REG - Trifast PLC - HALF-YEARLY FINANCIAL REPORT
19/11/2024 07:00
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RNS Number : 6943M Trifast PLC 19 November 2024
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, 19 November 2024
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 2024
"Self-help benefits of "Recover, Rebuild and Resilience" strategy driving
improved margins and cash generation against a challenging market backdrop"
Iain Percival, Chief Executive Officer
Summary of our strategic progress to date
· We are seeing positive change and demonstrating operational and
financial resilience and strategy execution
· Margin management - we have intensified our focus through
mandated direction, pricing and procurement policy launches and the
implementation of contract matrix, and sales and negotiation training
· Focussed growth - we have centred decision making and activities
around the customer with a refreshed growth focus
· Operational efficiency - we have introduced new metrics and
targets and have commenced a review to optimise our supply chain and to
standardise our distribution centres. We aspire to do the basics well and
improve operational and technology infrastructure to power future growth
· Organisational effectiveness - we are committed to building a
stronger safety culture and have made significant progress on our organisation
change towards "One TR", and
· We remain confident in the delivery of our mid-term margin and
returns ambitions
Key half-year financials
Six months ended 30 September
Underlying measures CER(2) CER(2) AER(2) AER(2) AER
HY2025 change HY2025 change HY2024
Revenue £116.0m (1.4)% £113.9m (3.2)% £117.6m
Gross profit % 27.4% 169bps 27.4% 169bps 25.7%
Underlying operating profit (UOP)(1) £7.2m 9.4% £6.9m 3.9% £6.6m
Underlying operating profit %(1) 6.2% 61bps 6.0% 40bps 5.6%
Underlying profit before tax(1) £5.0m 29.6% £4.6m 20.3% £3.9m
Underlying diluted earnings per share(1) 2.94p 34.9% 2.18p
Adjusted net debt(3) £15.4m £(12.4)m £27.8m
Return on capital employed (ROCE)(1) 6.3% 71bps 5.6%
Interim dividend 0.60p 0.60p
GAAP measures
Operating profit £3.8m (19.8)% £4.7m
Operating profit % 3.3% (70)bps 4.0%
Profit before tax £1.6m (20.8)% £2.0m
Diluted earnings per share 0.99p (13.9%) 1.15p
1. Before separately disclosed items (see notes 2, 6 and 7)
2. "CER" being Constant Exchange Rate, calculated by translating the HY2025
figures by the average HY2024 exchange rate and "AER" being Actual 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 £(18.5)m to £(33.9)m (HY2024: net debt would increase by
£(20.0)m to £(47.8)m).
Operational highlights
169 bps improvement on gross margins
· Pricing and sourcing improvement more than offset volume
reduction
· Organisation change (strengthened Engineering, Commercial and
Procurement functions) completed and benefits delivering
61bps improvement on EBIT margin
· Effective overhead cost management mitigating inflationary
headwinds
· On track to achieve c.£3m savings from operational improvement
programme
Small decline in revenue, reflecting:
· Decision to exit low margin customers, and
· Lower volumes in a number of sectors due to challenging market
headwinds
£12.4m improvement in net debt position with leverage now < 1.0
Pipeline wins reflect new focused growth strategy supported by capability
build in sales and engineering:
· 95% of pipeline wins are aligned with our strategic markets:
Automotive, Smart Infrastructure, and Medical Equipment
· Accelerated growth in North America driven by new customers in
Smart Infrastructure
Other
· Chinese Joint Venture Chai Yi fully operational and contributing
positively to our China profitability
· Exciting green energy project on track for our Italy
manufacturing facility
Presentation of HY2025 results
1 The Group will be holding a presentation in person and virtual to analysts
today at 10.00am (UK time) at the offices of Peel Hunt (7(th) Floor), 100
Liverpool Street, London EC2M 2AT Further details can be obtained by
contacting TooleyStreet Communications - details are shown below. Investor
enquiries can also be made via, Peel Hunt LLP's corporate access team.
2 The Company will also be presenting the HY2025 results via the Investor Meet
Company platform today (19 November) at 11.30am (UK time). CEO Iain Percival
and CFO Kate Ferguson 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 already 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
Kate Ferguson, 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
Charlotte Sutcliffe
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
Founded in 1973, Trifast 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. As an international business we can provide customer support from
across key regions in the UK & Ireland, Asia, Europe, and North America.
In addition to our service locations, we operate several manufacturing
facilities focused on high volume cold forged fasteners and special parts. We
have also established Engineering & innovation centres to support R&D
and customer collaboration across the world.
The Group supplies to customers in c.70 countries across a wide range of
industries, including Automotive, Smart Infrastructure, Medical Equipment,
distributors and other. 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.
We have defined a clear purpose and vision:
To sustainably drive our customers' success by simplifying their fastener
supply chain and supporting them in their technical requirements through our
world-class engineering and manufacturing capabilities.
For more information, visit:
TRIFAST PLC TRI Stock | London Stock Exchange
(https://www.londonstockexchange.com/stock/TRI/trifast-plc/company-page)
website: www.trifast.com (http://www.trifast.com)
LinkedIn: www.linkedin.com/company/tr-fastenings
(http://www.linkedin.com/company/tr-fastenings)
X: www.x.com/trfastenings (http://www.x.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
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 2024.
Copies can be requested via Companysecretariat@trifast.com
(mailto:Companysecretariat@trifast.com) , or by writing to, The Company
Secretary, Trifast plc, Registered Office: National distribution centre,
Reedswood Park Road, Walsall, WS2 8DQ
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)
.
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 (HY2025)
Unaudited results for the six months ended 30 September 2024
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 HY2025 figures by the
average HY2024 exchange rate.
Key financials
Underlying measures CER(2) CER(2) AER(2) AER(2) AER
HY2025 change HY2025 change HY2024
Revenue £116.0m (1.4)% £113.9m (3.2)% £117.6m
Gross profit % 27.4% 169bps 27.4% 169bps 25.7%
Underlying operating profit (UOP)(1) £7.2m 9.4% £6.9m 3.9% £6.6m
Underlying operating profit %(1) 6.2% 61bps 6.0% 40bps 5.6%
Underlying profit before tax(1) £5.0m 29.6% £4.6m 20.3% £3.9m
Underlying diluted earnings per share(1) 2.94p 34.9% 2.18p
Adjusted net debt £15.4m £(12.4)m £27.8m
Return on capital employed (ROCE)(1) 6.3% 71bps 5.6%
Interim dividend 0.60p 0.60p
GAAP measures
Operating profit £3.8m (19.8)% £4.7m
Operating profit % 3.3% (70)bps 4.0%
Profit before tax £1.6m (20.8)% £2.0m
Diluted earnings per share 0.99p (13.9%) 1.15p
1. Before separately disclosed items (see notes 2, 6 and 7)
2. "CER" being Constant Exchange Rate, calculated by translating the HY2025
figures by the average HY2024 exchange rate and "AER" being Actual Exchange
Rate
Group performance
Revenue reduced year-on-year 1.4% to £116m, with persistent market headwinds
in a number of sectors leading to reductions in Europe and UK & Ireland.
North America and Asia however reported revenue growth, ahead of expectations,
reflecting more supportive local market conditions and benefitting from the
contribution from the Group's refreshed commercial focus.
We are pleased to report an improvement in gross profit margin of 169 bps and
the highest margin at 27.4% reported since 2020 as we drive pricing and
sourcing improvements as part of our journey to recover, rebuild and become
resilient.
The £1.0m improvement in gross profit, £0.9m overhead savings offset by
exchange loss movement of £1.3m (exchange loss of £0.5m in HY2025 as
compared to exchange gain of £0.8m in HY2024) resulted in a £0.6m
improvement in underlying operating profit to £7.2m (HY2024: £6.6m).
Overhead costs have been actively managed, with productivity savings in part
mitigating ongoing inflation and strategic capability investments.
We remain on track to achieve the phased cost savings in FY25 of c.£3m from
our operational improvement programme which included 10% reduction on
non-operating headcount and the consolidation of the UK facilities in the
National distribution centre in the West Midlands.
Underlying profit before tax has also increased to £5.0m (HY2024: £3.9m) due
to the improvement in underlying Operating profit and also a c.£0.5m
reduction in net finance costs as a result of lower average borrowings.
We continue to reduce our net debt, with pre IFRS 16 net debt of c.£15.4m at
30 September 2024 (HY2024: £27.8m). This represents a reduction of £12.4m in
the past year, leaving an unutilised £78.1m on the Group's £120.0m banking
facilities and leverage of c. 0.9x (HY2024: 1.6x), providing the Group with
strengthened financial position and capacity to invest in support of its
strategic objectives.
Our working capital focus contributing to the reduction in net debt included a
material reduction in overdue debt and overall receivables balance. Our
inventory balance increased compared to last year primarily due to increase in
inventory in Asia to support regional increase in business, while reductions
in other regions aligned with our inventory reduction targets to improve
working capital management.
Capital expenditure reduced to £1.1m (HY2024: £2.2m) mainly due to the
completion of the Atlas project.
Profit before tax decreased by £0.4m to £1.6m primarily due to higher
one-off separately disclosed items and includes: acquired intangible
amortisation £0.9m, impairment of a customer receivable on administration
£1.0m, restructuring costs and transformation costs £1.4m.
Regional performance
Region CER HY2025 AER HY2024 CER Change AER HY2025 AER Change
UK & Ireland Sales 36.7 39.3 (6.7)% 36.7 (6.7)%
UOP 1.5 1.6 (4.9)% 1.5 (5.3)%
UOP% 4.1% 4.0% 10bps 4.1% 10bps
Europe Sales 40.8 44.8 (9.0)% 39.8 (11.2)%
UOP 3.5 3.6 (3.1)% 3.4 (7.0)%
UOP% 8.6% 8.0% 60bps 8.4% 40bps
North America Sales 16.7 14.0 19.7% 16.3 16.8%
UOP 1.7 0.6 204.7% 1.7 194.6%
UOP% 10.3% 4.1% 620bps 10.2% 610bps
Asia Sales 28.0 26.5 5.6% 27.1 2.4%
UOP 4.7 4.3 9.1% 4.5 5.3%
UOP% 16.8% 16.3% 50bps 16.7% 40bps
Central Sales (6.15) (6.97) (11.8)% (6.0) (14.2%)
UOP (Central costs) (4.2) (3.5) 21.2% (4.2) 21.2%
Note 1 - Regional sales include intercompany
Note 2 - Central sales relate to intercompany eliminations
UK & Ireland
Revenue declined 6.7% to £36.7m (HY2025: £39.3m), with reduced demand mainly
in the Automotive sector contrasted with growth in Smart Infrastructure
revenue as a result of data centre roll outs, driven by global investment in
Artificial Intelligence (AI). Distribution demand reduced further in the
period with continued overstocking in customers' supply chain. During the half
year, we concluded the transfer of our UK distribution business to Germany and
handed back some under-performing business which has also reduced our revenue
although it has enabled us to maintain our UOP / EBIT margin at 4.1% (HY2024:
4.0%).
Europe
Revenue decreased 9.0% to 40.8m (HY2025: 44.8m), primarily due to challenges
in the distribution and Automotive sectors. Master distributors, particularly
in Germany, also faced reduced OEM demand and aggressive pricing competition.
The Automotive sector experienced delays with new programmes and reduced
demand, driven by uncertainties surrounding the transition to hybrid and full
EV from traditional powertrains. There are signs of recovery in the Smart
Infrastructure sector, especially in Hungary, along with promising new
business opportunities supported by a strong pipeline. Investment in our
European manufacturing facility in Italy continues to support our 'Europe for
Europe' strategy. UOP/EBIT margins improved by 60 bps to 8.6% (HY2024: 8.0%)
as a result of enhanced margin management.
North America
North America revenue increased to £16.7m (HY205: £14.0m) with Smart
Infrastructure emerging as the fastest-growing sector at 26.3%. This growth is
driven by new business wins and strong demand for specialised engineering
products from our Asian operations, underscoring the importance of engineering
and manufacturing in our value proposition. The Automotive sector also
performed well, with a 13.6% increase in revenue, largely attributed to
significant growth from a key vehicle programme. Overall, UOP/EBIT margins
improved materially to 10.3%, up from 4.1%, reflecting our effective margin
management and strategic market positioning.
Asia
Revenue increased to £28.0m (HY2024: £26.5m), largely driven by gains in the
home appliances sector, although this was partially offset by lower demand
from distribution customers selling into European and North American markets.
Automotive also saw some reduction due to weakened consumer confidence
particularly in China and Malaysia. UOP margins were 16.8% compared to 16.3%
in HY2024, thanks to targeted margin management initiatives across key
sectors.
Central costs
Central reported a UOP/EBIT loss of £4.2m (HY2024: £3.5m), driven by higher
accruals as we incentivise staff to achieve our strategic initiatives.
Net financing costs (AER)
Net financing costs have reduced to £2.2m (HY2024: £2.8m) mostly due to
lower interest rates applied to our Revolving credit facility (RCF) and UKEF -
Export Development Guarantee facility (EDG) drawdowns and our reduction of net
debt through working capital and cash management initiatives.
Taxation (AER)
The decrease in the underlying effective tax rate (UETR) to 14.5% (HY2024:
23.7%) and the effective tax rate (ETR) to 14.5% (HY2024: 21.5%) was
principally due to the utilisation of brought forward losses in the UK region
that have not previously been provided for.
Earnings per share (AER)
The increase in underlying profit before tax and the decrease in our UETR, has
increased the underlying diluted EPS by 34.9% to 2.94p (HY2024: 2.18p). The
diluted earnings per share reduced 0.99p (HY2024: 1.15p) due to higher one-off
separately disclosed items resulting in lower profit before tax as compared to
HY2024 offset by the impact of reduced ETR.
Dividend
The Company has declared an interim dividend of 0.60p (HY2024: 0.60p) which will be paid on 10 April 2025 to members on the register as at 7 March 2025. 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 2024, the Group's shareholders' equity decreased to
£121.8m (FY2024: £124.2m). The £2.4m reduction reflects the impact of the
profit for the period of £1.3m, a dividend charge of £(2.4)m, a net movement
in share-based payments of £(0.4)m and a foreign exchange reserve loss of
£(0.9)m (most notably sterling strengthening against Singapore Dollar, Taiwan
Dollar, Renminbi, United States Dollar and Euro).
Over this lower asset base and higher underlying EBIT during the period, our
ROCE has increased to 6.3% (FY2024: 5.6%).
Adjusted net debt (AER)
The Group's adjusted net debt has decreased by £5.6m to £15.4m (FY2024:
£21.0m).
Working capital management continues to be a focus, with a £3.8m reduction in
receivables in HY2025. Capital expenditure in the period amounted to £1.1m.
Interest paid was £2.0m (excluding IFRS16 interest) due to lower interest
rates and average loan balance during the period.
Including the impact of IFRS16 Leases, the Group's net debt position decreased
by £5.5m to £33.9m (FY2024: £39.4m). IFRS16 Leases were £18.5m (FY2024:
£18.4m).
Other key balance sheet movements
Right-of-use assets, Property, plant and equipment and intangibles have
decreased to £69.4m (FY2024: £71.8m) 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.
Trade and other receivables decreased by £3.8m to £55.2m (FY2024: £59.0m)
due to lower sales and improved collections. This, combined with the increase
in our trade and other creditors has seen working capital as a % of sales
decrease to 39.4% (FY2024: 40.8%).
Other interest-bearing loans and borrowings reduced £1.4m to £40.4m (FY2024:
£41.8m), net of unamortised loan arrangement fees.
Trade and other payables increased £3.8m to £40.0m (FY2024: £36.2m),
principally due to higher accruals for bonus and supplier accruals for goods
received prior to the period end.
Provisions reduced by £1.0m to £3.0m (FY2024: £4.0m) principally on account
of the utilisation of the restructuring and related charges provisions during
HY2025.
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
Global macro-economic and geopolitical uncertainties remain volatile,
resulting in trading conditions being variable across sectors and visibility
limited at this stage. It is encouraging to report that our self-help plans
are mitigating some of this risk and we are also seeing benefits feeding
through from our "Recover, Rebuild and Resilience strategy.
As we progress through the remainder of this financial year, we expect our
'RRR' strategy to continue to make an incremental contribution to our
performance, whilst productivity and cost saving actions and additional
operational and commercial initiatives being implemented in H2 in line with
strategic roadmap are all expected to deliver further margin benefits as we
move forward.
In summary:
• Trifast is making good progress with its strategic operational
roadmap
• We have a strong business, backed by a solid balance sheet and
cash generation
• H2 inventory reduction historically better than H1 and we are
committed to our plans to further reduce inventory levels while maintaining
customer service and response and our focus on debt reduction
• We remain on track to deliver results for the year ending 31
March 2025 in line with expectations, and
• We remain confident in the delivery of our mid-term margin and
returns ambitions.
RISKS AND UNCERTAINTIES
The Directors do not consider that the principal risks and uncertainties of
the Group have changed since the publication in July 2024 of the Group's
Annual Report for the year ended 31 March 2024. 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 2024 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 Kate Ferguson
Chief Executive Officer Chief Financial Officer
18 November 2024 18 November 2024
Condensed consolidated interim income statement
Unaudited results for the six months ended 30 September 2024
Six months Six months Year
Notes ended ended ended
30 September 30 September 31 March
2024 2023 2024
£000 £000 £000
Continuing operations
Revenue 3, 9 113,896 117,625 233,671
Cost of sales (82,687) (87,365) (174,404)
Gross profit 31,209 30,260 59,267
Other operating income 260 497 721
Distribution expenses (3,751) (3,483) (6,633)
Administrative expenses before separately disclosed items (20,852) (20,666) (41,321)
Acquired intangible amortisation 2 (867) (893) (1,780)
Project Atlas 2 - (500) (2,079)
Restructuring and transformation cost 2 (1,435) (477) (1,491)
Impairment of goodwill 2 - - (1,964)
Impairment of customer receivable on administration 2 (1,007) - -
Profit on disposal of a subsidiary 2 243 -
Total administrative expenses (23,918) (22,536) (48,635)
Share of loss of joint venture accounted for using the equity method - - (90)
Operating profit 3,800 4,738 4,630
Financial income 147 60 269
Financial expenses (2,376) (2,814) (5,688)
Net financing costs 3 (2,229) (2,754) (5,419)
Profit / (loss) before tax 3 1,571 1,984 (789)
Taxation 4 (228) (426) (3,651)
Profit / (loss) for the period (4,440)
(attributable to equity shareholders of the Parent Company) 1,343 1,558
Earnings / (loss) per share
Basic 6 0.99p 1.15p (3.29)p
Diluted 6 0.99p 1.15p (3.29)p
Condensed consolidated interim statement of comprehensive income
Unaudited results for the six months ended 30 September 2024
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2024 2023 2024
£000 £000 £000
Profit/(loss) for the period 1,343 1,558 (4,440)
Other comprehensive (expense)/income for the period:
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations (1,706) (2,372) (5,075)
Gain/(loss) on a hedge of a net investment taken to equity 806 466 889
Other comprehensive (expense)/income recognised for the period (900) (1,906) (4,186)
Total comprehensive (expense)/income recognised for the period 443 (348) (8,626)
(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 2024
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 2024 6,806 22,537 16,328 (2,194) 10,496 70,205 124,178
Total comprehensive income for the period:
Profit for the period - - - - - 1,343 1,343
Other comprehensive expense for the period - - - - (900) - (900)
Total comprehensive income / (expense) for the period - - - - (900) 1,343 443
Transactions with owners, recorded directly
in equity:
Share-based payment transactions - - - - - (380) (380)
(net of tax)
Movement in own shares held - - - 155 - (155) -
Dividends (note 5) - - - - - (2,426) (2,426)
Total transactions with owners - - - 155 - (2,961) (2,806)
Balance at 30 September 2024 6,806 22,537 16,328 (2,039) 9,596 68,587 121,815
Share Share Merger reserve Own Translation reserve Retained Total
£000
capital premium shares held £000 earnings equity
£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 / expense for the period - - - - (1,906) 1,558 (348)
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
Condensed consolidated interim statement of financial position
Unaudited results for the six months ended 30 September 2024
Notes 30 September 30 September 31 March
2024 2023 2024
£000 £000 £000
Non-current assets
Property, plant, and equipment 18,356 18,734 19,070
Right-of-use assets 16,401 18,457 16,450
Intangible assets 34,653 39,327 36,275
Investment in joint venture 157 159 159
Deferred tax assets 4,192 4,456 4,256
Total non-current assets 73,759 81,133 76,210
Current assets
Inventories 74,497 83,399 73,403
Trade and other receivables 55,223 57,858 59,039
Assets classified as held for sale - 2,130 623
Cash and cash equivalents 7 25,072 32,026 20,884
Total current assets 154,792 175,413 153,949
Total assets 3 228,551 256,546 230,159
Current liabilities
Trade and other payables 40,004 37,223 36,218
Right-of-use liabilities 7 3,661 3,592 3,392
Provisions 1,421 1,499 2,432
Tax payable 420 481 2,167
Dividends payable 1,618 2,020 -
Liabilities classified as held for sale - - 348
Total current liabilities 47,124 44,815 44,557
Non-current liabilities
Other interest-bearing loans and borrowings 7, 12 40,432 59,856 41,848
Right-of-use liabilities 7 14,880 16,433 15,031
Provisions 1,543 1,546 1,548
Deferred tax liabilities 2,102 1,983 2,105
Other Payables 655 - 892
Total non-current liabilities 59,612 79,818 61,424
Total liabilities 3 106,736 124,633 105,981
Net assets 121,815 131,913 124,178
Equity
Share capital 6,806 6,805 6,806
Share premium 22,537 22,530 22,537
Merger reserve 16,328 16,328 16,328
Own shares held 8 (2,039) (2,319) (2,194)
Translation reserve 9,596 12,776 10,496
Retained earnings 68,587 75,793 70,205
Total equity 121,815 131,913 124,178
Condensed consolidated interim statement of cash flows
Unaudited results for the six months ended 30 September 2024
Notes Six months Six months Year
ended ended ended
30 September 30 September 31 March
2024 2023 2024
£000 £000 £000
Cash flows from operating activities
Profit / (loss) for the period 1,343 1,558 (4,440)
Adjustments for:
Depreciation, amortisation, and impairment 2,786 2,671 5,616
Right-of-use asset amortisation 1,727 2,002 4,068
Unrealised foreign currency loss/(gain) 60 32 (248)
Financial income (147) (60) (269)
Financial expense (excluding right-of-use liabilities) 1,970 2,488 4,893
Right-of-use liabilities' financial expense 406 326 796
Profit on assets classified as held for sale - - (2,014)
Loss / (gain) on sale of property, plant & equipment, intangibles 9 (9) (59)
Equity settled share-based payment transactions (380) (656) (101)
Impairment of intangible assets - - 1,476
Gain on termination of right-of-use liabilities and expense on lease - - (454)
back
Impairment of right-of-use assets and property, plant, and equipment on - - 1,330
restructuring
Gain on disposal of a subsidiary (243) - -
Taxation charge 228 426 3,651
Operating cash inflow before changes in working capital and provisions 7,759 8,778 14,245
Change in trade and other receivables 2,647 2,342 (4)
Change in inventories (2,344) 6,537 14,977
Change in trade and other payables 4,001 1,496 3,593
Change in provisions (1,040) (1,206) (900)
Cash generated / (used) in operations 11,023 17,947 31,911
Tax paid (1,591) (1,686) (3,335)
Net cash generated / (used) in operating activities 9,432 16,261 28,576
Cash flows from investing activities
Proceeds from sale of property, plant & equipment 175 1,028 91
Proceeds from sale of assets classified as held for - - 4,144
sale
Proceeds from disposal of a subsidiary 2 699 - -
Interest received 157 60 265
Investment in joint venture - (159) (162)
Acquisition of property, plant and equipment, and intangibles (1,124) (1,748) (4,573)
Net cash used in investing activities (93) (819) (235)
Cash flows from financing activities
Net proceeds from the issue of share capital - - 8
Repayments of borrowings - (98,962) (116,500)
Proceeds from borrowings - 91,414 91,414
Repayment of right-of-use liabilities (1,571) (1,846) (3,362)
Dividends paid (809) (1,006) (3,026)
Interest and charges paid (2,430) (4,208) (6,702)
Net cash used in financing activities (4,810) (14,608) (38,168)
Net change in cash and cash equivalents 4,529 834 (9,827)
Cash and cash equivalents at 1 April 20,884 31,798 31,798
Effect of exchange rate fluctuations on cash held (342) (606) (1,087)
Cash and cash equivalents at end of period 7 25,071 32,026 20,884
NOTES TO THE 2024 HALF-YEARLY FINANCIAL REPORT
Unaudited results for the six months ended 30 September 2024
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 2024. 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.
The comparative figures for the financial year ended 31 March 2024 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 2024, except the following amendments
which apply for the first time in HY2025, but, they do not have a material
impact on these condensed consolidated interim financial statements.
The following amendments are effective for accounting periods beginning on or
after 1 January 2024:
· IAS 1 Presentation of Financial Statements (Amendment -
Classification of liabilities as current or non-current)
· IAS 1 Presentation of Financial Statements (Amendment -
Non-current liabilities with covenants)
· IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments -
Disclosure (Amendment - Supplier Finance Arrangements)
· IFRS 16 Leases (Amendment - Lease Liability in a Sale and
Leaseback)
Going concern
The Group's business activities, together with the factors 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 2024 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 generate
positive EBITDA 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 elevated 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 2024.
A key judgement made by management in the previous year's 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 significant
judgment applied in the current period as Project Atlas is now complete.
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 outcomes includes a write-off of the carrying amount at 30 September 2024,
to a write back of the customer-specific inventory provision at period end
(HY2025: £6.2m; HY2024: £6.2m; FY2024: £6.9m).
The carrying amount of goodwill as at 30 September 2024, was £22.3m (HY2024:
£22.8m; FY2024: £22.5m). In the 31 March 2024 consolidated financial
statements, an impairment of the non-current assets of £1.9m was identified
for TR Hungary CGU. For the remaining CGUs, an impairment assessment was
conducted, and no indicators of impairment were identified as of 30 September
2024.
2. Underlying profit before tax and separately disclosed items
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2024 2023 2024
£000 £000 £000
Underlying profit before tax 4,637 3,854 6,525
Separately disclosed items within administrative expenses:
Acquired intangible amortisation (867) (893) (1,780)
Project Atlas - (500) (2,079)
Restructuring and transformation cost (1,435) (477) (1,491)
Impairment of Goodwill - - (1,964)
Impairment of customer receivable on administration (1,007) - -
Profit on disposal of a subsidiary 243 - -
Profit /(loss) before tax 1,571 1,984 (789)
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2024 2023 2024
£000 £000 £000
Underlying EBITDA 10,512 10,388 19,848
Separately disclosed items within administrative expenses:
Project Atlas - (500) (2,079)
Restructuring and transformation cost (1,435) (477) (1,491)
Impairment of Goodwill - - (1,964)
Impairment of customer receivable on administration (1,007) - -
Profit on disposal of a subsidiary 243 - -
EBITDA 8,313 9,411 14,314
Acquired intangible amortisation (867) (893) (1,780)
Depreciation (including right-of-use depreciation) and non-acquired (3,646) (3,780) (7,904)
amortisation
Operating profit 3,800 4,738 4,630
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 now complete and hence, no charge in the current period.
Project Atlas was a multi-year investment into our IT infrastructure and
underlying business processes. We had excluded these costs (primarily relating
to training and project team costs) in the previous years from our underlying
results, to reflect the unusual scale and one-off nature of this project.
Restructuring and transformation costs of £1.4m are charges incurred in
relation the Key strategic initiatives (margin management, operational
efficiencies, focussed growth and organisation effectiveness) initiated at the
beginning of the year in line with the new strategy. Includes primarily costs
for transformation activities, redundancies, and other costs related to the
key strategic initiatives. The charges of £0.5m in HY2024 relates to
professional fees and other related costs incurred for setting up the National
distribution centre (NDC) in the Midlands. We have excluded these costs from
our underlying results, to reflect the size and one-off nature of these costs
consistent with the Group's policy on separately disclosed items.
On 27 June 2024, one of our customers entered into bankruptcy proceedings.
Given the administration status of the customer, the debtor balance of £1.0m
as on the date the customer went into administration was impaired. The
management is closely monitoring the situation and will take appropriate
actions to mitigate any potential financial impact on the Group. The amount
has been disclosed as separately disclosed due to it being material in size
and one-off in nature.
Profit on disposal of subsidiary of £0.2m is for the sale of TR Norge AS to
Otto Olsen on 3 April 2024. Otto Olsen will provide a solid and stable base
for the TR Norge A/S team and enable customers to continue to be supported by
a locally aligned business. The subsidiary was disposed for a sales
consideration (net of direct costs) of £0.7m which adjusted for net assets of
TR Norge AS of £0.4m and recycling the cumulative translation reserve loss of
£0.1m resulted in profit of £0.2m.
Recurring items
Acquired intangible amortisation has remained in line with HY2024. 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.
3. Geographical operating segments
The Group is comprised of the following main geographical operating segments:
· UK & Ireland
· 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
Leadership Team (the 'ELT') 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 ELT).
Ireland, for HY2024, was reported and reviewed as part of Europe. However, for
HY2025 it is now reported and reviewed as part of UK & Ireland segment.
Hence, for the disclosure for HY2025 below, Ireland is reported as part of the
UK segment and HY2024 numbers are restated to include Ireland within the UK.
Segment revenue and results under the primary reporting format for the six
months ended 30 September 2024 and 2023 are disclosed in the table below:
September 2024 UK & Ireland Central costs, Total
£000 Europe USA Asia assets and £000)
£000 £000 £000 liabilities
£000
Revenue*
Revenue from external customers 35,046 39,054 16,276 23,520 - 113,896
Inter segment revenue 1,613 727 35 3,604 - 5,979
Total revenue 36,659 39,781 16,311 27,124 - 119,875
Underlying operating profit (see note 7) 1,505 3,355 1,669 4,541 (4,204) 6,866
Net financing costs 84 (486) (447) 248 (1,628) (2,229)
Underlying profit before tax 1,589 2,869 1,222 4,789 (5,832) 4,637
Separately disclosed items (see note 2) (359) (1,515) (210) (18) (964) (3,066)
Profit before tax 1,230 1,354 1,012 4,771 (6,796) 1,571
Specific disclosure items
Depreciation and amortisation (1,237) (1,695) (390) (773) (418) (4,513)
Assets and liabilities
Non-current asset additions 506 1,912 86 312 194 3,010
Non-current assets^ 23,375 14,815 4,517 20,058 6,802 69,567
Segment assets 70,825 66,946 22,874 57,049 10,857 228,551
Segment liabilities (19,953) (18,999) (3,502) (11,586) (52,696) (106,736)
September 2023 UK & Ireland Central costs, Total
£000 Europe USA Asia assets and £000 (restated)
(restated) £000 £000 £000 liabilities
(restated) £000
Revenue*
Revenue from external customers 37,001 43,935 13,884 22,805 - 117,625
Inter segment revenue 2,333 878 78 3,682 - 6,971
Total revenue 39,334 44,813 13,962 26,487 - 124,596
Underlying operating profit (see note 7) 1,590 3,607 567 4,313 (3,469) 6,608
Net financing costs (243) (450) (504) 152 (1,709) (2,754)
Underlying profit before tax 1,347 3,157 63 4,465 (5,178) 3,854
Separately disclosed items (see note 2) (599) (563) (194) (9) (505) (1,870)
Profit before tax 748 2,594 (131) 4,456 (5,683) 1,984
Specific disclosure items
Depreciation and amortisation (1,204) (1,842) (420) (845) (362) (4,673)
Assets and liabilities
Non-current asset additions 6,623 825 160 200 172 7,980
Non-current assets^ 22,862 18,375 5,675 21,733 8,052 76,677
Segment assets 74,328 80,378 27,096 60,494 14,250 256,546
Segment liabilities (27,217) (17,877) (3,956) (12,123) (63,460) (124,633)
* Revenue is derived from the manufacture and logistical supply of industrial
fasteners and category 'C' components.
^ Non-current assets exclude financial instruments and deferred tax.
4. Taxation
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2024 2023 2024
£000 £000 £000
Current tax on income for the period
UK tax - - 10
Foreign tax 271 259 2,964
Deferred tax income for the period (44) 12 488
Adjustments in respect of prior years 1 155 189
228 426 3,651
The decrease in the underlying effective tax rate (UETR) to 14.5% (HY2024:
23.7%) and the effective tax rate (ETR) to 14.5% (HY2024: 21.5%) was mainly
due to the utilisation of brought forward losses in the UK region that have
not been previously provided for.
Remaining in line with FY2024, the Deferred tax asset was £4.2m (FY2024:
£4.3m) and Deferred tax liability £2.1m (FY2024: £2.1m).
5. Dividends
The dividend payable of £1.6m represents the final dividend for the year ended 31 March 2024 which was approved by Shareholders at the AGM on 10 September 2024 and paid on 11 October 2024 to members on the Register on 13 September 2024. The Company paid an HY2024 interim dividend of 0.60p (HY2023: 0.75p) on 11 April 2024 totalling £0.8m to Shareholders on the register as at 15 March 2024. The Company has declared an HY2024 interim dividend of 0.60p (HY2024: 0.60p) which will be paid on 10 April 2025 to Shareholders on the Register as at 7 March 2025.
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 134,967,813 (net of own shares held) (HY2024: 134,930,615, FY2024:
134,959,632).
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
134,967,813 (HY2024: 134,930,615 FY2023: 134,959,632). There is no potential
dilutive effect of share options as the share options have not yet vested and
conditions have not been met at the balance sheet.
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
2024 2023 2024
£000 £000 £000
Profit/(loss) after tax for the period 1,343 1,558 (4,440)
Separately disclosed items (see note 2) 3,066 1,870 7,314
Tax charge on adjusted items above (444) (488) (692)
Underlying profit after tax 3,965 2,940 2,182
Basic EPS 0.99p 1.15p (3.29)p
Diluted EPS 0.99p 1.15p (3.29)p
Underlying diluted EPS 2.94p 2.18p 1.62p
7. Alternative performance measure (APM)
The half-yearly financial report includes both IFRS measures and APM's, 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 APM's are used by management to measure the KPI's 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 APM's 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 HY2025
income statement results (of subsidiaries whose presentation currency is not
sterling) using HY2024 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 to understand the underlying earnings per share.
The calculation is disclosed in note 6.
· Underlying profit before tax
A key measure for the Group, as it is one of the measures used to set the
Directors' variable remuneration, as disclosed in the Directors' remuneration
report. The calculation has been disclosed in note 2.
· Underlying operating margin/EBIT 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 (ROCE)
section for reconciliation to operating profit) by revenue in the year.
· Return on capital employed (ROCE)
ROCE 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
2024 2023 2023
£000 £000 £000
Underlying EBIT/Underlying operating profit 6,866 6,608 11,944
Separately disclosed items within administrative expenses (See note 2) (3,066) (1,870) (7,314)
Operating profit 3,800 4,738 4,630
· 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
2024 2023 2024
£000 £000 £000
Underlying cash conversion 12,541 20,155 34,344
Project Atlas costs paid (accrued in previous year) - (536) 815
Restructuring and related charges (2,217) (1,672) (5,262)
Profit on disposal of assets classified as held for sale - - 2,014
Profit on disposal of sale of 699 - -
subsidiary
Cash generated in operations 11,024 17,947 31,911
· 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 2024 30 September 2023
Profit Tax ETR Profit impact Tax impact ETR
impact impact % £000 £000 %
£000 £000
Profit before tax 1,571 228 14.5% 1,984 (426) 21.5%
Separately disclosed items 3,066 444 14.5% 1,870 (488) 26.1%
Underlying profit before tax 4,637 672 14.5% 3,854 (914) 23.7%
· 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
2024 2023 2024
£000 £000 £000
Net cash and cash equivalents 25,071 32,026 20,884
Debt due within one year (3,661) (3,592) (3,392)
Debt due after one year (55,312) (76,289) (56,879)
Gross debt (58,973) (79,881) (60,271)
Net debt (33,902) (47,855) (39,387)
Right-of-use lease liabilities 18,541 20,025 18,423
Adjusted net debt (15,361) (27,830) (20,964)
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2024 2023 2024
£000 £000 £000
Underlying EBITDA 10,512 10,388 19,848
IFRS2 share-based payment charge and other related costs (347) (645) (101)
Operating lease rentals (2,165) (2,337) (4,447)
Adjusted underlying EBITDA 8,000 7,406 15,300
· 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
2024 2023 2024
£000 £000 £000
Net Interest (2,229) (2,754) (5,419)
Right-of-use liability interest 406 326 796
Adjusted net interest (1,823) (2,428) (4,623)
· 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 2024, the Group held 1,275,237 of the Company's
shares (HY2024: 1,452,696; FY2024: 1,373,663).
9. Financial instruments
There is no significant difference between the fair values and the carrying
values shown in the balance sheet.
10. IFRS2 Share-based payments
During the period, a gain of £0.4m (HY2024: gain of £0.6m) was recognised in
relation to IFRS2 Share-based payments due to the reversal of the cumulative
charge relating to the 2022 Board, Executive Committee and Senior Manager LTIP
shares as the non-market performance conditions are unlikely to be met.
11. 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 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 2024. Kate Ferguson (Chief Financial Officer) was appointed to the
Board with effect from 10 September 2024.
In the period, there were share options granted to key management personnel
totalling 9,430,800 (HY2024: Nil). There were lapses related to key management
personnel LTIP share options totalling 230,808 (HY2024: 132,407).
12. Other interest-bearing loans and borrowings
On 2 May 2024, the Group agreed to amend the interest cover covenant in the
Revolving Credit Facility (RCF) and UK Export Finance (UKEF) Export
Development Guarantee (EDG) term loan facilities agreements. This applies from
the 30 June 2024 quarterly covenant calculation as follows:
1. Each relevant period from 30 June 2024, ending on 30 September 2025: 3.25x
2. Each relevant period from 31 December 2025, ending on 30 September 2026:
3.50x
3. Each relevant period from 31 December 2026, thereafter: 4.00x
On 3 July 2024, KBC Bank NV (KBC) became a lender to the RCF agreement
following a transfer of a commitment from an existing lender. The facility
commitment remained at £70.0m. This commitment will support the Group's
treasury strategy and plans in Eastern Europe.
Further details can be found in notes 26 and 29 of the Group's Annual report
for the year ended 31 March 2024.
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