TIDMTRI
RNS Number : 8007T
Trifast PLC
19 November 2019
The information contained within this announcement
is deemed by the Company to constitute inside information
stipulated under the Market Abuse Regulation (EU) No. 596/2014.
Upon the publication of this announcement via the Regulatory
Information Service, this inside information is now considered to
be in the public domain.
TRIFAST PLC
HALF-YEARLY FINANCIAL REPORT
FOR THE SIX MONTHSED 30 SEPTEMBER 2019
"Even in challenging market conditions, we have maintained
similar revenue levels, a double-digit operating margin and solid
cash generation"
KEY FINANCIALS
---------------------------- -------------- ---------- -------------- ---------- ------------- -------------
AER change
AER HY2020 v HY2019 FY2019
CER HY2020 CER change
Underlying measures (post-IFRS16) v HY2019 (post-IFRS16) HY2019 (pre-IFRS16) (pre-IFRS16)
---------------------------- -------------- ---------- -------------- ---------- ------------- -------------
Group revenue GBP102.2m -2.7% GBP103.1m -1.8% GBP105.0m GBP209.0m
Gross profit %^ 28.7% -150bps 28.8% -140bps 30.2% 30.0%
Underlying operating
profit*^ GBP10.9m -8.4% GBP11.1m -6.7% GBP11.9m GBP24.2m
Underlying profit before
tax*^ GBP10.4m -10.2% GBP10.6m -8.5% GBP11.6m GBP23.5m
Underlying diluted earnings
per share*^ 6.39p -11.3% 6.52p -9.4% 7.20p 14.53p
Adjusted net debt(--) GBP15.7m +GBP2.2m GBP13.5m GBP14.2m
Return on capital employed
(ROCE)*^ 16.5% -300bps 19.5% 18.8%
---------------------------- -------------- ---------- -------------- ---------- ------------- -------------
Interim/total dividend(Yen) 1.20p - 1.20p 4.25p
---------------------------- -------------- ---------- -------------- ---------- ------------- -------------
GAAP measures
Operating profit^ GBP8.4m +1.3% GBP8.3m GBP17.1m
Profit before tax^ GBP7.9m -1.0% GBP8.0m GBP16.4m
Diluted earnings per
share^ 4.82p - 4.82p 9.90p
Basic earnings per share^ 4.92p -0.2% 4.93p 10.14p
---------------------------- -------------- ---------- -------------- ---------- ------------- -------------
* Before separately disclosed items (see notes 2, 6 and 9)
^Presented after adoption of IFRS16 Leases in HY2020. For ROCE
the impact has been a reduction of 70bps (before IFRS16: 17.2%).
Less significant impacts on the remaining metrics have been
explained in a separate paragraph at the end of the business
review.
(--) Adjusted net debt is presented, excluding the impact of
IFRS16 Leases, as this is how the calculation is performed for the
purposes of the Group's banking facilities. Including right-of-use
lease liabilities, net debt would increase by GBP16.1m to GBP31.8m
at HY2020.
(Yen) Change is in interim dividend only
OPERATIONAL HIGHLIGHTS
-----------------------
The investment journey continues...
-- Challenging macroeconomic environment sees revenues reduce
2.7% at Constant Exchange Rate (CER), 1.8% at Actual Exchange Rate
(AER)
-- Ongoing market share wins restrict Group automotive revenue
reduction to 2.5%, against a global production downturn of 7.3%
(Source: European Automobile Manufacturers Association)
-- Underlying operating profit margins hold up well at 10.6% at CER (HY2019: 11.3%)
-- Underlying diluted earnings per share reduce 9.4% to 6.52p at AER
-- Project Atlas, our multi-year investment in our systems,
policies and procedures is on track and on budget, with a spend of
GBP2.5m in the period
-- A strong balance sheet and c.GBP40.0m of banking facility
headroom provide a solid financial platform and significant
flexibility to support our long-term investment driven growth
plans
-- Potential M&A opportunities increase due to uncertain
market conditions and an increased focus on key geographies
-- Interim dividend maintained at 1.20p reflecting the Board's
confidence in the long-term future of the business and our ongoing
strong profitability
"Despite the short-term end market weaknesses and macroeconomic
uncertainty, we are confident in the strong long-term fundamentals
of our business model. The Board remains committed to its ongoing
investment driven growth strategy and is optimistic for the
long-term future"
"After ten years of continuous growth and strong cash
generation, we have a very solid balance sheet. This coupled with
our new banking facilities provides us with significant flexibility
and security, to continue to invest and to make sure that when the
macroeconomic environment begins to settle, we have the best
foundation and are in the best possible position to add further
stimulus to our growth ambitions."
Malcolm Diamond MBE, Non-Executive Chairman
Presentation of results:
This will be held at 8:45am (UK time) today at, No1 Cornhill,
The Gold Room - London, EC3V 3ND.
Conference dial-in facility: on request, please contact Fiona
Tooley on +44 (0)7785 703523
or email fiona@tooleystreet.com.
Enquiries please contact:
---------------------------------------------------
Trifast plc
Malcolm Diamond MBE, Non-Executive Chairman
Mark Belton, Chief Executive Officer
Clare Foster, Chief Financial Officer
Today: Mobile: +44 (0) 7979 518493 (MMD)
Office: +44 (0) 1825 747630
Email: corporate.enquiries@trifast.com
Peel Hunt LLP (Stockbroker & financial adviser)
Mike Bell
Tel: +44 (0)20 7418 8900
TooleyStreet Communications (IR & media relations)
Fiona Tooley
Tel : +44 (0)7785 703523
Email : fiona@tooleystreet.com
Editors' note:
--------------------------------------------------------------------------------
LSE Premium Listing: Ticker: TRI
LEI number: 213800WFIVE6RUK3CR22
Group website: www.trifast.com
About us: Trifast, leading international specialist in the design, engineering,
manufacture and distribution of high-quality industrial and Category 'C'
fastenings principally to major global assembly industries. Key sectors
include automotive, domestic appliances, electronics and distributors.
The Group employs c.1,300 staff across 32 global locations across the
UK, Europe, Asia and the USA.
For more information, visit
Commercial website: www.trfastenings.com
LinkedIn: www.linkedin.com/company/tr-fastenings
Twitter: www.twitter.com/trfastenings
Facebook: www.facebook.com/trfastenings
Electronic communications
-------------------------------------------------------------------------------
The Company is not proposing to bulk print and distribute hard copies
of this half-yearly financial report for the six months ended 30 September
2019 unless specifically requested by individual shareholders. News updates,
Regulatory News and Financial statements, can be viewed and downloaded
from the Group's website, www.trifast.com. Copies can also be requested
via corporate.enquiries@trifast.com or, in writing to, The Company Secretary,
Trifast plc, Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22
1QW.
Forward-looking statements
-------------------------------------------------------------------------------
This announcement contains certain forward-looking statements. These reflect
the knowledge and information available to the Company during the preparation
and up to the publication of this document. By their very nature, these
statements depend upon circumstances and relate to events that may occur
in the future thereby involving a degree of uncertainty. Therefore, nothing
in this document should be construed as a profit forecast by the Company.
TRIFAST PLC
HALF-YEARLY FINANCIAL REPORT
FOR THE SIX MONTHSED 30 SEPTEMBER 2019
"Investing to build the Trifast of tomorrow, a truly world class
global industrial player"
Dear Shareholder,
Way back in the late Eighties a visiting newspaper journalist to
TR Uckfield asked me a very insightful question: "Do you manage
your company for profit or prosperity?"
I replied that, as a privately-owned business with only two
founder shareholders, we favoured prosperity over profit so as to
try and enable future proofing, and to provide an
ever-strengthening foundation for growth.
Of course, since flotation on the LSE in early 1994, the focus
on delivering consistent and sustainable profitability has
increased in order to safeguard the very basis upon which outside
investors risk buying our shares in trusting anticipation of
gaining value, ideally both in capital and dividend yield.
It is tempting to fall into line with what is now a majority of
industrially based enterprises at this vexed time who are reporting
the damaging effects of Brexit, global trade disruption, climate
change policies and currency fluctuations. However, although we
have seen revenues reduce slightly due to these external factors
beyond our control, we are also in a transitionary phase where we
are consciously reinvesting earnings into internal initiatives
which we believe are crucial to enhance the platform for long-term
prosperity.
We have already explained and notified you of the initiation of
our transformational investment into our global systems, policies
and procedures, Project Atlas, which is now halfway through its
four-year time line and progressing as expected and on budget
(thanks to the ongoing focus and dedication of our implementation
team that are linked across the entire Group).
However, there has been a strategic shift in what our customers
expect of our commitment and service support that has been
accelerating over the past decade. We are no longer simply "box
shifters", instead we are involved earlier in new customer product
development (including problem solving and cost effectiveness),
after passing stringent auditing on product and process
quality.
Once our prototype design or specification has been thoroughly
tested in an assembly process, we secure orders over the life of
the customer's product and also provide adequate stock or
production availability.
With two thirds of our customers being multinationals, our
price, quality and service must be consistent across all their
assembly facilities, hence our locations now being spread across
Europe, Asia and North America in order to provide seamless support
across all time zones.
In the early days of TR Fastenings, our reputation was built on
prompt reliable service driven by our sales team having great
interpersonal skills in communicating with buyers and purchasing
managers.
Now, it is more about globally accepted quality and process
certification tangibly under pinned by qualified engineers able to
provide assembly solutions that save time and resource - hence
cost. Price is still crucial, but it is now well documented that
this is only a small part of what is called "in place cost". This
cost optimisation is what predominantly TR now sells.
This, in turn, has led to further investment in qualified field
engineers that has intensified this year, with intake in the USA,
UK, Europe and Asia. As a result, this has required the set-up of a
sophisticated Technical & Innovation centre in a neighbouring
unit to our Waterside facility in the West Midlands. To maximise
the impact of this investment, this new site interacts with the
centre established last year in Gothenburg, Sweden.
We have also invested recently in a range of highly technical
measuring and testing equipment that our increasingly demanding
customers expect us to provide, some of which are so cutting edge
as to be market leading. Robotic assembly is also now so prevalent
that every component we supply has to have highly consistent and
accurate dimensions that, due to large volume consumption can only
be realistically assessed by automatic camera and laser machines.
The Group now owns a significant number of these sophisticated and
costly machines installed across many of our logistics and
manufacturing facilities.
You can read a great more detail regarding our investment
programme within the reports of my colleagues that follow my
letter, which I hope you will find both relevant and
reassuring.
As always, I remain inspired by the sheer quality, loyalty and
energy of our truly outstanding workforce, many of whom have
devoted years of unstinting commitment to our Company. To these, me
and my fellow Board colleagues give our sincere thanks.
Malcolm Diamond MBE, Non-Executive Chairman
18 November 2019
BUSINESS REVIEW
Unless stated otherwise, comparisons with prior year are
calculated at constant currency (CER) and where we refer to
'underlying', this is defined as being before separately disclosed
items (see note 2). CER calculations have been calculated by
translating the HY2020 figures by the average HY2019 exchange
rate.
The impact of foreign exchange movements has increased our AER
revenue by 0.9%, GBP0.9m (HY2019: decreased by 0.5%, GBP0.4m), our
AER underlying profit before tax by 1.7%, GBP0.2m (HY2019:
decreased by 0.9%, GBP0.1m) and our AER underlying diluted EPS by
1.9%, 0.13p (HY2019: decreased by 1.0%, 0.07p).
Our Group performance
Underlying measures HY2020 CER Change HY2020 Change HY2019
(post-IFRS16) at CER AER (post-IFRS16) at AER
(pre-IFRS16)
Revenue GBP102.2m -2.7% GBP103.1m -1.8% GBP105.0m
--------------- -------- ------------------- -------- --------------
GP%^ 28.7% -150bps 28.8% -140bps 30.2%
--------------- -------- ------------------- -------- --------------
Underlying EBITDA*^ GBP13.5m +4.2% GBP13.7m +6.0% GBP12.9m
--------------- -------- ------------------- -------- --------------
Underlying EBITDA%*^ 13.2% +90bps 13.3% +100bps 12.3%
--------------- -------- ------------------- -------- --------------
Underlying operating
profit (UOP)*^ GBP10.9m -8.4% GBP11.1m -6.7% GBP11.9m
--------------- -------- ------------------- -------- --------------
UOP%*^ 10.6% -70bps 10.7% -60bps 11.3%
--------------- -------- ------------------- -------- --------------
Underlying profit before
tax*^ GBP10.4m -10.2% GBP10.6m -8.5% GBP11.6m
--------------- -------- ------------------- -------- --------------
Underlying diluted EPS*^ 6.39p -11.3% 6.52p -9.4% 7.20p
--------------- -------- ------------------- -------- --------------
Return on capital employed
ROCE*^ 16.5% -300bps 19.5%
---------------------------- --------------- -------- ------------------- -------- --------------
GAAP measures
--------------- -------- ------------------- -------- --------------
Operating profit^ GBP8.4m +1.3% GBP8.3m
--------------- -------- ------------------- -------- --------------
Operating profit %^ 8.2% +30bps 7.9%
--------------- -------- ------------------- -------- --------------
Profit before tax^ GBP7.9m -1.0% GBP8.0m
--------------- -------- ------------------- -------- --------------
Diluted EPS^ 4.82p - 4.82p
--------------- -------- ------------------- -------- --------------
*Before separately disclosed items (see notes 2, 6 and 9)
^Presented after adoption of IFRS16 Leases in HY2020. For
Underlying EBITDA and Underlying EBITDA%, the impact has been an
increase of GBP1.6m and
160bps at CER (before IFRS16: GBP11.9m and 11.6%) and GBP1.6m
and 160bps at AER (before IFRS16: GBP12.1m and 11.7%). For ROCE
(AER) the impact has been a reduction of 70bps (before IFRS16:
17.2%). Less significant impacts on the remaining metrics have been
explained in a separate table at the end of the business review
Similar to many other businesses in the industrials space, the
first half of FY2020 has been a challenging time for the business
with end markets across a number of sectors remaining weak,
particularly in the automotive sector. This has led to some reduced
volumes to existing builds across the UK, Europe and Asia, as well
as lead times on production schedules moving out on a number of new
business wins.
In the context of this high degree of uncertainty and volatility
in the macroeconomic climate, we are very pleased to report a solid
set of results, that show only a small reduction in revenues, down
2.7% to GBP102.2m (AER: down 1.8% to GBP103.1m; HY2019:
GBP105.0m).
Our core growth strategy, focusing on sales to our multinational
OEMs, has continued to produce results, especially in the
automotive sector where despite a 7.3% fall in global automotive
production levels, we are reporting only a 2.5% decrease. This
demonstrates our ongoing ability to win market share alongside site
penetration, most specifically into our existing multinational Tier
1 customers. On a gross level, we have seen overall volume
reductions on existing builds largely across our European and UK
Tier 1 customer base. But these reductions have been substantially
offset by very strong market share wins, most specifically from our
rapidly growing sites in the US, Spain and Thailand.
Group domestic appliances sales have reduced, most particularly
in Europe where ongoing low volumes continue at a key multinational
OEM. The reduction in the electronics sector is largely driven out
of decreased volumes on more established lines at one of our key
OEMs in Europe, as well as the ongoing indirect impact of US
tariffs on certain multinational OEMs in China.
In contrast, growth in the general industrial sector has been
strong, with new customer relationships and double-digit growth at
our latest acquisition, PTS, driving a c.5% revenue increase.
Although as previously reported, Brexit related disruption to our
EU distributor sales has worked to offset some of these gains
overall.
Gross margins have reduced by 150bps to 28.7% (HY2019: 30.2%).
As semi-fixed costs are less easily absorbed by the reduction in
sales and product mix changes, temporary increases in stock holding
and provisioning levels, and foreign exchange movements negatively
impact margins in our Italian operations. Underlying operating
margins have reduced by less, down 70bps to 10.6% (HY2019: 11.3%).
With short-term savings and deferrals being made at overhead level,
where possible in the context of our ongoing investment plans, so
as to reduce the impact of the lower gross margin.
Our underlying PBT is down 10.2% to GBP10.4m (AER: 8.5%, to
GBP10.6m, HY2019: GBP11.6m). This has resulted in a decrease in our
underlying diluted earnings per share (EPS) at CER, down 11.3% to
6.39p and at AER, down 9.4% to 6.52p (HY2019: 7.20p).
Our underlying EBITDA has increased 4.2% to GBP13.5m (HY2019:
GBP12.9m). However, this increase reflects the first-year adoption
of IFRS16 Leases, which has moved GBP1.6m of operating rental costs
into depreciation and financial expenses. Excluding the positive
impact of this, underlying EBITDA would have decreased by 8.2% to
GBP11.9m (HY2019: GBP12.9m).
Revenue (CER)
Outside of very strong growth in the USA, up 21.1% (HY2019:
34.8%), we have seen challenging conditions across all of our
regions, with revenue reductions ranging from 1.9% to 6.8% (HY2019:
growth of 4.3% to 10.8%) against a strong HY2019.
Europe has seen a revenue decrease of 3.1% to GBP37.3m (AER:
down 3.6% to GBP37.1m, HY2019: GBP38.4m). In Holland this reflects
a reduction in automotive as volumes on existing builds have
reduced. Whereas in Italy, the main driver for the decrease is in
the domestic appliances sector. As previously reported, volumes at
one of the Group's largest domestic appliances customers have
continued to be depressed due to their ongoing reputational issues.
In conjunction now with some volume decreases in the wider market
as economic uncertainties start to weigh on consumer confidence and
production scheduling in the region. In Hungary, sales to one of
our key electronics OEMs have reduced, as volumes decrease on more
established lines ahead of new product introductions. While
overall, we are also seeing deferred start of production dates
reducing automotive growth in the short-term.
Helping to offset the above, we are pleased to report ongoing,
albeit more limited, growth in TR Kuhlmann, despite the
recessionary environment in Germany. As well as encouraging
automotive market share wins at both our Swedish and Spanish
sites.
As national economies struggle with the impact of trade tariffs
and reducing growth rates, it is perhaps not surprising that Asia
has been our poorest performing region in HY2020. Revenues have
reduced by 6.8% to GBP28.7m (AER: down 3.7% to GBP29.6m, HY2019:
GBP30.8m).
In Taiwan, sales to European automotive distributors have
reduced significantly as production volumes in Europe decrease.
Whilst in China, it is lower domestic automotive production volumes
that have decreased sales, with JLR related builds being
particularly badly affected. Additional reductions have also been
seen in the electronics sector in China as a small number of
multinational OEMs reduce local production volumes in the face of
US trade tariffs. We are working closely with customers in this
situation, to ensure we follow business as it transfers to new
locations wherever possible.
In contrast, we continue to see positive growth in the
electronics sector in Singapore and automotive market share wins
for our distribution site in Thailand.
In the UK, revenues have reduced 1.9% to GBP38.4m (HY2019:
GBP39.2m). There are two main reasons for this reduction. Firstly,
due to the expected automotive slowdown, with planned production
line stops across a number of OEMs in April as well as falling
production volumes more generally across existing builds and
deferred start of production dates. Secondly, as a result of
Brexit, disruption to the EU distributors sector. As expected,
April and May saw revenues fall led by a reversal to the stocking
up that had happened in February and March, coupled with some signs
of more cautious ordering and de-stocking taking place into Q2.
On the positive side, revenues in the general industrial sector
have increased strongly in the UK, with new customer wins mainly
responsible for driving growth. Furthermore, we are very pleased to
report that PTS continues to perform very well with double digit
revenue growth despite all the current uncertainty in the market
place.
In the USA, growth continues to be extremely strong, up 21.1% to
GBP5.2m (AER: up 28.4% to GBP5.5m; HY2019: GBP4.3m). This is
largely being driven out of our ongoing penetration into the
Group's existing automotive multinational Tier 1 customers and
looks set to continue at double-digit level for the foreseeable
future.
Underlying operating profit (CER)
The Board's ongoing confidence in the long-term fundamentals of
the business model have allowed us to continue to invest for
long-term growth, despite the current macroeconomic uncertainties.
Whilst even in more challenging trading conditions, a focus on
strong overhead control, has helped to maintain a double-digit
operating margin of 10.6% (HY2019: 11.3%) and limit the overall
decrease in underlying operating profit, down 8.4% to GBP10.9m
(AER: down 6.7% to GBP11.1m; HY2019: GBP11.9m).
In Europe, we have seen a 320bps reduction in UOP margins
against HY2019 to 8.5% (HY2019: 11.7%, FY2019: 10.9%). This
primarily reflects a reduction in the gross margin, including a
reversal due to particularly favourable product mixes in both
Sweden and Hungary in HY2019. The positive impact of these had
already reversed by FY2019. The remainder is largely related to
Italy, where movements in the average EUR:$ exchange rate have
increased $ purchase costs unfavourably against a largely EUR
denominated revenue base.
Outside of the gross margin, the reduction in sales has led to a
fall in UOP against a semi-fixed cost base. In response, no overall
overhead increases were recorded in the period despite some ongoing
investments in the region, as short-term savings and deferrals have
been made wherever possible to offset.
In Asia, underlying operating margins have remained broadly
level at 15.8% (HY2019: 15.9%). Gross margins have improved, most
noticeably in Singapore as previous capital investments in the
mezzanine floor flow through to greater production efficiencies.
The reduction in sales over a semi-fixed cost base has reduced
overall operating margins with the remaining difference largely
coming out of a reduced balance sheet translation gain of
<GBP0.1m (HY2019: GBP0.5m) as the US$ has remained more stable
against our main Asian trading currencies in the period.
In the UK, underlying operating margins have reduced 60bps to
10.3% (HY2019: 10.9%). Gross margins have fallen in the region,
reflecting a change in product mix due to a lower distributor
spend, some temporary increases in stock provisioning due to higher
levels on hand and the flow through of a small amount of residual
purchase price inflation following the extended weakness of GBP
since the referendum in 2016. Outside of the gross margin, the fall
in sales against a semi-fixed cost base has reduced operating
margins. But we are pleased to report that a decrease in overheads,
as costs have been saved or deferred where possible, has helped to
reduce the overall negative impact on operating margins in the
short-term.
In our smallest region, the USA, UOP% has remained broadly level
at 4.5% (HY2019: 4.8%), largely reflecting the significant increase
in trading in the period offset by a gross margin reduction due to
the ongoing shift in focus to automotive. Additional investments in
overheads, mostly relating to additional headcount, have
temporarily reduced UOP% ahead of further expected increases in
sales volumes. As in prior periods, low underlying operating
margins are to be expected in this region for the medium-term given
the level of investments for future growth being made here.
Net financing costs (AER)
These have increased to GBP0.5m (HY2019: GBP0.3m). The main
reason for this increase is the inclusion of GBP0.2m of expense in
relation to right-of-use lease liabilities, following the adoption
of IFRS16.
Taxation (AER)
The HY2020 underlying effective tax rate (ETR) has remained
consistent at 23.4% (HY2019: 23.5%, FY2019: 23.6%).
Subject to future tax changes and excluding prior year
adjustments, our normalised underlying ETR is expected to remain in
the range of c.22.5-24.5% going forward.
Earnings per share (AER)
The reduction in underlying profit before tax, has decreased our
underlying diluted EPS by 9.4% to 6.52p (HY2019: 7.20p). Diluted
EPS has remained consistent at 4.82p (HY: 4.82p) largely due to
lower IFRS2 costs incurred in the period. These have reduced to
GBP0.6m (2019: GBP1.2m) reflecting the lower trading results
achieved in the current challenging macroeconomic environment,
against original benchmark targets set.
Dividend
Given the Board's confidence in the long-term future of the
business and our ongoing strong profitability even in a period of
macroeconomic uncertainty, the interim dividend has been maintained
in line with the previous period. We have therefore declared an
interim dividend of 1.20p (HY2019: 1.20p). This will be paid on 9
April 2020, to shareholders on the Register as at 13 March 2020.
The shares will become ex-dividend on 12 March 2020.
Shareholder equity (AER)
As at 30 September 2019, the Group's shareholders' equity
increased to GBP123.7m (FY2019: GBP121.1m). The GBP2.6m uplift
reflects retained earnings of GBP1.4m (HY2019: GBP2.0m), a foreign
exchange reserve gain of GBP2.3m and an opening balance adjustment
in respect of IFRS 16 reducing retained equity by GBP1.1m.
At the 30 September 2019, the number of shares still held by the
EBT to honour future equity award commitments as required, has
remained unchanged at 1,317,378 shares (HY2019: 1,317,378 shares;
FY2019: 1,317,378 shares).
Over this increased asset base, a solid, albeit lower, trading
performance and ongoing investment has led to a reduced ROCE of
16.5% (FY2019: 18.8%). We note that part of this reduction is due
to the adoption of IFRS16 Leases. Excluding the impact of this,
ROCE would be higher at 17.2%.
Net debt (AER)
Our net debt position at the end of HY2020 has increased by
GBP17.6m to GBP31.8m (FY2019: GBP14.2m). Some GBP16.1m of this
increase is due to the adoption of IFRS 16 Leases. Excluding the
impact of this, our pre-IFRS16 adjusted net debt is significantly
lower at GBP15.7m.
Capital expenditure of GBP1.9m (HY2019: GBP1.3m) in the period
supports the Board's ongoing investment in the business, most
specifically with regards to Project Atlas. With GBP1.3m being
capitalised, largely reflecting phase one of the design and build
element of the project, as well as directly related infrastructure
spend. In July 2019, we were also pleased to pay a final GBP0.5m
earn-out amount in relation to PTS. This follows on from a very
successful first year with us, achieving double digit growth that
has subsequently carried on into HY2020.
Outside of these movements, our cash generation is lower than
the prior period with a conversion rate of underlying EBITDA to
underlying cash of 60.5% (FY2019: 64.9%; HY2019: 67.4%). However we
note that this conversion rate has also been negatively impacted by
the adoption of IFRS16 Leases. If we exclude the impact of this,
then our cash conversion would be slightly ahead of the prior
period at 68.9%. Our half year cash conversion is historically
lower than our full year position, due to the higher stock levels
we hold at this stage of the trading cycle.
Our overall investment in gross stock has increased by GBP4.5m
since year end and we have retained the investment in stock that we
were holding at the 31 March 2019 in case of a no-deal Brexit. We
intend to continue to hold this for the foreseeable future, until
there is greater clarity over our future trading relationship with
the EU.
Our stock weeks across the Group have increased by 2.1 weeks,
largely in the UK (up GBP3.4m) where lower than budgeted sales and
planned stock range investments, especially on the distribution
side have temporarily lowered stock turn.
Banking facilities
As previously reported, on 16 April 2019 the Group signed new
four year banking facilities with a consortium of three banks.
As at 30 September the RCF headroom on these facilities was
GBP39.9m (FY2019: GBP6.2m). In addition to which, we have access to
an additional accordion facility of GBP40.0m. The adjusted net debt
to Underlying EBITDA ratio (excluding the impact of IFRS16) was
0.65x, and significantly less than our covenant limit of 3.00x
(1.16x including IFRS16).
This provides us with a significant degree of potential
flexibility to debt finance future acquisitions and further
investments as required. As well as an increase in both security
and tenure of funding to adequately support us in a less certain
macroeconomic environment.
Acquisitions
We successfully added PTS to our portfolio in April 2018.
However, in a fragmented market, and with a track record of
success, inevitably the search for the next successful acquisition
remains an important strategic aim for the Group.
Over the course of the last six months, we have continued to
develop our proactive search. We have appointed advisors in a
couple of key geographies and with their help are now actively
researching and approaching the market where opportunities that fit
our acquisition criteria are identified. The full benefits of this
increased activity are likely to come through over time. However,
even at this early stage we are seeing a marked increase in the
number of potential targets being identified. And in a less certain
world, we are also seeing an increased number of opportunities
approaching us. This is an exciting and busy time for the TR
Acquisitions team.
Ongoing and future investment plans
Trading
We are continuing to invest in both our global and local sales
resources and cross functional supporting teams. Some specific
investments have already been made into our engineering sales,
quality, and IT teams and additional plans are being pulled
together now to further develop and build our sourcing and supply
side resources.
In Europe, our successful greenfield site in Spain continues to
grow, with an exciting pipeline in place. We anticipate making
additional overhead investments to support that growth in the
second half of the year and beyond. Looking ahead, we are also in
the process of finalising a potential site move for our Hungarian
business. This is needed to support the strong growth we have
already seen here over the last five years and to pave the way for
future growth in this fast growing region.
In the UK an expanded warehouse in our Lancaster site has
provided us with a much-needed capacity increase of 20%, including
additional picking locations as well as bulk storage facilities to
support future growth plans. Whilst in the Midlands, further
investments have been made in our newly developed Technical and
Innovation Centre. This investment sets us apart from the
competition and further supports the TR UK Brand just when we need
it most, as the local competitive landscape hardens.
Following on from a few years of significant capital investment
in Asia, we have focused over the last six months on Taiwan. Here a
reasonably small investment of c.GBP0.2m has got the final machines
installed to successfully complete the factory extension we started
in FY2019.
In the USA, we continue to invest in headcount to support the
significant growth in the region. We have also taken the strategic
decision to secure a small site at Clemson University, South
Carolina where we intend to set up a mini Technical and Innovation
Centre. The Clemson University International Centre for Automotive
Research is an advanced technology research campus and a real hub
for all areas of vehicle research and design. We intend this to be
a smaller version of the very successful sites that we have already
set up in the heart of Sweden's electric vehicle development area,
Lindholmen Gothenburg, and next to our main Midlands distribution
hub here in the UK.
Project Atlas - we remain on track and on budget
Project Atlas is a significant GBP15.0m planned investment into
the integration and development of the Group's IT infrastructure
and underlying rules, processes and policies. 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 estimated ROI of >25%, at the point of full benefit
realisation, compares favourably to our current ROCE. We remain
confident that this project has the ability to create significant
shareholder value in its own right as well as creating the capacity
for ongoing growth.
As planned, over the last six months our international Atlas
cross functional workstreams, the Atlas project team and our
implementation partner have been working closely together to
finalise the analysis work and start the design and build phase of
the project. This is an incredibly exciting time for the business
as we start to see all of that hard work turned into initial Proof
of Concepts ahead of testing and training starting in earnest.
Alongside the main project launch, we have also started looking
at our HR (Talent) platform. This will help to drive consistency
across all of our businesses, making sure that we are best able to
recruit, develop and retain our people around the world.
As a consequence of the work undertaken to date on this project,
we have incurred direct costs of GBP2.5m in HY2020, largely
relating to project team, consultancy and directly related
infrastructure costs. We have excluded GBP1.2m of these costs from
our underlying results, (see note 2), to reflect the unusual scale
and one-off nature of this project. In line with accounting
standards, we have also recognised the remaining GBP1.3m as
intangible fixed assets on the balance sheet at 30 September 2019.
These will start to be amortised as the new IT system is rolled out
across our global sites.
Looking ahead from a strong foundation
HY2020 has been a challenging six months. But even in
challenging market conditions and during a period of investment, we
have maintained similar revenue levels, a double-digit operating
margin and solid cash generation.
In line with the majority of our recent history, we currently
expect a slightly stronger second half than first half to the year.
The Board consider that set against what was a very strong HY1
& a slower HY2 in FY2019, this is the most appropriate position
to take. Although we do continue to expect that in the short to
medium-term the macroeconomic environment will remain challenging
and volatile.
We are pleased to report that our pipeline of new wins remains
reassuringly solid and activity levels around the Group continue to
be encouraging across all sectors. Our core strategy focusing on
our multinational OEM/Tier 1 customers is continuing to bear fruit.
With significant new platform wins in automotive, domestic
appliances and general industrial on the horizon for our existing
customers. In addition to which, we have a number of exciting new
multinational relationships under development, most specifically in
the general industrials sector.
There is no doubt that on some level, as a component supplier we
are always dependent on the fortunes of our customers. And in an
uncertain, volatile world we have inevitably seen production volume
reductions and start of production date deferrals across a number
of our multinational OEMs/Tier 1s in recent months. It is very
reassuring to note that we have not lost business or customers. We
continue to hold preferred supplier status at a wide range of large
manufacturers across the globe, and as soon as manufacturing
volumes return we will be there, in place and ready to support. In
the meantime, we continue to be at the forefront of the new and
rapidly growing sub-sectors of our markets, with exciting
opportunities currently being worked on in both the electric
vehicle and 5G markets.
After ten years of continuous growth and strong cash generation,
we have a very solid balance sheet. This coupled with our new
banking facilities provides us with significant flexibility and
security to continue to invest and to make sure that when the
macroeconomic environment begins to settle, we have the best
foundation and are in the best possible position to add further
stimulus to our growth ambitions.
Trifast is a global business serving a broad and balanced range
of sectors and geographies, generating c.70% of revenues and
profits outside of the UK and with no one customer representing
greater than 7% of revenue. We are a full service provider to our
multinational customers, delivering reliable product engineering,
quality and supply, via flexible global logistics solutions. In the
long term, it is these core skills that will continue to allow us
to increase market share across a wide customer base and put us in
a good position to keep moving forward and delivering on our future
aspirations.
Despite the short-term end market weaknesses and macroeconomic
uncertainty, we are confident in the strong long-term fundamentals
of our business model. The Board remains committed to its ongoing
investment driven growth strategy and is optimistic for the
long-term future.
RISKS AND UNCERTAINTIES
The Directors do not consider that the principal risks and
uncertainties of the Group have changed since the publication
in June 2019 of the Group's Annual Report for the year ended 31
March 2019. The principal risks and uncertainties include: loss of
key personnel and resource, a major quality issue, foreign exchange
volatility, macroeconomic factors, loss of a key customer and
debtor exposure, interruption of supply, inventories obsolescence,
a breach of cyber security and Brexit. A copy of this publication
can be found on the website www.trifast.com.
No system can fully eliminate risk and therefore the
understanding of operational risk is central to the management
process within TR. The Group operates a system of internal control
and risk management to provide assurance that we are managing risk
whilst achieving our business objectives. Risk assessment reviews
are regularly carried out by management, with responsibilities for
monitoring and mitigating personally allocated to a broad spread of
individual managers. These reviews are analysed and discussed at
Audit Committee meetings chaired by our Senior Independent
Non-Executive Director.
As with all businesses, the Group faces risks, with some not
wholly within its control, which could have a material impact on
the Group, and may affect its performance with actual results
becoming materially different from both forecast and historic
results. There are indications that the macroeconomic climate is
still under pressure, and so, we continue to remain vigilant for
any indications that could adversely impact expected results going
forward. Past and future acquisitions can also carry impairment
risks on goodwill should there be a sustained downturn in trading
within an acquired subsidiary.
The long-term success of the Group depends on the ongoing
review, assessment and control of the key business risks it
faces.
IFRS16 impacts
Underlying measures HY2020 IFRS16 HY2020 HY2019
impact
(post-IFRS16) (pre (pre-
-IFRS16) IFRS16)
CER
--------------- ---------- ---------- ---------
GP% 28.7% +10bps 28.6% 30.2%
--------------- ---------- ---------- ---------
Underlying EBITDA GBP13.5m +GBP1.6m GBP11.9m GBP12.9m
--------------- ---------- ---------- ---------
Underlying EBITDA% 13.2% +160bps 11.6% 12.3%
--------------- ---------- ---------- ---------
Underlying operating profit (UOP) GBP10.9m +GBP0.2m GBP10.7m GBP11.9m
--------------- ---------- ---------- ---------
UOP% 10.6% +10bps 10.5% 11.3%
--------------- ---------- ---------- ---------
Underlying profit before tax GBP10.4m - GBP10.4m GBP11.6m
--------------- ---------- ---------- ---------
AER
--------------- ---------- ---------- ---------
Underlying diluted EPS 6.52p - 6.52p 7.20p
--------------- ---------- ---------- ---------
Return on capital employed (ROCE) 16.5% -70bps 17.2% 19.5%
--------------- ---------- ---------- ---------
Net debt GBP31.8m +GBP16.1m GBP15.7m* GBP13.5m
--------------- ---------- ---------- ---------
Net debt to underlying EBITDA ratio 1.16x +0.51x 0.65x* 0.54x
--------------- ---------- ---------- ---------
Underlying cash conversion as a percentage
of underlying EBITDA 60.5% -840bps 68.9% 67.4%
--------------- ---------- ---------- ---------
Net financing costs GBP0.5m +GBP0.2m GBP0.3m GBP0.3m
--------------- ---------- ---------- ---------
GAAP Measures (AER)
--------------- ---------- ---------- ---------
Operating profit GBP8.4m +GBP0.2m GBP8.2m GBP8.3m
--------------- ---------- ---------- ---------
Operating profit % 8.2% +10bps 8.1% 7.9%
--------------- ---------- ---------- ---------
Profit before tax GBP7.9m - GBP7.9m GBP8.0m
--------------- ---------- ---------- ---------
Diluted EPS 4.82p - 4.82p 4.82p
--------------- ---------- ---------- ---------
*These measures are referred to as adjusted net debt and
adjusted net debt to Underlying EBITDA ratio in the business
review
Trifast plc - responsibility statement
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by
the EU;
-- the interim management report includes a fair review of the information required by:
a. DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed
set of financial statements; and a description of the principal
risks and uncertainties for the remaining six months of the year;
and
b. DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
Mark Belton, Chief Executive Officer
Clare Foster, Chief Financial Officer
18 November 2019
Condensed consolidated interim income statement
Unaudited results for the six months ended 30 September 2019
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
Notes GBP000 GBP000 GBP000
--------------------------------------------- ------- ------------- ------------- ---------
Continuing operations
Revenue 103,107 104,981 208,952
Cost of sales (73,461) (73,327) (146,317)
--------------------------------------------- ------- ------------- ------------- ---------
Gross profit 29,646 31,654 62,635
Other operating income 165 266 464
Distribution expenses (2,311) (2,223) (4,268)
--------------------------------------------- ------- ------------- ------------- ---------
Administrative expenses before separately
disclosed items 2 (16,423) (17,822) (34,635)
IFRS 2 share based payment charge (581) (1,152) (2,454)
Acquired intangible amortisation (712) (734) (1,419)
Net acquisition costs - (177) (3)
Project Atlas (1,267) (1,490) (3,117)
Cost on exercise of executive share options (88) - (107)
--------------------------------------------- ------- ------------- ------------- ---------
Total administrative expenses (19,071) (21,375) (41,735)
--------------------------------------------- ------- ------------- ------------- ---------
Operating profit 8,429 8,322 17,096
--------------------------------------------- ------- ------------- ------------- ---------
Financial income 44 36 80
Financial expenses (550) (356) (755)
--------------------------------------------- ------- ------------- ------------- ---------
Net financing costs (506) (320) (675)
--------------------------------------------- ------- ------------- ------------- ---------
Profit before tax 7,923 8,002 16,421
Taxation 4 (1,938) (2,087) (4,177)
--------------------------------------------- ------- ------------- ------------- ---------
5,985 12,244
--------------------------------------------- ------- ------------- ------------- ---------
Profit for the period
(attributable to equity shareholders of
the parent company) 5,915
--------------------------------------------- ------- ------------- ------------- ---------
Earnings per share
Basic 6 4.92p 4.93p 10.14p
Diluted 6 4.82p 4.82p 9.90p
--------------------------------------------- ------- ------------- ------------- ---------
Condensed consolidated interim statement of comprehensive
income
Unaudited results for the six months ended 30 September 2019
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
---------------------------------------------------------- ------------- ------------- ---------
Profit for the period 5,985 5,915 12,244
Other comprehensive income:
Exchange differences on translation of foreign operations 3,439 1,571 148
(Loss)/profit on a hedge of a net investment taken
to equity (1,142) (295) 466
---------------------------------------------------------- ------------- ------------- ---------
Other comprehensive income recognised directly in
equity,
net of income tax 2,297 1,276 614
---------------------------------------------------------- ------------- ------------- ---------
Total comprehensive income recognised for the period
(attributable to equity shareholders of the parent
company) 8,282 7,191 12,858
---------------------------------------------------------- ------------- ------------- ---------
Condensed consolidated interim statement of changes in
equity
Unaudited results for the six months ended 30 September 2019
Unaudited results for the Share Share Own shares Translation Retained Total
six months ended 30 September capital premium held reserve earnings equity
2019 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------------- -------- -------- ---------- -------------------- --------- -------
Balance at 1 April 2019 6,095 21,914 (3,019) 13,988 82,115 121,093
Effect of change in accounting
policy (see note 1) - - - - (1,069) (1,069)
----------------------------------- -------- -------- ---------- -------------------- --------- -------
Balance at 1 April 2019 (restated) 6,095 21,914 (3,019) 13,988 81,046 120,024
Total comprehensive income for
the period:
Profit for the period - - - - 5,985 5,985
Other comprehensive income for
the year - - - 2,297 - 2,297
Total comprehensive income for
the period - - - 2,297 5,985 8,282
----------------------------------- -------- -------- ---------- -------------------- --------- -------
Transactions with owners, recorded
directly
in equity:
Issue of share capital 1 23 - - - 24
Share based payment transactions
(net of tax) - - - - 482 482
Dividends - - - - (5,134) (5,134)
----------------------------------- -------- -------- ---------- -------------------- --------- -------
Total transactions with owners 1 23 - - (4,652) (4,628)
----------------------------------- -------- -------- ---------- -------------------- --------- -------
Balance at 30 September 2019 6,096 21,937 (3,019) 16,285 82,379 123,678
----------------------------------- -------- -------- ---------- -------------------- --------- -------
Unaudited results for the Share Share Own shares Translation Retained Total
six months ended 30 September capital premium held reserve earnings equity
2018 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------------- -------- -------- ---------- ----------- --------- -------
Balance at 1 April 2018 6,068 21,579 (3,437) 13,374 72,705 110,289
Total comprehensive income for
the period:
Profit for the period - - - - 5,915 5,915
Other comprehensive income for
the year - - - 1,276 - 1,276
Total comprehensive income for
the period - - - 1,276 5,915 7,191
----------------------------------- -------- -------- ---------- ----------- --------- -------
Transactions with owners, recorded
directly
in equity:
Issue of share capital 1 21 - - - 22
Own shares acquired - - 409 - (409) -
Share based payment transactions
(net of tax) - - - - 1,088 1,088
Dividends - - - - (4,625) (4,625)
----------------------------------- -------- -------- ---------- ----------- --------- -------
Total transactions with owners 1 21 409 - (3,946) (3,515)
----------------------------------- -------- -------- ---------- ----------- --------- -------
Balance at 30 September 2018 6,069 21,600 (3,028) 14,650 74,674 113,965
----------------------------------- -------- -------- ---------- ----------- --------- -------
Condensed consolidated interim statement of financial
position
Unaudited results for the six months ended 30 September 2019
30 September 30 September 31 March
2019 2018 2019
Group Notes GBP000 GBP000 GBP000
-------------------------------------------- ----- ------------ ------------ --------
Non-current assets
Property, plant and equipment 21,130 20,664 21,081
Right-of-use asset 14,732 - -
Intangible assets 46,352 45,104 44,818
Deferred tax assets 2,251 2,311 2,129
-------------------------------------------- ----- ------------ ------------ --------
Total non-current assets 84,465 68,079 68,028
-------------------------------------------- ----- ------------ ------------ --------
Current assets
Inventories 63,271 55,594 57,558
Trade and other receivables 51,908 52,405 53,782
Cash and cash equivalents 7 25,027 26,661 25,199
-------------------------------------------- ----- ------------ ------------ --------
Total current assets 140,206 134,660 136,539
-------------------------------------------- ----- ------------ ------------ --------
Total assets 224,671 202,739 204,567
-------------------------------------------- ----- ------------ ------------ --------
Current liabilities
Trade and other payables 34,032 38,492 37,207
Other interest-bearing loans and borrowings 7 537 30,548 32,617
Right-of-use liabilities 7 2,933 - -
Tax payable 1,748 1,640 1,982
Dividends payable 5 3,688 3,307 -
Total current liabilities 42,938 73,987 71,806
-------------------------------------------- ----- ------------ ------------ --------
Non-current liabilities
Trade and other payables - 140 138
Other interest-bearing loans and borrowings 7 40,204 9,645 6,739
Right-of-use liabilities 7 13,115 - -
Provisions 959 991 959
Deferred tax liabilities 3,777 4,011 3,832
-------------------------------------------- ----- ------------ ------------ --------
Total non-current liabilities 58,055 14,787 11,668
-------------------------------------------- ----- ------------ ------------ --------
Total liabilities 100,993 88,774 83,474
-------------------------------------------- ----- ------------ ------------ --------
Net assets 123,678 113,965 121,093
-------------------------------------------- ----- ------------ ------------ --------
Equity
Share capital 6,096 6,069 6,095
Share premium 21,937 21,600 21,914
Own shares held 10 (3,019) (3,028) (3,019)
Translation reserve 16,285 14,650 13,988
Retained earnings 82,379 74,674 82,115
-------------------------------------------- ----- ------------ ------------ --------
Total equity 123,678 113,965 121,093
-------------------------------------------- ----- ------------ ------------ --------
Condensed consolidated interim statement of cash flows
Unaudited results for the six months ended 30 September 2019
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
Group Notes GBP000 GBP000 GBP000
------------------------------------------------------- ----- ------------- ------------- ---------
Cash flows from operating activities
Profit for the period 5,985 5,915 12,244
Adjustments for:
Depreciation, amortisation & impairment (excluding
right-of-use assets' depreciation) 1,872 1,801 3,672
Right-of-use assets' depreciation 1,487 - -
Unrealised foreign currency (gain)/loss (95) (43) 38
Financial income (44) (36) (80)
Financial expense (excluding right-of-use liabilities'
financial expense) 378 356 755
Right-of-use liabilities' financial expense 172 - -
(Gain)/loss on sale of property, plant & equipment
and investments (3) 18 12
Acquisition contingent consideration - discount
unwinding - 76 -
Equity settled share based payment charge 539 1,126 2,414
Taxation charge 1,938 2,087 4,177
------------------------------------------------------- ----- ------------- ------------- ---------
Operating cash inflow before changes in working
capital
and provisions 12,229 11,300 23,232
Change in trade and other receivables 2,918 1,475 (755)
Change in inventories (4,528) (3,649) (6,036)
Change in trade and other payables (3,469) (1,984) (2,645)
Change in provisions - 20 (12)
------------------------------------------------------- ----- ------------- ------------- ---------
Net cash generated from operations 7,150 7,162 13,784
Tax paid (2,159) (2,213) (3,877)
------------------------------------------------------- ----- ------------- ------------- ---------
Net cash generated from operating activities 4,991 4,949 9,907
------------------------------------------------------- ----- ------------- ------------- ---------
Cash flows from investing activities
Proceeds from sale of property, plant & equipment - 2 31
Interest received 45 38 84
Acquisition of subsidiary, net of cash acquired (503) (8,150) (8,150)
Acquisition of property, plant & equipment and
intangibles (1,899) (1,288) (4,180)
------------------------------------------------------- ----- ------------- ------------- ---------
Net cash used in investing activities (2,357) (9,398) (12,215)
------------------------------------------------------- ----- ------------- ------------- ---------
Cash flows from financing activities
Proceeds from the issue of share capital 24 22 353
Proceeds from new loan 46,774 9,393 12,136
Repayment of borrowings (46,638) (3,202) (5,953)
Repayment of right-of-use liabilities (1,729) - -
Payment of finance lease liabilities (17) 22 (2)
Dividends paid (1,447) (1,319) (4,620)
Interest paid (378) (356) (758)
------------------------------------------------------- ----- ------------- ------------- ---------
Net cash (used in)/generated from financing activities (3,411) 4,560 (1,156)
------------------------------------------------------- ----- ------------- ------------- ---------
Net change in cash and cash equivalents (777) 111 (1,152)
Cash and cash equivalents at 1 April 25,199 26,222 26,222
Effect of exchange rate fluctuations on cash held 605 328 129
------------------------------------------------------- ----- ------------- ------------- ---------
Cash and cash equivalents at end of period 7 25,027 26,661 25,199
------------------------------------------------------- ----- ------------- ------------- ---------
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
Unaudited results for the six months ended 30 September 2019
1. Basis of preparation
These condensed consolidated interim financial statements have
been prepared in accordance with the Disclosure and Transparency
Rules (DTR) of the Financial Conduct Authority and International
Financial Reporting Standard (IFRS) IAS 34: Interim Financial
Reporting as adopted by the EU. They do not include all the
information required for full annual financial statements, and
should be read in conjunction with the consolidated financial
statements of the Group as at and for the year ended 31 March 2019.
The annual financial statements of the Group are prepared in
accordance with International Reporting Standards (IFRSs) as
adopted by the EU.
This statement does not comprise full financial statements
within the meaning of Section 495 and 496 of the Companies Act
2006. The statement is unaudited but has been reviewed by KPMG LLP
and their Report is set out at the end of this document.
The comparative figures for the financial year ended 31 March
2019 are not the Company's statutory accounts for that financial
year and have been extracted from the full Annual Report and
Accounts for that financial year. Those accounts have been reported
on by the Company's auditor and delivered to the Registrar of
Companies. The Report of the Auditors was (i) unqualified, (ii) did
not include a reference to any matters to which the auditor drew
attention by way of emphasis without qualifying their Report, and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006.
Except as described below, these condensed consolidated interim
financial statements have been prepared on the basis of accounting
policies set out in the full Annual Report and Accounts for the
year ended 31 March 2019.
This note explains the impact of the adoption of IFRS 16 Leases
on the group's financial statements and discloses the new
accounting policies that have been applied from 1 April 2019.
The group adopted IFRS 16 retrospectively from 1 April 2019
under the modified retrospective approach and therefore has not
restated comparatives for the 2019 reporting period. The
reclassifications and the adjustments arising from the new leasing
rules are therefore recognised in the opening balance sheet on 1
April 2019.
Policy applied from 1 April 2019 - The Group as lessee
The Group's leases primarily comprise of right-of-use assets
regarding Land & buildings, Motor vehicles and Equipment.
Short-term leases and leases for which the underlying asset is of a
low value are excluded.
The Group recognises a right-of-use asset and a lease liability
at the lease commencement date. The right-of-use asset is initially
measured at cost, and subsequently at cost less any accumulated
depreciation and impairment losses. The right-of-use asset is
subsequently depreciated using the straight-line method from the
lease commencement date to the end of the lease term. In addition,
the right-of-use asset is periodically reduced by impairment
losses, if any, and adjusted for certain remeasurements of the
lease liability.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the Group's incremental
borrowing rate. Generally, the Group uses its incremental borrowing
rate.
The lease liabilities are subsequently increased by the interest
cost on the lease liability and decreased by lease payments made.
The liability will be remeasured if there is a change in the future
lease payments or if there are changes in the estimated length of
the lease.
The lease period is established as the non-cancellable period
together with the opportunity to extend the lease if the lessee is
reasonably certain to utilise that option, and periods covered by
an opportunity to terminate the lease if the lessee is reasonably
certain not to utilise that option.
Practical Expedients applied
In applying IFRS 16 for the first time, the group has used the
following practical expedients permitted by the standard:
-- the use of a single discount rate to a portfolio of leases
with reasonably similar characteristics
-- the accounting for operating leases with a remaining lease
term of less than 12 months as at 1 April 2019 as short-term
leases
-- the exclusion of initial direct costs for the measurement of
the right-of-use asset at the date of initial application, and
-- the use of hindsight in determining the lease term where the
contract contains options to extend or terminate the lease
The Group has also elected not to reassess whether a contract is
or contains a lease at the date of initial application. Instead,
for contracts entered into before the transition date the Group
relied on its assessment made applying IAS 17 and IFRIC 4
Determining whether an Arrangement contains a Lease.
Adjustments recognised on adoption of IFRS 16
On adoption of IFRS 16, the Group recognised lease liabilities
in relation to leases which had previously been classified as
operating leases under the principles of IAS 17 Leases. These
liabilities were measured at the present value of the remaining
lease payments, discounted using the lessee's incremental borrowing
rate as of 1 April 2019. The Group also recognised right-of-use
assets for properties, vehicles & equipment which were measured
on a retrospective basis as if the new rules had always been
applied. This has been summarised below.
1 April
2019 GBP'000
--------------------------------------- -------------
Right-of-use assets 12,909
Deferred tax asset 251
Right-of-use liabilities (current) 2,727
Right-of-use liabilities (non-current) 11,566
Prepayments (117)
Accruals (180)
Retained Earnings (1,069)
--------------------------------------- -------------
When measuring lease liabilities for leases that were classified
as operating leases, the Group discounted lease payments using its
incremental borrowing rate at 1 April 2019. The weighted average
rate applied is 2.4%.
1 April
2019 GBP'000
------------------------------------------------------------ --------------
Operating lease commitment as at 31 March 2019 as
disclosed in the Group's consolidated financial statements 14,283
Recognition exemption for leases of low-value assets (160)
Recognition exemption for leases with less than 12
months lease term at transition (250)
------------------------------------------------------------ --------------
Operating leases in scope of IFRS 16 13,873
Discounted using the incremental borrowing rate as
1 April 2019 (1,676)
Inception date before transition date but lease commenced
after (203)
Difference between minimum lease payments & end of
lease 2,105
Extension options reasonably certain to be exercised 194
------------------------------------------------------------ --------------
Lease liabilities recognised at 1 April 2019 14,293
------------------------------------------------------------ --------------
The recognised right-of-use assets relate to the following types
of assets:
1 April
2019 GBP'000
------------------------- --------------
Land & buildings 11,925
Motor vehicles 951
Equipment 33
Total right-of-use asset 12,909
------------------------- --------------
A number of amendments to existing standards are also effective
from 1 April 2019 but they do not have a material effect on the
Group financial statements.
Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the accompanying business review from the Chief
Executive Officer and Chief Financial Officer. The financial
position of the Group, its cash flows, liquidity position and
borrowing facilities are also described in the same report. In
addition, note 26 to the Group's previously published financial
statements for the year ended 31 March 2019 include the Group's
objectives, policies and processes for managing its capital; its
financial risk management objectives; details of its financial
instruments and hedging activities; and its exposures to credit
risk and liquidity risk.
These condensed consolidated interim financial statements have
been prepared on a going concern basis which the Directors consider
to be appropriate.
Estimates
The preparation of financial statements in conformity with IFRSs
requires management to make estimates, judgements and assumptions
that affect the application of policies and reported amounts of
assets and liabilities, income and expenses. The estimates and
associated assumptions take account of the circumstances and facts
at the period end, historical experience of similar situations and
other factors that are believed to be reasonable and relevant, the
results which form the basis of making the judgements about
carrying values of assets and liabilities that are not readily
available from other sources. Actual results may ultimately differ
from these estimates.
In preparing these condensed consolidated interim financial
statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty include those disclosed in the consolidated
financial statements for the year ended 31 March 2019.
The key judgement made by management relates to Project Atlas
costs meeting the capitalisation criteria under IAS 38 Intangible
Assets, allowing directly attributable costs to be capitalised. No
other key judgements have been made, other than those involving
estimations. The key sources of estimation uncertainty are
inventory valuation and recoverability of goodwill.
In the 31 March 2019 consolidated financial statements, in note
12, specific disclosure was made around sensitivity to changes in
key assumptions relating to impairment testing for the
recoverability of goodwill relating to TR VIC (GBP10.1m). The
unsettled political climate, as well as the economic struggles in
Italy, had caused the year end discount rate for TR VIC to
significantly increase, thus reducing headroom. As at our 30
September 2019 impairment review, this discount rate had reduced to
9.9% (FY2019: 11.2%). However, we note that the ongoing
recoverability of the TR VIC goodwill amount continues to be
sensitive to any subsequent increase in this rate.
2. Underlying performance (before separately disclosed
items)
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
------------------------------------------------- -------------- -------------- ---------
Underlying profit before tax 10,571 11,555 23,521
Separately disclosed items within administrative
expenses:
IFRS 2 share based payment charge (581) (1,152) (2,454)
Acquired intangible amortisation (712) (734) (1,419)
Net acquisition costs - (177) (3)
Project Atlas (1,267) (1,490) (3,117)
Cost on exercise of executive share options (88) - (107)
Profit before tax 7,923 8,002 16,421
------------------------------------------------- -------------- -------------- ---------
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
------------------------------------------------- -------------- -------------- ---------
Underlying EBITDA 13,724 12,942 26,449
Separately disclosed items within administrative
expenses:
IFRS 2 share based payment charge (581) (1,152) (2,454)
Net acquisition costs - (177) (3)
Project Atlas (1,267) (1,490) (3,117)
Cost on exercise of executive share options (88) - (107)
EBITDA 11,788 10,123 20,768
------------------------------------------------- -------------- -------------- ---------
Acquired intangible amortisation (712) (734) (1,419)
Depreciation and non-acquired amortisation (2,647) (1,067) (2,253)
------------------------------------------------- -------------- -------------- ---------
Operating profit 8,429 8,322 17,096
------------------------------------------------- -------------- -------------- ---------
Consistent with prior periods, management feel it is appropriate
to remove event driven costs and certain non-trading items included
above to better allow the reader of the accounts to understand the
underlying performance of the Group. Further reconciliations of
underlying measures to IFRS measures can be found in note 9.
IFRS2 share based payment charges have continued to be
specifically presented as separately disclosed items within
administrative expenses. We understand that these costs are more
conventionally included within underlying results and we confirm
management's intention to present these as such at the appropriate
time. However, currently the underlying equity award schemes that
form the basis of these charges are under a period of significant
development.
This includes:
-- the cessation of the Board deferred equity schemes that were
in operation from FY2014 to FY2017;
-- the one-off introduction of a three-year Senior Manager
deferred equity bonus award in FY2016;
-- the introduction of the current annual, rolling three year
Board LTIP share awards in FY2018; and
-- the subsequent introduction of a new annual, rolling three
year Senior Manager LTIP share award scheme in FY2020
As a result of the above, the annual IFRS2 charge is expected to
be subject to a significant degree of volatility until we reach a
more stable ongoing position. We consider that this ongoing
volatility, if presented within our underlying results in the short
to medium-term, will only detract readers from being able to gain a
clear understanding of the Group's underlying trading position.
Management will continue to periodically assess this decision to
determine when IFRS2 share based payment charges will become part
of the underlying results.
The rationale for the exclusion of Project Atlas costs is
provided within the business review.
3. Geographical operating segments
The Group is comprised of the following main geographical
operating segments:
-- UK
-- Europe includes Norway, Sweden, Germany, Hungary, Ireland,
Italy, Holland, Spain and Poland
-- USA includes USA and Mexico
-- Asia includes Malaysia, China, Singapore, Taiwan, Thailand,
Philippines and India
In presenting information on the basis of geographical operating
segments, segment revenue and segment assets are based on the
geographical location of our entities across the world consolidated
into the four distinct geographical regions, which the Board use to
monitor and assess the Group.
Goodwill and intangible assets acquired on business combinations
are included in the region to which they relate. This is consistent
with the internal management reports that are reviewed by the Chief
Operating Decision Maker.
Segment revenue and results under the primary reporting format
for the six months ended 30 September 2019 and 2018 are disclosed
in the table below:
Central
costs,
assets
and
UK Europe USA Asia liabilities Total
September 2019 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------------- -------- -------- -------- -------- ------------ ---------
Revenue*
Revenue from external customers 36,963 36,093 5,351 24,700 - 103,107
Inter segment revenue 1,459 972 120 4,903 - 7,454
-------------------------------- -------- -------- -------- -------- ------------ ---------
Total revenue 38,422 37,065 5,471 29,603 - 110,561
-------------------------------- -------- -------- -------- -------- ------------ ---------
Underlying operating profit 3,979 3,136 260 4,700 (998) 11,077
Net financing costs (89) (47) (61) (10) (299) (506)
-------------------------------- -------- -------- -------- -------- ------------ ---------
Underlying profit before tax 3,890 3,089 199 4,690 (1,297) 10,571
Separately disclosed items
(see note 2) (2,648)
-------------------------------- -------- -------- -------- -------- ------------ ---------
Profit before tax 7,923
-------------------------------- -------- -------- -------- -------- ------------ ---------
Specific disclosure items
Depreciation and amortisation (870) (1,372) (113) (953) (51) (3,359)
Assets and liabilities
Segment assets 63,109 76,909 9,159 63,152 12,342 224,671
Segment liabilities (25,080) (16,487) (1,353) (13,319) (44,754) (100,993)
-------------------------------- -------- -------- -------- -------- ------------ ---------
Central
costs,
assets
and
UK Europe USA Asia liabilities Total
September 2018 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------------- -------- -------- -------- -------- ------------ --------
Revenue*
Revenue from external customers 37,628 37,718 4,176 25,459 - 104,981
Inter segment revenue 1,551 719 84 5,296 - 7,650
-------------------------------- -------- -------- -------- -------- ------------ --------
Total revenue 39,179 38,437 4,260 30,755 - 112,631
-------------------------------- -------- -------- -------- -------- ------------ --------
Underlying operating profit 4,272 4,491 204 4,900 (1,992) 11,875
Net financing (costs)/income (45) (22) (5) 30 (278) (320)
-------------------------------- -------- -------- -------- -------- ------------ --------
Underlying profit before tax 4,227 4,469 199 4,930 (2,270) 11,555
Separately disclosed items
(see note 2) (3,553)
-------- -------- -------- -------- ------------ --------
Profit before tax 8,002
-------------------------------- -------- -------- -------- -------- ------------ --------
Specific disclosure items
Depreciation and amortisation (361) (931) (23) (447) (39) (1,801)
Assets and liabilities
Segment assets 51,131 78,972 5,069 59,445 8,122 202,739
Segment liabilities (18,888) (16,343) (905) (13,418) (39,220) (88,774)
-------------------------------- -------- -------- -------- -------- ------------ --------
* Revenue is derived from the manufacture and logistical supply
of industrial fasteners and category 'C' components.
4. Taxation
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
-------------------------------------- ------------- ------------- ---------
Current tax on income for the period
UK tax 134 396 496
Foreign tax 1,902 1,940 3,941
Deferred tax income (103) (269) (262)
Adjustments in respect of prior years 5 20 2
-------------------------------------- ------------- ------------- ---------
1,938 2,087 4,177
-------------------------------------- ------------- ------------- ---------
The HY2020 underlying effective tax rate (ETR) of 23.4% (HY2019:
23.5%) is in line with our normalised ETR range of c.22.5-25%,
based on the geographical split of the Group's profits. The
effective tax rate has reduced to 24.5% (HY2019: 26.1%) due to the
change in mix of profits by legal entity.
5. Dividend
The dividend payable of GBP3.7m represents the final dividend
for the year ended 31 March 2019 which was approved by Shareholders
at the AGM on 24 July 2019 and paid on 11 October 2019 to Members
on the Register on 13 September 2019.
6. Earnings per share
The calculation of earnings per 5 pence ordinary share is based
on profit for the period after taxation and the weighted average
number of shares in the period of 121,737,700 (HY2019: 119,894,777,
FY2019: 120,723,637).
The calculation of the fully diluted earnings per 5 pence
ordinary share is based on profit for the period after taxation. In
accordance with IAS 33 the weighted average number of shares in the
period has been adjusted to take account of the effects of all
dilutive potential ordinary shares. The number of shares used in
the calculation amount to 124,221,747 (HY2019: 122,761,456; FY2019:
123,734,170).
The underlying diluted earnings per share, which in the
Directors' opinion best reflects the underlying performance of the
Group, is detailed below:
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
-------------------------------------------- ------------- ------------- ---------
Profit after tax for the period 5,985 5,915 12,244
IFRS 2 share based payment charge 581 1,152 2,454
Acquired intangible amortisation 712 734 1,419
Cost on exercise of executive share options 88 - 107
Net acquisitions costs - 177 3
Project Atlas 1,267 1,490 3,117
Tax charge on adjusted items above (536) (630) (1,370)
Underlying profit after tax 8,097 8,838 17,974
-------------------------------------------- ------------- ------------- ---------
Basic EPS 4.92p 4.93p 10.14p
Diluted EPS 4.82p 4.82p 9.90p
Underlying diluted EPS 6.52p 7.20p 14.53p
7. Analysis of net debt
At At At
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
------------------------------- ------------- ------------- ---------
Net cash and cash equivalents 25,027 26,661 25,199
------------------------------- ------------- ------------- ---------
Debt due within one year (3,470) (30,548) (32,617)
Debt due after one year (53,319) (9,645) (6,739)
------------------------------- ------------- ------------- ---------
Gross debt (56,789) (40,193) (39,356)
------------------------------- ------------- ------------- ---------
Net debt (31,762) (13,532) (14,157)
------------------------------- ------------- ------------- ---------
Right-of-use lease liabilities 16,048 - -
------------------------------- ------------- ------------- ---------
Adjusted net debt* (15,714) (13,532) (14,157)
------------------------------- ------------- ------------- ---------
*Adjusted net debt is stated before IFRS16 right-of-use lease
liabilities. There is no impact to HY2019 and FY2019 as IFRS16 was
applied under the modified retrospective approach, see note 1.
On 16 April 2019, all of the Group's centrally held facilities
and the ABL facility in TR Fastenings Ltd were redeemed via a new
four year Revolving Credit Facility of up to GBP80m maturing in
April 2023. These new facilities have been reflected in debt due
after one year, as they include the right to an automatic roll over
of outstanding funds.
8. Reconciliation of net cash flow to movement in net debt
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
----------------------------------------------------- ------------- ------------- ---------
Net (decrease)/increase in cash and cash equivalents (777) 111 (1,152)
Net increase in right-of-use liabilities (1,544) - -
Net increase in borrowings (124) (6,213) (6,181)
----------------------------------------------------- ------------- ------------- ---------
(2,445) (6,102) (7,333)
Exchange rate differences (867) 1 607
----------------------------------------------------- ------------- ------------- ---------
Movement in net debt (3,312) (6,101) (6,726)
Opening net debt* (28,450) (7,431) (7,431)
----------------------------------------------------- ------------- ------------- ---------
Closing net debt (31,762) (13,532) (14,157)
----------------------------------------------------- ------------- ------------- ---------
*Net debt at 1 April 2019 was restated to include GBP14.3m of
right-of-use liabilities due to the IFRS 16 Leases accounting
standard change (see note 1).
9. Alternative Performance Measure
The half-yearly financial report includes both IFRS measures and
Alternative Performance Measures (APMs), the latter of which are
considered by management to better allow the readers of the
accounts to understand the underlying performance of the Group. A
number of these APMs are used by management to measure the KPIs of
the business (see the business review) and are therefore aligned to
the Group's strategic aims. They are also used at Board level to
monitor financial performance throughout the year.
The APMs used in the half-yearly financial report (including the
basis of calculation, assumptions, use and relevance) are detailed
in note 2 (underlying profit before tax, EBITDA and underlying
EBITDA) and below.
-- Constant Exchange Rate (CER) figures
These are used predominantly in the Business review and give the
readers a better understanding of the performance of the Group,
regions and entities from a trading perspective. They have been
calculated by translating the HY2020 income statement results (of
subsidiaries whose presentational currency is not sterling) using
HY2019 average exchange rates to provide a comparison which removes
the foreign currency translational impact. The impact of
translational gains and losses made on non-functional currency net
assets held around the Group have not been removed.
-- Organic measures
Organic measures are calculated before the impact of
acquisitions. This provides a better 'like-for-like' comparison
against the prior period for the reader. Acquisitions are included
in organic figures from the start of the 13(th) month of being part
of the Group.
-- Underlying diluted EPS
A key measure for the Group as it is one of the measures used to
set the Directors' variable remuneration. The calculation has been
disclosed in note 6.
-- Return on capital employed (ROCE)
Return on capital employed is a key metric used by investors to
understand how efficient the Group is with its capital employed.
The calculation is underlying EBIT divided by average capital
employed (net assets + net debt), multiplied by 100%. Underlying
EBIT has been reconciled to operating profit below.
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
------------------------------------------------- ------------- ------------- ---------
Underlying EBIT/Underlying operating profit 11,077 11,875 24,196
Separately disclosed items within administrative
expenses
IFRS2 share based payment charge (581) (1,152) (2,454)
Acquired intangible amortisation (712) (734) (1,419)
Net acquisition costs - (177) (3)
Project Atlas (1,267) (1,490) (3,117)
Cost on exercise of executive share options (88) - (107)
------------------------------------------------- ------------- ------------- ---------
Operating profit 8,429 8,322 17,096
------------------------------------------------- ------------- ------------- ---------
-- Underlying cash conversion as a percentage of underlying
EBITDA
This is another key metric used by investors to understand how
effective the Group was at converting profit into cash. Since the
underlying cash conversion is compared to underlying EBITDA, which
has removed the impact of IFRS2 share based payment charges,
acquisition costs and Project Atlas (see note 2), the impact of
these have also been removed from the underlying cash conversion.
The adjustments made to arrive at underlying cash conversion from
cash generated from operations are detailed below. To reconcile
operating profit to underlying EBITDA, see note 2.
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
--------------------------------------------- ------------- ------------- ---------
Underlying cash conversion 8,306 8,722 17,154
Cost on exercise of executive share options (88) - (107)
Acquisition costs - (274) (101)
Expensed Project Atlas costs paid (1,068) (1,286) (3,162)
Cash generated from operations 7,150 7,162 13,784
--------------------------------------------- ------------- ------------- ---------
-- Underlying effective tax rate
This is used in the underlying diluted EPS calculation. It
removes the tax impact of separately disclosed items in the year to
arrive at a tax rate based on the underlying profit before tax.
-- Adjusted net debt and adjusted net debt to Underlying EBITDA
ratio
This removes the impact of IFRS16 from both net debt and
Underlying EBITDA from HY2020. There is no impact to HY2019 and
FY2019 as IFRS16 was applied under the modified retrospective
approach, see note 1
Six months
ended
30 September
2019
GBP000
---------------------------------------------------- -------------
Net debt (31,762)
Right-of-use lease liabilities 16,048
---------------------------------------------------- -------------
Adjusted net debt (15,714)
Underlying EBITDA 13,724
Operating lease rentals (1,654)
---------------------------------------------------- -------------
Adjusted EBITDA 12,070
Net debt to annualised Underlying EBITDA ratio 0.65x
Adjusted net debt to annualised adjusted Underlying
EBITDA ratio 1.16x
---------------------------------------------------- -------------
10. Own shares held
The own shares held reserve comprises the cost of the Company's
shares held by the Group. At 30 September 2019 the Group held
1,317,378 of the Company's shares (30 September 2018: 1,317,378; 31
March 2019: 1,317,378).
11. Disaggregation of revenue
In line with IFRS 15 Revenue from Contracts with Customers we
have included the disaggregation of external revenue by sector,
breaking this down by our geographical operating segments.
September 2019 UK Europe USA Asia Total
--------------------------------- ---- ------- ---- ----- ------
Electronics 4% 4% 1% 6% 15%
Automotive 9% 12% 4% 8% 33%
Domestic appliances 2% 12% - 6% 20%
Distributors 9% - - 2% 11%
General industrial 7% 5% - 1% 13%
Other 5% 2% - 1% 8%
--------------------------------- ---- ------- ---- ----- ------
Revenue from external customers
(AER) 36% 35% 5% 24% 100%
--------------------------------- ---- ------- ---- ----- ------
September 2018 UK Europe USA Asia Total
---------------------------------
Electronics 5% 4% 2% 5% 16%
Automotive 9% 14% 2% 8% 33%
Domestic appliances 2% 12% - 6% 20%
Distributors 9% - - 2% 11%
General industrial 7% 4% - 2% 13%
Other 4% 2% - 1% 7%
--------------------------------- ---- ------- ---- ----- ------
Revenue from external customers
(AER) 36% 36% 4% 24% 100%
--------------------------------- ---- ------- ---- ----- ------
INDEPENT REVIEW REPORT TO TRIFAST PLC
Conclusion
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 September 2019 which comprises the condensed
consolidated interim income statement, the condensed consolidated
interim statement of comprehensive income, the condensed
consolidated interim statement of changes in equity, the condensed
consolidated interim statement of financial position, the condensed
consolidated interim statement of cash flows and the related
explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
September 2019 is not prepared, in all material respects, in
accordance with IAS 34 Interim Financial Reporting as adopted by
the EU and the Disclosure Guidance and Transparency Rules ("the
DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. We read the other information contained in the
half-yearly financial report and consider whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
The impact of uncertainties due to the UK exiting the European
Union on our review
Uncertainties related to the effects of Brexit are relevant to
understanding our review of the condensed financial statements.
Brexit is one of the most significant economic events for the UK,
and at the date of this report its effects are subject to
unprecedented levels of uncertainty of outcomes, with the full
range of possible effects unknown. An interim review cannot be
expected to predict the unknowable factors or all possible future
implications for a company and this is particularly the case in
relation to Brexit.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with International Financial
Reporting Standards as adopted by the EU. The Directors are
responsible for preparing the condensed set of financial statements
included in the half-yearly financial report in accordance with IAS
34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the Company in accordance with the
terms of our engagement to assist the Company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the Company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company for our
review work, for this report, or for the conclusions we have
reached.
Mark Sheppard
for and on behalf of KPMG LLP
Chartered Accountants
1 Forest Gate
Brighton Road, Crawley
West Sussex, RH11 9PT
18 November 2019
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
IR FFAFMAFUSEDF
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November 19, 2019 02:00 ET (07:00 GMT)
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