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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
Underlying measures CER(2) CER(2) AER(2) AER(2) AER HY2023 AER HY2022
HY2024 change HY2024 change
Revenue £119.1m (1.0)% £117.6m (2.2)% £120.2m £103.8m
Gross profit % 25.9% 130bps 25.7% 110bps 24.6% 26.3%
Underlying operating profit (UOP)(1) £6.9m 11.0% £6.6m 6.6% £6.2m £7.4m
Underlying operating profit %(1) 5.8% 60bps 5.6% 40bps 5.2% 7.2%
Underlying profit before tax(1) £4.1m (24.2)% £3.9m (29.3)% £5.5m £7.0m
Underlying diluted earnings per share(1) 2.18p (34.5)% 3.33p 4.42p
Adjusted net debt(3) £27.8m £(12.6)m £40.4m £5.1m
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 £4.7m 26.4% £3.7m £5.7m
Operating profit % 4.0% 90 bps 3.1% 5.5%
Profit before tax £2.0m (33.8)% £3.0m £5.3m
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 £(20.0)m to £(47.8)m (HY2023: net debt would increase by
£(14.8)m to £(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 £1.6m to £3.9m at AER - higher underlying
operating profits more than offset by increased interest costs
· Adjusted net debt reduced by £10.2m to £27.8m, 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 £0.2m
· 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
(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
(mailto:corporate.enquiries@trifast.com)
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)
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 (http://www.trifast.com)
Commercial website: www.trfastenings.com (http://www.trfastenings.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)
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%,
£1.4m (HY2023: increased by 2.1%, £2.4m), our AER underlying profit before
tax by 6.6%, £0.3m (HY2023: increased by 4.5%, £0.2m).
Underlying measures CER CER AER AER AER HY2023 AER HY2022
HY2024 change HY2024 change
Revenue £119.1m (1.0)% £117.6m (2.2)% £120.2m £103.8m
Gross profit % 25.9% 130bps 25.7% 110bps 24.6% 26.3%
Underlying operating profit (UOP)(1) £6.9m 11.0% £6.6m 6.6% £6.2m £7.4m
Underlying operating profit %(1) 5.8% 60bps 5.6% 40bps 5.2% 7.2%
Underlying profit before tax(1) £4.1m (24.2)% £3.9m (29.3)% £5.5m £7.0m
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 £4.7m 26.4% £3.7m £5.7m
Operating profit % 4.0% 90 bps 3.1% 5.5%
Profit before tax £2.0m (33.8)% £3.0m £5.3m
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 £119.1m (AER: decreased 2.2% to
£117.6m). 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 £6.9m.
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.£0.2m
Underlying profit before tax (UPBT) is down 24.2% at CER to £4.1m (AER: down
29.3% to £3.9m, HY2023: £5.5m). Interest has increased year-on-year by
£2.0m reflecting an increase in interest rates and higher average
borrowings. Adjusted net debt reduced to £27.8m from £38.0m 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 £2.0m (HY2023: £3.0m) and includes
the following one-off separately disclosed items: Project Atlas spend
£0.5m, acquired intangible amortisation £0.9m and restructuring costs £0.5m
(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 £120m,
provides strength and support to enable the Group to meet its future strategic
growth plans. We have undrawn facilities of £58.5m (FY2023: £10.5m),
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 £119.1m (AER decreased 2.2% to
£117.6m) as detailed below.
Europe - revenues have increased 9.5% to £46.2m (HY2023: £42.2m) 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 £38.0m (HY2023: £42.5m) 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 £27.6m (HY2023: £32.2m)
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 £14.3m (HY2023: £13.6m).
Note - Regional revenues include intercompany
Underlying operating profit (CER)
Region(2) HY2024 HY2023 Movement HY2024 HY2023 Movement
UOP UOP UOP margin UOP margin
Europe £3.7m £0.6m £3.1m 8.0% 1.4% 660bps
UK £1.6m £3.0m £(1.4)m 4.2% 7.1% (290)bps
Asia £4.5m £5.2m £(0.7)m 16.1% 16.0% 10bps
North America £0.6m £(0.1)m £0.7m 4.1% (0.3)% 440bps
2 :Regional operating profit exclude central costs
The underlying operating profit (UOP) has increased to £6.9m (HY2023: £6.2m)
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 £3.7m (HY2023:1.4% margin, £0.6m 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 £1.6m (HY2023: 7.1%, £3.0m). 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.£0.2m.
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 £4.5m
(HY2023: 16.0%, £5.2m) 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 £0.6m from £(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 £4.7m from £3.7m and operating
margin to 4.0% from 3.1%. Operating profit includes £1.9m of costs not
included in UOP (primarily acquired intangible amortisation, Project Atlas
costs and NDC set up costs) (HY2023: £2.5m).
At a regional level, the movements at operating profit and margins broadly
follow the movements at UOP level:
Region(2) HY2024 HY2023 Movement HY2024 HY2023 Movement
Operating profit Operating profit Operating margin Operating margin
Europe £3.1m £0.1m £3.0m 6.6% 0.2% 640 bps
UK £1.0m £2.8m £(1.8)m 2.6% 6.7% (410) bps
Asia £4.3m £5.2m £(0.9)m 16.2% 16.0% 20 bps
USA £0.4m £(0.2)m £0.6m 2.7% (1.8)% 450 bps
2 : Regional operating profit exclude central costs
Net financing costs (AER)
Net financing costs have increased to £2.8m (HY2023: £0.7m) 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
£131.9m (FY2023: £135.9m). The £4.0m reduction reflects the impact of the
profit for the period of £1.6m, a dividend charge of £(3.0)m, a net movement
in share-based payments of £(0.6)m and a foreign exchange reserve loss of
£1.9m (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 £10.2m to £27.8m (FY2023:
£38.0m).
A strong focus on working capital management contributed £9.2m, of which
£6.5m 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 £2.2m,
including £0.5m on Project Atlas charged to the Condensed consolidated
interim income statement and £0.2m capitalised as Intangible Assets on
Project Atlas (Also, see Project Atlas section below). Interest paid was
£2.1m (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 £6.0m to £47.8m (FY2023: £53.8m). IFRS16 Leases have increased to
£20.0m (FY2023: £15.8m) 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 £1.8m to
£58.1m (FY2023: £59.9m) 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 £4.1m to £18.5m (FY2023: £14.4m) and
right-of-use liabilities increased by £5.2m to £20.0m (FY2023: £15.8m),
principally due to the new lease for NDC.
Trade and other receivables decreased by £4.0m to £57.9m (FY2023: £61.9m)
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 £9.9m to £59.9m (FY2023:
£69.8m), 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 £120m was signed in June 2023.
Trade and other payables increased £1.9m to £37.2m (FY2023: £35.3m), this
movement includes the recognition of a deposit received on 29 September 2023
for £1.0m for the uncompleted sale of freehold land and therefore, presented
as a creditor at the balance sheet date.
Provisions have reduced by £1.3m to £3.0m (FY2023: £4.3m) 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 £0.7m in HY2024 (cumulatively £18.1m),
largely relating to the project team, consultancy, localised testing and
training costs. We have excluded £0.5m 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 £0.2m
(cumulatively £8.1m) 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 (http://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
Notes ended ended ended
30 September 30 September 31 March
2023 2022 2023
£000 £000 £000
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 (2,866)
(attributable to equity shareholders of the Parent Company) 1,558 2,500
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
£000 £000 £000
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 (348) 7,484 (468)
(attributable to equity shareholders of the parent company)
Condensed consolidated interim statement of changes in equity
Unaudited results for the six months ended 30 September 2023
Share Share Merger reserve Own Translation Retained Total
£000
capital premium shares held reserve earnings equity
£000 £000 £000 £000 £000 £000
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 - - - - - (602) (602)
(net of tax)
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
Share Share Merger reserve Own Translation Retained Total
£000
capital premium shares held reserve earnings equity
£000 £000 £000 £000 £000 £000
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
Notes 30 September 30 September 31 March
2023 2022 2023
£000 £000 £000
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
Notes Six months Six months Year
ended ended ended
30 September 30 September 31 March
2023 2022 2023
£000 £000 £000
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: £6.2m; HY2023: £7.0m; FY2023: £6.1m).
The carrying amount of goodwill as at 30 September 2023, was £22.8m (HY2023:
£26.4m; FY2023: £22.9m). In the 31 March 2023 consolidated financial
statements, carrying value of the goodwill in the VIC CGU of £2.9m 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
£000 £000 £000
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
£000 £000 £000
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 (3,780) (3,275) (7,313)
amortisation
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 £4.2m 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 £0.5m 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:
September 2023 UK Central costs, Total
£000 Europe USA Asia assets and £000
£000 £000 £000 liabilities
£000
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)
September 2022 UK Central costs, Total
£000 Europe USA Asia assets and £000
£000 £000 £000 liabilities
£000
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
£000 £000 £000
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 £4.4m (FY2023:
£4.3m) and Deferred tax liability £1.9m (FY2023: £1.7m).
5. Dividends
The dividend payable of £2.0m 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 £1.0m 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
£000 £000 £000
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
£000 £000 £000
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
£000 £000 £000
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 ETR Profit impact Tax impact ETR
impact impact % £000 £000 %
£000 £000
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
£000 £000 £000
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
£000 £000 £000
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
£000 £000 £000
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 £0.6m (HY2023: gain of £0.6m) 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 £2.1m. 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 £1.0m 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 £80m Revolving Credit Facility was redeemed via
two new banking agreements with a combined facility limit of £120m, in the
form of:
1. Revolving Credit Facility (£70m) 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 (£50m
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
(€17m) and a GBP facility (£10m) 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 (http://www.trifast.com) .
INDEPENDENT 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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