REG - Trifast PLC - Annual results - 31 March 2023 - Annual Report
11/07/2023 07:00
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RNS Number : 5662F Trifast PLC 11 July 2023
Tuesday, 11 July 2023 07.00hrs
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.
Trifast plc
(Trifast, TR or the Company)
Annual results for the year ended 31 March 2023
Publication of the 2023 Annual report and financial statements
Trifast publishes the Group's audited Annual report and Financial statements
for the year ended 31 March 2023. The following information contained within
this announcement is a summary extracted from the Group's audited FY2023
Annual report and financial statements. The publication can be read in full
via this link:
http://www.rns-pdf.londonstockexchange.com/rns/5662F_1-2023-7-10.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/5662F_1-2023-7-10.pdf)
"My role is not to fundamentally change the corporate strategy but to align
this strategy with greater focus. The task is building on TR's reputation as a
trusted and reliable partner by accelerating the pace of execution and
creating an aligned leadership team with the skills and necessary
capabilities, visions and drive to maximise 50 more years of success"
Scott Mac Meekin, Interim CEO
Key operational highlights
· After a challenging period, TR is now focused on continuing its
momentum to deliver profitable growth and its medium-term aspirations
· Strong revenue growth of 9.1% at Constant exchange rate (CER)
(organic: 7.3%; acquisition: 1.8%; 11.8% at Actual exchange rate (AER))
· Pass through of inflationary cost successfully concluded by
January 2023 with some key customers
· Growth momentum sustained in FY23 Q4; along with record level
of contract wins for the year totalling £25.6m
· Underlying profit before tax reduces to £9.3m at AER resulting
in underlying diluted earnings per share of 5.13p
· Comprehensive UK operational improvement plan developed,
annualised savings in excess of £5m
· Gross stock levels reduced by more than £10m during Q4
although flat year on year
· Reflecting confidence in the future, proposing final dividend
of 1.50p per share, up 7.1% over 2022
· Post year end - new banking facilities with a combined limit of
£120m
Group financial performance
Underlying measures: CER CER AER AER AER
FY23 change FY23 change FY22
Revenue £238.5m 9.1% £244.4m 11.8% £218.6m
Gross profit % 25.3% (140)bps 25.3% (140)bps 26.7%
Underlying operating profit (UOP)(1) £11.2m (24.1)% £12.0m (18.7)% £14.7m
Underlying operating profit %(1) 4.7% (200)bps 4.9% (180)bps 6.7%
Underlying profit before tax(1) £8.6m (37.7)% £9.3m (32.4)% £13.8m
Underlying diluted earnings per share(1) - - 5.13p (36.9)% 8.13p
Adjusted leverage ratio(1,3) - - 2.19x 0.92x 1.27x
Adjusted net debt(1,2) - - £(38.0)m £(14.2)m £(23.8)m
Return on capital employed (ROCE)(1) - - 5.4% (290)bps 8.3%
Total dividend - - 2.25p 7.1% 2.10p
GAAP measures
Operating (loss) /profit - - £(0.0)m (100.1)% £11.6m
Operating (loss) / profit % - - (0.0)% (530)bps 5.3%
(Loss) / profit before tax - - £(2.7)m (125.4)% £10.6m
Diluted (loss) / earnings per share - - (2.12)p (132.3)% 6.56p
1.Before separately disclosed items (see note 1)
2.Adjusted net debt is stated excluding the impact of IFRS 16 Leases.
Including right-of-use lease liabilities, net debt increases by £(15.8)m to
£(53.8)m (FY22: net debt increases by £(13.7)m to £(37.5)m)
3.Adjusted leverage ratio is calculated using adjusted net debt against
adjusted underlying EBITDA
Note:
Unless stated otherwise, amounts and comparisons with prior year are
calculated at constant currency (Constant Exchange Rate (CER)).
Where reference is made to 'underlying' this is defined as being before
separately disclosed items.
Reference links:
The Board believe that the 2023 Annual report gives a fair and balanced review
of the Trifast business and its strategy for the future. For ease of
reference, the following links will be of interest:
To read more about: Refer to:
Where we operate Page 3
Our strategy for growth Pages 8-15
Key strategic and performance indicators Pages 18-21
Our business model Page 16-17
Our sectors Page 22 -23
Board and leadership structure Pages 68-70
Stakeholder engagement Page 24-31
Presentation of results webcast
The Company is holding a 'live' presentation via the Investor Meet Company
platform (IMC). The session will start at 11.30am today. To register and
join the event please follow the link:
https://www.investormeetcompany.com/trifast-plc/register-investor
(https://www.investormeetcompany.com/trifast-plc/register-investor)
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.
To read more on our 50 years of progress please refer to pages 4-5 of the 2023
Annual report.
The 2023 Sustainability Report is available on the Company website.
For more information, visit:
TRIFAST PLC TRI Stock | London Stock Exchange
(https://www.londonstockexchange.com/stock/TRI/trifast-plc/company-page)
Our website: www.trifast.com (http://www.trifast.com/)
LinkedIn: www.linkedin.com/company/tr-fastenings
(http://www.linkedin.com/company/tr-fastenings)
Twitter: www.twitter.com/trfastenings (http://www.twitter.com/trfastenings)
Facebook: www.facebook.com/trfastenings
(http://www.facebook.com/trfastenings)
Note
Trifast, TR and TR Fastenings are registered trademarks of the Company
LEI number: 213800WFIVE6RWK3CR22
Trifast plc
Annual results for the year ended 31 March 2023
Extracts from the letter to shareholders from the Non-executive Chair,
Jonathan Shearman
Introduction
In this, TR's 50th anniversary year, it is only right to express our gratitude
to 'the Mikes' (Timms and Roberts). We joined with them on 4 June this year to
celebrate the Company's 'birth' and it is a privilege for me and the team to
be involved in the business today. Trifast has experienced a significant
amount of change and evolution since 1973. Over the last 12 months, we have
once again seen this, some of which has been encouraging and some of which has
been challenging but necessary for the business and its future. Simplifying
and better aligning the business will provide the foundations for a bright and
rewarding future for all of our stakeholders.
Dividend policy
Our focus on growth allows us to remain committed to a progressive dividend
policy that shares the benefit of ongoing profitable growth with our
shareholders.
Reflecting our confidence in the prospects for the business, the Board is
proposing an increased final dividend of 1.50p (FY22: 1.40p). This, together
with the interim dividend of 0.75p (paid on 14 April 2023), brings the total
for the year to 2.25p per share, an increase of 7.1% on the prior year (FY22:
2.10p). The final dividend, subject to shareholder approval at the AGM, will
be paid on 13 October 2023 to shareholders on the register at the close of
business on 29 September 2023. The ordinary shares will become ex-dividend on
28 September 2023. The dividend cover is currently 2.3x, however the Board
continues to consider that an appropriate future level of dividend cover is in
the range of 3.0x to 4.0x.
Board and Senior Management changes
In November 2022, we announced that Darren Hayes-Powell and Louis Eperjesi
were both joining the Board as Chief Financial Officer and Non-Executive
Director, respectively. The Company is already benefiting from their
contributions and counsel. In addition, Dan Jack, who joined Trifast in June
2020, was promoted to Chief Operating Officer. Scott Mac Meekin, previously a
Non-executive director, stepped in as interim Chief Executive Officer in
February 2023, following the resignation of Mark Belton. Scott's pace,
approach and immense sector knowledge is proving extremely insightful, and
feedback from customers, employees and stakeholders has been positive.
In August our previous CFO, Clare Foster, also, left the business. We take
this opportunity to thank Clare and Mark for the contributions to the Group
and wish them well in their future endeavours.
Annual General Meeting
The forthcoming AGM in September will be the final time I will be seeking
re-election. Together with the Board, I now feel that the baton can be safely
passed to the next Chair.
People
I acknowledge that this has been a year of change and disruption, and it has
resulted in some hard decisions having to be made. Over the last 50 years,
many colleagues have contributed to TR's growth and I thank all of them around
the world for their personal and collective contribution, including during
this challenging period. They make Trifast what it is and they will continue
to drive us forward into our future.
Finally, having navigated the many challenges of the last few years, I am
encouraged that we now have a Board and leadership structure with the
experience and capabilities to support the business and capitalise on the many
opportunities that lie ahead.
To read the Chair's letter in full please refer to page 4 of the 2023 Annual
report.
Extracts from the Review by the Interim Chief Executive Officer, Scott Mac
Meekin
Introduction
When the Board asked me to step into this role in February this year, I took
the opportunity without hesitation. As interim CEO, my role is not to
fundamentally change the corporate strategy, but to align this strategy with
greater focus. I see my task as building on TR's reputation as a trusted and
reliable partner by accelerating the pace of execution and creating an aligned
leadership team with the skills and necessary capabilities, visions and drive
to maximise 50 more years of success.
Operating background in FY23
Throughout the year we witnessed macroeconomic and geopolitical elements
impacting the business directly and through our suppliers and customers. We
encountered extraordinary input cost increases, which combined to pressure
several of our customer segments, in particular the health & home sector.
This 'mixed' environment, coupled with a host of corrective actions,
implemented throughout the year, and a full year contribution from our Falcon
acquisition, resulted in a reasonable start to FY23 across all regions in
terms of volume.
However, during the first half, this was accompanied by challenges
specifically at TR VIC, our Italian operation, and the loss of a full two
months trading due to Covid-19 in our China operations, both of which impacted
our margins.
During the second half of the year, the business enjoyed a gradual return
towards more normal levels of lead times, freight costs and raw material
costs, though, by Q4, several of our businesses were further affected by the
changing macroenvironments.
More detail on the operating background is contained within the CFO's
Financial review.
Significant changes in FY23
· Global wins: The year under review saw new highs for both revenue
and contract wins, the latter, significantly within the automotive and energy,
tech & infrastructure sectors. This momentum included both of our North
American businesses.
· Revenue growth: In FY23 we saw revenue growth in Europe and North
America. Asia operations recorded moderate growth in the year and was even
able to overcome the impacts of the national shutdown in China.
· Dynamic pricing: During the year, several major customers'
multi-year contracts were due for renegotiation. It is satisfying to report
that the team has, in partnership with these key accounts, successfully
renewed these contracts which now incorporate a flexible price mechanism that
will automatically adapt for extraordinary up or downside changes in a broad
basket of input prices. This is a significant step towards building in a more
dynamic pricing model for the business as a whole.
· Customer centricity: We have recently launched a global programme
designed to help us focus our resources more acutely on a well-defined set of
market segments and key customers. This programme is a comprehensive review of
our existing and potential customer engagements, providing our teams across
the Group with a clear and standardised lens. This initiative will assist us
in determining the optimal customers and prospects for us to partner with, and
what are the most effective services and products for each unique customer.
· Our IT journey - beyond Atlas: I am happy to say that, after a
long period of transformation and learning, the Group has now proven they are
able to roll out our finance and operations solutions using Microsoft D365
together with our standard operating procedures (SOPs) and data templates. The
availability of key data from the completed implementations has provided the
basis for many of our recent decisions and will continue to be a key strategic
part of our development road map.
Going forward
Following my appointment, I agreed an initial 100-day plan with the Board,
which largely flowed from the key points instigated in the previous quarter,
namely reduction of working capital and therefore debt and the execution of a
cost reduction programme focused on the UK.
By the end of the financial period, we had introduced quarterly sprints, with
Sprint 2 having started in June. A significant objective of this process is to
implement a much tighter focus allowing us to postpone or sequence the many
other, albeit important, competing tasks, allowing for faster execution of
those tasks agreed as priorities within any sprint.
Most importantly, the people of TR
The most important part of Trifast is its people. They are renowned worldwide
for their tireless commitment to customer service and reliability, priding
themselves on delivering excellent product, service and quality. As part of a
key driver of our future success, we intend to enhance our training and
leadership efforts. Our mission is to implement a 'winning team' programme
over the next 24 months consisting of three fundamental elements:
· Building a climate for action
· Competencies for success
· Commitment to results
Outlook
As we said in April's update, the Group's business foundations remain strong,
and there is significant potential to be realised during the coming years. We
are also mindful that the short-term macro-economic outlook remains
challenging.
We continue to take meaningful steps across a range of operational and
financial initiatives, including an on-going reduction in working capital, a
focus of Sprint 2 being further integration of Asia into the Group and
improved utilisation of our in-house manufacturing.
We have added further new contract wins in the year to date, especially in our
North American and European regions, alongside an increasingly healthy
pipeline. These, together with the initial benefits from our operational
improvement programmes, support the Board's continued expectation in
delivering an improvement in performance in FY24, albeit weighted towards the
second half of the year.
The Company looks forward to updating shareholders of further progress over
the coming year.
To read the CEO review in full please refer to page 6 of the 2023 Annual
report.
Trifast plc
Annual results for the year ended 31 March 2023
Financial review by the Chief Financial Officer, Darren Hayes-Powell
FY23 presented well-documented challenges for the Group, however, our focus on
our immediate priorities in Q4 showed a positive boost. This, combined with
robust growth in the second half, enabled us to deliver revenues up 9.1% CER
to £238.5m (AER: 11.8% to £244.4m; FY22: £218.6m). 7.3% of that growth was
organic, with the remaining 1.8% reflecting five months' trading from TR
Falcon.
By the end of FY23, we had successfully achieved most of our price increase
programme, incorporating a flexible pricing mechanism with our key customers,
and we are pleased to report that in March 2023 our margins improved.
This growth reflected persistent demand in most of our underlying markets and
was achieved through focused sales initiatives across a number of sectors.
Gross profit has reduced to 25.3% (AER: 25.3%; FY22: 26.7%) as the positive
impact of higher revenues has been offset by the lag in pass-through of cost
factors due to freight, higher electricity and raw material cost deltas.
During the final quarter of 2023 the flexible pricing mechanisms with key
customers were agreed to ensure costs were fairly passed on to our end
customer. Supply chain and energy challenges are now stabilising across most
of the world allowing a normalisation of our cost deltas we have faced in HY1,
although this is still working its way through stock holdings in the first
half of FY24.
Underlying operating profit reduced by £3.5m to £11.2m (AER: £12.0m; FY22:
£14.7m) due to investments in overheads relating to recruitment, Project
Atlas (Microsoft D365) BAU costs as well as inflationary cost impacts. As a
result of the increased overhead levels, we commenced a strategic review of
operations and function costs that is anticipated during FY24 to start
delivering savings in excess of £5m per annum.
Gross inventory levels at c.£97m (AER: c.£99m; FY22: c.£98m) are back in
line with FY22, reflecting a more balanced trade position and a significant
reduction from HY1 levels of £107m. The continued reduction in gross stock
levels will remain a key focus in FY24. The inventory provision in FY23 was
c.£8m (FY22: c.£9m).
Adjusted net debt has risen to £38.0m (HY23: £40.4m; FY22: £23.8m) as
underlying cash inflow of £11.5m has been more than offset by a reduction in
creditors (£11.7m), capex, Atlas investments (£7.3m) and other amounts
including interest, tax, dividends and FX.
Following these cash movements, our leverage ratio, calculated in line with
the banking agreement, at 31 March 2023 was 2.19x (FY22: 1.27x). Whilst this
is higher than historically, it remains within our covenant range of < 3.0x
and therefore continues to provide flexibility. Facility headroom as of 31
March 2023 was £10.2m (FY22: c.£29.3m), as stated before an additional £40m
accordion option.
Revenue
We have seen a mixed performance across the regions with Europe and North
America showing strong growth whilst the UK remains flat and Asia has shown
small growth. Across our key market sectors, the majority have seen strong
growth, most notably in light vehicle, with only distributors and health &
home showing reductions year-on-year.
Europe has seen a 10.4% increase to £89.0m (AER: 9.8% to £88.4m; FY22:
£80.6m). This was driven by strong growth across the heavy vehicle sector,
predominantly in our Swedish operation, as well as robust growth in light
vehicle driven by our entities in Holland and Spain. Germany continues to grow
strongly in the general industrial sector supported by transfer of business
from the UK in the distributors sector. TR VIC, Italy, has seen a reduction in
revenue year-on-year, mostly from the health & home sector due to the
downturn in customer sentiment and the indirect impact the Ukraine conflict is
having on some of our customers.
In Asia, we have seen a revenue increase of 2.6% to £56.8m (AER: 9.1% to
£60.4m; FY22: £55.4m). Growth in the region was hampered by China imposing
Covid-19 lockdowns at the start of FY23, impacting our operations in Shanghai,
a key health & home customer in our Singaporean entity undertaking a
significant de-stocking exercise which resulted in a flat year-on-year
position for the sector. The light vehicle sector has shown a significant
uplift in business in Malaysia and Thailand.
Trading levels in the UK businesses have been impacted differently, with light
vehicle showing strong growth, offset by a reduction in distributors due to
the transfer of business to TR Kuhlmann, Germany. In our biggest trading
entity, TR Fastenings, UK, we have seen strong growth in energy, tech &
infrastructure and general industrial offset by a fall in health & home.
We have seen the highest growth from our North American business, 50.3% to
£26.6m (AER: 68.8% to £29.9m; FY22: £17.7m) with investment in new
leadership quickly helping to co-ordinate our legacy and acquired businesses.
Organic growth has driven 28.5% of this as new platform builds in the light
vehicle sector come online and energy, tech & infrastructure sales gain
momentum. TR Falcon has provided 21.8% acquisition growth to the region. It
has also performed well organically in the period, with revenues running ahead
of expectation. Whilst this has started from a low base, the ability to now
take advantage of global customers has enabled this business to perform.
Underlying operating profit
Underlying operating margins reduced by 200bps, to 4.7% (FY22: 6.7%) resulting
in operating profit of £11.2m (AER: £12.0m; FY22: £14.7m).
As a Group we have been impacted by the macroeconomic environment, most
notably raw material, freight and energy deltas, but as we finished FY23 the
positive impact of stronger sales and aligned pricing gives us a good base
moving forward. Key investments include Project Atlas business-as-usual costs
now roll-out is underway (including amortisation of £0.5m), further
investments into our Group functions and targeted recruitment into our
commercial and compliance teams.
Towards the end of FY23 we commenced a strategic review of operations and
functions to identify specific measures that could support profitability
without adversely impacting our growth momentum or customer service levels.
The output of this review shows expected savings during FY24 rising to an
annualised saving in excess of c.£5m.
In North America we have seen an improvement in year-on-year margins from a
negative position of (0.4)% in FY22 to a positive margin of 3.9% (AER: 4.2%),
as very strong sales growth has driven operational gearing gains, and
following the acquisition of TR Falcon in August 2021.
Our European region has fallen, recording a reduction of 140bps to 3.4% margin
(AER: 3.3%; FY22: 4.8%), as sales growth gains are more than offset by gross
margin pressures due to the delays in the pass-through of inflationary cost
pressures, most notably energy. Cost increases have impacted underlying
operating profits across all regions and are now stabilising as pricing
negotiations are becoming an everyday and key part of doing business.
The UK businesses fell by 310bps to 6.6% margin (FY22: 9.7%) as it has been
impacted greatly by the macroeconomic slowdown combined with stock write-downs
and the transfer of distribution business to Germany. As the inventory is
coming back to lower levels, we do not expect this to continue. We anticipate
the margin recovering towards the medium term target as costs reduce due to
operational improvement programme.
All of our regions are showing underlying operating profits, with Asia
continuing to bring in the highest returns at 15.5% (AER: 15.7%; FY22: 12.9%).
The majority of this improvement has come from trading and efficiencies in our
distribution and contract business.
Operating profit (at AER)
At a Group level, operating profit reduced by £11.6m to a loss of <£0.1m
(FY22: £11.6m). Outside of the factors mentioned in underlying operating
profit (£2.7m), the reduction is caused by the recognition of a restructuring
and related charges (£4.2m), the impairment of goodwill in TR VIC (£2.9m),
settlement for loss of office (£1.1m) and an increase in Project Atlas costs
(£0.7m).
The restructuring and related charges relates 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, for TR
Fastenings, our largest subsidiary. Costs within the figure of £4.2m include
redundancy costs in respect of a downsizing of personnel and impairment of
non-current assets due to the closure of certain offices and warehouses. This
was approved by the Board in March 2023 and is expected to be completed by
March 2024. We have excluded these costs from our underlying results, to
reflect the size and one-off nature of this project. Further details can be
found in Note 1 to this announcement.
Net financing costs (at AER)
Net interest costs have increased to £2.7m (FY22: £1.0m) as average gross
debt (including IFRS 16) has increased to £80.9m (FY22: average £44.4m). Net
marginal interest rates (net of commitment fees) have increased. Post year-end
the Group has signed a new revolving credit facility (RCF) agreement,
supported by a UK export finance - export development guarantee (UKEF - EDG)
agreement to allow the Group flexibility on future cash investments.
This combined facility limit of £120m, with the same lenders, provides
strength and support to enable the Group to meet its future strategic growth
plans. Interest margins have increased in line with market conditions and will
now be within a range of 2.10-3.60% compared to 1.10-2.20% under the previous
RCF.
Taxation (at AER)
The underlying effective tax rate (ETR) is higher at 25.6% (FY22: underlying
effective tax rate: 19.1%). The main reason for this is an increase in the
amount of tax on dividends. Despite recording a loss before tax at statutory
level, there still remains a tax charge as some significant accounting entries
in the year (e.g. TR VIC impairment of goodwill and aborted acquisition costs)
have no tax credit associated to them. Removing these one-off accounting
entries, the effective tax rate is 35.7%, which is still high due to the low
profit before tax relative to the increase in the amount of tax on dividends.
Subject to future tax changes and excluding prior year adjustments, our
normalised underlying ETR is expected to remain in the range of c.20-25% going
forward.
Underlying diluted earnings per share (AER)
Reflecting the challenging performance as explained above, our underlying PBT
at AER is down 32.4% to £9.3m (FY22: £13.8m). This, coupled with the
increase in our underlying effective tax rate, has resulted in a reduction in
underlying diluted earnings per share (EPS) of 36.9% to 5.13p at AER (FY22:
8.13p).
Net debt (AER)
The Group's adjusted net debt has increased by £14.2m to £38.0m (FY22:
£23.8m). An increase in working capital contributed to £7.2m of this as a
decrease in creditors, due to ongoing stock reductions, was only partially
offset by other working capital movements. A major focus will remain on
working capital management, reducing the inventory levels and managing debtors
accordingly.
Capital expenditure in the period amounted to £7.3m (FY22: £6.3m), including
£3.0m in relation to increasing capacity at our Italian operations as well as
£2.6m on Project Atlas.
Including the impact of IFRS 16 Leases, the Group's net debt position was
£53.8m (FY22: £37.5m).
Return on capital employed (at AER)
As at 31 March 2023, the Group's shareholders' equity decreased to £135.9m
(FY22: £139.1m). The £(3.2)m reduction reflects a decrease in retained
earnings of £(6.1)m, a movement on own shares held reserve of £0.5m, and a
foreign exchange reserve gain of £2.4m. With this reduced asset base and
lower profits, our ROCE has reduced by 290bps to 5.4% (FY22: 8.3%). At 31
March 2023, the number of ordinary shares held by the Employee Benefit Trust
(EBT) to honour future equity award commitments was 1,896,098 shares (FY22:
2,194,470 shares).
Outlook
There can be no doubt that this has been a very challenging year, particularly
with macro-level supply chain issues and inflationary cost pressures. However,
the recent performance, together with renewed focus, starts to give us
confidence on achieving our plans in FY24.
In Q4 FY23, the Group achieved its key immediate priorities together with
robust future orders received. Our record-breaking order book of £25.6m
together with a focused, customer engagement programme allows us to work
towards our medium-term objectives.
Our price increase programme for some of our key customers ensures price
mechanisms are in place to manage future key cost drivers as our ongoing way
of doing business. This, combined with our focused drive on working capital,
especially inventory management, ensures we manage our customer expectations
at controlled and appropriate levels. Our target for FY24 is to achieve a
balanced inventory level with a continued focus to reduce further through
innovative tools.
We have prepared for the future by renegotiating debt facilities, which will
allow us to grow through organic and acquisition investments. This is in two
forms: first, renegotiation of our RCF to £70m; and second, with a new
UKEF-EDG supported debt facility of £50m. This combined facility will allow
us the flexibility to invest and grow the business in the key sectors on a
global basis.
In support of our ongoing growth journey and developing the foundations for
the future we are targeting our capex on sustainable opportunities combined
with short financial payback periods. FY24 is key to complete the revised
roll-out for our business transformation D365 project by the end of the year.
As a result of this we are confident in the medium term that we can return to
our KSI targets for both UOP% and ROCE.
There can be no doubt that the macroeconomic, finance markets and geopolitical
environment continue to present challenges in the short term. Notwithstanding
this, we are confident with the fundamentals of the business and our position
across the globe to deal with macro-level issues, while continuing to invest
for growth for the medium term. Consequently, the Board remains committed to
the Group's strategic journey and medium-term profitable growth aspirations.
To read the Financial review in full please refer to page 50 of the 2023
Annual report.
Trifast plc
The notes on pages 139-197 of the 2023 Annual Report form part of these
financial statements.
Consolidated income statement
Annual results for the year ended 31 March 2023
Annual report note 2023 2022
£000 £000
Continuing operations
Revenue 3, 35 244,391 218,618
Cost of sales (182,462) (160,189)
Gross profit 61,929 58,429
Other operating income 4 510 565
Distribution expenses (6,727) (5,296)
Administrative expenses before separately disclosed items (43,728) (38,952)
Acquired intangible amortisation 2, 13 (1,798) (1,593)
Project Atlas 2 (1,722) (1,041)
Restructuring and related charges 2 (4,235) -
Impairment of goodwill 2, 13 (2,926) -
Settlement for loss of office 2 (1,050) -
Aborted acquisition costs 2 (261) -
Acquisition costs 2, 36 - (508)
Total administrative expenses (55,720) (42,094)
Operating (loss) / profit 5, 6, 7 (8) 11,604
Financial income 8 158 31
Financial expenses 8 (2,842) (1,018)
Net financing costs (2,684) (987)
(Loss) / profit before taxation 3 (2,692) 10,617
Taxation 9 (174) (1,640)
(Loss) / profit for the year
(attributable to equity shareholders of the Parent Company) (2,866) 8,977
(Loss) / earnings per share
Basic 25 (2.12)p 6.61p
Diluted 25 (2.12)p 6.56p
Consolidated statement of comprehensive income
for the year ended 31 March 2023
2023
£000 2022
£000
(Loss) / profit for the year (2,866) 8,977
Other comprehensive income for the year:
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations 4,053 2,907
Loss on a hedge of a net investment taken to equity (1,655) (147)
Other comprehensive income recognised directly in equity 2,398 2,760
Total comprehensive (expense) / income recognised for the year
(attributable to the equity shareholders of the Parent Company) (468) 11,737
Consolidated statement of changes in equity
for the year ended 31 March 2023
Share Share Merger Own Translation Retained Total
capital premium reserve shares held reserve earnings equity
£000 £000 £000 £000 £000 £000 £000
Balance at 31 March 2022 6,804 22,512 16,328 (3,487) 12,284 84,704 139,145
Total comprehensive expense for the year:
Loss for the year - - - - - (2,866) (2,866)
Other comprehensive income for the year - - - - 2,398 - 2,398
Total comprehensive expense recognised for the year - - - - 2,398 (2,866) (468)
Issue of share capital 1 18 - - - - 19
Share-based payment transactions (net of tax) - - - - - 5 5
Movement in own shares held - - - 470 - (470) -
Dividends - - - - - (2,812) (2,812)
Total transactions with owners 1 18 - 470 - (3,277) (2,788)
Balance at 31 March 2023 6,805 22,530 16,328 (3,017) 14,682 78,561 135,889
Consolidated statement of changes in equity
for the year ended 31 March 2022
Share Share Merger Own Translation Retained Total
capital premium reserve shares held reserve earnings equity
£000 £000 £000 £000 £000 £000 £000
Balance at 31 March 2021 6,802 22,461 16,328 (595) 9,524 77,284 131,804
Total comprehensive income for the year:
Profit for the year - - - - - 8,977 8,977
Other comprehensive income for the year - - - - 2,760 - 2,760
Total comprehensive income recognised for the year - - - - 2,760 8,977 11,737
Issue of share capital 2 51 - - - - 53
Share-based payment transactions (net of tax) - - - - - 742 742
Movement in own shares held - - - (2,892) - (143) (3,035)
Dividends - - - - - (2,156) (2,156)
Total transactions with owners 2 51 - (2,892) - (1,557) (4,396)
Balance at 31 March 2022 6,804 22,512 16,328 (3,487) 12,284 84,704 139,145
Note: Company statement of changes in equity can be found on pages 134 to 135
of the Annual report.
Statements of financial position
at 31 March 2023
Group Company
Annual report note 2023 2022 2023 2022
£000 £000 £000 £000
Non-current assets
Property, plant, and equipment 10, 11 19,417 20,297 6 2,216
Right-of-use assets 12 14,395 12,757 36 40
Intangible assets 13, 14 40,451 42,981 7,854 7,027
Equity investments 15 - - 42,298 42,298
Non-current trade and other receivables 19 - - 76,848 66,344
Deferred tax assets 16, 17 4,289 2,787 998 724
Total non-current assets 78,552 78,822 128,040 118,649
Current assets
Inventories 18 90,948 88,933 - -
Trade and other receivables 19 61,906 60,520 3,754 1,888
Assets classified as held for sale 10, 11 2,130 - 2,130 -
Cash and cash equivalents 26 31,798 26,741 640 604
Total current assets 186,782 176,194 6,524 2,492
Total assets 3 265,334 255,016 134,564 121,141
Current liabilities
Trade and other payables 21 35,332 45,249 2,395 1,569
Right-of-use liabilities 12, 20, 26 3,498 3,028 21 19
Provisions 23 2,809 - 396 -
Tax payable 2,560 2,455 - -
Total current liabilities 44,199 50,732 2,812 1,588
Non-current liabilities
Other interest-bearing loans and borrowings 20, 26 69,825 50,507 69,825 50,507
Right-of-use liabilities 12, 20, 26 12,315 10,683 17 23
Provisions 23 1,443 1,088 - -
Deferred tax liabilities 16, 17 1,663 2,861 - -
Total non-current liabilities 85,246 65,139 69,842 50,530
Total liabilities 3 129,445 115,871 72,654 52,118
Net assets 135,889 139,145 61,910 69,023
Equity
Share capital 6,805 6,804 6,805 6,804
Share premium 22,530 22,512 22,530 22,512
Merger reserve 16,328 16,328 16,328 16,328
Own shares held (3,017) (3,487) (3,017) (3,487)
Reserves 14,682 12,284 - -
Retained earnings 78,561 84,704 19,264 26,866
Total equity 135,889 139,145 61,910 69,023
The loss after tax for the Company is £4.3m (FY22: £4.1m).
Statements of cash flows
for the year ended 31 March 2023
Group Company
Annual report note 2023 2022 2023 2022
£000 £000 £000 £000
Cash flows from operating activities
(Loss) / profit for the year (2,866) 8,977 (4,325) (4,106)
Adjustments for:
Depreciation and amortisation 10, 11, 13, 14 5,471 4,125 638 84
Right-of-use asset depreciation 12 3,640 3,131 23 19
Unrealised foreign currency gain (50) (34) (43) (45)
Financial income 8 (158) (31) (1,268) (155)
Financial expense (excluding right-of-use liabilities) 8 2,412 692 2,383 683
Right-of-use liabilities' financial expense 8, 12 430 326 1 -
Loss on sale of property, plant, and equipment, intangibles and investments 6 9 145
149
Dividends received - - (7,434) (3,358)
Equity settled share-based payment charge 24 772 (398) 325
Impairment of goodwill 2, 13 2,926 - - -
Impairment of right-of-use assets and property, plant, and equipment on 2, 10, 11, 12 - - -
restructuring
1,426
Taxation expense / (income) 9 174 1,640 (300) (13)
Operating cash inflow / (outflow) before changes in working capital and 19,604 (10,714) (6,421)
provisions
13,578
Change in trade and other receivables 1,644 (5,950) (536) 916
Change in inventories 215 (31,716) - -
Change in trade and other payables (11,739) 2,922 661 299
Change in provisions 2,792 - 396 -
Cash generated from / (used in) operations 6,490 (15,140) (10,193) (5,206)
Tax paid (3,529) (2,757) - -
Net cash generated from / (used in) operating 2,961 (17,897) (10,193) (5,206)
activities
Cash flows from investing activities
Proceeds from sale of property, plant, and equipment 27 36 - -
Interest received 138 31 366 196
Acquisition of property, plant and equipment and intangibles 10, 11, 13, 14 (5,248) (1,394) (1,481)
(5,625)
Acquisition of subsidiary, net of cash acquired - (5,847) - -
Lending to subsidiary undertakings - - (9,897) (21,638)
Repayment by subsidiary undertakings - - 2,125 -
Dividends received - - 7,434 3,358
Net cash used in investing activities (5,460) (11,028) (1,366) (19,565)
Cash flows from financing activities
Purchase of own shares 24 - (3,035) - (3,035)
Proceeds from the issue of share capital 24 19 53 19 53
Proceeds from new loan 16,423 32,980 16,423 32,980
Repayment of loans from subsidiaries - - - (4,248)
Repayment of right-of-use liabilities 12 (3,792) (2,977) (24) (19)
Dividends paid 24 (2,812) (2,156) (2,812) (2,156)
Interest paid (2,477) (805) (2,011) (456)
Net cash generated from financing activities 7,361 24,060 11,595 23,119
Net change in cash and cash equivalents 4,862 (4,865) 36 (1,652)
Cash and cash equivalents at 1 April 26,741 30,265 604 2,256
Effect of exchange rate fluctuations on cash held 195 1,341 - -
Cash and cash equivalents at 31 March 31,798 26,741 640 604
Notes to the Annual Results Announcement
1. Underlying profit before tax and separately disclosed items
FY23 Annual report Note 2023 2022
note £000 £000
Underlying profit before tax 9,300 13,759
Separately disclosed items within administrative expenses:
Acquired intangible amortisation 13 (1,798) (1,593)
Project Atlas (1,722) (1,041)
Restructuring and related charges (4,235) -
Impairment of goodwill 13 (2,926) -
Settlement for loss of office (1,050) -
Aborted acquisition costs (261) -
Acquisition costs 36 - (508)
(Loss) / profit before tax (2,692) 10,617
FY23 Annual report Note 2023 2022
note £000 £000
Underlying EBITDA 19,297 20,409
Separately disclosed items within administrative expenses:
Project Atlas (1,722) (1,041)
Restructuring and related charges (4,235) -
Impairment of goodwill 13 (2,926) -
Settlement for loss of office (1,050) -
Aborted acquisition costs (261) -
Acquisition costs 36 - (508)
EBITDA 9,103 18,860
Acquired intangible amortisation 13 (1,798) (1,593)
Depreciation and non-acquired amortisation (7,313) (5,663)
Operating (loss) / profit (8) 11,604
In addition to the above, there were £0.4m separately disclosed items in
relation to VIC patent box claims set against the tax charge in FY22.
Recurring items
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.
Event-driven items
Project Atlas is a multi-year investment into our IT infrastructure and
underlying business processes. As a consequence of the work undertaken to date
on this project, we have incurred direct costs of £1.7m in FY23 (FY22:
£1.0m), largely relating to the project team and the ongoing roll out. We
have excluded these costs from our underlying results, to reflect the unusual
scale and one-off nature of this project. The cost has been excluded 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. The financial impact of the work
undertaken to date on this project totals direct costs of £2.6m in FY23
(cumulatively £17.4m) of which £0.9m has been recognised (cumulatively
£7.9m) as intangible assets on the balance sheet. Out of the £7.9m
recognised as intangible assets on the balance sheet, £6.6m has been
capitalised in relation to the sites which have gone live on the new IT
system.
Restructuring and related charges of £4.2m are a result of a strategic review
of operations and functions initiated in Q4 FY22 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 FY24
and is planned to be completed by 31 March 2024. We have excluded these costs
from our underlying results, to reflect the size and one-off nature of this
project.
Impairment of goodwill of £2.9m relates to the TR VIC SPA cash generating
unit. We have excluded these costs from our underlying results both due to
their size and incidence.
Settlement for loss of office costs of £1.0m (FY22: £nil) were recognised in
the year due to the CFO and CEO leaving the Group with immediate effect on 31
August 2022 and 18 February 2023 respectively. The costs include payment in
lieu of notice, compensation for loss of office and loss of contractual
benefits. We have excluded these costs from our underlying results both due to
their size and incidence.
Aborted acquisition costs of £0.3m (FY22: £nil) were incurred in the year in
relation to a potential target which was aborted in July 2022. They are
excluded from underlying results to help provide a better understanding of the
trading performance of the Group.
Acquisition costs of £nil (FY22: £0.5m) were incurred in the year. In FY22,
£0.5m of costs were incurred in relation to the acquisition of TR Falcon on
31 August 2021. They were excluded from underlying results to help provide a
better understanding of the trading performance of the Group in relation to
the acquisition of Falcon on 31 August 2021.
Management removes the event-driven costs and certain non-trading items
discussed above to allow the reader of the accounts to understand the
underlying trading performance of the Group. Further reconciliations of
underlying measures to GAAP measures can be found in note 32 in the Annual
report.
2. Operating segmental analysis
Segment information is presented in the consolidated financial statements in
respect of the Group's geographical segments. This reflects the Group's
management and internal reporting structure, and the operating basis on which
individual operations are reviewed by the Chief Operating Decision Maker (the
Executive Committee). Performance is measured based on each segment's
underlying operating result as included in the internal management reports
that are reviewed by the Chief Operating Decision Maker. This is used to
measure performance as management believes that such information is the most
relevant in evaluating the results of certain segments relative to other
entities that operate within the industry.
Inter-segment pricing is determined on an arm's length basis. Segment results,
assets and liabilities include items directly attributable to a segment as
well as those that can be allocated on a reasonable basis.
Goodwill and intangible assets acquired on business combinations are included
in the region to which they relate.
Geographical operating segments:
The Group is comprised of the following main geographical operating segments:
UK
Europe: includes Norway, Sweden, Hungary, Ireland, Holland, Italy, Germany,
Spain and Poland
North America: includes USA and Mexico
Asia: includes Malaysia, China, Singapore, Taiwan, Thailand, India and
Philippines.
In presenting information on the basis of geographical operating segments,
segment revenue 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 (the "EC") 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. All
material non-current assets are located in the country the relevant Group
entity is incorporated in.
March 2023 UK Europe North America Asia Common Total
amounts
£000 £000 £000 £000
£000
£000
Revenue
Revenue from external customers 77,857 85,362 29,657 51,515 - 244,391
Inter-segment revenue 6,032 3,077 271 8,893 - 18,273
Total revenue 83,889 88,439 29,928 60,408 - 262,664
Underlying operating result 5,509 2,915 1,256 9,473 (7,169) 11,984
Net financing costs (367) (643) (593) 28 (1,109) (2,684)
Underlying segment result 5,142 2,272 663 9,501 (8,278) 9,300
Separately disclosed items (11,992)
Loss before tax (2,692)
Specific disclosure items
Depreciation and amortisation (2,279) (3,500) (902) (1,770) (660) (9,111)
Government support income - - - - - -
Assets and liabilities
Non-current asset additions 1,101 5,832 1,082 2,222 1,412 11,649
Segment assets 74,423 82,259 27,426 69,475 11,751 265,334
Segment liabilities (23,247) (16,817) (3,612) (13,608) (72,161) (129,445)
March 2022 UK Europe North America Asia Common Total
amounts
£000 £000 £000 £000
£000
£000
Revenue
Revenue from external customers 77,056 78,482 17,535 45,545 - 218,618
Inter-segment revenue 6,805 2,089 191 9,805 - 18,890
Total revenue 83,861 80,571 17,726 55,350 - 237,508
Underlying operating result 8,122 3,858 (72) 7,123 (4,285) 14,746
Net financing costs (125) (169) (107) (58) (528) (987)
Underlying segment result 7,997 3,689 (179) 7,065 (4,813) 13,759
Separately disclosed items (3,142)
Profit before tax 10,617
Specific disclosure items
Depreciation and amortisation (2,184) (2,731) (554) (1,685) (102) (7,256)
Government support income - - - 76 8 84
Assets and liabilities
Non-current asset additions 1,962 3,269 1,381 54 1,481 8,147
Segment assets 74,479 81,125 22,472 65,593 11,347 255,016
Segment liabilities (25,929) (20,339) (4,389) (13,243) (51,971) (115,871)
There were no material differences in Europe and North America between the
external revenue based on location of the entities and the location of the
customers. Of the UK external revenue, £12.0m (FY22: £16.2m) was sold into
the European market. Of the Asian external revenue, £5.8m (FY22: £9.0m) was
sold into the North American market and £7.6m (FY22: £9.8m) was sold into
the European market.
Within Europe, TR VIC has revenue of £27.3m (FY22: £28.3m) and non-current
assets of £11.7m (FY22: £13.1m).
Within Asia, TR Formac Singapore has revenue of £20.4m (FY22: £20.3m) and
non-current assets of £4.5m (FY22: £4.4m).
Revenue is derived solely from the manufacture and logistical supply of
industrial fasteners and Category 'C' components.
3. 2023 Annual report
The Annual report and financial statements for the year ended 31 March 2023
were approved by the Board of Directors on 10 July 2023.
In addition to the link on the front of this announcement to a pdf of the 2023
Annual report, a copy together with the Notice of Meeting will in due course
be available to view and download from the Company website at www.trifast.com
(http://www.trifast.com) .
The documents will also be uploaded to the National Storage Mechanism at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
The financial information set out in this release does not constitute the
Group's statutory Report and Accounts for the years ended 31 March 2023 or
2022. However, it is derived from the 2023 Report and Accounts
http://www.rns-pdf.londonstockexchange.com/rns/5662F_1-2023-7-10.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/5662F_1-2023-7-10.pdf) .
The Report and Accounts for 2022 has been delivered to the Registrar of
Companies and those for 2023 will be delivered in due course. The external
auditor has reported on the 2023 Report and Accounts; the report was (i)
unqualified, (ii) did not include references to any matters to which the
external auditor drew attention by way of emphasis without qualifying the
reports and (iii) did not contain statements under section 498(2) or (3) of
the Companies Act 2006.
The Independent auditor's report to the members of Trifast plc can be read on
pages 122 to 129 of the 2023 Annual report.
4. Annual General Meeting (AGM)
The Annual General Meeting will be held at 11.30am on Friday, 15 September
2023 at Peel Hunt LLP, 100 Liverpool Street, London, EC2M 2AT.
The Notice of Meeting, which includes special business to be transacted at the
AGM together with an explanation of the resolutions to be considered at the
meeting, will be made available on the Company website around 18 July, and
communicated directly to shareholders.
Any questions relating to the 2023 Annual report can be sent to: The Company
Secretary, Trifast plc, Trifast House, Bellbrook Park, Uckfield, East Sussex
TN22 1QW, alternatively email: Companysecretariat@trifast.com
(mailto:Companysecretariat@trifast.com) .
Further enquiries please contact:
Trifast plc
Scott Mac Meekin, Interim Chief Executive Officer Tel: +44 (0) 1825 747630
Darren Hayes-Powell, Chief Financial Officer Email: corporate.enquiries@trifast.com
(mailto:corporate.enquiries@trifast.com)
Christopher Morgan, Company Secretary
Shareholders: Companysecretariat@trifast.com
(mailto: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 (mailto:fiona@tooleystreet.com)
Forward Looking Statement
This document may contain certain forward-looking statements. The
forward-looking statements 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 involve a degree of uncertainty.
Therefore, nothing in this document should be construed as a profit forecast
by the Company.
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