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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Trifast Plc | LSE:TRI | London | Ordinary Share | GB0008883927 | ORD 5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 76.00 | 75.20 | 77.00 | 77.00 | 76.00 | 76.00 | 73,887 | 16:35:25 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Manufacturing Industries,nec | 244.39M | -2.87M | -0.0213 | -36.15 | 103.68M |
From Apr 2019 to Apr 2024
TIDMTRI
RNS Number : 0383R
Trifast PLC
12 June 2018
Tuesday, 12 June 2018
TRIFAST PLC
('Trifast', the 'Group' 'TR' or 'Company')
Preliminary results for the year ended 31 March 2018
"CELEBRATING 45 YEARS OF SERVICE TO INDUSTRY"
Leading international specialists in the engineering, manufacturing and distribution
of high quality, industrial fastenings to major global assembly industries
"HOLDING THE WORLD TOGETHER"
"TR delivers another year of strong growth and a 10% dividend increase - this year's key revenue message continues to be one of consistent growth across all our regions"
"THE GROWTH STORY SET TO CONTINUE...."
KEY FINANCIALS
Hot Features
Premium
Year ended
Year ended 31 March Year ended
31 March 2018 at 31 March Change Change
Continuing operations 2018 at CER AER 2017 CER AER^
------------ ---------- ---------- --------
Total Group revenue GBP193.9m GBP197.6m GBP186.5m +4.0% +6.0%
Gross profit % 30.5% 30.5% 31.1% -60bps -60bps
Underlying operating profit* GBP22.1m GBP22.7m GBP21.0m +5.1% +8.1%
Operating profit GBP18.4m GBP19.0m GBP17.9m +3.1% +6.3%
Underlying profit before tax* GBP21.6m GBP22.2m GBP20.5m +5.4% +8.5%
Profit before tax GBP17.9m GBP18.5m GBP17.3m +3.4% +6.7%
Underlying diluted earnings
per share* 13.39p 13.78p 12.82p +4.4% +7.5%
Diluted earnings per share 11.82p 12.20p 10.40p +13.7% +17.3%
Dividend:
- final proposed 2.75p 2.50p +10%
- interim 1.10p 1.00p +10%
- total for the year 3.85p 3.50p +10%
Net debt GBP7.4m GBP6.4m +GBP1.0m
Return on capital employed
(ROCE)* 20.1% 19.9% +20bps
*Before separately disclosed
items (see note 2)
Constant exchange rate (CER)
^Actual exchange rate (AER)
-------------------------------- ------------ ---------- ---------- -------- --------
-- Total revenue increase of 6.0% at Actual Exchange Rate (AER), 4.0% at Constant Exchange Rate (CER)
-- Sales to multinational OEMs contribute over 65% of Group turnover -- At 30.5%, gross margin remains 50bps above target -- Underlying profit before tax increased 8.5% at AER, 5.4% at CER -- Total dividend of 3.85p, an increase of 10.0% on the prior year
-- An investment of up to GBP15.0m to transform our IT infrastructure and business processes has been approved, underpinning our future growth and generating an estimated ROI of over 25% p.a. at the point of full benefit realisation
-- Targeted warehouse expansions support double digit growth in key locations -- Capital investment rises to GBP3.7m, increasing our manufacturing capacity and capabilities
-- Precision Technology Supplies ("PTS"), a key distributor of stainless steel fastenings in the UK, acquired on 4 April 2018, expected to be earnings enhancing in FY2019
"As expected, 2018 has delivered another year of strong growth, with ongoing investment across all our regions.
As a Group, we continue to invest in our operations around the world to support our ongoing growth story. In manufacturing, our capital expenditure plans will continue to increase capacity most noticeably at both our Italian and Singaporean sites. On the distribution side of the business, we have already expanded warehousing capacity in Shanghai and Northern Ireland to support the strong growth we are seeing in both of these markets. Moving into our new site in the USA in April this year, represents one of our biggest warehousing investments in recent years. This has increased capacity significantly to future proof the business for further growth.
This, together with a strong balance sheet, as well as a proven track record of profitable investment, means the Group is in a great position to keep moving forward. The current year has started well, with a robust pipeline in place, and the Board remains confident of delivering on its expectations."
Mark Belton
Chief Executive Officer
"Our solid record of delivering organic revenue growth in recent times has provided the financial strength and confidence to underpin the teams' judgement that this is the optimum time in our development to further strengthen our operating, manufacturing and digital platforms across the world.
As we acknowledge yet another strong, progressive and profitable year for Trifast, I would like to offer my sincere thanks, admiration and gratitude to all our colleagues across the various locations within our Group who have fully displayed their commitment and abilities against the stretching challenges set by the Board on behalf of all our shareholders."
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'). Where we refer to 'underlying' this is defined as being before separately disclosed items. Where we refer to 'EBITDA' this is defined as being earnings before interest, tax, depreciation and amortisation (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.
To listen to an interview with Mark Belton, CEO follow this link:
https://www.brrmedia.co.uk/broadcasts-embed/5b19536602f5e74d0f2d8e20/event
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.1,300 staff across 31 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
Further 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 Email: corporate.enquiries@trifast.com 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
TRIFAST PLC
('Trifast', the 'Group' 'TR' or 'Company')
Preliminary results for the year ended 31 March 2018
Statement to shareholders from Chairman Malcolm Diamond MBE
"A solid record of delivering growth. The 2018 final proposed dividend means that over the last five years dividends have grown from 0.80p to 3.85p, equating to a compound annual growth rate of 37%."
The commercial, political and macro-economic uncertainties of this year have dominated all news media in such an unrelenting negative stream that any semblance of positive news seems to have been all but eclipsed.
However, as can be demonstrated within this report, global manufacturing (upon which Trifast relies for its continuing annual growth) has steadily flourished in the UK, Europe, Asia and North America, thus supporting the rationale for, and subsequently reinforcing, our decision to make extensive capital and personnel investment across our entire customer service network over the last couple of years.
Our solid record of delivering organic revenue growth in recent times has provided the financial strength and confidence to underpin the teams' judgement that this is the optimum time in our development to further strengthen our operating, manufacturing and digital platforms across the world.
With over 65% of revenue deriving from multinational OEMs, we have carefully examined what will continue to differentiate Trifast from our competitors going forward and maintain our growth momentum.
In addition to our excellent service levels and high-quality products, we have identified specialist worldwide sourcing together with technical development for customer new designs through in-house engineering and production resources, as "must haves" within our service offering, all of which should future proof the Trifast business.
To fully coordinate these facilities into a one-stop service offering on a global scale, there has to be an integrated management information system (MIS). This is where Project Atlas, our significant investment in our IT infrastructure and business processes, comes in so that a customer who requires identical components for their assembly plants in say China, Germany or the US can rely on just one of our customer support teams based, for example, in Holland or Sweden, to organise the entire supply and traceability function. This will ensure consistency for our customers who assemble identical equipment in their geographically spread plants. Likewise, our aim is to enable our procurement managers based, say in Italy, to be able to pinpoint an actual individual TR factory machine within the Group, that has the optimum capacity at that moment in time to quickly satisfy an urgent customer order, rather than the traditional process which is to quote an average delivery time based on the entire factory loading (typically some six to eight weeks). This is where our markets are looking and so Trifast must be ready.
All these initiatives are aimed at Trifast remaining widely acknowledged by the market as being truly world class. However, no financial business investment will provide a realistic return without the support of its people - which in turn can only come from consistent care and attention, complemented by motivation and appropriate training provided by our team leaders.
Therefore, we have grown our HR team to ensure a strong focus, which this year, for the first time, has included a Group wide staff survey, further details are contained in the forthcoming Annual Report.
Following recent publicity about large scale outsourcing providers, I am extremely reassured by our preference to retain key company functions within the Group. This is reflected in our culture, which shareholders recognise, which is very robust in developing skills in-house. This is clearly demonstrated through our first-class specialists who manage our IT, HR, Quality and Marketing functions for the entire Group with very little recourse for external help.
As we acknowledge yet another strong, progressive and profitable year for Trifast, I would like to offer my sincere thanks, admiration and gratitude to all our colleagues across the various locations within our Group who have fully displayed their commitment and abilities against the stretching challenges set by the Board on behalf of all our shareholders.
Finally, on behalf of all stakeholders, I would like to thank all staff for their hard work and dedication and congratulations on another year of great achievement.
Malcolm Diamond MBE
Non-Executive Chairman
11 June 2018
BUSINESS REVIEW
"2018 has delivered another year of strong growth, with ongoing investment across all our regions. This, together with a robust balance sheet, good banking relationships and access to facilities as well as a proven track record of profitable investment, means the Group is in a great position to keep moving forward."
Mark Belton
Chief Executive Officer
Our Group performance:
Growth Growth
FY2018 FY2018 at at
CER AER FY2017 CER AER
------------------------------------ --------- --------- --------- ------ ------
Revenue GBP193.9m GBP197.6m GBP186.5m +4.0% +6.0%
Gross profit GBP59.2m GBP60.2m GBP58.0m +2.0% +3.8%
GP% 30.5% 30.5% 31.1% -60bps -60bps
Underlying operating profit ('UOP')
* GBP22.1m GBP22.7m GBP21.0m +5.1% +8.1%
UOP%* 11.4% 11.5% 11.3% +10bps +20bps
Operating profit ('OP') GBP18.4m GBP19.0m GBP17.9m +3.1% +6.3%
OP% 9.5% 9.6% 9.6% -10bps +0bps
Underlying EBITDA* GBP24.0m GBP24.7m GBP22.9m +4.9% +7.8%
Underlying EBITDA%* 12.4% 12.5% 12.3% +10bps +20bps
Underlying profit before tax* GBP21.6m GBP22.2m GBP20.5m +5.4% +8.5%
Profit before tax GBP17.9m GBP18.5m GBP17.3m +3.4% +6.7%
Underlying diluted EPS* 13.39p 13.78p 12.82p +4.4% +7.5%
Diluted EPS 11.82p 12.20p 10.40p +13.7% +17.3%
Underlying ROCE* 20.1% 19.9% +20bps
------------------------------------ --------- --------- --------- ------ ------
* Before separately disclosed items (see note 2)
The Group has continued to perform well across all our regions, delivering another year of strong organic growth. Revenues have increased by 4.0% at Constant Exchange Rate (CER) and are up 6.0% to GBP197.6m at Actual Exchange Rate ('AER') for FY2018.
The largest source of growth continues to be from our multinational OEMs, with sales to these contributing over 65% of our Group turnover.
We are particularly pleased to report that, despite the effects of anticipated purchase price inflation and the upfront costs of our ongoing investments into manufacturing capacity in our European region, we have been able to maintain gross margins 50bps above our 30.0% target at 30.5% (2017: 31.1%). Whilst good cost control across the business, even in a period of investment driven growth, has allowed our underlying operating margins to remain at an historic high of 11.4% (2017: 11.3%), up 5.1% to GBP22.1m at CER, 8.1% to GBP22.7m at AER (2017: GBP21.0m).
All of the above has helped to drive strong AER growth in both our underlying PBT, up 8.5% to GBP22.2m (2017: GBP20.5m) and our underlying diluted EPS, up 7.5% to 13.78p (2017: 12.82p).
Dividend
With a proven track record, a strong balance sheet and an established 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 2.75p per share. This, together with the interim dividend of 1.10p (paid on 12 April 2018), brings the total for the year to 3.85p per share, an increase of 10.0% on the prior year (2017: 3.50p). The final dividend will be paid on 12 October 2018 to shareholders on the register at the close of business on 14 September 2018. The ordinary shares will become ex-dividend on 13 September 2018.
The 2018 final proposed dividend means that over the last five years dividends have grown from 0.80p to 3.85p, equating to a compound annual growth rate ('CAGR') of 37%. Over the same time, dividend cover has fallen, now representing cover of 3.6x. 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 into account our ongoing strategy of investment driven growth, any acquisitions and working capital requirements of a growing business.
Revenue
As in 2017, this year's key revenue message continues to be one of consistent growth across all of our regions.
Our European operations have exited the year strongly, with revenues in HY2 growing by 5.2% at CER (7.5% at AER) and leading to a year-on-year revenue growth of 3.8% at CER, 8.6% at AER (2017: 9.8% of which 4.6% was organic at CER). This good regional performance is particularly commendable, as it follows abnormally high sales volumes in our Italian domestic appliances business in 2017, as we supported a global product recall programme for one of our key accounts. Our most significant trading gains in 2018 have arisen in the automotive sector in Holland and Sweden, with both sites achieving double digit CER revenue growth of 15.4% and 13.6% respectively.
In Asia, we have seen continued good growth, with a year-on-year increase of 4.6% to GBP56.3m (6.3% at AER, 2017: 6.5%) coming out of sustained high trading levels following a very strong first half of the year. Trading has increased almost across the board, with Shanghai showing the strongest individual growth at 9.6%. This is mostly in the automotive sector as we expand into a number of our multinational OEM customers both locally and into Japan.
For our UK businesses, despite the ongoing uncertainties surrounding Brexit, it has been another year of strong growth. Overall total revenues are up 5.4% to GBP73.0m (2017: 4.6% to GBP69.3m). With the biggest increase continuing to be seen across our European distribution businesses, growing 23.4% to GBP10.0m at AER. Outside of this, growth has largely come from increased sales to our core multinational OEMs across a number of sectors.
In the US, we are very pleased to report a return to higher growth levels following a slow HY1 as a result of Hurricane Harvey. A very strong HY2, predominantly in the automotive sector, has seen year-on-year growth increase back up to 8.2%, and GBP6.5m (6.8% at AER; HY1 2018: 3.7%; 2017: 12.3%).
Gross profit
The Group's gross margin of 30.5% means we have remained a comfortable 50bps above our long held, but only recently achieved, 30.0% target (2017: 31.1%).
The expected gross margin decrease from prior year is primarily from our European operations. This is most specifically within our Italian business where, as previously reported, the impact of purchase cost increases in the second half of 2017 have continued into 2018. In addition to this, there was a planned increase in fixed production costs as we invest in manufacturing capacity to support future growth. Positive margin movements in other parts of our European business have helped to offset the effect of this, reducing the overall gross margin fall in the region to (150) bps.
In the UK, gross margins have held steady with the net impact of purchase price inflation, following the protracted weakness of sterling, having been relatively modest to date.
Whilst in Asia, gross margins have also remained consistent, as growth driven production cost benefits have helped to successfully offset the impact of e-bidding pricing pressures at one of our key electronics multinational OEMs.
In the US, gross margins have fallen by 560bps as the result of product mix changes and an increased focus on the automotive sector. The negative impact of this has been exaggerated in 2018 by reduced sales volumes due to Hurricane Harvey as well as one-off set-up costs, relating to the start of production for one of the region's biggest automotive customers.
Underlying operating margin
Underlying operating margins have remained broadly in line, up 10bps to 11.4% (11.5% at AER, 2017: 11.3%). This reflects strong cost control at overhead level in a period of growth, offsetting the gross margin reduction and generating an overall increase in underlying operating profit of 5.1% to GBP22.1m (AER: up 8.1% to GBP22.7m).
In Europe, the underlying operating margin has reduced by 230bps to 12.2% (12.3% AER, 2017: 14.5%) largely as the result of the gross margin movements noted above. Whilst additional overhead spend has mainly been incurred to support our new greenfield site in Spain. With sales invoicing now firmly underway and a strong pipeline of opportunities, TR Espana remains a very exciting area of organic growth for us.
Offsetting the reduction in Europe, we have seen a 210bps underlying operating margin increase in our UK region to 11.5% (2017: 9.4%), reflecting the benefits of ongoing revenue growth over a semi-fixed cost base and good cost control.
In Asia, margins have remained consistent at 14.7% (14.7% at AER, 2017: 14.9%). The benefits of increased sales have been largely offset by a GBP(0.4)m foreign exchange loss on translation of the balance sheet due to the recent weakening of the US$ (2017: loss of GBP(0.2)m). In conjunction with additional overhead investments in the region to support ongoing growth, not least of which is the new warehouse and inspection facilities at our Shanghai location, opened in November 2017.
In our small, but fastest growing region, the USA, decreased gross margins have fed directly down to underlying operating profit level. However, as in prior periods, low underlying operating margins continue to be expected in this region given the level of investments for future growth being made here.
Net financing costs (at AER)
Interest costs remain at GBP0.5m (2017: GBP0.5m) reflecting a broadly consistent average gross debt balance of around GBP30m year-on-year, to support our ongoing investments for growth.
Taxation (at AER)
The 2018 effective tax rate ("ETR") of 18.5% is significantly lower than our underlying 2018 ETR of 23.3%.
The main reason for this difference is due to the finalisation of a fully provided historic tax position in the UK relating to a combination of EU loss relief claims (GBP0.6m) for losses made in the run up to the closure of TR France in 2007 and EU dividend relief claims (GBP0.6m) to cover dividends paid up to Trifast plc between the years of 2007 to 2009. The provision in the accounts at 31 March 2017 was GBP1.2m whereas the final settlement agreed on 7 September 2017 was GBP0.3m, leading to a prior year corporation tax adjustment of GBP0.9m.
Due to the size and the nature of this amount we have removed the impact of this from our underlying ETR (see note 6).
The underlying ETR has remained in line at 23.3% (2017: 23.6%). Subject to future tax changes and excluding prior year adjustments, our underlying ETR is expected to remain in the range of c.23-25% going forward.
Net debt
Our net debt position increased by GBP1.0m to GBP7.4m (2017: GBP6.4m). Some GBP1.2m of this increase is due to the payment out of cash held specifically at 31 March 2017 to settle the national insurance and income tax payments relating to the Chairman, Malcolm Diamond's, exercise of 1,000,000 share options on 17 February 2017.
Capital expenditure of GBP3.6m (net of GBP0.1m paid in April 2018) in the period (2017: GBP2.9m) supports the Board's ongoing investment in the business, most specifically within our manufacturing sites, with the most significant additional capacity project in the final stages of completion in Singapore via the construction of a new mezzanine floor.
In addition, GBP3.4m has also been used to acquire 1,500,000 5p ordinary shares on the open market via the Trifast EBT.
In February 2018, we received an additional cash inflow relating to the successful disposal of our second property in PSEP, Malaysia. This office building had been rented out to the same automotive Tier 1 company since before our acquisition of PSEP in 2011. In August 2017, the property was vacated and as we retained no ongoing commercial requirement for the additional space, a decision was made to sell. The profit of GBP0.6m and the net proceeds of GBP1.6m generated on disposal have been shown outside of our underlying results (see note 2), but have impacted positively on our year end net debt position.
Although our cash is held across a number of currencies around the world, our gross debt continues to be held predominantly in Euro and this has led to a GBP1.3m net increase in net debt mainly from the relative strengthening of the Euro in the period.
Outside of these movements, as expected our cash generation has reduced with a conversion rate of underlying EBITDA to underlying cash of 68.1% (FY2017: 97.3%). Our investment in gross stock in the period includes an extra GBP2.5m to normalise the very low position we ended 2017 on. Without the impact of this, our conversion rate of underlying EBITDA to underlying cash would be higher at 78.2%.
Return on capital employed (at AER)
As at 31 March 2018, the Group's shareholders' equity had increased to GBP110.3m (2017: GBP101.7m). This GBP8.6m movement is made up of retained earnings of GBP13.3m, net of own shares held by the EBT of GBP(3.4)m, share issues totalling GBP0.2m and a foreign exchange reserve loss of GBP(1.5)m which arose due to a relative strengthening of sterling against the US$ and our key Asian currencies in the financial year.
Over this increased asset base, our very strong trading performance has led to a higher underlying ROCE of 20.1% (2017: 19.9%).
Banking facilities
As at 31 March 2018 the headroom on our banking facility was GBP24.0m (2017: GBP18.9m). The reason for this marked increase is that on 20 February 2018 and in preparation for the acquisition of Precision Technology Supplies ('PTS') on 4 April 2018, we requested the release of GBP11.0m from our Accordion facility with HSBC.
We continue to have access to a residual Accordion facility of GBP9.0m within our Group banking facilities. This provides a degree of potential flexibility to debt finance future acquisitions and further investments as required.
However, following on from the successful acquisition of PTS in April 2018 and given our significant investment plans under Project Atlas into our Group business platform, we have already started discussions to secure access to additional funds and thereby maintain an appropriate degree of funding flexibility. This process will be ongoing over the coming months.
Investment
Ongoing and future investment plans
As a Group, we continue to invest in our operations around the world to support our ongoing growth story.
In manufacturing, our capital expenditure plans will continue to increase capacity, most noticeably at both our Italian and Singaporean sites. This will reduce our per-part production costs by bringing more manufacturing in-house in the future.
On the distribution side of the business, we have already expanded warehousing capacity in Shanghai and Northern Ireland to support the strong growth we are seeing in both of these markets. In 2019 we will see further targeted expansions in some of our other high growth sites, including Holland. Moving into our new site in the USA in April 2018, represents one of our biggest warehousing investments in recent years. This has increased capacity significantly, to not only better support existing trading levels following a CAGR of 16% over the last five years, but also to future proof the business for further growth.
In Europe, we will continue to invest into our rapidly expanding greenfield distribution site in Spain. Whilst the successful setup in November 2017 of a TR Innovation and Technical Centre situated in the heart of Sweden's electric vehicle development area, Lindholmen, Gothenburg, is already helping to develop our presence in this important developing market.
Complementing all the above, we are continuing to invest in both our global and local sales resources and supporting teams, with specific plans for 2019 already approved for Holland, Shanghai, Germany and the USA.
Project Atlas
"An investment that will underpin our ongoing organic and acquisitive growth strategy and further integrate our global business to create the Trifast of tomorrow."
As a business, we have been successfully investing for growth in a number of areas over the last few years. And whilst that investment has focused to date on increasing our manufacturing capabilities and supporting our ongoing organic distribution growth, it has become more and more apparent over that time that one area where we also need to turn our attention to, is in developing our MIS, IT infrastructure and the underlying business processes that stand alongside it.
This is not only to ensure that our systems are able to continue to support our planned business growth long into the future, but also to future proof the business and give us the opportunity to take full advantage of the significant pace of development that has been made in digital technologies in recent years.
As a result, over the course of FY2018 we have been on a journey of research and discovery. This process started with a consideration of how we could best join up our global sales and enquiry processes to support the other investments we have been making into this area of the business but has subsequently led to a more complete review of our Enterprise Resource Planning processes and systems around the world.
The result of this comprehensive review is Project Atlas, a significant planned investment into the integration and development of the Group's business platform and underlying processes. This project is considered an essential part of our ongoing growth plans, both organic and acquisitive, and will allow us to continue to meet the evolving needs of our multinational OEM customers.
The four key drivers for this investment are:
1 Supporting our core strategy - underpinning our ongoing growth plans and allowing us to differentiate ourselves in our core markets
2 Operational efficiencies and integration - driving efficiency gains, increased automation and lowering operational gearing to support our ongoing growth story
3 Improving our management information and data management - leading to better decision making, more globalised supplier management and a more proactive approach to opportunities and challenges
4 Building an adaptable, scalable, stable environment - flexible, rapidly deployable and widely supported systems and processes that will form the backbone of our growing global business
HIGH LEVEL Cost-benefit ANALYSIS
This project clearly represents a major multi-year organic investment programme for Trifast and after the necessary consideration, the Board has signed off on a budget of up to GBP15m. Given the scale and complexity of the programme, this budget will be closely monitored and may be subject to change as we further develop and refine the scope and timings of this investment.
As already noted, this project is about far more than an IT platform, with this element representing only about a third of the overall cost. A significant portion of the budgeted spend has been assigned to a comprehensive review and redesign of our business processes which in turn will drive improvements in our operating and commercial effectiveness. In addition, we are planning a substantial investment in change management, training and user adoption to ensure our people are ready to adopt and deliver the expected benefits.
Projects of this nature often fail as a result of a focus on the 'IT box' and an inadequate regard for the importance of bringing users fully on board. At Trifast, we see this investment as being as much about our people as our processes and therefore have assigned a significant portion of the budget to this. This will help to ensure not only the ongoing success and benefit realisation of the project but will also assist in bringing our Group-wide businesses closer together.
The Board expects there to be material benefits from the investment programme. The estimated ROI of over 25% p.a. at the point of full benefit realisation (FY2023), compares favourably to our current ROCE of 20.1% and we are confident that this project has the ability to create significant shareholder value in its own right as well as creating the capacity for our expected ongoing growth.
As a consequence of the work undertaken to date on this project, we have incurred direct costs of GBP0.4m in FY2018, largely relating to project team and consultancy costs. We have excluded these costs from our underlying results, (see note 2), to reflect the unusual scale and one-off nature of this project. We anticipate continuing to do so in order to provide shareholders with a better understanding of our underlying trading performance during this period of significant investment.
Acquisitions
We were delighted to announce the acquisition of PTS on 4 April 2018. Being able to successfully acquire such a high quality, growing operation in a complementary part of the market was a key win for us and we look forward to reporting back on the joint successes that we expect to follow.
Our newly established internal acquisitions structure and team will continue to drive our ongoing proactive and reactive activities in this area. This will be supported by the use of external expertise, where appropriate, to improve our access to key acquisition geographies.
Outlook
As expected, 2018 has delivered another year of strong growth, with ongoing investment across all our regions. This, together with a robust balance sheet, good banking relationships and access to facilities as well as a proven track record of profitable investment, means the Group is in a great position to keep moving forward.
The current year has started well, with a robust pipeline in place, and the Board remains confident of delivering on its expectations.
There are, of course, some risks that we cannot fully control. Competitive pricing pressures are, and always have been, a factor in our industry, but by focusing on being a distributor and manufacturer of specialist industrial fastenings, we are better protected from some of the volatilities of the market. However, we are not always immune from the behaviour that certain parts of the industry periodically employ and whilst we are currently in a period of sustained growth across all of our sectors, ultimately, we remain susceptible on some level to the underlying success of our key strategic accounts.
As ever, wider macroeconomic factors continue to exist that we cannot fully mitigate, including the ongoing volatility in the foreign currency and raw materials markets, the expected wash through of input cost pressures in the UK due to the protracted weakness of sterling, as well as the wider potential implications of Brexit on our business and the UK economy.
Notwithstanding the above, as an international business with over 70% of our revenues now being generated outside of the UK, and a very well-balanced geographical and sector spread, the Board remains confident we will continue to have the flexibility and foresight to carry on successfully investing for growth, while facing any challenges head on as and when they arise.
Mark Belton
Chief Executive Officer
Clare Foster
Chief Financial Officer
Trifast plc
11 June 2018
TRIFAST PLC
('Trifast', the 'Group' 'TR' or 'Company')
Preliminary results for the year ended 31 March 2018
Consolidated income statement
for the year ended 31 March 2018
2018 2017
Note GBP000 GBP000
--------------------------------------------------------- ---- --------- ---------
Continuing operations
Revenue 3 197,632 186,512
Cost of sales (137,386) (128,495)
--------------------------------------------------------- ---- --------- ---------
Gross profit 60,246 58,017
Other operating income 4 467 395
Distribution expenses (4,068) (3,964)
--------------------------------------------------------- ---- --------- ---------
Administrative expenses before separately disclosed
items (33,932) (33,430)
IFRS2 charge 2 (2,194) (1,512)
Acquired intangible amortisation 2 (1,363) (1,273)
Net acquisition costs 2 (110) -
Project Atlas 2 (375) -
Profit on sale of fixed assets 2 556 195
Costs on exercise of executive share options 2 (244) (567)
--------------------------------------------------------- ---- --------- ---------
Total administrative expenses (37,662) (36,587)
--------------------------------------------------------- ---- --------- ---------
Operating profit 5 18,983 17,861
Financial income 60 60
Financial expenses (540) (581)
--------------------------------------------------------- ---- --------- ---------
Net financing costs (480) (521)
--------------------------------------------------------- ---- --------- ---------
Profit before taxation 2,3 18,503 17,340
Taxation 6 (3,417) (4,642)
--------------------------------------------------------- ---- --------- ---------
Profit for the year (attributable to equity shareholders
of the Parent Company) 15,086 12,698
--------------------------------------------------------- ---- --------- ---------
Earnings per share
Basic 14 12.54p 10.72p
Diluted 14 12.20p 10.40p
--------------------------------------------------------- ---- --------- ---------
Consolidated statement of comprehensive income
for the year ended 31 March 2018
2018 2017
GBP000 GBP000
---------------------------------------------------------------- ------- -------
Profit for the year 15,086 12,698
Other comprehensive (expense)/income for the year:
Items that may be reclassified subsequently to profit or
loss:
Exchange differences on translation of foreign operations (846) 8,486
Loss on a hedge of a net investment taken to equity (680) (2,155)
---------------------------------------------------------------- ------- -------
Other comprehensive (expense)/income recognised directly
in equity (1,526) 6,331
---------------------------------------------------------------- ------- -------
Total comprehensive income recognised for the year
(attributable to the equity shareholders of the Parent Company) 13,560 19,029
---------------------------------------------------------------- ------- -------
Consolidated statement of changes in equity
for the year ended 31 March 2018
Share Share Own shares Translation Retained Total
capital premium held reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------- -------- -------- ---------- ----------- --------- -------
Balance at 31 March 2017 6,014 21,378 - 14,900 59,406 101,698
Total comprehensive income
for the year:
Profit for the year - - - - 15,086 15,086
Other comprehensive income
for the year - - - (1,526) - (1,526)
--------------------------------- -------- -------- ---------- ----------- --------- -------
Total comprehensive income
recognised for the year - - - (1,526) 15,086 13,560
--------------------------------- -------- -------- ---------- ----------- --------- -------
Issue of share capital 54 201 - - (41) 214
Share based payment transactions
(including tax) - - - - 2,472 2,472
Own shares acquired - - (3,437) - - (3,437)
Dividends (note 12) - - - - (4,218) (4,218)
--------------------------------- -------- -------- ---------- ----------- --------- -------
Total transactions with owners 54 201 (3,437) - (1,787) (4,969)
--------------------------------- -------- -------- ---------- ----------- --------- -------
Balance at 31 March 2018 6,068 21,579 (3,437) 13,374 72,705 110,289
--------------------------------- -------- -------- ---------- ----------- --------- -------
Consolidated statement of changes in equity
for the year ended 31 March 2017
Share Share Translation Retained Total
capital premium reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------------------------- -------- -------- ----------- --------- -------
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
-------------------------------------------- -------- -------- ----------- --------- -------
Company statement of changes in equity
for the year ended 31 March 2018
Share Share Own shares Merger Retained Total
capital premium held reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------- -------- -------- ---------- -------- --------- -------
Balance at 31 March 2017 6,014 21,378 - 1,521 19,222 48,135
Total comprehensive income
for the year:
Profit for the year - - - - 4,677 4,677
--------------------------------- -------- -------- ---------- -------- --------- -------
Total comprehensive income
recognised for the year - - - - 4,677 4,677
--------------------------------- -------- -------- ---------- -------- --------- -------
Issue of share capital 54 201 - - (41) 214
Share based payment transactions
(including tax) - - - - 2,213 2,213
Own shares acquired - - (3,437) - - (3,437)
Dividends (note 12) - - - - (4,218) (4,218)
--------------------------------- -------- -------- ---------- -------- --------- -------
Total transactions with owners 54 201 (3,437) - (2,046) (5,228)
--------------------------------- -------- -------- ---------- -------- --------- -------
Balance at 31 March 2018 6,068 21,579 (3,437) 1,521 21,853 47,584
--------------------------------- -------- -------- ---------- -------- --------- -------
Company statement of changes in equity
for the year ended 31 March 2017
Share Share Merger Retained Total
capital premium reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000
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
--------------------------------- -------- -------- -------- --------- -------
Statements of financial position
at 31 March 2018
Group Company
2018 2017 2018 2017
Note GBP000 GBP000 GBP000 GBP000
-------------------------------------------- ---- ------- ------- ------- -------
Non-current assets
Property, plant and equipment 20,013 19,258 2,493 2,574
Intangible assets 38,401 39,682 - -
Equity investments - - 41,440 41,440
Deferred tax assets 2,355 2,359 767 685
-------------------------------------------- ---- ------- ------- ------- -------
Total non-current assets 60,769 61,299 44,700 44,699
-------------------------------------------- ---- ------- ------- ------- -------
Current assets
Inventories 7 49,199 41,926 - -
Trade and other receivables 8 52,466 49,360 33,257 31,382
Cash and cash equivalents 9 26,222 24,645 477 2,587
-------------------------------------------- ---- ------- ------- ------- ------- Total current assets 127,887 115,931 33,734 33,969 -------------------------------------------- ---- ------- ------- ------- ------- Total assets 3 188,656 177,230 78,434 78,668 -------------------------------------------- ---- ------- ------- ------- ------- Current liabilities Other interest-bearing loans and borrowings 10 21,912 14,872 17,393 11,077 Trade and other payables 11 38,697 37,145 2,429 4,362 Tax payable 1,811 2,471 - - Provisions 76 76 - - -------------------------------------------- ---- ------- ------- ------- ------- Total current liabilities 62,496 54,564 19,822 15,439 -------------------------------------------- ---- ------- ------- ------- ------- Non-current liabilities Other interest-bearing loans and borrowings 10 11,741 16,221 10,896 14,930 Provisions 845 1,111 - - Deferred tax liabilities 3,285 3,636 132 164 -------------------------------------------- ---- ------- ------- ------- ------- Total non-current liabilities 15,871 20,968 11,028 15,094 -------------------------------------------- ---- ------- ------- ------- ------- Total liabilities 3 78,367 75,532 30,850 30,533 -------------------------------------------- ---- ------- ------- ------- ------- Net assets 110,289 101,698 47,584 48,135 -------------------------------------------- ---- ------- ------- ------- ------- Equity Share capital 6,068 6,014 6,068 6,014 Share premium 21,579 21,378 21,579 21,378 Own shares held (3,437) - (3,437) - Reserves 13,374 14,900 1,521 1,521 Retained earnings 72,705 59,406 21,853 19,222 -------------------------------------------- ---- ------- ------- ------- ------- Total equity 110,289 101,698 47,584 48,135 -------------------------------------------- ---- ------- ------- ------- -------
These financial statements were approved by the Board of Directors on 11 June 2018.
Statements of cash flows
for the year ended 31 March 2018
Group Company
2018 2017 2018 2017
GBP000 GBP000 GBP000 GBP000
--------------------------------------------- ------- ------- ------- --------
Cash flows from operating activities
Profit for the year 15,086 12,698 4,677 4,814
Adjustments for:
Depreciation, amortisation and impairment 3,300 3,123 87 76
Unrealised foreign currency (gain)/loss (66) 165 - -
Financial income (60) (60) (12) (28)
Financial expense 540 581 397 350
Gain on sale of property, plant and
equipment and investments (560) (184) -
Dividends received - - (9,494) (10,814)
Equity settled share based payment
charge 2,107 1,512 989 1,145
Taxation charge 3,417 4,642 - 402
--------------------------------------------- ------- ------- ------- --------
Operating cash inflow/(outflow) before
changes in working capital and provisions 23,764 22,477 (3,356) (4,055)
Change in trade and other receivables (2,536) (3,075) (91) 4,653
Change in inventories (7,674) (273) - -
Change in trade and other payables 1,677 3,764 (1,934) (1,361)
Change in provisions (266) (6) - -
--------------------------------------------- ------- ------- ------- --------
Cash generated from/ (used in) operations 14,965 22,887 (5,381) (763)
Tax paid (4,849) (5,136) - -
--------------------------------------------- ------- ------- ------- --------
Net cash from/ (used in) operating
activities 10,116 17,751 (5,381) (763)
--------------------------------------------- ------- ------- ------- --------
Cash flows from investing activities
Proceeds from sale of property, plant
and equipment 1,650 198 - -
Interest received 61 60 12 26
Acquisition of subsidiary, net of cash
acquired - (1,471) - -
Acquisition of property, plant and
equipment and intangibles (3,566) (2,948) (6) (288)
Dividends received - - 9,494 10,814
--------------------------------------------- ------- ------- ------- --------
Net cash (used in)/from investing activities (1,855) (4,161) 9,500 10,552
--------------------------------------------- ------- ------- ------- --------
Cash flows from financing activities
Proceeds from the issue of share capital 214 341 214 341
Purchase of own shares (3,437) - (3,437) -
Proceeds from new loan 5,542 2,236 4,854 2,100
Repayment of borrowings (3,773) (7,030) (3,245) (5,120)
Proceeds/(payment) from finance leases 66 (6) - -
Dividends paid (4,218) (3,310) (4,218) (3,310)
Interest paid (540) (581) (397) (346)
--------------------------------------------- ------- ------- ------- --------
Net cash used in financing activities (6,146) (8,350) (6,229) (6,335)
--------------------------------------------- ------- ------- ------- --------
Net change in cash and cash equivalents 2,115 5,240 (2,110) 3,454
Cash and cash equivalents at 1 April 9 24,645 17,581 2,587 (867)
Effect of exchange rate fluctuations
on cash held (538) 1,824 - -
--------------------------------------------- ------- ------- ------- --------
Cash and cash equivalents at 31 March 9 26,222 24,645 477 2,587
--------------------------------------------- ------- ------- ------- --------
TRIFAST PLC
('Trifast', the 'Group' 'TR' or 'Company')
Preliminary results for the year ended 31 March 2018
NOTES TO THE PRELIMINARY STATEMENT
1. Preparation of the preliminary statement
The preliminary results announcement for the year ended 31 March 2018 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 11 June 2017.
2. Underlying profit before tax and separately disclosed items
2018 2017
Note GBP000 GBP000
------------------------------------------------- ---- ------- -------
Underlying profit before tax 22,233 20,497
Separately disclosed items within administrative
expenses
IFRS2 share based payment charge (2,194) (1,512)
Acquired intangible amortisation (1,363) (1,273)
Net acquisition costs 13 (110) -
Project Atlas (375) -
Profit on sale of fixed assets 556 195
Costs on exercise of executive share options (244) (567)
------------------------------------------------- ---- ------- -------
Profit before tax 18,503 17,340
------------------------------------------------- ---- ------- -------
2018 2017
Note GBP000 GBP000
------------------------------------------------- ---- ------- -------
Underlying EBITDA 24,650 22,868
Separately disclosed items within administrative
expenses
IFRS2 share based payment charge (2,194) (1,512)
Net acquisition costs 13 (110) -
Project Atlas (375) -
Profit on sale of fixed assets 556 195
Costs on exercise of executive share options (244) (567)
------------------------------------------------- ---- ------- -------
EBITDA 22,283 20,984
------------------------------------------------- ---- ------- -------
Acquired intangible amortisation (1,363) (1,273)
Depreciation and non-acquired amortisation (1,937) (1,850) ------------------------------------------------- ---- ------- ------- Operating profit 18,983 17,861 ------------------------------------------------- ---- ------- -------
There were no separately disclosed items in 2018 (2017: GBPnil) other than the amounts detailed above.
Recurring items
During the period the IFRS2 charge increased due to Senior Manager deferred bonus shares being included in the results for a full year, offset by a lower charge for Director shares due to the grant date for the new LTIP structure being later in the year (30 September 2017). GBP0.7m (2017: GBP1.1m) relates to the Board deferred equity bonus scheme of which GBP0.2m (2017: GBP0.1m) relates to retiring Directors. GBP0.2m (2017: GBPnil) relates to the new LTIP structure for the Directors. GBP1.1m (2017: GBP0.3m) represents the charge for the Deferred Bonus Award scheme for senior managers. The remaining GBP0.2m (2017: GBP0.1m) relates to the SAYE scheme.
Acquired intangible amortisation has remained in line with prior year.
During the year, the 2014 Board deferred equity bonus shares were exercised, and the Company incurred GBP0.2m of employer's National Insurance in relation to these exercises. Last year, the remaining 2m options granted under the 2009 executive share option and the accelerated 2014, 2015 and 2016 Deferred Equity Bonus awards were exercised resulting in the Company incurring GBP0.6m of employer's National Insurance.
Event driven/one-off items
Net acquisition costs of GBP0.1m (2017: GBPnil) were incurred ahead of year end in relation to the acquisition of PTS on 4 April 2018.
Project Atlas is a multi-year investment into our IT infrastructure and underlying business processes, budgeted to cost up to GBP15.0m. As a consequence of the work undertaken to date on this project, we have incurred direct costs of GBP0.4m in FY2018, largely relating to project team and consultancy costs. We have excluded these costs from our underlying results, to reflect the unusual scale and one-off nature of this project. We anticipate continuing to do so in order to provide shareholders with a better understanding of our underlying trading performance during this period of investment. This will happen as a combination of capital expenditure and separately disclosed items, dependent on accounting convention.
A factory, previously rented to an automotive Tier 1 company, in PSEP was sold during the year for GBP1.7m, generating a profit of GBP0.6m. Last year, obsolete plant and machinery was sold in our Italian manufacturing company Viteria Italia Centrale ("VIC"). The sales price and profit recorded on this sale was GBP0.2m.
Management feel it is appropriate to remove the one-off costs and certain non-trading items discussed above to better allow the reader of the accounts to understand the underlying performance of the Group.
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.
Common
UK Europe USA Asia costs Total
March 2018 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------------- -------- -------- ------- -------- -------- --------
Revenue
Revenue from external customers 70,286 72,721 6,271 48,354 - 197,632
Inter segment revenue 2,689 938 162 8,838 - 12,627
-------------------------------- -------- -------- ------- -------- -------- --------
Total revenue 72,975 73,659 6,433 57,192 - 210,259
-------------------------------- -------- -------- ------- -------- -------- --------
Underlying operating result 8,410 9,085 52 8,426 (3,260) 22,713
Net financing costs (100) (52) - 55 (383) (480)
-------------------------------- -------- -------- ------- -------- -------- --------
Underlying segment result 8,310 9,033 52 8,481 (3,643) 22,233
Separately disclosed items
(see note 2) (3,730)
-------------------------------- -------- -------- ------- -------- -------- --------
Profit before tax 18,503
-------------------------------- -------- -------- ------- -------- -------- --------
Specific disclosure items
Depreciation and amortisation 267 1,713 17 1,215 88 3,300
-------------------------------- -------- -------- ------- -------- -------- --------
Assets and liabilities
Segment assets 44,561 75,729 3,788 60,392 4,186 188,656
Segment liabilities (19,350) (16,211) (408) (11,592) (30,806) (78,367)
-------------------------------- -------- -------- ------- -------- -------- --------
UK Europe USA Asia Common Total
March 2017 GBP000 GBP000 GBP000 GBP000 costs GBP000 GBP000
-------------------------------- -------- -------- ------- -------- ------------- --------
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)
-------------------------------- -------- -------- ------- -------- ------------- --------
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 GBP14.9m (2017: GBP11.3m) was sold into the European market. Of the Asian external revenue, GBP4.7m (2017: GBP4.6m) was sold into the American market and GBP5.9m (2017: GBP5.5m) 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
2018 2017
GBP000 GBP000
------------------------------------------------ ------- -------
Rental income received from freehold properties 57 152
Other income 410 243
------------------------------------------------ ------- -------
467 395
------------------------------------------------ ------- -------
5. Expenses and auditor's remuneration
Included in profit for the year are the following:
2018 2017
GBP000 GBP000
------------------------------------------- ------- -------
Depreciation and non-acquired amortisation 1,937 1,850
Amortisation of acquired intangibles 1,363 1,273
Operating lease expense 3,302 2,529
Net foreign exchange loss/(gain) 420 (46)
Project Atlas (IT and business processes) 375 -
Gain on disposal of fixed assets (560) (184)
-------------------------------------------- ------- -------
For more details on Project Atlas see note 2.
Auditor's remuneration:
2018 2017
GBP000 GBP000
---------------------------------------------------------- ------- -------
Audit of these financial statements 66 38
Audit of financial statements of subsidiaries pursuant to
legislation 225 222
Taxation compliance services 15 15
Other assurance services 29 28
Other services relating to transaction services 30 -
---------------------------------------------------------- ------- -------
6. Taxation
2018 2017
Recognised in the income statement GBP000 GBP000
-------------------------------------------------- ------- -------
Current UK tax expense:
Current year 597 520
Adjustments for prior years (983) (8)
-------------------------------------------------- ------- -------
(386) 512
-------------------------------------------------- ------- -------
Current foreign tax expense:
Current year 4,186 4,756
Adjustments for prior years (35) (138)
-------------------------------------------------- ------- -------
4,151 4,618
-------------------------------------------------- ------- -------
Total current tax 3,765 5,130
Deferred tax expense:
Origination and reversal of temporary differences (281) (454)
Reduction in tax rates (47) -
Adjustments for prior years (20) (34)
-------------------------------------------------- ------- -------
Deferred tax income (348) (488)
-------------------------------------------------- ------- -------
Tax in income statement 3,417 4,642
-------------------------------------------------- ------- -------
2018 2017
Tax recognised directly in equity GBP000 GBP000
--------------------------------------------------------- ------- -------
Current tax recognised directly in equity - IFRS2 share
based tax credit (239) (522)
Deferred tax recognised directly in equity - IFRS2 share
based tax (credit)/charge (127) 130
--------------------------------------------------------- ------- -------
Total tax recognised in equity (366) (392)
--------------------------------------------------------- ------- -------
Reconciliation of effective tax rate ('ETR') 2018 ETR 2017 ETR
and tax expense GBP000 % GBP000 %
--------------------------------------------- ------- --- ------- ---
Profit for the period 15,086 12,698
Tax from continuing operations 3,417 4,642
--------------------------------------------- ------- --- ------- ---
Profit before tax 18,503 17,340
--------------------------------------------- ------- --- ------- ---
Tax using the UK corporation tax rate of
19% (2017: 20%) 3,516 19 3,468 20
Tax suffered on dividends 319 2 264 2
Retention tax - - 102 1
Non-deductible expenses 222 1 190 1
Tax incentives (82) - (274) (2)
Non-taxable receipts (100) (1) - -
IFRS2 share option (credit)/charge 53 - (1) -
Deferred tax assets not recognised 107 1 511 3
Different tax rates on overseas earnings 467 2 540 3
Adjustments in respect of prior years (1,038) (6) (180) (1)
Tax rate change (47) - 22 -
--------------------------------------------- ------- --- ------- ---
Total tax in income statement 3,417 18 4,642 27
--------------------------------------------- ------- --- ------- ---
Reductions in the UK tax rate from 20% 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 enacted rates.
The tax rate change in Italy (IRES reduced from 27.5% to 24%) has reduced our tax charge by GBP0.2m, whilst due to brought forward losses the tax rate change in the USA (federal tax rate reduced from 34% to 21%) has increased our tax charge by GBP0.2m.
During the year the open tax enquiry was settled for GBP0.3m. This resulted in a GBP0.9m release of the GBP1.2m provision on the balance sheet at 31 March 2017. The amount recognised in the Company financial statements is GBPnil (2017: GBPnil).
7. Inventories - Group
2018 2017
GBP000 GBP000
------------------------------------ ------- -------
Raw materials and consumables 5,284 4,903
Work in progress 1,856 1,972
Finished goods and goods for resale 42,059 35,051
------------------------------------ ------- -------
49,199 41,926
------------------------------------ ------- -------
In 2018, inventories of GBP125.0m (2017: GBP115.5m) were recognised as an expense during the year and included in cost of sales. Inventories have been written down by GBP0.8m in the year (2017: GBP1.7m) in line with the Group's stock provisioning policy. Such write-downs were recognised as an expense during 2018. No significant specific stock provisions have been reversed in the year.
No inventories are pledged as security for liabilities.
The carrying amount of inventories carried at fair value less costs to sell is GBP0.8m (2017: GBP0.6m).
8. Trade and other receivables
Group Company
2018 2017 2018 2017
GBP000 GBP000 GBP000 GBP000
---------------------------------------- ------- ------- ------- -------
Trade receivables 47,984 47,497 - -
Non-trade receivables and prepayments 4,482 1,863 306 183
Amounts owed by subsidiary undertakings - - 32,951 31,199
---------------------------------------- ------- ------- ------- -------
52,466 49,360 33,257 31,382
---------------------------------------- ------- ------- ------- -------
An explanation of credit risk and details of the security held over receivables will be provided in the 2018 Annual Report
9. Cash and cash equivalents/bank overdrafts
Group Company
2018 2017 2018 2017
GBP000 GBP000 GBP000 GBP000
-------------------------------------------- ------- ------- ------- -------
Cash and cash equivalents per Statements
of financial position 26,222 24,645 477 2,587
Bank overdrafts per Statements of financial - - - -
position
-------------------------------------------- ------- ------- ------- -------
Cash and cash equivalents per Statements
of cash flows 26,222 24,645 477 2,587
-------------------------------------------- ------- ------- ------- -------
10. Other interest-bearing loans and borrowings
This note provides information about the Group and Company's existing interest-bearing loans and borrowings. For more information about the security provided by the Group and Company over loans or the Group and Company's exposure to interest rate, foreign currency and liquidity risk, further details will be contained in the Annual Report.
Current Non-current
-------------------------- ---------------- ---------
2018 2017 2018 2017
Initial loan value Rate Maturity GBP000 GBP000 GBP000 GBP000
-------------------------- ---------------- --------- ------- ------- ------- -------
Group
Asset based lending Base + 1.49% - 3,968 3,280 - -
VIC unsecured loan EURIBOR + 1.95% 2020 528 513 792 1,283
Finance lease liabilities Various 2018-19 23 2 53 8
Group and Company
Facility A VIC
acquisition loan EURIBOR + 1.50% 2021 4,398 3,208 8,796 12,830
Facility B Revolving LIBOR/ EURIBOR
Credit Facility + 1.50% 2019/2021 12,995 7,869 - -
Property Loan LIBOR + 1.25% 2021 - - 2,100 2,100
-------------------------- ---------------- --------- ------- ------- ------- -------
Total Group 21,912 14,872 11,741 16,221
-------------------------------------------- --------- ------- ------- ------- -------
Total Company 17,393 11,077 10,896 14,930
-------------------------------------------- --------- ------- ------- ------- -------
11. Trade and other payables
Group Company
2018 2017 2018 2017
GBP000 GBP000 GBP000 GBP000
------------------------------------------- ------- ------- ------- -------
Trade payables 21,400 19,302 - -
Amounts payable to subsidiary undertakings - - 325 954
Non-trade payables and accrued expenses 15,396 15,322 1,979 2,073
Other taxes and social security 1,901 2,521 125 1,335
------------------------------------------- ------- ------- ------- -------
38,697 37,145 2,429 4,362
------------------------------------------- ------- ------- ------- -------
12. Dividends
During the year the following dividends were recognised and paid by the Group:
2018 2017
GBP000 GBP000
-------------------------------------------------------------- ------- -------
Final paid 2017 - 2.50p (2016: 2.00p) per qualifying ordinary
share 3,015 2,376
Interim paid 2017 - 1.00p (2016: 0.80p) per qualifying
ordinary share 1,203 934
-------------------------------------------------------------- ------- -------
4,218 3,310
-------------------------------------------------------------- ------- -------
After the balance sheet date, a final dividend of 2.75p per qualifying ordinary share (2017: 2.50p) was proposed by the Directors and an interim dividend of 1.10p (2017: 1.00p) was paid in April 2018.
2018 2017
GBP000 GBP000
--------------------------------------------------------- ------- -------
Final proposed 2018 - 2.75p (2017: 2.50p) per qualifying
ordinary share 3,296 3,007
Interim paid 2018 - 1.10p (2017: 1.00p) per qualifying
ordinary share 1,319 1,203
--------------------------------------------------------- ------- -------
4,615 4,210
--------------------------------------------------------- ------- -------
Subject to Shareholder approval at the Annual General Meeting which is to be held on 25 July 2018, the final dividend will be paid on 12 October 2018 to Members on the register at the close of business on 14 September 2018. The ordinary shares will become ex-dividend on 13 September 2018.
13. Acquisition of Precision Technology Supplies Limited ('PTS')
On 4 April 2018, the Group acquired PTS for an initial consideration of GBP8.5m, subject to adjustment based on the net cash in the business at completion. The initial amount was paid on completion in cash. Contingent consideration of up to GBP2.5m in cash is based on the achievement of significant earn out targets and will be deferred for 12 months. The targets require PTS to achieve a minimum adjusted PAT for FY2019 to receive a further GBP0.5m consideration. Then for every GBP1 of adjusted PAT in excess of the minimum an extra GBP3.77 will be payable subject to a maximum of GBP2.0m. This contingent consideration will also serve as a retention against which any potential warranty and indemnity claims can be offset at the end of the earn out period. The cash consideration has been met from the Company's existing bank facilities via a drawdown of part of the Accordion facility with HSBC.
Based in East Grinstead, UK, PTS was founded in 1988 and employs 27 staff. It is a highly regarded distributor of stainless steel industrial fastenings and precision turned parts, primarily to the electronics, medical instruments, petrochemical, defence and robotics sectors. Its emphasis is on delivering high quality products and services, currently selling into c.80 countries directly through its well-established distributor network, as well as digitally through its newly developed, fully integrated commercial website which lists over 43,000 products for sale. This approach has enabled PTS to continue to deliver strong sales growth over the last three years.
For the year ended 31 March 2017, PTS reported revenue of GBP5.1m and profit before tax of GBP0.7m. Gross assets at that date were GBP3.6m. These figures were not audited.
TR has experienced a growing demand for stainless steel fastenings from a number of our global OEM customers. Adding the PTS product portfolio will widen our global stock range to enhance our customer offering and provide further support to our distributor sales (currently c10% of Group revenue).
As the acquisition completed so close to 31 March 2018, a full fair value exercise is still to be completed and therefore, the amounts disclosed below are given for information purposes only. The fair value exercise will be completed as part of the completion accounts process and updated consolidated values will be disclosed in the Half-Yearly Report for the period ending 30 September 2018.
GBP000
---------------------------------------- -------
Property, plant and equipment 253
Intangible assets 4,816
Inventories 2,417
Trade and other receivables 1,324
Cash and cash equivalents 632
Trade and other payables (1,218)
Deferred tax liabilities (861)
----------------------------------------- -------
Net identifiable assets and liabilities 7,363
----------------------------------------- -------
Consideration paid:
Initial cash price paid 8,781
Contingent consideration at fair value 598
----------------------------------------- -------
Total consideration 9,379
----------------------------------------- -------
Goodwill on acquisition 2,016
----------------------------------------- -------
Intangible assets that arose on the acquisition include the following:
-- GBP3.7m of customer relationships, with an amortisation period deemed to be 15 years -- GBP1.1m of other intangibles, with an amortisation period deemed to be under 12 years
Goodwill is the excess of the purchase price over the fair value of the net assets acquired and is not deductible for tax purposes.
It mostly represents potential synergies, e.g. cross-selling opportunities between PTS and the Group, and PTS's assembled workforce.
Effect of acquisition
The Group incurred costs of GBP0.2m up to 31 March 2018 in relation to the PTS acquisition of which GBP0.1m have been included in administrative expenses in the Group's consolidated statement of comprehensive income and form part of separately disclosed items, (see note 2). The remaining GBP0.1m relates to the arrangement fee to drawdown part of the Accordion facility and this is recognised on the balance sheet and will be expensed to the consolidated statement of comprehensive income over the term of the facility.
14. Earnings per share
Basic earnings per share
The calculation of basic earnings per share at 31 March 2018 was based on the profit attributable to ordinary shareholders of GBP15.1m (2017: GBP12.7m) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2018 of 120,313,586 (2017: 118,493,886), calculated as follows:
Weighted average number of ordinary shares
2018 2017
------------------------------------------------------- ----------- -----------
Issued ordinary shares at 1 April 120,294,486 116,747,887
Effect of shares issued/purchased 19,100 1,745,999
------------------------------------------------------- ----------- -----------
Weighted average number of ordinary shares at 31 March 120,313,586 118,493,886
------------------------------------------------------- ----------- -----------
Diluted earnings per share
The calculation of diluted earnings per share at 31 March 2018 was based on profit attributable to ordinary shareholders of GBP15.1m (2017: GBP12.7m) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2018 of 123,678,854 (2017: 122,143,769), calculated as follows:
Weighted average number of ordinary shares (diluted)
2018 2017
------------------------------------------------------- ----------- -----------
Weighted average number of ordinary shares at 31 March 120,313,586 118,493,886
Effect of share options on issue 3,365,268 3,649,883
------------------------------------------------------- ----------- -----------
Weighted average number of ordinary shares (diluted)
at 31 March 123,678,854 122,143,769
------------------------------------------------------- ----------- -----------
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
2018 2017
EPS EPS
-------------------------------------
Earnings Earnings
EPS (total) GBP000 Basic Diluted GBP000 Basic Diluted
------------------------------------- -------- ------- -------- -------- ------- --------
Profit after tax for the financial
year 15,086 12.54p 12.20p 12,698 10.72p 10.40p
Separately disclosed items:
IFRS2 share based payment
charge 2,194 1.83p 1.77p 1,512 1.28p 1.24p
Acquired intangible amortisation 1,363 1.13p 1.10p 1,273 1.07p 1.04p
Net acquisition costs 110 0.09p 0.09p - - -
Costs on exercise of executive
share options 244 0.20p 0.20p 567 0.48p 0.46p
Profit on sale of fixed assets (556) (0.46p) (0.45p) (195) (0.17p) (0.16p)
Project Atlas 375 0.31p 0.30p - - -
Tax charge on adjusted items
above (802) (0.67p) (0.65p) (609) (0.51p) (0.50p)
Tax adjusted items (967) (0.80p) (0.78p) 418 0.35p 0.34p
------------------------------------- -------- ------- -------- -------- ------- --------
Underlying profit after tax 17,047 14.17p 13.78p 15,662 13.22p 12.82p
------------------------------------- -------- ------- -------- -------- ------- --------
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 (see note 2).
The tax adjusted items include the release of the tax provision from the open tax enquiry and the tax rate changes in Italy and the USA respectively. Further details will be contained in the Annual Report.
15. Preliminary statement
The financial information set out above does not constitute the Group's statutory Report and Accounts for the years ended 31 March 2018 or 2017 but is derived from the 2018 Report and Accounts. The Report and Accounts for 2017 have been delivered to the Registrar of Companies and those for 2018 will be delivered in due course. The external auditor has reported on the 2018 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.
16. 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 2018, 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 2018 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.
17. Annual General Meeting
The Annual General Meeting will be held on Wednesday, 25 July 2018 at 12noon at Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW.
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.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
FR ZMGMVRMZGRZM
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June 12, 2018 02:00 ET (06:00 GMT)
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