REG - Trifast PLC - Preliminary Results - year ended 31 March 2017 <Origin Href="QuoteRef">TRFT.L</Origin> - Part 1
RNS Number : 8723HTrifast PLC13 June 2017Tuesday, 13 June 2017
TRIFAST PLC
('Trifast', the 'Group' 'TR' or 'Company')
"HOLDING THE WORLD TOGETHER"
Leading international specialists in the engineering, manufacturing and distribution
of high quality, industrial fastenings to major global assembly industries
Preliminary results for the year ended 31 March 2017
"MOVING FORWARD WITH GROWTH"
Our FY2017 trading performance across the business has delivered another record breaking financial year
with results, ahead of our expectations. Dividend for the year is 3.50p per share, an increase of 25.0%
KEY FINANCIALS
Continuing operations
Year ended
31 March
2017 at CER
Year ended
31 March
2017 at AER
Year ended
31 March
2016
Change
CER
Change
AER^
Total Group revenue
172.6m
186.5m
161.4m
+7.0%
+15.6%
Gross profit %
31.1%
31.1%
29.7%
+140bps
+140bps
Underlying operating profit*
18.6m
21.0m
16.8m
+10.9%
+25.2%
Operating profit
15.6m
17.9m
13.9m
+12.5%
+28.8%
Underlying profit before tax*
18.1m
20.5m
16.0m
+13.2%
+28.1%
Profit before tax
15.1m
17.3m
13.1m
+15.4%
+32.6%
Underlying diluted earnings per share*
11.28p
12.82p
9.99p
+12.9%
+28.3%
Diluted earnings per share
8.97p
10.40p
8.50p
+5.5%
+22.4%
Dividend:
- final proposed
2.50p
2.00p
+25.0%
- interim
1.00p
0.80p
+25.0%
- total for the year
3.50p
2.80p
+25.0%
Net debt
6.4m
16.0m
-9.6m
Return on capital employed (ROCE)*
19.9%
18.5%
+140bps
*Before separately disclosed items (see note 2)
Constant exchange rate (CER)
^Actual exchange rate (AER)
Total revenue increase of 7.0% at Constant Exchange Rate (CER), 15.6% at Actual Exchange Rate (AER)
Revenue to multinational OEMs up 10.0% at CER
At 31.1%, gross margin exceeds 30.0% for the first time in our history
Underlying profit before tax increases by 13.2% at CER, 28.1% at AER
Significant FX tailwinds add 2.4m to underlying profit before tax
Ongoing investment for growth in our sales and operations around the world
TR Espaa - a base to grow from in one of Europe's most vibrant economies
TR Kuhlmann continues to perform above expectations
Strong cash conversion reduces net debt to 6.4m (normalised 7.6m)
Capital investment of 2.9m increases our manufacturing capacity and capabilities, with more to follow
Total dividend of 3.50p, an increase of 25.0% on the prior year
"The current financial year has started well and, with a robust pipeline in place, there is no indication this will change. The additional investments we are making in our people across the world, including into our global and local sales teams, mean the Group is in a good position to move forward. There are, of course, some macroeconomic factors we cannot fully mitigate, including movements in foreign currency and the ongoing volatility in the raw materials markets, as well as the wider potential implications of Brexit on our business and the UK economy.
However, taking the Group as a whole, with our geographical diversity, our balanced sector mix and our clear strategies for growth, we remain optimistic about the Group's prospects."
Mark Belton, CEO
"I have had the absolute privilege in witnessing first the recovery, and now the ongoing underlying growth and development of what I regard as a uniquely dynamic, professional and caring organisation that has every reason to feel confident, but not in any way complacent, about its future prosperity"
Malcolm Diamond MBE, Non-Executive Chairman
PRELIMINARY STATEMENT ATTACHED
NOTE:
Unless stated otherwise, amounts and comparisons with prior year are calculated at constant currency (Constant Exchange Rate 'CER') and, where we refer to 'underlying' this is defined as being before separately disclosed items (see note 2 in this announcement).
PRESENTATION OF RESULTS
Results briefing will be held at 8.45am-9.45am (UK) today at No1 Cornhill Business Centre, London, EC3V 3ND
Conference dial-in facility: on request, please contact Fiona Tooley on +44 (0)7785 703523 or email fiona@tooleystreet.com.
Enquiries please contact:
Trifast plc
Today: Mobile: +44 (0) 7979 518493 (MMD)
Malcolm Diamond MBE, Non-Executive Chairman
Mark Belton, Chief Executive Officer
Clare Foster, Chief Financial Officer
Thereafter: +44 (0) 1825 747630
Peel Hunt LLP Stockbroker & financial adviser
Justin Jones
Mike Bell
Tel: +44 (0)20 7418 8900
TooleyStreet Communications IR & media relations
Fiona Tooley
Tel : +44 (0)7785 703523
Email : fiona@tooleystreet.com
EDITOR'S NOTE
TRIFAST PLC
LSE Premium Listing: Ticker: TRI
About us:Trifast is a leading international specialist in the engineering, manufacturing and distribution of high quality industrial fastenings to major global assembly industries.
We are a 24/7 'full service provider' offering 'end-to-end' support to all our customers. Our success and ongoing growth is based on a unique mix of high quality manufacturing, sourcing know-how and adaptable, reliable global logistics.
Key sectors are automotive, domestic appliances, electronics and distributors. The Group employs c.1,200 staff across 27 global locations across the UK, Europe, Asia and the USA.
For more information, please visit
Group website:www.trifast.com
LinkedIn:www.linkedin.com/company/tr-fastenings
Twitter:www.twitter.com/trfastenings
Facebook:www.facebook.com/trfastenings
The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.
TRIFAST PLC
('Trifast', the 'Group' 'TR' or 'Company')
Preliminary results for the year ended 31 March 2017
CHAIRMAN'S LETTER TO SHAREHOLDERS
The older that one becomes then the quicker the time passes it seems, and this is certainly the case with our progress throughout the 2016/17 Financial Year.
In recent years, we have dedicated ourselves to blending organic revenue growth with carefully chosen acquisitions under the umbrella of Continuous Improvement within our operational processes and procedures. This recipe for consistent profit growth clearly keeps on giving as we report another successful year completed and near our first quarter end for the current 2017/18 period.
Our Board is regularly asked for the business outlook implications from Brexit, especially with part of our global interests being within the automotive Tier 1 sector. The most strategic impact is likely to be import and export tariffs in and out of the UK. Fortunately, with our substantial logistics facilities based in Germany, Sweden, Hungary and Holland, plus our new Spanish site, we can switch purchase, warehousing and sales activities between Europe and the UK should the markets demand. Our manufacturing and logistics facility in Italy also provides substantial flexibility to our supply chain should the need arise.
Despite much research and many site visits, this past year has not yielded a suitable acquisition that we felt comfortable with. However, our consistent organic growth provides robust investor returns sufficient for us to maintain our strict acquisition criteria.
This organic growth trajectory is not only driven by selling more to existing customers, and winning new customers, but also by our introduction of new product ranges that are known to be already in demand from our three key market sectors of automotive, domestic appliances and electronics.
Our most strategic new product investment by far is into enclosure hardware (e.g. locks, hinges, handles, cable management etc.) where the global market spend extends to hundreds of millions of dollars, and where the majority of our international OEMs are already large users, often paying premium prices due to design, specification and supply constraints. We believe that our enhanced and unique supply chain flexibility provides TR with a competitive market advantage on this vast range of high volume components.
This year has seen another period of major capital and people investment to help sustain our future prosperity, including the significant decision to open a greenfield distribution and technical support facility in Barcelona. Although the UK has grown its automotive production significantly in the last decade, it is not widely known that Spain produced 50% more units than the UK last year, providing TR with a clear opportunity to invest to respond to this market demand.
Market dynamics have also prompted our TR Midlands team to acquire a second building to accommodate more efficient warehousing plus a training, technical and customer fulfilment facility - mainly to support our automotive customers.
The automotive sector is the most prolific exponent of design and production consolidation and rationalisation on a global basis, which has seen Trifast ramp up its technical support and supply chain disciplines across the Group. TR VIC in Italy, TR Kuhlmann in Germany, TR Inc. in USA and TR Spain are now aligned with TR in the UK, Hungary, India, Thailand, Malaysia, Taiwan, Sweden and Holland with the consistent high level capabilities required by this industry. Recent demand has also turned our focus on to Japan, where currency changes and high quality demands have made our exports into that country more competitive.
This past year has seen a whole raft of new operational process and people resource initiatives, with our Executive team grasping the reins of a wide range of improvement opportunities that range from broadening our HR support, management training and succession planning to digital investments and treasury management. Most of these activities span more than a year and so I look forward to updating you at a later stage with what I believe will be significant progress.
Having re-joined Trifast with Jim Barker way back in March 2009, I have had the absolute privilege in witnessing first the recovery, and now the ongoing underlying growth and development of what I regard as a uniquely dynamic, professional and caring organisation that has every reason to feel confident, but not in any way complacent, about its future prosperity.
I fundamentally believe that we now have the most competent and committed management teams across the Group that I have ever seen in my many years with the Company. This trust has allowed me to step down from my Executive role of the last eight years, while still remaining loyal and supportive as Non-Executive Chairman of Trifast going forward.
I believe very much that every employee is important and that management must constantly endorse that personally with daily encouragement, recognition and mentorship. It is with pride that I can claim that the TR culture is very light on ego, politics and status seeking, whilst being big on loyalty, commitment and work ethics. As this is a core requirement for success I want to sincerely thank our management and all our staff for their contribution to our Company and its excellent performance, not only on my behalf but on behalf of all our stakeholders.
MALCOLM DIAMOND MBE, NON-EXECUTIVE CHAIRMAN
12 June 2017
TRIFAST PLC
('Trifast', the 'Group' 'TR' or 'Company')
Preliminary results for the year ended 31 March 2017
"Our people continue to be the driving force of our business and their length of service, their loyalty, their enthusiasm and their skills and experience form the backbone of our success"
Clare Foster, CFO
SUMMARY BUSINESS REVIEW
FY2017
CER
FY2017
AER
FY2016
Growth
at Constant Exchange Rate
(CER)
Growth at Actual Exchange Rate
(AER)
Revenue
172.6m
186.5m
161.4m
7.0%
15.6%
Gross profit (GP)
53.6m
58.0m
48.0m
11.7%
20.9%
GP%
31.1%
31.1%
29.7%
+140bps
+140bps
Underlying operating profit (UOP)*
18.6m
21.0m
16.8m
10.9%
25.2%
UOP%*
10.8%
11.3%
10.4%
+40bps
+90bps
Operating profit (OP)
15.6m
17.9m
13.9m
+12.5%
+28.8%
OP%
9.0%
9.6%
8.6%
+40bps
+100bps
Underlying profit before tax*
18.1m
20.5m
16.0m
13.2%
28.1%
Profit before tax
15.1m
17.3m
13.1m
+15.4%
+32.6%
Underlying diluted EPS*
11.28p
12.82p
9.99p
+12.9%
+28.3%
Diluted EPS
8.97p
10.40p
8.50p
+5.5%
+22.4%
Underlying Return on capital employed (ROCE)*
19.9%
18.5%
+140bps
*Before separately disclosed items (see note 2)
OUR GROUP PERFORMANCE
Our performance across the business has delivered another record breaking financial year with strong trading results ahead of our expectations. Strong profitable top line growth has continued across every region, up by 7.0% at CER and leading to revenues of 186.5m at Actual Exchange Rate ('AER') for 2017.
Our underlying businesses have performed well with foreign exchange tailwinds also having a positive impact.
By far the biggest driver of our performance in 2017 has been organic growth (5.2%; 13.7% at AER), with the focus on our core strategy leading to sales increases to our 25 key multinational OEMs of 14.2% at AER. On the non-organic side, 2017 has seen the first full year of trading from our acquisition of TR Kuhlmann, successfully generating 1.8% (1.9% at AER) of revenue growth for the Group.
The strongest measure of the Group's success this year has been at the profit level. For the first time in our history we have ended the year with a gross margin in excess of 30%, representing the achievement of a long held ambition. Gross margin has increased by 140bps to 31.1% (at both AER and CER; 2016: 29.7%) and our gross profit is up by 11.7% to 53.6m (58.0m at AER; 2016: 48.0m).
Against this gross margin increase, our Group underlying operating margin has stayed more consistent at 10.8% (11.3% at AER; 2016: 10.4%), reflecting the ongoing investments for growth that we have been making around the Group in our sales and operational teams as well as our capital investment programmes. Despite this ongoing investment for future growth, our underlying operating profit has continued to grow strongly with a 10.9% increase at CER and 25.2% at AER.
All of the above factors has helped to drive substantial growth in our underlying diluted EPS, up by 28.3% at AER to 12.82p (2016: 9.99p).
Given the significant weakening of Sterling since June 2016, CER continues to be the best way of understanding the positive progress of our business. To aid understanding, the table below details the impact AER has made to some of our key numbers.
FY2017 CER
AER uplift
FY2017 AER
Revenue
172.6m
13.9m
186.5m
Underlying PBT*
18.1m
2.4m
20.5m
Underlying diluted EPS*
11.28p
1.54p
12.82p
Normalised net debt
7.1m
0.5m
7.6m
Shareholders' funds
95.4m
6.3m
101.7m
*Before separately disclosed items (see note 2)
DIVIDEND POLICY
With our proven track record, a strong balance sheet and a confident strategy for growth, we remain committed to a progressive dividend policy.
As a result the Directors are proposing, subject to shareholder approval, a final dividend of 2.50p per share. This together with the interim dividend of 1.00p (paid on 13 April 2017), brings the total for the year to 3.50p per share, an increase of 25.0% on the prior year (2016: 2.80p). The final dividend will be paid on 13 October 2017 to shareholders on the register at the close of business on 15 September 2017. The ordinary shares will become ex-dividend on 14 September 2017.
The 2017 final proposed dividend means that over the last six years dividends have grown from 0.50p to 3.50p, equating to a compound annual growth rate ('CAGR') of 47.6%.
At the same time, dividend cover has fallen, now representing a cover of 3.7x. For the medium term, we believe an appropriate level of cover will continue to be in the range of 3x to 4x. As is always the case, the actual dividend each year will need to take in to account our ongoing strategy of investment driven growth, potential acquisitions and the working capital requirements of a growing business.
GROUP REVENUE
This year's key revenue message is one of consistent growth. In FY2017, all of our regions have experienced strong top line growth ranging from 4.6% in our UK businesses to 12.3% in the US (4.6% to 28.2% at AER).
In Europe, our total growth has been 9.8%, made up of 4.6% of organic growth and 5.2% from acquisitions. This reflects a particularly strong HY1, specifically in our Italian domestic appliances business, and FY2017 gains in electronics in Hungary and automotive in Sweden.
In Asia, we have seen a robust return to growth, with total sales (including intercompany) in the region growing by 6.5% to 47.8m (2016: 1.1% and 44.9m) following a strong HY2. Growth at entity level has been equally good, with Singapore continuing to perform well, up by 9.4% (25.2% at AER), in the domestic appliances market and Shanghai, up 9.8% (18.4% at AER), on the automotive side. Most notable is the successful return to growth in our PSEP, Malaysia business. A contraction in the local automotive market has reduced trading levels over recent years. However, in FY2016 we saw this bottom out and in FY2017 top line growth of 6.2% (16.1% at AER) has come from of a mix of both domestic, and export sales.
For our UK businesses, it has also been a year of good growth in what is a mature market. Overall total revenues are up 4.6% to 69.3m (2016: 66.2m), with the biggest increase being seen across our distribution businesses, 10.4% to 12.5m at AER, predominantly arising out of additional sales volumes to our European distributors. Outside of this, growth has largely come from increased sales to our multinational OEMs in the automotive sector.
In the US, we continue to see very strong revenue growth of 12.3% to 5.3m (6.0m at AER; 2016: 4.7m) again largely as a result of our ongoing multinational OEMs focus.
GROSS MARGIN
The Group's gross margin has increased by 140bps (at both AER and CER) to 31.1% (2016: 29.7%). Outside of the US, gross margin improvements have been seen across all regions. This is most specifically within Europe, largely due to favourable cost variances and capacity increases at our Italian manufacturing site.
In the UK, gross margins have increased by 100bps, largely due to transactional gains on our export revenues caused by positive movements in the Euro exchange rate. Whilst in Asia, a change in product mix and capacity increases at our Singapore and Malaysian sites has had a similar margin impact.
In the US gross margins have fallen by 410bps as the result of product mix changes and an increased focus on the automotive sector.
GROUP UNDERLYING OPERATING MARGIN
Underlying operating margins have increased by 40bps to 10.8% (11.3% at AER; 2016: 10.4%). The biggest increase is in Europe of 160bps (180bps at AER), largely as the result of the increase in gross margin noted above. In Asia, margins have fallen by 40bps to 14.6% (14.9% at AER; 2016: 15.0%) partly as the result of a foreign exchange balance sheet translation loss of 0.2m (2016: gain of 0.2m) due to the ongoing weakness in the Euro & Sterling as well as additional investments to support ongoing growth in the region.
In the UK, margins have remained broadly stable at 9.4% (2016: 9.3%), whereas in the US we have seen the drop in gross margin feeding down into a similar fall at the underlying operating profit level. As sales continue to build, we expect underlying operating profits in this region to improve as planned investments for growth can be better absorbed.
NET FINANCING COSTS (AT AER)
Interest costs have continued to fall to 0.5m (2016: 0.8m) reflecting both a decrease in the average net debt balance to 12.2m (2016: 16.6m) and a reduction in the interest margin charged following an amendment of our HSBC banking facilities on the 7 October 2016.
TAXATION (AT AER)
The Underlying Effective Tax Rate ('UETR') has reduced slightly in the year to 23.6% (2016: 24.9%) largely as a result of an increase in the tax deductibility of certain permanent staff costs in Italy.
Subject to future tax changes and excluding prior year adjustments, our UETR is expected to be c.25% going forward.
NET DEBT (AT AER)
Our net debt position has significantly decreased by 9.6m to 6.4m (2016: 16.0m). One of the key reasons driving that reduction is our very strong cash generation. In FY2017 our underlying EBITDA to underlying operating cash conversion rate was 97.3% (2016: 88.9%, 102.7% net of the de-factoring in VIC). This led to an operating cash inflow of 22.5m, and despite our significant increase in trading (15.6% and 25.1m at AER), a working capital increase of only 0.8m reflecting our continued high focus on working capital levels around the Group.
Our normalised net debt position at 31 March 2017 is higher at 7.6m. This adjustment reduces our cash holding at year end to take in to account the 1.2m of cash specifically held to settle the NI and income tax payments (due in April 2017) relating to Malcolm Diamond's exercise of 1,000,000 share options on 17 February 2017. Further information is included in the Directors' Remuneration Report regarding this transaction and Malcolm's shareholding.
BANKING FACILITIES
The Group finalised amended banking facilities with HSBC on 7 October 2016. In summary, the amendments reduce the Group's reliance on the Asset-Backed Lending (ABL) facilities, decrease the overall cost structure and extend the maturity profile of a proportion of our borrowings to better reflect the Group's core funding and investment requirements.
Taking these changes into account, headroom has increased by c.5.0m, helping to support our strategy of investment driven growth. In addition, an Accordion facility of 20.0m has been written in to the agreement, providing the potential flexibility to debt finance future acquisitions and investments.
RETURN ON CAPITAL EMPLOYED (AT AER)
As at 31 March 2017, the Group's shareholders' equity had increased significantly to 101.7m (2016: 83.8m). This 17.9m movement is made up of retained earnings of 11.3m, share issues totalling 0.3m and a substantial foreign exchange reserve gain of 6.3m which arose due to the sustained weakening in Sterling in the financial year.
Over this increased asset base, our very strong trading performance has led to a higher underlying ROCE of 19.9% (2016: 18.5%).
GROUP OUTLOOK
Looking ahead, the global fastenings market is forecast to grow by 5% a year over the next 5 years, with all our regions predicting growth.
Geographically Europe, Asia and USA all remain key focus areas for us both organically and non-organically and with our new Spanish greenfield site now up and running, we are in a prime position to continue to develop that important market in the future.
The current financial year has started well and, with a robust pipeline in place, there is no indication this will change. The additional investments we are making in our people across the world, including into our global and local sales teams, mean the Group is in a good position to move forward. Moreover, the strategic investments we are making in our global Customer Relationship Management systems and our key account management have been specifically targeted to further support our core strategy of focusing on our multinational OEMs.
In manufacturing, our capital expenditure plans will increase capacity at both our Italian and Singaporean sites so as to reduce our per part production costs, and allow us to retain higher profits per sale by bringing more manufacturing in-house in the future.
To complement these strong underlying growth plans, further acquisitions remain an important strategic growth pillar for the Group. Our acquisition strategy has been developed to identify key criteria and geographies and we will continue to use this to drive our proactive search for the next successful acquisition.
There are, of course, some macroeconomic factors we cannot fully mitigate, including movements in foreign currency and the ongoing volatility in the raw materials markets, as well as the wider potential implications of Brexit on our business and the UK economy. We are already starting to see some purchase price challenges arising out of both the ongoing weakness in Sterling and the relative strength of the US$, which we expect to increase over time if circumstances persist. However, taking the Group as a whole, with our geographical diversity, our balanced sector mix and our clear strategies for growth, we remain optimistic about the Group's prospects.
MARK BELTON, CEO
CLARE FOSTER, CFO
TRIFAST PLC
12 June 2017
TRIFAST PLC
('Trifast', the 'Group' 'TR' or 'Company')
Preliminary results for the year ended 31 March 2017
CONSOLIDATED INCOME STATEMENT
for the year ended 31 March 2017
Note
2017
000
2016
000
Continuing operations
Revenue
3
186,512
161,370
Cost of sales
(128,495)
(113,366)
Gross profit
58,017
48,004
Other operating income
4
395
317
Distribution expenses
(3,964)
(3,202)
Administrative expenses before separately disclosed items
(33,430)
(28,326)
IFRS2 charge
2
(1,512)
(1,687)
Acquired intangible amortisation
2
(1,273)
(974)
Net acquisition costs
2
-
(264)
Profit on sale of fixed assets
2
195
-
Costs on exercise of executive share options
2
(567)
-
Total administrative expenses
(36,587)
(31,251)
Operating profit
5
17,861
13,868
Financial income
60
60
Financial expenses
(581)
(851)
Net financing costs
(521)
(791)
Profit before taxation
2,3
17,340
13,077
Taxation
6
(4,642)
(2,852)
Profit for the year (attributable to equity shareholders of the Parent Company)
12,698
10,225
Earnings per share
Basic
13
10.72p
8.78p
Diluted
13
10.40p
8.50p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2017
2017
000
2016
000
Profit for the year
12,698
10,225
Other comprehensive income/(expense) for the year:
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
8,486
4,764
(Loss) on a hedge of a net investment taken to equity
(2,155)
(2,537)
Other comprehensive income recognised directly in equity
6,331
2,227
Total comprehensive income recognised for the year
(attributable to the equity shareholders of the Parent Company)
19,029
12,452
TRIFAST PLC
('Trifast', the 'Group' 'TR' or 'Company')
Preliminary results for the year ended 31 March 2017
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2017
Share
capital
000
Share
premium
000
Translation
reserve
000
Retained
earnings
000
Total
equity
000
Balance at 31 March 2016
5,837
21,161
8,569
48,183
83,750
Total comprehensive income for the year:
Profit for the year
-
-
-
12,698
12,698
Other comprehensive income for the year
-
-
6,331
-
6,331
Total comprehensive income recognised for the year
-
-
6,331
12,698
19,029
Issue of share capital
177
217
-
(53)
341
Share based payment transactions (including tax)
-
-
-
1,888
1,888
Dividends (note 12)
-
-
-
(3,310)
(3,310)
Total transactions with owners
177
217
-
(1,475)
(1,081)
Balance at 31 March 2017
6,014
21,378
14,900
59,406
101,698
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2016
Share
capital
000
Share
premium
000
Translation
reserve
000
Retained
earnings
000
Total
equity
000
Balance at 31 March 2015
5,809
20,978
6,342
38,551
71,680
Total comprehensive income for the year:
Profit for the year
-
-
-
10,225
10,225
Other comprehensive income for the year
-
-
2,227
-
2,227
Total comprehensive income recognised for the year
-
-
2,227
10,225
12,452
Issue of share capital
28
183
-
-
211
Share based payment transactions (including tax)
-
-
-
1,847
1,847
Dividends (note 12)
-
-
-
(2,440)
(2,440)
Total transactions with owners
28
183
-
(593)
(382)
Balance at 31 March 2016
5,837
21,161
8,569
48,183
83,750
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2017
Share
capital
000
Share
premium
000
Merger
reserve
000
Retained
earnings
000
Total
equity
000
Balance at 31 March 2016
5,837
21,161
1,521
16,013
44,532
Total comprehensive income for the year:
Profit for the year
-
-
-
4,814
4,814
Total comprehensive income recognised for the year
-
-
-
4,814
4,814
Issue of share capital
177
217
-
(53)
341
Share based payment transactions (including tax)
-
-
-
1,758
1,758
Dividends (note 12)
-
-
-
(3,310)
(3,310)
Total transactions with owners
177
217
-
(1,605)
(1,211)
Balance at 31 March 2017
6,014
21,378
1,521
19,222
48,135
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2016
Share
capital
000
Share
premium
000
Merger
reserve
000
Retained
earnings
000
Total
equity
000
Balance at 31 March 2015
5,809
20,978
1,521
5,586
33,894
Total comprehensive income for the year:
Profit for the year
-
-
-
11,068
11,068
Total comprehensive income recognised for the year
-
-
-
11,068
11,068
Issue of share capital
28
183
-
-
211
Share based payment transactions (including tax)
-
-
-
1,799
1,799
Dividends (note 12)
-
-
-
(2,440)
(2,440)
Total transactions with owners
28
183
-
(641)
(430)
Balance at 31 March 2016
5,837
21,161
1,521
16,013
44,532
TRIFAST PLC
('Trifast', the 'Group' 'TR' or 'Company')
Preliminary results for the year ended 31 March 2017
STATEMENTS OF FINANCIAL POSITION
at 31 March 2017
Group
Company
Note
2017
000
2016
000
2017
000
2016
000
Non-current assets
Property, plant and equipment
19,258
17,171
2,574
2,362
Intangible assets
39,682
38,259
-
-
Equity investments
-
-
41,440
41,440
Deferred tax assets
2,359
2,165
685
836
Total non-current assets
61,299
57,595
44,699
44,638
Current assets
Inventories
7
41,926
39,438
-
-
Trade and other receivables
8
49,360
43,386
31,382
33,613
Cash and cash equivalents
9
24,645
17,614
2,587
1,406
Total current assets
115,931
100,438
33,969
35,019
Total assets
3
177,230
158,033
78,668
79,657
Current liabilities
Bank overdraft
9
-
33
-
2,273
Other interest-bearing loans and borrowings
10
14,872
16,901
11,077
12,091
Trade and other payables
11
37,145
33,030
4,362
5,720
Tax payable
2,471
2,773
-
-
Provisions
76
76
-
-
Total current liabilities
54,564
52,813
15,439
20,084
Non-current liabilities
Other interest-bearing loans and borrowings
10
16,221
16,675
14,930
14,866
Provisions
1,111
1,117
-
-
Deferred tax liabilities
3,636
3,678
164
175
Total non-current liabilities
20,968
21,470
15,094
15,041
Total liabilities
3
75,532
74,283
30,533
35,125
Net assets
101,698
83,750
48,135
44,532
Equity
Share capital
6,014
5,837
6,014
5,837
Share premium
21,378
21,161
21,378
21,161
Reserves
14,900
8,569
1,521
1,521
Retained earnings
59,406
48,183
19,222
16,013
Total equity
101,698
83,750
48,135
44,532
TRIFAST PLC
('Trifast', the 'Group' 'TR' or 'Company')
Preliminary results for the year ended 31 March 2017
STATEMENTS OF CASH FLOWS
for the year ended 31 March 2017
Group
Company
Note
2017
000
2016
000
2017
000
2016
000
Cash flows from operating activities
Profit for the year
12,698
10,225
4,814
11,068
Adjustments for:
Depreciation, amortisation and impairment/(reversal)
3,123
2,331
76
(6,676)
Unrealised foreign currency loss/(gain)
165
(119)
-
(256)
Financial income
(60)
(60)
(28)
(32)
Financial expense
581
851
350
406
(Gain)/loss on sale of property, plant and equipment and investments
(184)
15
-
-
Dividends received
-
-
(10,814)
(8,532)
Equity settled share based payment charge
1,512
1,687
1,145
1,224
Taxation charge/(credit)
4,642
2,852
402
(277)
Operating cash inflow/(outflow) before changes in working capital
and provisions
22,477
17,782
(4,055)
(3,075)
Change in trade and other receivables
(3,075)
(1,360)
4,653
(3,914)
Change in inventories
(273)
(421)
-
-
Change in trade and other payables
3,764
(58)
(1,361)
(3,743)
Change in provisions
(6)
(70)
-
-
Cash generated from/(used in) operations
22,887
15,873
(763)
(10,732)
Tax paid
(5,136)
(3,080)
-
-
Net cash from/(used in) operating activities
17,751
12,793
(763)
(10,732)
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
198
16
-
-
Interest received
60
91
26
32
Acquisition of subsidiary, net of cash acquired
(1,471)
(7,684)
-
-
Acquisition of property, plant and equipment and intangibles
(2,948)
(2,339)
(288)
(2)
Dividends received
-
-
10,814
8,532
Net cash (used in)/from investing activities
(4,161)
(9,916)
10,552
8,562
Cash flows from financing activities
Proceeds from the issue of share capital, net of acquisition
341
181
341
181
Proceeds from new loan
2,236
11,451
2,100
9,252
Repayment of borrowings
(7,030)
(8,969)
(5,120)
(1,825)
Payment of finance lease liabilities
(6)
(31)
-
-
Dividends paid
(3,310)
(2,440)
(3,310)
(2,440)
Interest paid
(581)
(895)
(346)
(419)
Net cash (used in)/from financing activities
(8,350)
(703)
(6,335)
4,749
Net change in cash and cash equivalents
5,240
2,174
3,454
2,579
Cash and cash equivalents at 1 April
9
17,581
15,014
(867)
(3,446)
Effect of exchange rate fluctuations on cash held
1,824
393
-
-
Cash and cash equivalents at 31 March
9
24,645
17,581
2,587
(867)
TRIFAST PLC
('Trifast', the 'Group' 'TR' or 'Company')
NOTES TO THE PRELIMINARY STATEMENT
1. PREPARATION OF THE PRELIMINARY STATEMENT
The preliminary results announcement for the year ended 31 March 2017 has been prepared by the Directors based on the results and position reflected in the statutory accounts. The statutory accounts are prepared in accordance with international Financial Reporting Standards as adopted by the European Union ('Adopted IFRS').
The Board of Directors approved the preliminary announcement on 12 June 2017.
2. UNDERLYING PROFIT BEFORE TAX AND SEPARATELY DISCLOSED ITEMS
2017
000
2016
000
Underlying profit before tax
20,497
16,002
Separately disclosed items within administrative expenses
IFRS2 share based payment charge
(1,512)
(1,687)
Acquired intangible amortisation
(1,273)
(974)
Net acquisition costs
-
(264)
Profit on sale of fixed assets
195
-
Costs on exercise of executive share options
(567)
-
Profit before tax
17,340
13,077
2017
000
2016
000
Underlying EBITDA
22,868
18,150
Separately disclosed items within administrative expenses
IFRS2 share based payment charge
(1,512)
(1,687)
Net acquisition costs
-
(264)
Profit on sale of fixed assets
195
-
Costs on exercise of executive share options
(567)
-
EBITDA
20,984
16,199
Acquired intangible amortisation
(1,273)
(974)
Depreciation and non-acquired amortisation
(1,850)
(1,357)
Operating profit
17,861
13,868
3. OPERATING SEGMENTAL ANALYSIS
Segment information is presented in the consolidated financial statements in respect of the Group's geographical segments. This reflects the Group's management and internal reporting structure, and the operating basis on which individual operations are reviewed by the Chief Operating Decision Maker (the Board).
Performance is measured based on each segment's underlying profit before finance costs and income tax as included in the internal management reports that are reviewed by the Chief Operating Decision Maker. This is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within the industry. Inter-segment pricing is determined on an arm's length basis. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Goodwill and intangible assets acquired on business combinations are included in the region to which they relate.
Geographical operating segments
The Group is comprised of the following main geographical operating segments:
- UK
- Europe: includes Norway, Sweden, Hungary, Ireland, Holland, Italy, Germany, Spain and Poland
- USA: includes USA and Mexico
- Asia: includes Malaysia, China, Singapore, Taiwan, Thailand and India
In presenting information on the basis of geographical operating segments, segment revenue and segment assets are based on the geographical location of our entities across the world, and are consolidated into the four distinct geographical regions, which the Board use to monitor and assess the Group.
March 2017
UK
000
Europe
000
USA
000
Asia
000
Common
costs
000
Total
000
Revenue
Revenue from external customers
66,825
67,231
5,900
46,556
-
186,512
Inter segment revenue
2,443
613
123
7,262
-
10,441
Total revenue
69,268
67,844
6,023
53,818
-
196,953
Underlying operating result
6,538
9,818
334
8,005
(3,677)
21,018
Net financing costs
(145)
(73)
-
20
(323)
(521)
Underlying segment result
6,393
9,745
334
8,025
(4,000)
20,497
Separately disclosed items (see note 2)
(3,157)
Profit before tax
17,340
Specific disclosure items
Depreciation and amortisation
423
1,626
25
973
76
3,123
Assets and liabilities
Segment assets
40,348
68,289
3,742
58,876
5,975
177,230
Segment liabilities
(19,535)
(13,689)
(294)
(11,581)
(30,433)
(75,532)
March 2016
UK^
000
Europe
000
USA
000
Asia*
000
Common
costs ^
000
Total
000
Revenue
Revenue from external customers
64,156
54,030
4,602
38,582
-
161,370
Inter segment revenue
2,057
341
97
6,276
-
8,771
Total revenue
66,213
54,371
4,699
44,386
-
170,141
Underlying operating result
6,172
6,880
401
6,730
(3,390)
16,793
Net financing costs
(278)
(107)
(2)
(29)
(375)
(791)
Underlying segment result
5,894
6,773
399
6,701
(3,765)
16,002
Separately disclosed items (see note 2)
(2,925)
Profit before tax
13,077
Specific disclosure items
Depreciation and amortisation
231
1,181
22
833
64
2,331
Assets and liabilities
Segment assets
36,525
63,568
3,164
50,295
4,481
158,033
Segment liabilities
(15,792)
(14,952)
(385)
(9,679)
(33,475)
(74,283)
^ Including the offset of the UK overdrafts from Common costs, as allowable under financing agreements with HSBC.
*Historically this was stated after eliminating revenue between Asian entities. However management believe it is more appropriate to include this in the inter segment revenue number above and therefore this has been restated to 6.3m from 5.8m. In FY2017 the equivalent adjustment was 0.3m.
There were no material differences in Europe and USA between the external revenue based on location of the entities and the location of the customers. Of the UK, external revenue 11.3m (2016: 10.4m) was sold into the European market. Of the Asian external revenue, 4.6m (2016: 3.9m) was sold into the American market and 5.5m (2016: 5.9m) sold into the European market.
Revenue is derived solely from the manufacture and logistical supply of industrial fasteners and category 'C' components.
4. OTHER OPERATING INCOME
2017
000
2016
000
Rental income received from freehold properties
152
139
Other income
243
178
395
317
5. EXPENSES AND AUDITOR'S REMUNERATION
Included in profit for the year are the following:
Note
2017
000
2016
000
Depreciation and amortisation
1,850
1,357
Amortisation of acquired intangibles
2
1,273
974
Operating lease expense
2,529
2,507
Net foreign exchange gain
(46)
(661)
(Gain)/loss on disposal of fixed assets
(184)
15
Auditor's remuneration:
2017
000
2016
000
Audit of these financial statements
38
41
Audit of financial statements of subsidiaries pursuant to legislation
222
208
Taxation compliance services
15
15
Other assurance services
28
27
Other services relating to transaction services
-
60
6. TAXATION
Recognised in the income statement
2017
000
2016
000
Current UK tax expense:
Current year
520
554
Adjustments for prior years
(8)
210
512
764
Current foreign tax expense:
Current year
4,756
3,052
Adjustments for prior years
(138)
19
4,618
3,071
Total current tax
5,130
3,835
Deferred tax expense:
Origination and reversal of temporary differences
(454)
(196)
Adjustments for prior years
(34)
(787)
Deferred tax income
(488)
(983)
Tax in income statement
4,642
2,852
Tax recognised directly in equity
2017
000
2016
000
Current tax recognised directly in equity - IFRS2 share based tax credit
(522)
(70)
Deferred tax recognised directly in equity - IFRS2 share based tax charge/(credit)
130
(90)
Total tax recognised in equity
(392)
(160)
Reconciliation of effective tax rate ('ETR') and tax expense
2017
000
ETR
%
2016
000
ETR
%
Profit for the period
12,698
10,225
Tax from continuing operations
4,642
2,852
Profit before tax
17,340
13,077
Tax using the UK corporation tax rate of 20% (2016: 21%)
3,468
20
2,615
20
Tax suffered on dividends
264
2
133
2
Retention tax
102
1
71
-
Non-deductible expenses
190
1
223
2
Tax incentives
(274)
(2)
(123)
(1)
IFRS2 share option charge / (credit)
(1)
-
112
1
Deferred tax assets not recognised
511
3
72
-
Different tax rates on overseas earnings
540
3
256
2
Adjustments in respect of prior years
(180)
(1)
(558)
(4)
Tax rate change
22
-
51
-
Total tax in income statement
4,642
27
2,852
22
A reduction in the UK corporation tax rate from 21% to 20% (effective from 1 April 2015) was substantively enacted on 2 July 2013. Further reductions to 19% (effective from 1 April 2017) and to 18% (effective 1 April 2020) were substantively enacted on 26 October 2015, and an additional reduction to 17% (effective 1 April 2020) was substantively enacted on 6 September 2016. This will reduce the Company's future current tax charge accordingly. Deferred tax has been calculated based on these rates.
7. INVENTORIES - GROUP
2017
000
2016
000
Raw materials and consumables
4,903
4,067
Work in progress
1,972
1,458
Finished goods and goods for resale
35,051
33,913
41,926
39,438
8. TRADE AND OTHER RECEIVABLES
Group
Company
2017
000
2016
000
2017
000
2016
000
Trade receivables
47,497
41,931
-
-
Non trade receivables and prepayments
1,863
1,455
183
41
Amounts owed by subsidiary undertakings
-
-
31,199
33,572
49,360
43,386
31,382
33,613
9. CASH AND CASH EQUIVALENTS/BANK OVERDRAFTS
Group
Company
2017
000
2016
000
2017
000
2016
000
Cash and cash equivalents per Statement of financial position
24,645
17,614
2,587
1,406
Bank overdrafts per Statement of financial position
-
(33)
-
(2,273)
Cash and cash equivalents per Statements of cash flows
24,645
17,581
2,587
(867)
10. OTHER INTEREST BEARING LOANS AND BORROWINGS
This note provides information about the Group and Company's existing interest-bearing loans and borrowings.
Initial loan value
Rate
Maturity
Current
Non-current
2017
000
2016
000
2017
000
2016
000
Group
Asset based lending
Base +1.49%
-
3,280
3,144
-
-
PSEP acquisition loan
Fixed 3.14%
2016
-
1,170
-
-
VIC unsecured loan
EURIBOR +1.95%
2020
513
476
1,283
1,665
Kuhlmann unsecured loan
EURIBOR +1.55%
2024
-
18
-
132
Finance lease liabilities
Various
2017-19
2
2
8
12
Group and Company
Facility A VIC acquisition loan
EURIBOR +1.50%
2021
3,208
2,091
12,830
14,866
Facility B Revolving Credit Facility
LIBOR/EURIBOR +1.50%
2019/2021
7,869
10,000
-
-
Property Loan
Base +1.25%
2021
-
-
2,100
-
Total Group
14,872
16,901
16,221
16,675
Total Company
11,077
12,091
14,930
14,866
11. TRADE AND OTHER PAYABLES
Group
Company
2017
000
2016
000
2017
000
2016
000
Trade payables
19,302
17,164
-
-
Amounts payable to subsidiary undertakings
-
-
954
2,630
Deferred consideration
-
1,348
-
1,348
Non-trade payables and accrued expenses
15,322
13,149
2,073
1,623
Other taxes and social security
2,521
1,369
1,335
119
37,145
33,030
4,362
5,720
12. DIVIDENDS
During the year the following dividends were recognised and paid by the Group:
2017
000
2016
000
Final paid 2016 - 2.00p (2015: 1.50p) per qualifying ordinary share
2,376
1,743
Interim paid 2016 - 0.80p (2015: 0.60p) per qualifying ordinary share
934
697
3,310
2,440
After the balance sheet date a final dividend of 2.50p per qualifying ordinary share (2016: 2.00p) was proposed by the Directors and an interim dividend of 1.00p (2016: 0.80p) was paid in April 2017.
2017
000
2016
000
Final proposed 2017- 2.50p (2016: 2.00p) per qualifying ordinary share
3,007
2,376
Interim paid 2017 - 1.00p (2016: 0.80p) per qualifying ordinary share
1,203
934
4,210
3,310
Subject to Shareholder approval at the Annual General Meeting which is to be held on 27 July 2017, the final dividend will be paid on 13 October 2017 to Members on the Register at the close of business on 15 September 2017. The ordinary shares will become ex-dividend on 14 September 2017.
13. EARNINGS PER SHARE
Basic earnings per share
The calculation of basic earnings per share at 31 March 2017 was based on the profit attributable to ordinary shareholders of 12.7m (2016: 10.2m) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2017 of 118,493,886 (2016: 116,388,265), calculated as follows:
Weighted average number of ordinary shares
2017
2016
Issued ordinary shares at 1 April
116,747,887
116,174,086
Effect of shares issued
1,745,999
214,179
Weighted average number of ordinary shares at 31 March
118,493,886
116,388,265
Diluted earnings per share
The calculation of diluted earnings per share at 31 March 2017 was based on profit attributable to ordinary shareholders of 12.7m (2016: 10.2m) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2017 of 122,143,769 (2016: 120,345,662), calculated as follows:
Weighted average number of ordinary shares (diluted)
2017
2016
Weighted average number of ordinary shares at 31 March
118,493,886
116,388,265
Effect of share options on issue
3,649,883
3,957,397
Weighted average number of ordinary shares (diluted) at 31 March
122,143,769
120,345,662
The average market value of the Company's shares for the purposes of calculating the dilutive effect of share options was based on quoted market prices for the period that the options and deferred equity awards were outstanding.
Underlying earnings per share
EPS (total)
2017 EPS
2016 EPS
Earnings
000
Basic
Diluted
Earnings
000
Basic
Diluted
Profit after tax for the financial year
12,698
10.72p
10.40p
10,225
8.78p
8.50p
Separately disclosed items:
IFRS2 share option
1,512
1.28p
1.24p
1,687
1.45p
1.40p
Intangible amortisation
1,273
1.07p
1.04p
974
0.84p
0.81p
Net acquisition costs
-
-
-
264
0.23p
0.22p
Costs on exercise of
executive share options
567
0.48p
0.46p
-
-
-
Sale of fixed assets
(195)
(0.17p)
(0.16p)
-
-
-
Tax charge on adjusted items^
(193)
(0.16p)
(0.16p)
(1,132)
(0.97p)
(0.94p)
Underlying profit after tax
15,662
13.22p
12.82p
12,018
10.33p
9.99p
^ For the 2016 calculation this includes adjusting for the recognition of the deferred tax asset in TR Fastenings Inc
The 'underlying diluted' earnings per share is detailed in the above tables. In the Directors' opinion, this best reflects the underlying performance of the Group and assists in the comparison with the results of earlier years.
14. Preliminary statement
The financial information set out above does not constitute the Group's statutory Report and Accounts for the years ended 31 March 2017 or 2016 but is derived from the 2017 Report and Accounts. The Report and Accounts for 2016 have been delivered to the Registrar of Companies and those for 2017 will be delivered in due course. The external auditor has reported on the 2017 Report and Accounts; the report was (i) unqualified, (ii) did not include references to any matters to which the external auditor drew attention by way of emphasis without qualifying the reports and (iii) did not contain statements under section 498(2) or (3) of the Companies Act 2006.
15. INVESTOR COMMUNICATIONS
The Company is not proposing to bulk print and distribute hard copies of this Preliminary statement unless specifically requested by individual shareholders, however it can be downloaded from the investor website. News updates, Regulatory News, and previous years' Annual Reports, can also be viewed and downloaded from the Group's website, www.trifast.com.
The Report and Accounts for the year ended 31 March 2017, together with the Notice of Meeting will be posted to shareholders where requested and uploaded to the National Storage Mechanism (http://www.morningstar.co.uk/uk/NSM) and the Group's website, www.trifast.com in due course.
The 2017 Annual Report and Financial Statements will also be available on request by writing to: The Company Secretary, Trifast plc, Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, Email: corporate.enquiries@trifast.com.
16. ANNUAL GENERAL MEETING
The Annual General Meeting will be held on 27 July 2017 at Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW.
13 June 2017
This information is provided by RNSThe company news service from the London Stock ExchangeENDFR DMGMVNZRGNZM
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