REG - Trifast PLC - Publication of the 2022 Annual Results
26/07/2022 07:00
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RNS Number : 6812T Trifast PLC 26 July 2022
Publication of the 2022 Annual Results
"Innovation today for a better tomorrow - Growing sustainably, together"
LONDON: Tuesday, 26 July 2022: Trifast plc (LSE Premium listing: TRI)
('Trifast', the 'Group' 'TR' or 'Company'), publishes the Group's audited
Annual report and Financial statements for the year ended 31 March 2022. The
following information contained within this announcement is a summary taken
from the Group's audited FY2022 Annual report and Financial statements which
can be viewed in full via this link:
http://www.rns-pdf.londonstockexchange.com/rns/6812T_1-2022-7-25.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/6812T_1-2022-7-25.pdf)
"The medium term is increasingly exciting and as a Board we remain confident
that the fundamentals of our business model and strategy position us well to
become a larger, more profitable company. Over the coming financial year we
will continue to make steady progress through a mix of customer service,
technical innovation, investment and capturing key opportunities being
presented"
CEO, Mark Belton
FY2022 Summary
· Strong recovery in HY1 and robust growth in HY2 drives a
year-on-year revenue increase of 18.7% (organic 15.9%; acquisition 2.8%, 8.9%
organic increase at CER against FY2020)
· Successful phase one price increase negotiation, implemented to
mitigate cost inflation, returns gross margins in the month of March 2022 much
closer to historic levels
· Underlying operating margins increase to 6.8% (FY2021: 6.4%), as
strong sales growth offsets overhead normalisation
· Strong financial position allows further investment in inventory
to support sales growth and protect supply, even as lead times remain at
historic highs
· Falcon acquired - a first step on our ambitious North American
acquisition journey
· Project Atlas, phased roll-out to our largest subsidiary
underway, completion expected by end of 2022
FY2022 Financial highlights
Underlying measures: CER CER AER AER FY2021 FY2020
FY2022 change FY2022 change
Revenue £223.3m 18.7% £218.6m 16.2% £188.2m £200.2m
Gross profit % 26.6% 10bps 26.7% 20bps 26.5% 27.5%
Underlying operating profit (UOP) £15.2m 27.1% £14.7m 23.1% £12.0m £15.8m
Underlying operating profit % 6.8% 40bps 6.7% 30bps 6.4% 7.9%
Underlying profit before tax £14.2m 29.2% £13.8m 25.0% £11.0m £14.7m
Underlying diluted earnings per share 8.44p 35.3% 8.13p 30.3% 6.24p 8.64p
Adjusted leverage ratio(2) 1.27x n/a n/a 0.80x
Adjusted net (debt)/cash(1) £(23.8)m £(37.1)m £13.3m £(15.2)m
Underlying return on capital employed (ROCE) 8.3% 150bps 6.8% 8.8%
Total dividend 2.10p 31.3% 1.60p 1.20p
GAAP measures
Operating profit £11.6m 32.5% £8.8m £4.1m
Operating profit % 5.3% 60bps 4.7% 2.0%
Profit before tax £10.6m 36.4% £7.8m £3.0m
Diluted earnings per share 6.56p 52.2% 4.31p (0.19)p
1. Adjusted net (debt)/cash is presented excluding the impact of IFRS
16 Leases
2. Calculated in line with banking agreement
To read the financial report in full, please go to pages 52-59 of the FY2022
Annual report
To also read more about:
-our key strategic indicators (KSIs) and key performance indicators (KPIs),
refer to pages 12-15 of the FY2022 Annual report
-our balance sheet and focus on capital allocation refer to pages 38-41 of the
FY2022 Annual report.
Unless stated otherwise, amounts and comparisons with prior year are
calculated at constant currency (Constant Exchange Rate (CER)). Comparisons
with FY2020 are calculated at FY2020 exchange rates. Where we refer to
'underlying' this is defined as being before separately disclosed items (see
note 2 in the Annual report).
Presentation of FY2022 results
1 The Group will be holding a presentation to financial analysts today at 8:45am
(UK time). Further details can be obtained by contacting TooleyStreet
Communications - details are shown below. Investor enquiries can also be made
via the Company's stockbroker, Peel Hunt LLP and its corporate access team.
2 The Company will also be presenting the FY2022 results via the Investor Meet
Company platform on Thursday, 28 July 2022 at 11:30am (UK time). This 'live'
event will be hosted by CEO Mark Belton, and CFO Clare Foster. Investors who
follow Trifast on the IMC platform will automatically be invited to join the
event. The webcast will be available on the Trifast website following the
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)
Further enquiries please contact:
Trifast plc
Jonathan Shearman, Non-Executive Chair
Mark Belton, Chief Executive Officer
Clare Foster, Chief Financial Officer
Office: 44 (0) 1825 747366
Email: corporate.enquiries@trifast.com or Companysecretariat@trifast.com
Peel Hunt LLP (Stockbroker & financial adviser)
Mike Bell, Tel: 44 (0) 20 7418 8900
TooleyStreet Communications, (IR & media relations)
Fiona Tooley, Tel: 44 (0)7785 703523 or Email: fiona@tooleystreet.com
Editors' note
LSE Premium Listing: Ticker: TRI
LEI number: 213800WFIVE6RWK3CR22
Trifast (TR) is a leading international specialist in the design, engineering,
manufacture and distribution of high-quality industrial fastenings and
Category 'C' components, principally to major global assembly industries. We
employ c.1,300 people across 34 business locations within the UK, Asia,
Europe, and North America including seven high-volume, high-quality, and
cost-effective manufacturing sites across the world. TR supplies to c.5,000
customers in c.75 countries worldwide. As a full-service provider to
multinational OEMs and Tier 1 companies spanning several sectors, TR delivers
comprehensive support to its customers across every requirement, from concept
design through to technical engineering consultancy, manufacturing, supply
management and global logistics.
· Our purpose: To provide Trusted Reliability at every turn to our
customers, suppliers and our people, empowering them to deliver sustainable
products and solutions that add value to society and our planet
· Our vision: To enable innovation today for a better tomorrow
· Our mission: To promote an environment that is safe and fair, which
motivates, develops and maximises the contribution and potential of all
employees. To be acknowledged commercially as the market leader in industrial
fastenings in terms of service, quality, design, engineering support, ESG
(environmental, social and governance), together with brand reputation. To
continue to grow profitability, improve stakeholder returns through organic
and acquisitive growth, and by driving continual efficiencies throughout the
organisation
To read more about
· being a global leader operating in attractive markets, go to
pages 16-25 of the FY2022 Annual report
· driving growth through our business model - go to pages 10-11 of
the FY2022 Annual report
· about our culture, go to page 3 of the FY2022 Annual report
· Our five-year sustainability strategy framework (2022-2026): go
to pages 43 and 50-51 of the FY2022 Annual report
http://www.rns-pdf.londonstockexchange.com/rns/6812T_1-2022-7-25.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/6812T_1-2022-7-25.pdf)
or visit
Investor website: www.trifast.com (http://www.trifast.com/)
Commercial website: www.trfastenings.com (http://www.trfastenings.com/)
LinkedIn: www.linkedin.com/company/tr-fastenings
(http://www.linkedin.com/company/tr-fastenings)
Twitter: www.twitter.com/trfastenings (http://www.twitter.com/trfastenings)
Facebook: www.facebook.com/trfastenings (http://www.facebook.com/trfastenings)
Note Trifast, TR and TR Fastenings are registered trademarks of the Company.
Trifast plc
2022 Annual results
Extracts from the Strategic report
The report can be read in full on pages 2-89 of the FY2022 Annual report
"As we approach our 50 year anniversary in 2023, I am pleased to see how our
business is transforming, from an international company with individual
operations worldwide, to a more global company, working together as one team"
CEO, Mark Belton
Introduction
Over the last few years, we have seen the world change dramatically creating
opportunities and challenges along the way. As a Group we have come together
and met those changes head on. The combination of the Covid-19 pandemic and
the Ukraine conflict has affected everyday life around the world in so many
different ways. In business, further obstacles have created a combined
macroeconomic backdrop not seen commercially for many decades, manifesting in
commodity shortages, to supply chain logistics disruption, plant lockdowns,
and significant cost inflation.
Yet despite these challenges, we have had our best trading year ever by
revenue, with growth of 18.7%. This resulted in underlying operating profit
increasing by 27.1%. Gross margins at the end of March moved much closer to
our historic levels and all regions delivered profitable growth. In the
summer we also acquired Falcon Fastening Solutions Inc. as part of our
strategy to both grow and rebalance our North American region and I am pleased
to report that TR Falcon revenue is performing slightly ahead of our original
expectations.
We have had to operate smarter, collaborating much more with our customers and
suppliers to ensure our Trusted Reliability of supply. I am incredibly proud
of how our teams globally have managed it, thanks to the strong relationships
that they have developed over many years.
I want to take this opportunity to acknowledge the hard work and commitment of
all my colleagues around the world, as none of this could have been possible
without their dedication, and their 'can do' spirit.
Overview
At the beginning of the financial year the Covid-19 vaccination programme
began to be rolled out and life started to return to some form of new
normality. We adapted our working practices to ensure all our people
continued to remain safe and that the Group adhered to local government
regulations. While virtual communications cut down travel costs and in the
main made us more productive, we recognised the importance of working together
face-to-face and the comradery that this achieves. The opening up,
therefore, of restrictions towards the end of 2021 and into 2022 has been very
much welcomed, enabling us to visit and, more importantly, continue to support
our people around the business. We are mindful that potential risks
associated with Covid-19 remain in many parts of the world, as the recent
lockdowns in Shanghai have evidenced, however this has had limited impact on
FY2022 and we will continue to adapt our business to ensure our people remain
safe and that we are able to service our customers effectively.
Following change and technological developments in our end markets, we
revisited our sector analysis in FY2021 to better reflect how we view these
markets and the opportunities within them. All sectors within the period
showed growth, despite the ongoing supply chain disruption and the temporary
factory closures across several of our global OEMs. In particular, we are
very pleased to have delivered growth of 7.4% in our light vehicle (LV)
sector, which represented an outperformance of c.9% against an automotive
market that has been subject to significant short-term challenges. We are
delighted to report that we have successfully added a number of contractual
wins to our order book both from existing and new customer relationships
across our key sectors. Sales to distributors and energy, tech &
infrastructure (ET&I) sectors were driven by strong underlying demand.
We have also continued to see an increased number of opportunities develop
in the electric vehicle (EV) market.
Our North America region continues to go from strength to strength, with very
strong organic revenue growth further supplemented by acquisition growth from
TR Falcon.
The Ukraine conflict has exacerbated wider supply chain disruption, especially
in Europe. The direct impact on the business has been minimal with less than
1% of Group revenue going into Russia and Ukraine, however a number of our
global customers operating in Europe do also include Russia as an end market
which is impacting volumes at specific locations. On behalf of all of us at
Trifast our thoughts go out to all those affected by this conflict and we hope
the situation can be resolved quickly and family and friends reunited.
The macroeconomic environment (supply chain pressures, together with freight,
energy and other input cost increases over the period) created challenges,
generating pent up demand but also impacting our margins in the first half of
the year. In response to ongoing inflationary pressures, we instigated a
co-ordinated price increase programme, with phase one substantially completed
by the financial year end. This helped gross margins return closer to more
historic levels, although further inflationary cost increases, such as energy
incurred during the latter part of the financial year, held back a full margin
recovery due to the lag between cost increase and recovery. As part of doing
business in this environment we are continuing dialogue with our customers to
pass on relevant additional costs and the successful outcome of these
negotiations will remain key.
Given the various macroeconomic factors affecting the supply chain, we
invested significantly in stock during the period and whilst this has impacted
cash generation, it has guaranteed continuity of supply in a period of very
high lead times. It is pleasing to report that over this difficult period,
we have met our contractual obligations and not let customers down as well as
enabling us to capture market share. During FY2023 we expect stock levels to
start to unwind as the macroeconomic environment stabilises.
Engineering-led innovation
'Innovation today for a better tomorrow' has long been our mantra and this has
never been so important as in this current dynamically changing marketplace.
As a society we are moving away from being wasteful towards preservation and
conservation; not only do we have a resolute team focused on ESG, but we also
have teams of highly skilled engineers who collaborate with customers to help
support them on their application fastening issues by developing innovative
and cost-effective engineered products. Our agile approach enables customers
to develop sustainable products and solutions that will add value to society
and the planet.
You can read more in depth on our approach to sustainability in the case
studies on pages 32 of the Annual report
Accelerated acquisition journey
Following our successful integration and the solid performance delivered by TR
Falcon, we continue our acquisition journey. With a focus on our strategic
initiatives of rebalancing the regions alongside establishing supply chain
support through more on/near-shoring manufacturing capabilities to help
deliver economic and environmental benefits.
You can read more about our acquisition journey, go to page 34 of the Annual
report
Investing in organic growth
Organic investment is core to our strategy for growth and medium-term margin
enhancement. This encompasses our people, our systems and targeted locational
investments.
You can read more about our organic growth strategy, go to page 28 of the
Annual report
Locational investment
As we continue to expand, we need to ensure that our locations remain fit for
purpose. In May 2022 we relocated our high growth Hungary operation to
larger, purpose built facilities and around the beginning of FY2024 our
UK-based PTS business will also relocate to facilities that are over 40%
bigger, enabling it to support future growth and more product ranges for the
distributor market.
We recognised early last year that TR VIC, our European manufacturing site,
would soon reach its capacity as higher-level demand is set to increase over
the next few years. By the end of this calendar year we will have invested
c.€4.0m into TR VIC's infrastructure and its machine capacity increasing
production capability by over 30% and providing the foundation to produce more
in-house, improve efficiencies and localise manufacturing support for our
European OEMs and their ESG requirements.
You can read more about this on pages 28-29 of the Annual report
Project Atlas
Project Atlas, a key driver of future growth and cost efficiencies, has
continued to progress over FY2022. After the successful implementation at
three sites in Europe, we decided to bring forward the phased roll-out to our
highest revenue trading subsidiary TR Fastenings (UK). This in turn will
enable us to free up greater capacity sooner. We knew this was always going to
be the most complex and challenging roll-out and despite a successful phase
one, we have seen a delay, to the end of calendar year 2022, in the
implementation of phases two and three due to capacity constraints balancing
supporting and protecting the growth we have seen, against training and
educating the same people involved in Atlas. Although early days, we are
pleased to report that the benefits of Atlas, both expected and unexpected,
are being seen already within the business. Again, I would like to express my
thanks to all our people involved in this transformational project. To undergo
a change like this is difficult in the best of times, but to do it in the
environment we have seen over the last few years is testimony to their
resilience and strength of character.
Full details of our progress and plans for Project Atlas are provided on pages
30 and 31 of the Annual report. The financial impact of the work undertaken to
date on this project is as follows. We have incurred direct costs of £2.6m in
FY2022 (cumulatively £14.9m), largely relating to project team, consultancy
and training costs. We have excluded £1.0m of these costs from our underlying
results (see note 2 in the Annual report), to reflect the unusual scale and
one-off nature of this project. In line with accounting standards, we have
also recognised the remaining £1.6m (cumulatively £7.2m) as fixed assets on
the balance sheet at 31 March 2022.
You can read more about this project on pages 30-31 of the Annual report
People
We place great importance on the development and training of all our people.
As part of our investment in Atlas we have launched a comprehensive human
resources module which includes a global Employee Assistance portal to support
staff in all aspects of wellbeing and an Online Learning Management System to
complement face-to-face Development training. During the year we expanded
our talent pool in our commercial function to drive our ambitious growth
plans.
In March 2022, Scott McDaniel joined us as North America Regional Director.
He has a wealth of operational and business leadership skills and has worked
in a variety of industries including large global industrial fastenings
companies. Scott will also sit on the Operational Executive Board (OEB) and
is responsible for driving profitable growth in North America, both
organically and acquisitively. As part of our succession planning, Glenda
Roberts (who previously held the responsibility for the US), will continue to
provide mentorship to the US team and remain Global Projects and Marketing
Director.
We have further strengthened our Group compliance team to ensure that we
continue to meet the expectations of our stakeholders. From April 2022,
Lyndsey Case became Head of Governance and we welcomed Christopher Morgan, an
experienced FTSE 250 practitioner, to the plc team as Group Company Secretary.
To increase our strategic resilience within the business, Maddy Webb, who
has been with the business for 21 years, has become Head of Risk, while Neil
Stanbury joined us in March 2022 to assume the role of Global Director of
Quality. With our strong growth aspirations, continual improvement
initiatives, combined with the importance of environmental, social and
governance (ESG), the enhanced team provides a stronger structured framework
of governance.
To read more
· on governance, refer to pages 47 and 96-100 of the Annual report
· about the Board and OEB, refer to pages 92-95 of the Annual
report
Sustainability
We have developed a clear vision for sustainability for the next five years
and have created a focused strategy that will improve both our sustainability
and opportunities in a changing market. During FY2022 we conducted a full
review of our global KSIs and operational KPIs, which will be reported into
the Trifast plc Board and our Operational Executive Board. In addition, we
have also included a second level of KPIs which we believe will support
functional reporting of sustainability data. These indicators have now been
expanded to include a more detailed overview of our sustainability
performance, supporting the ongoing commitment to our sustainability strategy.
I am pleased that our work to explore and assess climate-related risks and
opportunities has gone well and the Annual report includes disclosures in line
with the Task Force on Climate-related Financial Disclosures.
To read in more detail about
· our five-year framework go to page 43 of the Annual report
· our approach and focus on Sustainability, please go to pages
44-51 of the Annual report
Outlook
As a Group, we continue to see significant scope to build the business through
a mix of organic market share growth, as well as through strategic
acquisitions. We are pleased with the progress we are making, albeit the
operating backdrop continues to require considerable effort to be applied to
managing rising inflationary costs and supply chain disruption, as well as the
ongoing roll out of Project Atlas. I remain incredibly proud, as well as
amazed as to how the TR teams around the Group cope with all of this on a
daily basis.
A rigorous focus on service levels and responsiveness have strengthened the
Group's position in its established markets during this challenging period and
have created incremental opportunities with key international OEM customers.
While supply lead times are now stabilising across most of our territories,
they remain at historically high levels at c.50+ weeks vs. c.25 weeks pre 2020
and so we have continued to invest in inventory to support customer demand.
To protect margins as inflationary cost increases continue, we do expect price
increase negotiations to form an important ongoing part of doing business in
the current macroenvironment. The pass-through of these additional costs is a
better understood process as we head into FY2023, than it was a year ago, but
the successful outcomes of those conversations will remain key. Consistent
with many businesses, in the first quarter of FY2023, we have seen a further
uplift in certain key input costs, including energy. As a result of this, in
the short term we expect to see a period of cost recovery deferral across our
non-transactional business and therefore a greater degree of the Group's
FY2023 profitability weighted towards the second half of the year.
In the first three months of the new financial year Group trading has been
solid with c.10% growth in total revenue (at CER). We are continuing to see an
increased number of opportunities in high growth and emerging technologies,
with good momentum in new contract wins and our pipeline has never been so
strong.
Revenue growth in the first quarter has been achieved despite ongoing
challenges in certain markets. We welcomed the easing of the Shanghai
lockdown in June, having seen trading in our Chinese operations significantly
affected in the first two months of FY2023. This is estimated to have
impacted revenue by c.£1.5m, although providing there are no further
lockdowns in China, we envisage recouping a good proportion of this by the end
of FY2023. Whilst less than 1% of Group revenue is directly derived from
Russia, the conflict is having an indirect impact on some of our European
health & home customers, coupled with some volume reductions as a result
of a downturn in consumer sentiment. Our light vehicle OEM/Tier 1 customers
continue to manage through semi-conductor chip shortages across all regions.
We continue to be proactive in both cost management and pricing actions to
mitigate the impact of ongoing, significant, inflationary cost increases.
These actions are proving effective, albeit the lag between cost increase
and recovery has continued to be seen in margins in the first quarter.
Given the unprecedented political and economic times the short term outlook
for the Group is proving somewhat challenging to predict. However our Q1
performance, together with new contract wins and the growing pipeline, gives
us confidence in delivering strong revenue growth in FY2023, despite a
cautious view as to how quickly some of our specific market headwinds
described above abate. We anticipate inflation in many cost areas will remain
elevated over the remainder of the year and we will continue to take proactive
steps to mitigate the impact of this on our margins.
The medium term is increasingly exciting and as a Board we remain confident
that the fundamentals of our business model and strategy position us well to
become a larger, more profitable company. Over the coming financial year we
will continue to make steady progress through a mix of customer service,
technical innovation, investment and capturing key opportunities being
presented.
We look forward to updating you on our journey over the coming months and as
always thank you for the interest you have shown in our business.
Key Strategic Indicators
Indicator (AER) Revenue growth vs GDP% Underlying operating margin (%) Underlying Group revenue in Atlas Implementation (% of employees)(1)
ROCE (%) North America
Medium-term target In excess of GDP - FY2022 4% 10-13% 10-15% >25% 100% of employees
Key metric FY2022: 13.6% FY2022: 6.7% FY2022: 8.3% FY2022: 8.0% FY2022: 12.6%
FY2021: (6.0)% FY2021: 6.4% FY2021: 6.8% FY2021: 5.1% FY2021: 1.6%
FY2020: (4.2)% FY2020: 7.9% FY2020: 8.8% FY2020: 5.4% FY2020: nil
Our progress in FY2022 The Group delivered 13.6% organic revenue growth, 960bps higher than global Higher trading levels, offset by a slower recovery in gross margins due to ROCE increased by 150bps, reflecting higher profitability, offset in part by Two further sites implemented in FY2022 and phase
GDP in FY2022, reflecting a very strong recovery from Covid-19 trading levels inflationary pressures and a post-pandemic normalisation of our underlying investment in inventory
cost base Extremely strong one of the three‑phase roll-out to our biggest trading subsidiary, TR
Fastenings (UK). Phase two and phase three is now on track to complete by the
revenue growth has increased regional sales end of calendar year 2022
by 82.0% (organic: 31.5%; Falcon: 50.5%)
1. Based on initial scoping
Extracts from the Financial review
To read in full, refer to pages 52-59 of the Annual report
"The next couple of years remain a very exciting and challenging time for the
business as we build the momentum and the foundation for our medium‑term
aspirations"
Clare Foster, CFO
FY2022 was a very positive year for the Group. Robust growth in the second
half followed a strong recovery in HY1, to end the year with revenues up 18.7%
to £223.3m (AER 16.2% to £218.6m; FY2021: £188.2m). 15.9% of that growth
was organic, with the remaining 2.8% reflecting seven months' trading from our
latest acquisition, TR Falcon. Against FY2020, we grew organically by 8.9%,
meaning that FY2022 represented a record-breaking trading year for the Group,
with organic revenues coming in 2.3% greater (at AER) than our previous
highest level of £209.0m, as recorded in FY2019.
This growth reflected persistent high demand in most of our underlying
markets, and was achieved despite supply chain shortages across a number of
sectors, most markedly in the light vehicle market, coupled with a significant
increase in our sales to distributors, as end customers increased in-fill
stock purchasing in the face of wider supply chain pressures.
Gross margins have remained in line with FY2021 at 26.6% (AER: 26.7%; FY2021:
26.5%) as the positive impact of higher revenues has been offset by the lag
effect in the pass-through of inflationary cost pressures. UOP increased
significantly by 27.1% to £15.2m (AER: up 23.1% to £14.7m, FY2021: £12.0m),
with UOP margin up 40bps to 6.8% (AER: up 30bps to 6.7%, FY2021: 6.4%).
Operational gearing gains fed through into profits, although the positive
impact of this was partially offset by the normalisation of overheads from a
lowered FY2021 base (including the removal of government support schemes) as
well as ongoing strategic investments to support our organic growth journey.
Reflecting the strong trading performance, our underlying PBT is up 29.2% at
CER to £14.2m (AER: 25.0% to £13.8m; FY2021: £11.0m). This, coupled with a
reduction in our underlying effective tax rate, has resulted in a marked
increase in our underlying diluted earnings per share (EPS), up 30.3% to 8.13p
at AER (FY2021: 6.24p).
Supply chain challenges remain and although lead times are now stabilising
across most of the world, these continue to stand at historically high levels.
Considering this challenging backdrop and given our strong financial
position, the business took the decision to invest in inventory levels in
FY2022 (£31.7m) to support growth and ensure reliability of supply. This
has led to a temporarily negative underlying cash conversion rate at AER of
(66.8)% (FY2021: 147.9%), which, in conjunction with the acquisition of Falcon
on 31 August 2021 for £5.8m (net of cash), means that we ended the year with
an adjusted net debt position of £(23.8)m (FY2021: £13.3m adjusted net
cash). We expect the investment in stock to reduce and drive historically
high cash generation rates, as the macroeconomic environment settles.
As a result of these investments, our leverage ratio, calculated in line with
the banking agreement, at 31 March 2022 was 1.27x (FY2021: n/a - adjusted net
cash). Whilst this is higher than recent history, it remains within our
target range of 1.0x to 2.0x and therefore continues to provide flexibility to
invest in future non-organic growth. Facility headroom as at 31 March 2022
was c.£30m (FY2021: c.£62.6m), as stated before an additional £40m
accordion option.
CER continues to be the best way of understanding the positive progress of our
underlying business. To aid understanding, the impact of this on our key
metrics can be seen in the chart on page 53 of the Annual report.
Revenue
We have seen strong growth across all our regions, with revenue increases
ranging from 13.9% to 89.2% (3.5% to 78.1% against pre-Covid-19 FY2020). The
majority of these increases reflect volume, rather than price increases,
largely due to transitional delays in the pass-through of inflationary cost
pressures outside of our distributor sector business.
Europe has seen a 14.2% increase to £83.9m (AER 9.6% to £80.6m; FY2021:
£73.5m) to report record revenues that are 14.3% ahead of FY2020. We have
seen the highest growth from our German business, across a mix of sectors.
Strong growth in the energy, tech & infrastructure (ET&I) sector,
and a new global health and home OEM, has led to a marked trading increase at
our Hungarian operations. Our Italian operations drove the greatest revenue
increase in the region in HY1, predominantly into the health & home
sector, with revenues in the second half of the year going on to stabilise at
this high level. Supply chain shortages, most particularly in the light
vehicle sector, have continued to limit growth in Holland.
However, we are pleased to report that despite a similar sector focus on the
light vehicle market, solid market share gains in Spain have been able to more
than offset these macro challenges, to drive >20% year-on-year growth.
In Asia, we have seen a revenue increase of 13.9% to £56.1m (AER: 12.3% to
£55.4m; FY2021: £49.3m), but with trading only 3.5% ahead of FY2020. One
of the main reasons the region was slower to recover was the summer lockdowns
and December floods in Malaysia that limited domestic light vehicle volumes
and also health & home production levels at one of our key multinational
OEMs. In contrast, we have seen exceptionally strong growth in Taiwan as
distributor sales recovered and grew substantially beyond pre-Covid-19 levels
in key European end markets. In Singapore, solid growth in the ET&I
sector, supplemented by increased intercompany manufacturing, has more than
offset temporary sub-contractor transfer issues at a key health & home
customer.
Trading levels in the UK have recovered and grown very strongly, with revenues
increasing by 21.7% to £83.9m (FY2021: £68.9m), to end 11.1% ahead of
FY2020. The biggest driver of this has been significantly higher sales
volumes to distributors, coupled with a market pricing model that allows for
the rapid pass-through of inflationary costs in this sector. Health &
home and general industrial sales have continued to show strong growth across
a number of key global OEM customers. However, light vehicle sales remain
below pre-Covid-19 levels, predominantly due to the impact of semi-conductor
shortages.
In North America revenue growth has been very high at 89.2% to £18.4m (AER:
82.0% to £17.7m; FY2021: £9.7m), leading to a 71.8% increase against the
pre‑Covid-19 FY2020 period. Organic growth has driven 36.6% of this as new
platform builds in the light vehicle sector come online and ET&I sales
gain momentum. TR Falcon has represented 52.6% of growth, with revenues
running slightly ahead of expectation since acquisition on 31 August 2021.
Underlying operating profit
Underlying operating margins have increased by 40bps, to 6.8% (FY2021: 6.4%)
contributing to a strong uptick in operating profit of 27.1%, to £15.2m at
CER (AER: up 23.1% to £14.7m; FY2021: £12.0m).
As a Group we have seen the positive impact of stronger sales driving
operating profit increases and margin upgrades. Further supplemented by a
shift in sector mix with a greater proportion of the Group's trading being
secured in the higher margin distributor sector. The normalisation of our
overhead base, including the removal of government support schemes and the
return of higher bonus, travel and other discretionary spend has offset this
in part. In addition to which, the business has made a number of targeted
strategic investments (see pages 28 to 31 of the Annual report) to support our
ongoing growth journey. This includes Project Atlas business as usual costs,
now roll-out is underway, further investments into our HR, ESG and acquisition
capabilities and targeted recruitment into our commercial and compliance
teams.
Outside of North America all of our regions are now showing underlying
operating profits, with Asia continuing to bring in the highest returns at
12.9% (FY2021: 13.2%). In North America we have seen an improvement in
year-on-year margins from a negative position of (5.9)% in FY2021, as very
strong sales growth has driven operational gearing gains, and following the
acquisition of TR Falcon in August 2021. Our European region has seen the
largest fall, recording a reduction of 210bps, as sales growth gains are more
than offset by gross margin pressures due to the relatively early onset and
then transitional delays in the pass-through of inflationary cost pressures.
Cost increases have impacted underlying operating profits across all regions
and are expected to continue to do so as ongoing cost inflation and price
increase negotiations become an everyday and key part of doing business.
Net debt (AER)
The Group's adjusted net debt has increased by £37.1m to £(23.8)m (FY2021:
adjusted net cash of £13.3m), predominantly reflecting £34.7m of net working
capital investments to support growth and ensure reliability of supply.
Outside of working capital, £(5.8)m (net of cash acquired) was used to fund
the acquisition of Falcon (USA) on 31 August 2021 and supporting the Board's
ongoing investments for organic growth, capital expenditure in the period
amounted to £5.2m (FY2021: £3.1m), including £1.5m in relation to Project
Atlas. Further details of these strategic investments are provided on pages
34 to 37 and pages 30 to 31 respectively in the Annual report. Including the
impact of IFRS 16 Leases, the Group's net debt position was £(37.5)m (FY2021:
net cash of £0.5m).
Adjusted net debt bridge can be seen on page 57 of the Annual report
Taxation (AER)
The underlying effective tax rate (ETR) is lower at 19.1% (FY2021: underlying
effective tax rate: 23.9%). The main reason for the difference is the
year-on-year movement in adjustments in respect of prior years. Subject to
future tax changes and excluding prior year adjustments, our normalised
underlying ETR is expected to remain in the range of c.20-25% going forward.
The main reason for the difference between our FY2022 ETR of 15.4% and the
FY2021 ETR of 25.6% is due to a patent box claim in Italy in addition to the
adjustments in respect of prior years mentioned above.
Dividend policy
Following such a strong recovery in FY2022 and with an ambitious growth
strategy in place, we remain committed to a progressive dividend policy that
shares the benefit of ongoing profit growth with our shareholders. As a
result, the Directors are proposing, a final dividend of 1.40p per share.
Subject to shareholder approval at the forthcoming AGM this will be paid on
Friday, 14 October 2022 to shareholders on the register as at Friday, 16
September 2022,Together with the interim dividend of 0.70p (paid on 14 April
2022), this brings the total for the year to 2.10p per share, an increase of
31.3% on the prior year (FY2021: 1.60p). The ex-dividend date is Thursday,
15 September 2022.
Trifast plc
Consolidated income statement
for the year ended 31 March 2022
Annual report Note 2022 2021
£000 £000
Continuing operations
Revenue 3, 35 218,618 188,161
Cost of sales (160,189) (138,247)
Gross profit 58,429 49,914
Other operating income 4 565 595
Distribution expenses (5,296) (3,773)
Administrative expenses before separately disclosed items (38,952) (34,754)
Acquired intangible amortisation 2, 13 (1,593) (1,428)
Project Atlas 2 (1,041) (1,082)
Restructuring costs 2 - (377)
Loss on disposal of TR Formac (Malaysia) SDN Bhd 2 - (280)
Acquisition costs 2,36 (508) -
Equity raise costs 2 - (59)
Total administrative expenses (42,094) (37,980)
Operating profit 5, 6, 7 11,604 8,756
Financial income 8 31 37
Financial expenses 8 (1,018) (1,009)
Net financing costs (987) (972)
Profit before taxation 3 10,617 7,784
Taxation 9 (1,640) (1,994)
Profit for the year
(attributable to equity shareholders of the Parent Company) 8,977 5,790
Earnings per share
Basic 25 6.61p 4.33p
Diluted 25 6.56p 4.31p
Consolidated statement of comprehensive income
for the year ended 31 March 2022
2022 2021
£000 £000
Profit for the year 8,977 5,790
Other comprehensive income / (loss) for the year:
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations 2,907 (4,916)
(Loss) / gain on a hedge of a net investment taken to equity (147) 34
Other comprehensive income / (loss) recognised directly in equity 2,760 (4,882)
Total comprehensive income recognised for the year
(attributable to the equity shareholders of the Parent Company) 11,737 908
Consolidated statement of changes in equity
for the year ended 31 March 2022
Share Share Merger Own Translation Retained Total
capital premium reserve shares held reserve earnings equity
£000 £000 £000 £000 £000 £000 £000
Balance at 31 March 2021 6,802 22,461 16,328 (595) 9,524 77,284 131,804
Total comprehensive income for the year:
Profit for the year - - - - - 8,977 8,977
Other comprehensive income for the year - - - - 2,760 - 2,760
Total comprehensive income recognised for the year - - - - 2,760 8,977 11,737
Issue of share capital 2 51 - - - - 53
Share-based payment transactions (net of tax) - - - - - 742 742
Movement in own shares held - - - (2,892) - (143) (3,035)
Dividends - - - - - (2,156) (2,156)
Total transactions with owners 2 51 - (2,892) - (1,557) (4,396)
Balance at 31 March 2022 6,804 22,512 16,328 (3,487) 12,284 84,704 139,145
Consolidated statement of changes in equity
for the year ended 31 March 2021
Share Share Merger Own Translation Retained Total
capital premium reserve shares held reserve earnings equity
£000 £000 £000 £000 £000 £000 £000
Balance at 31 March 2020 6,132 22,340 - (1,934) 14,406 74,716 115,660
Total comprehensive income for the year:
Profit for the year - - - - - 5,790 5,790
Other comprehensive loss for the year - - - - (4,882) - (4,882)
Total comprehensive income recognised for the year - - - - (4,882) 5,790 908
Issue of share capital 670 121 14,807 - - - 15,598
Presentation transfer to merger reserve (1) - - 1,521 - - (1,521) -
Share-based payment transactions (net of tax) - - - - - 1,154 1,154
Movement in own shares held - - - 1,339 - (1,398) (59)
Dividends - - - - - (1,457) (1,457)
Total transactions with owners 670 121 16,328 1,339 - (3,222) 15,236
Balance at 31 March 2021 6,802 22,461 16,328 (595) 9,524 77,284 131,804
1. Previously, the merger reserve was reported in
retained earnings at a consolidated level. Due to the additional merger
reserve created from the equity raise, management now consider it appropriate
to separately disclose the merger reserve. Therefore, we have transferred
the £1.5m previously reported in retained earnings to the merger reserve
Statements of financial position
at 31 March 2022
Group Company
Annual report Note 2022 2021 2022 2021
£000 £000 £000 £000
Non-current assets
Property, plant, and equipment 10, 11 20,297 18,743 2,216 2,300
Right-of-use assets 12 12,757 11,958 40 60
Intangible assets 13, 14 42,981 38,452 7,027 5,691
Equity investments 15 - - 42,298 42,320
Non-current trade and other receivables 19 - - 66,344 44,318
Deferred tax assets 16, 17 2,787 2,539 724 721
Total non-current assets 78,822 71,692 118,649 95,410
Current assets
Inventories 18 88,933 54,765 - -
Trade and other receivables 19 60,520 53,194 1,888 2,375
Cash and cash equivalents 26 26,741 30,265 604 2,256
Total current assets 176,194 138,224 2,492 4,631
Total assets 3 255,016 209,916 121,141 100,041
Current liabilities
Trade and other payables 21 45,249 41,133 1,569 5,506
Right-of-use liabilities 12, 20, 26 3,028 2,726 19 19
Tax payable 2,455 2,645 - -
Total current liabilities 50,732 46,504 1,588 5,525
Non-current liabilities
Other interest-bearing loans and borrowings 20, 26 50,507 16,970 50,507 16,970
Right-of-use liabilities 12, 20, 26 10,683 10,060 23 42
Provisions 23 1,088 1,023 - -
Deferred tax liabilities 16, 17 2,861 3,555 - -
Total non-current liabilities 65,139 31,608 50,530 17,012
Total liabilities 3 115,871 78,112 52,118 22,537
Net assets 139,145 131,804 69,023 77,504
Equity
Share capital 6,804 6,802 6,804 6,802
Share premium 22,512 22,461 22,512 22,461
Merger reserve 16,328 16,328 16,328 16,328
Own shares held (3,487) (595) (3,487) (595)
Reserves 12,284 9,524 - -
Retained earnings 84,704 77,284 26,866 32,508
Total equity 139,145 131,804 69,023 77,504
Statements of cash flows
for the year ended 31 March 2022
Group Company
Annual report Note 2022 2021 2022 2021
£000 £000 £000 £000
Cash flows from operating activities
Profit/(loss) for the year 8,977 5,790 (4,106) 12,472
Adjustments for:
Depreciation, amortisation, and impairment 10, 11, 13, 14 4,125 3,813 84 84
Right-of-use asset depreciation 12 3,131 3,229 19 19
Unrealised foreign currency gain (34) (17) (45) (23)
Financial income 8 (31) (37) (155) (83)
Financial expense (excluding right-of-use liabilities) 8 692 696 683 708
Right-of-use liabilities' financial expense 8,12 326 313 - -
Loss / (gain) on sale of property, plant, and equipment, intangibles, and 6 (7) 145 -
investments
Dividends received - - (3,358) (16,628)
Equity settled share-based payment charge 772 1,052 325 133
Loss from sale of TR Formac (Malaysia) SDN Bhd - 280 - 108
Taxation charge 9 1,640 1,994 (13) (268)
Costs incurred on issue of share capital - 59 - 59
Operating cash inflow/(outflow) before changes in working capital and 19,604 17,165 (6,421) (3,419)
provisions
Change in trade and other receivables (5,950) (3,080) 916 2,239
Change in inventories (31,716) 2,571 - -
Change in trade and other payables 2,922 7,861 299 1,034
Change in provisions - 64 - -
Cash (used in)/generated from operations (15,140) 24,581 (5,206) (146)
Tax paid (2,757) (1,283) - -
Net cash (used in)/generated from operating activities (17,897) 23,298 (5,206) (146)
Cash flows from investing activities
Proceeds from sale of property, plant, and equipment 36 8 - -
Interest received 31 38 196 82
Acquisition of subsidiary, net of cash acquired (5,847) - - -
Acquisition of property, plant and equipment and intangibles 10, 11, 13, 14 (5,248) (3,060) (1,481) (1,603)
Lending to subsidiary undertakings - - (21,638) -
Proceeds from sale of TR Formac (Malaysia) SDN Bhd, net of cash held - 33 - -
Dividends received - - 3,358 16,628
Net cash (used in)/from investing activities (11,028) (2,981) (19,565) 15,107
Cash flows from financing activities
Proceeds from the issue of share capital 24 53 15,540 53 15,540
Purchase of own shares 24 (3,035) (59) (3,035) (59)
Proceeds from new loan 32,980 - 32,980 -
Repayment of borrowings - (26,656) - (26,390)
Repayment of loans from subsidiaries - - (4,248) -
Repayment of right-of-use liabilities 12 (2,977) (3,658) (19) (18)
Dividends paid 24 (2,156) (1,457) (2,156) (1,457)
Interest paid (805) (763) (456) (586)
Net cash from/(used in) financing activities 24,060 (17,053) 23,119 (12,970)
Net change in cash and cash equivalents (4,865) 3,264 (1,652) 1,991
Cash and cash equivalents at 1 April 30,265 28,727 2,256 265
Effect of exchange rate fluctuations on cash held 1,341 (1,726) - -
Cash and cash equivalents at 31 March 26,741 30,265 604 2,256
Trifast plc
Notes to the announcement
Detailed notes to the financial statements can be found in the Annual report
on pages 148-197
Geographical operating segments
The Group is comprised of the following main geographical operating segments:
· UK
· Europe: includes Norway, Sweden, Hungary, Ireland, Holland,
Italy, Germany, Spain, and Poland
· North America: includes USA and Mexico
· Asia: includes Malaysia, China, Singapore, Taiwan, Thailand,
India, and Philippines
In presenting information on the basis of geographical operating segments,
segment revenue and segment assets are based on the geographical location of
our entities across the world and are consolidated into the four distinct
geographical regions, which the Operational Executive Board uses to monitor
and assess the Group. Interest is reported on a net basis rather than gross
as this is how it is presented to the Chief Operating Decision Maker. All
material non-current assets are located in the country the relevant Group
entity is incorporated in.
March 2022 UK Europe North America Asia Common Total
amounts
£000 £000 £000 £000
£000
£000
Revenue
Revenue from external customers 77,056 78,482 17,535 45,545 - 218,618
Inter-segment revenue 6,805 2,089 191 9,805 - 18,890
Total revenue 83,861 80,571 17,726 55,350 - 237,508
Underlying operating result 8,122 3,858 (72) 7,123 (4,285) 14,746
Net financing costs (125) (169) (107) (58) (528) (987)
Underlying segment result 7,997 3,689 (179) 7,065 (4,813) 13,759
Separately disclosed items (3,142)
Profit before tax 10,617
Specific disclosure items
Depreciation and amortisation (2,184) (2,731) (554) (1,685) (102) (7,256)
Government support income - - - 76 8 84
Assets and liabilities
Non-current asset additions 1,962 3,269 1,381 54 1,481 8,147
Segment assets 74,479 81,125 22,472 65,593 11,347 255,016
Segment liabilities (25,929) (20,339) (4,389) (13,243) (51,971) (115,871)
March 2021 UK Europe North America Asia Common Total
amounts
£000 £000 £000 £000
£000
£000
Revenue
Revenue from external customers 64,116 72,151 9,596 42,298 - 188,161
Inter-segment revenue 4,776 1,359 143 6,987 - 13,265
Total revenue 68,892 73,510 9,739 49,285 - 201,426
Underlying operating result 3,744 5,221 (574) 6,522 (2,931) 11,982
Net financing costs (129) (105) (64) (48) (626) (972)
Underlying segment result 3,615 5,116 (638) 6,474 (3,557) 11,010
Separately disclosed items (3,226)
Profit before tax 7,784
Specific disclosure items
Depreciation and amortisation (2,000) (2,787) (237) (1,915) (103) (7,042)
Government support income 679 373 - 976 35 2,063
Assets and liabilities
Non-current asset additions 818 1,161 19 1,041 1,658 4,697
Segment assets 63,441 67,309 8,002 59,300 11,864 209,916
Segment liabilities (26,559) (17,935) (1,860) (13,344) (18,414) (78,112)
Annual report 2022 2021
Note
Underlying profit before tax and separately disclosed items £000 £000
Underlying profit before tax 13,759 11,010
Separately disclosed items within administrative expenses
Acquired intangible amortisation 13 (1,593) (1,428)
Project Atlas (1,041) (1,082)
Restructuring costs - (377)
Loss on disposal of TR Formac (Malaysia) SDN Bhd - (280)
Equity raise costs - (59)
Acquisition costs 36 (508) -
Profit before tax 10,617 7,784
Annual report 2022 2021
Note
£000 £000
Underlying EBITDA 20,409 17,596
Separately disclosed items within administrative expenses
Project Atlas (1,041) (1,082)
Restructuring costs - (377)
Loss on disposal of TR Formac (Malaysia) SDN Bhd - (280)
Equity raise costs - (59)
Acquisition costs 36 (508) -
EBITDA 18,860 15,798
Acquired intangible amortisation (1,593) (1,428)
Depreciation and non-acquired amortisation (5,663) (5,614)
Operating profit 11,604 8,756
In addition to the above, there were £0.4m separately disclosed items in
relation to VIC patent box claims set against the tax charge in FY2022
(FY2021: £nil).
FY2022 Annual report and Annual General Meeting (AGM)
In addition to the link on the front of this announcement to a pdf the Annual
report, it will be available in due course to view and download from the
Company website at www.trifast.com (http://www.trifast.com) , and it will also
be uploaded to the National Storage Mechanism in due course.
https://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism
(https://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism)
.
The 2022 Annual report and financial statements is also available on request
by writing to: The Company Secretary, Trifast plc, Trifast House, Bellbrook
Park, Uckfield, East Sussex TN22 1QW, alternatively email:
Companysecretariat@trifast.com.
Details of the AGM, which is to be at 12noon on Wednesday, 7 September 2022,
will be sent to shareholders in due course together with the Annual report,
Notice of Meeting and Form of Proxy.
The financial information set out in this release does not constitute the
Group's statutory Report and Accounts for the years ended 31 March 2022 or
2021 however, it is derived from the 2022 Report and Accounts (pdf attached to
this announcement on page 1).
The Report and Accounts for 2021 have been delivered to the Registrar of
Companies and those for 2022 will be delivered in due course. The external
auditor has reported on the 2022 Report and Accounts; the report was (i)
unqualified, (ii) did not include references to any matters to which the
external auditor drew attention by way of emphasis without qualifying the
reports and (iii) did not contain statements under section 498(2) or (3) of
the Companies Act 2006.
The Auditors Report can be read on pages 134-141 of the Annual report
The 2022 Annual report and Financial statements were approved by the Board of
Directors on 25 July 2022.
Forward Looking Statement
This document may contain certain forward-looking statements. The
forward-looking statements reflect the knowledge and information available to
the Company during the preparation and up to the publication of this document.
By their very nature, these statements depend upon circumstances and relate to
events that may occur in the future thereby involve a degree of uncertainty.
Therefore, nothing in this document should be construed as a profit forecast
by the Company.
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.
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