14%
Energy, tech & infrastructure 5% 5% 3% 2% 15%
General industrial 5% 4% 2% 1% 12%
Heavy vehicle 3% 3% - - 6%
--------------------------------- ---- ------- ---- ----- ------
Revenue from external customers
(AER) 30% 38% 13% 19% 100%
--------------------------------- ---- ------- ---- ----- ------
September 2022 UK Europe USA Asia Total
--------------------------------- ---- ------- ---- ----- ------
Light vehicle 5% 11% 4% 5% 25%
Health & home 2% 10% - 7% 19%
Distributors 11% 1% 1% 7% 20%
Energy, tech & infrastructure 6% 5% 3% 3% 17%
General industrial 5% 5% 2% 1% 13%
Heavy vehicle 2% 3% 1% - 6%
--------------------------------- ---- ------- ---- ----- ------
Revenue from external customers
(AER) 31% 35% 11% 23% 100%
--------------------------------- ---- ------- ---- ----- ------
10. Financial instruments
There is no significant difference between the fair values and
the carrying values shown in the balance sheet.
11. IFRS2 Share-based payments
During the period, a gain of GBP0.6m (HY2023: gain of GBP0.6m)
was recognised in relation to IFRS2 Share-based payments due to the
reversal of the cumulative charge relating to the 2021 Board,
Executive Committee and Senior Manager LTIP shares as the
non-market performance conditions are unlikely to be met.
12. Related parties
Transactions between subsidiaries of the Group, are not
disclosed in this note as they have been eliminated on
consolidation.
For the Executive Directors and the remaining key management
personnel (Executive Committee members) in the period, there is no
significant change in the components of the compensation that would
materially affect that disclosed in the Director's remuneration
report and note 28 of the consolidated financial statements for the
year ended 31 March 2023. Iain Percival (Chief Executive Officer)
and Serena Lang (Non-Executive Chair) were appointed to the Board
with effect from 20 September 2023 and 10 August 2023
respectively.
In the period, there were share options granted to key
management personnel totalling nil (HY2023: 1,910,554). There were
lapses related to key management personnel LTIP share options
totalling 132,407 (HY2023: 549,879).
13. Subsequent events
Asset classified as held for sale is the freehold land and
building of a net book value of GBP2.1m. A contract for sale and
leaseback of the freehold land and building was entered on 29
September and the sale was completed and lease entered on 23
October 2023. A deposit of GBP1.0m was received on 29 September and
is presented within 'Trade and other payables' within 'Current
Liabilities' in the Condensed consolidated interim statement of
financial position. Also, in the Condensed consolidated interim
statement of cash flows, the amount is presented within 'Proceeds
on sale of property, plant & equipment'.
14. Other interest-bearing loans and borrowings
On 1 June 2023, the Group's GBP80m Revolving Credit Facility was
redeemed via two new banking agreements with a combined facility
limit of GBP120m, in the form of:
1. Revolving Credit Facility (GBP70m) The facility has a term of
three years with two possible one-year extensions (i.e. potential
term of five years). The facility can be utilised in either USD,
EUR or GBP and there are no pre-determined currency limits.
2. UK Export Finance (UKEF) Export Development Guarantee (EDG)
Facility (GBP50m Sterling equivalent) The facility has a term of
five years with a three-year availability period and is split
between a USD facility ($31m), a EUR facility (EUR17m) and a GBP
facility (GBP10m) with UK Export Finance providing an 80%
guarantee.
The new Group facilities are subject to the same quarterly
covenant testing as follows:
Interest cover: Underlying EBITDA to net interest to exceed a
ratio of four.
Adjusted leverage: Total net debt to underlying EBITDA not to
exceed a ratio of three.
The three lenders who provided the redeemed Revolving Credit
Facility remain as the lenders in both facility agreements. The
facilities are guaranteed by 18 Group companies which exceed
thresholds in various metrics as specified by the lenders. Both
facilities are provided for general corporate purposes and will
support the Group in achieving growth ambitions.
Refer to note 29 of the Group's Annual report for the year ended
31 March 2023 for further details.
Electronic communications
The Company is not proposing to bulk print and distribute hard copies
of this half-yearly financial report for the six months ended 30 September
2023. Copies can be requested via Companysecretariat@trifast.com, or by
writing to, The Company Secretary, Trifast plc, Trifast House, Bellbrook
Park, Uckfield, East Sussex, TN22 1QW. News updates, Regulatory News and
Financial statements, can also be viewed and downloaded from the Group's
website, www.trifast.com.
INDEPENT REVIEW REPORT TO TRIFAST PLC
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
September 2023 is not prepared, in all material respects, in
accordance with UK adopted International Accounting Standard 34 and
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 September 2023 which comprises the condensed
consolidated interim income statement, the condensed consolidated
interim statement of comprehensive income, the condensed
consolidated interim statement of changes in equity, the condensed
consolidated interim statement of financial position, the condensed
consolidated interim statement of cash flows and the related
notes.
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" ("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.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with UK adopted international
accounting standards. The condensed set of financial statements
included in this half-yearly financial report has been prepared in
accordance with UK adopted International Accounting Standard 34,
"Interim Financial Reporting".
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 of directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half-yearly financial report, 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.
Auditor's responsibilities for the review of the financial
information
In reviewing the half-yearly report, we are responsible for
expressing to the Group a conclusion on the condensed set of
financial statement in the half-yearly financial report. Our
conclusion, including our Conclusions Relating to Going Concern,
are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the Group in meeting the requirements of the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority and for no other purpose. No person is
entitled to rely on this report unless such a person is a person
entitled to rely upon this report by virtue of and for the purpose
of our terms of engagement or has been expressly authorised to do
so by our prior written consent. Save as above, we do not accept
responsibility for this report to any other person or for any other
purpose and we hereby expressly disclaim any and all such
liability.
BDO LLP
Chartered Accountants
Gatwick
20 November 2023
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
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END
IR URSAROUUAUUA
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November 21, 2023 02:00 ET (07:00 GMT)
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