TIDMTRI
RNS Number : 2473G
Trifast PLC
24 November 2020
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.
Tuesday, 24 November 2020
TRIFAST PLC
"Our fastenings enable innovation today, to build a better
tomorrow"
HALF-YEARLY FINANCIAL REPORT
FOR THE SIX MONTHSED 30 SEPTEMBER 2020
Key financials
---------------------------- -------- -------- -------- --------- ----------
CER CER AER AER
Underlying measures HY2021 change HY2021 change HY2020
---------------------------- -------- -------- -------- --------- ----------
Revenue GBP81.5m (21.0)% GBP81.0m (21.4)% GBP103.1m
Gross profit % 27.1% (170)bps 27.0% (180)bps 28.8%
Underlying operating profit
(UOP)* GBP4.6m (58.0)% GBP4.6m (58.9)% GBP11.1m
Underlying operating profit
%* 5.7% (500)bps 5.6% (510)bps 10.7%
Underlying profit before
tax* GBP4.1m (60.8)% GBP4.1m (61.7)% GBP10.6m
Underlying diluted earnings
per share* 2.38p (63.5)% 2.31p (64.6)% 6.52p
Bank facility headroom GBP40.6m +GBP0.7m GBP39.9m
Adjusted net cash/(debt) GBP3.4m +GBP19.1m GBP(15.7)m
(^)
Return on capital employed
(ROCE)* 7.8% (870)bps 16.5%
---------------------------- -------- -------- -------- --------- ----------
GAAP measures
Operating profit GBP3.2m (62.6)% GBP8.4m
Operating profit % 3.9% (430)bps 8.2%
Profit before tax GBP2.7m (66.5)% GBP7.9m
Diluted earnings per share 1.48p (69.3)% 4.82p
---------------------------- -------- -------- -------- --------- ----------
"CER" being Constant Exchange Rate & "AER" being Average
Exchange Rate
* Before separately disclosed items (see notes 2, 6 and 9)
^Adjusted net cash/(debt) is presented excluding the impact of
IFRS16 Leases as this is how the calculation is performed for the
purposes of the Group's banking facilities. Including
right-of-use-liabilities, net cash would decrease by GBP13.9m to
net debt of GBP10.5m (HY2020: net debt would increase by GBP16.1m
to GBP31.8m)
Operational highlights
-- Resilient performance in extremely challenging macroeconomic conditions
-- Swift and effective operational and cost saving actions
secure underlying operating profit margins of 5.7% (HY2020:
10.7%)
-- Recovery begins across all sectors and regions during Q2:
o Domestic appliances sector has shown the fastest recovery
o European region returns to consistent growth for each month of
Q2 against the prior year
o Automotive and UK recovery begins, but is slower off the
mark
-- Operational Executive Board ('OEB') hits the ground running
to develop and drive organic growth and efficiency
opportunities
-- Project Atlas:
o First successful site roll-out in Ireland in October
o New global HR system starts to be implemented across Europe
and the USA first
-- Net cash position following a successful equity raise and
c.GBP40m of banking facility headroom provide flexibility and
confidence to finance our investment driven growth plans
"In the short term, the outlook for the macroeconomic
environment remains uncertain. Second waves of COVID-19 infection
in our major markets in the UK, Europe and the USA and any
resulting local lockdowns could impact on operations or trading
volumes. However, we have already demonstrated that as a business
we can react quickly and effectively in the face of such
disruption. We continue to have good access to banking facilities,
with headroom of c.GBP40m, providing us with the security and
flexibility to continue to invest in our future growth. The Board
therefore remains committed to its ongoing investment driven growth
strategy and is optimistic for the medium and long-term future"
Jonathan Shearman, Non-Executive Chair
"We are not complacent, but we are excited by the activity
levels and pipeline of opportunities that we are seeing, with
additional prospects for growth already secured, and enquiries
underway across a number of sectors including electric vehicle, 5G
and medical"
Mark Belton, Chief Executive Officer
Enquiries please contact:
---------------------------------------------------
Trifast plc
Jonathan Shearman, Non-Executive Chair
Mark Belton, Chief Executive Officer
Clare Foster, Chief Financial Officer
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
Trifast plc (TR) is an international specialist in the design, engineering,
manufacture, and distribution of high quality industrial and Category
'C' component s principally to major global assembly industries. TR employs
c.1,300 people across 32 business locations within the UK, Asia, Europe,
and the USA including seven high-volume, high-quality, and cost-effective
manufacturing sites across the world. TR supplies to over 5,000 customers
in >75 countries worldwide. As a full-service provider to multinational
OEMs and Tier 1 companies spanning several sectors, TR delivers comprehensive
support to its customers across every requirement, from concept design
through to technical engineering consultancy, manufacturing, supply management
and global logistics.
For more information, visit
Investor website: www.trifast.com
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
2020. Copies can 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. News updates, Regulatory News
and Financial statements, can be viewed and downloaded from the Group's
website, www.trifast.com.
Forward-looking statements
This announcement contains certain forward-looking statements. These
reflect the knowledge and information available to the Company during
the preparation and up to the publication of this document. By their
very nature, these statements depend upon circumstances and relate to
events that may occur in the future thereby involving a degree of uncertainty.
Therefore, nothing in this document should be construed as a profit forecast
by the Company.
TRIFAST PLC
HALF-YEARLY FINANCIAL REPORT
FOR THE SIX MONTHSED 30 SEPTEMBER 2020
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 HY2021 figures by the average HY2020 exchange
rate.
The impact of foreign exchange movements has decreased our AER
revenue by 0.4%, GBP0.5m (HY2020: increased by 0.9%, GBP0.9m), our
AER underlying profit before tax by 0.9%, GBPnil (HY2020: increased
by 1.7%, GBP0.2m) and our AER underlying diluted EPS by 1.1%, 0.07p
(HY2020: increased by 1.9%, 0.13p).
Our Group performance
Underlying measures HY2021 Change HY2021 Change HY2020
CER at CER AER at AER
Revenue GBP81.5m (21.0)% GBP81.0m (21.4)% GBP103.1m
--------- --------- --------- --------- ----------
GP% 27.1% (170)bps 27.0% (180)bps 28.8%
--------- --------- --------- --------- ----------
Underlying EBITDA* GBP7.5m (45.5)% GBP7.4m (46.3)% GBP13.7m
--------- --------- --------- --------- ----------
Underlying EBITDA%* 9.2% (410)bps 9.1% (420)bps 13.3%
--------- --------- --------- --------- ----------
Underlying operating
profit (UOP)* GBP4.6m (58.0)% GBP4.6m (58.9)% GBP11.1m
--------- --------- --------- --------- ----------
UOP%* 5.7% (500)bps 5.6% (510)bps 10.7%
--------- --------- --------- --------- ----------
Underlying profit before
tax* GBP4.1m (60.8)% GBP4.1m (61.7)% GBP10.6m
--------- --------- --------- --------- ----------
Underlying diluted EPS* 2.38p (63.5)% 2.31p (64.6)% 6.52p
--------- --------- --------- --------- ----------
Return on capital employed
ROCE* 7.8% (870)bps 16.5%
---------------------------- --------- --------- --------- --------- ----------
GAAP measures
--------- --------- --------- --------- ----------
Operating profit GBP3.2m (62.6)% GBP8.4m
--------- --------- --------- --------- ----------
Operating profit % 3.9% (430)bps 8.2%
--------- --------- --------- --------- ----------
Profit before tax GBP2.7m (66.5)% GBP7.9m
--------- --------- --------- --------- ----------
Diluted EPS 1.48p (69.3)% 4.82p
--------- --------- --------- --------- ----------
*Before separately disclosed items (see notes 2, 6 and 9)
The first half of FY2021 has been an extremely turbulent and
challenging time for the business. COVID-19 has had a significant
impact on trading in the first quarter. However as a result of
swift and significant action taken, all the Group's facilities were
back open and operational by 30 April 2020 and we are pleased to
report we have kept supply chains open and did not let a single
customer down over this difficult period.
As a result of this disruption, revenue in April 2020 was
approximately 50 percent lower year-on-year, with profitability
severely impacted. As previously reported, trading results in
subsequent months continued to grow with a step change in June
followed by incremental improvements against FY2020 throughout the
rest of HY1. In the month of September, the Group overall returned
to year-on-year growth, a trend that we have continued to see
across October and into November.
End markets across all our key sectors had a weak start to the
year, with the automotive sector showing the slowest start to
recovery and making up a reduced 27% of Group revenues in the
period (HY2020: 33%; FY2020:
34%). Encouragingly, towards the end of Q2, we saw a more steady state recovery in this market.
In the context of this high degree of uncertainty and volatility
in the macroeconomic climate, we were pleased that we were able to
contain the reduction in revenue to 21.0% to GBP81.5m (AER: down
21.4% to GBP81.0m; HY2020: GBP103.1m).
Gross margins have reduced by 170bps to 27.1% (HY2020: 28.8%) as
fixed and semi-fixed costs are less easily absorbed by the
reduction in sales, product mixes shift, and stock provisioning
levels increase. Notwithstanding the mitigating cost saving actions
we undertook, operational gearing has seen our underlying operating
margins decrease by 500bps to 5.7% (HY2020: 10.7%).
Our underlying PBT is down 60.8% at CER to GBP4.1m (AER: 61.7%,
to GBP4.1m, HY2020: GBP10.6m). This has resulted in a reduction in
our underlying diluted earnings per share (EPS) at CER, down 63.5%
to 2.38p and at AER, down 64.6% to 2.31p (HY2020: 6.52p).
Our cash generation has been strong over the period with an
underlying conversion rate of 138.5% (HY2020: 60.5%). We remain in
a net cash position following on from the successful equity raise
in June 2020. We continue to have good access to banking
facilities, with headroom of c.GBP40m, providing us with the
security and flexibility to continue to invest in our future
growth.
Revenue (CER)
We have seen challenging conditions across all our regions, with
revenue reductions for the period ranging from 15.1% to 25.0%.
Europe has seen the smallest revenue decrease of 15.1% to
GBP31.5m (AER: down 15.4% to GBP31.4m, HY2020: GBP37.1m) with
automotive production shutdowns and subsequent volume reductions in
Holland and Sweden having driven the biggest element of the
decline. This has been partially offset by increased electronics
volumes in Hungary as well as new automotive platform wins in our
fast-growing Spanish greenfield site. Trading conditions in the
general industrial sector in Germany have remained muted. In Italy,
domestic appliances sales have reduced due to local lockdowns and
manufacturing volume decreases at a number of our key OEMs. This
being said, recovery in this sector has been faster, allowing our
European region overall to consistently grow each month of Q2
against the prior year.
The UK has seen the highest reduction in revenues of 25.0% to
GBP28.8m (AER: down 25.0% to GBP28.8m, HY2020: GBP38.4m).
Automotive shutdowns extended longer into Q1 than in any other
region, subsequent manufacturing volumes have been slower to
recover and we have seen the continued pushback of start of
production dates on several key platform builds. Distributor and
general industrial trading volumes have also declined, reflecting
the levels of general uncertainty in the marketplace and the slower
relative recovery in the UK economy. On the positive side, we are
pleased to report that PTS, our UK stainless steel distributor,
continues to perform well year-on-year in this more specialist
market.
In Asia, revenues declined by 23.4% to GBP22.7m (AER: down 24.4%
to GBP22.4m, HY2020: GBP29.6m). Lockdowns and reduced manufacturing
volumes in Malaysia significantly reduced electronics, domestic
appliances and automotive sales in Q1. Recovery in all these local
markets started to feed through towards the end of Q2, although
this has been slower on the automotive side. In Taiwan, sales to
European and US automotive distributors have reduced significantly
as production volumes decreased. In contrast, our Shanghai
operations have grown by 6.1% in the six-month period, reflecting a
quicker COVID-19 recovery in the domestic market, especially in the
automotive and medical sectors.
In the USA, sales have reduced by 21.5% to GBP4.3m (AER: down
22.4% to GBP4.2m, HY2020: GBP5.5m), primarily as a result of
reduced automotive production volumes at a number of key
multinational Tier 1 customers operating in the region. By the end
of Q2, we had just started to see this turn around, allowing our
smallest region to record an overall Q2 growth against the prior
year.
Underlying operating profit (CER)
Despite the 21.0% reduction in revenue and our in-built
operational gearing, we have been able to restrict the reduction in
underlying operating profit to a 58.0% decrease to GBP4.6m (AER:
58.9% to GBP4.6m, HY2020: GBP11.1m). This is the direct result of
swift and effective cost saving actions including: pay-rise and
bonus deferrals, recruitment freezes, reduced travel and
discretionary spend and the use of job retention schemes.
In Europe, we have seen a reduction in UOP margins of 110bps to
7.4% (HY2020: 8.5%, FY2020: 7.9%). This primarily reflects the fall
in sales against a fixed and semi-fixed cost base, offset by
overhead cost savings and available government support
programmes.
In the UK, UOP margins have reduced by 820bps to 2.1% (HY2020:
10.3%, FY2020: 9.1%), primarily due to operational gearing effects
on a 25% revenue reduction combined with a shift in product mix due
to lower distributor sales and higher stock provisioning levels.
Appropriate cost savings have been made at both gross margin and
overhead level to help mitigate the overall impact.
In Asia, UOP margins have decreased by 150bps to 14.4% (HY2020:
15.9%, FY2020: 15.1%). The reduction in sales has had the biggest
negative impact on returns. However, cost saving actions taken and
access to more generous regional government support programmes have
helped to largely offset the impact of this. This is despite a
balance sheet translation loss of GBP0.6m (HY2020: gain of
<GBP0.1m) as the US$ has weakened against our main Asian trading
currencies in the period.
In the USA, we have seen the biggest reduction in UOP margin of
900bps to a loss of 4.2% (HY2020: profit of 4.8%, FY2020: profit of
2.0%). Here the reduction in sales against a fixed and semi-fixed
cost base has been further compounded by higher stock holding and
provisioning levels as start of production dates have shifted
outwards. Careful cost savings have been made, although this is
more difficult in a region where we are investing for a return to
high organic growth in the short to medium term.
Net financing costs (AER)
Net interest costs have remained in line with last year at
GBP0.5m (HY2020: GBP0.5m) despite the decrease in average net debt
reflecting higher average cash holding levels in the period.
Taxation (AER)
The HY2021 underlying effective tax rate (UETR) and effective
tax rate (ETR) are higher at 25.4% and 26.7% than the previous half
year. (HY2020: 23.4% and 24.5%, FY2020: 23.1% and 107.8%).
This is as a result of adjustments in respect of prior years in
the period partially offset by a change in the mix of profits by
legal entity. The main reason for the difference between the FY2020
ETR of 107.8% is due to the impairment charges and reduced deferred
tax on share options in FY2020.
Subject to future tax changes and excluding adjustments in
respect of prior years, our normalised underlying ETR is expected
to remain in the range of 22-25% going forward.
Earnings per share (AER)
The reduction in underlying profit before tax, has decreased our
underlying diluted EPS by 64.6% to 2.31p (HY2020: 6.52p). Diluted
EPS has decreased to 1.48p (HY2020: 4.82p).
Dividend
In order to allow us to appropriately manage our financial
position and flexibility in the current uncertain times, we are not
proposing an interim dividend for HY2021 (FY2020: interim of 1.20p,
final of 0.0p). The Board plans to review this decision before
year-end, depending on how the wider macroeconomic environment
develops. As a Board, we remain keen that dividends play their part
in our total shareholder returns (TSR) as soon as is practical.
Return on Capital Employed (AER)
As at 30 September 2020, the Group's shareholders' equity
increased to GBP132.1m (FY2020: GBP115.7m). The GBP16.4m uplift
reflects retained earnings of GBP0.5m (HY2020: GBP1.3m), net
proceeds from the equity raise in June 2020 of GBP15.4m and a
foreign exchange reserve gain of GBP0.4m.
Over this increased asset base and given the challenging
macroeconomic trading conditions, our ROCE has reduced to 7.8%
(FY2020: 12.0%).
At the 30 September 2020, the number of shares still held by the
Employee Benefit Trust (EBT) to honour future equity award
commitments had reduced to 830,610 shares (FY2020: 1,028,191
shares).
Adjusted net cash (AER)
As at the 30 September 2020 the Group is in an adjusted net cash
position of GBP3.4m (FY2020: adjusted net debt of GBP15.2m). Some
GBP15.4m of this increase relates to the net proceeds from the
equity raise.
Cash generation has been strong, with an increased conversion
rate of underlying EBITDA to underlying cash of 138.5% (HY 2020:
60.5%, FY2020: 95.9%). We are particularly pleased to report that
stock levels have remained stable against the year end at GBP59.0m
(FY2020: GBP59.2m). This reflects a concerted effort across the
business to effectively manage purchasing decisions despite the
high degree of uncertainty in the market and the reduction in
sales. As expected, we have also seen a noticeable reduction in
trade debtors, down GBP3.7m (cashflow impact: GBP3.9m), as these
are trailing a comparatively quieter Q2.
Supporting the Board's ongoing strategic investments in the
business. capital expenditure in the period amounted to GBP1.5m
(HY2020: GBP1.9m). With GBP0.6m in regard to Project Atlas, in
addition to GBP0.9m of plant and machinery routine maintenance
spend across our manufacturing sites.
Including the impact of IFRS16 Leases, the Group's net debt
position would be GBP10.5m (FY2020: net debt of GBP30.3m).
Post balance sheet event - Disposal of TR Formac (Malaysia) SDN
Bhd
Following a strategic review of the Group's businesses around
the world, the Board made the decision to dispose of our smallest
manufacturing site in Penang, Malaysia. In contrast to the rest of
our production facilities, this business is focused on more
standard product manufacture and was, therefore, no longer
considered a good fit with the Group's strategic direction.
Assets and liabilities are shown as Held for Sale at the 30
September 2020. On 04 November 2020, the sale to the local Managing
Director was completed for proceeds of GBP0.2m. Final calculations
are still being performed, however the loss on sale (including the
recycling of the relevant foreign exchange reserve) is expected to
be c.GBP0.3m.
Operational Executive Board (OEB)
At the start of this financial year we updated shareholders on
the creation of an Operational Executive Board (OEB) made up of
global and cross-functional leaders. The Board is delighted by the
early impact this team has made in driving the Group's strategy.
This has been primarily centred on a review and development of the
Group's organic growth and efficiency opportunities to drive
operational gearing benefits, including initiatives relating
to:
* Strategic sales expansion - product, sector,
geography
* Sourcing strategy - external and intercompany
supplier management
* Manufacturing process efficiency
* Atlas benefits case realisation
* Targeted cost optimisation - clear focus on
measured/appropriate actions to position the business
for future growth
Acquisitions
In the latest Annual Report, we highlighted that we would
shortly be joined by an experienced M&A professional, Paul
Ranson, to lead our global acquisition activities. This has now
taken place and his initial weeks have been spent reviewing
acquisition criteria, processes and opportunities with the relevant
teams and external advisers. In a fragmented market with a track
record of successful integration, acquisitions remain a vital part
of the long-term strategy and we continue to believe that the
current macro uncertainty is likely to generate more
opportunities.
Project Atlas
As planned HY1 has been about upfront site by site preparations,
and additional development and training of our teams to increase
internal expertise and self-sufficiency. As a result of all that
hard work, we are delighted to report that with minimal disruption
our first pilot site, Mallow in Ireland, successfully went live at
the beginning of October 2020.
The Project team are now working hard on getting ready for our
next roll-out in the new year. There can be no doubt that COVID-19
is causing some practical issues with roll-out, especially with the
second wave of infections taking hold in Europe and the USA. We
will continue to monitor this situation carefully and react
accordingly.
Our global HR system is also in the process of being implemented
around the Group. The first site in Holland successfully went live
in October 2020 and roll-out across the rest of Europe and the USA
has quickly followed. All distribution sites in both of these
regions were on board at the start of November.
Because of the work undertaken to date on this project, we have
incurred direct costs of GBP1.1m in HY2021 (cumulatively GBP11.1m),
largely relating to project team, consultancy, testing and training
costs. We have excluded GBP0.5m 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 GBP0.6m (cumulatively GBP5.0m) as
fixed assets on the balance sheet at 30 September 2020. These will
start to be amortised as the new IT system is rolled out across our
global sites.
Looking ahead from a strong foundation
In HY2021, the Group has delivered a resilient performance
despite the extremely challenging market conditions and the impact
of COVID-19.
In the short term, the outlook for the macroeconomic environment
remains uncertain. Second waves of infection in our major markets
in the UK, Europe and the USA and any resulting local lockdowns
could impact on operations or trading volumes. However, we have
already demonstrated that as a business we can react quickly and
effectively in the face of such disruption.
When it comes to Brexit, our cross-functional team, which has
been in place for the last three years, has completed its
contingency planning. We currently consider that both the
operational and financial impact of any Brexit scenario will be
manageable in the short-term, although longer-term implications for
the wider UK economy remain less easy to predict.
Encouragingly, volumes have begun to recover in all key end
markets. We have not lost any customers and we continue to hold
preferred supplier status at a wide range of large manufacturers
across the globe. We are not complacent, but we are excited by the
activity levels and pipeline of opportunities that we are seeing,
with additional prospects for growth already secured, and enquiries
underway across a number of sectors including electric vehicle, 5G
and medical.
The long-term fundamentals of our business model and strategy
remain unchanged. We believe that the combination of our reputation
for Trusted Reliability, our flexible and established global
supplier networks, and our balance sheet strength put us in a great
position to make the most of both the organic and M&A
opportunities that are likely to arise as the competitor landscape
shifts and demand builds in the market.
The Board therefore remains committed to its ongoing investment
driven growth strategy and is optimistic for the medium and
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
July 2020 of the Group's Annual Report for the year ended 31 March
2020. The principal risks and uncertainties include: COVID-19 and
the macroeconomic environment, a major quality issue, 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 management of the key business risks it
faces.
Trifast plc - responsibility statement
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with 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 Guidance and Transparency Rules, being
an indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed set
of financial statements; and a description of the principal risks and
uncertainties for the remaining six months of the year; and
b. DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being
related party transactions that have taken place in the first six months
of the current financial year and that have materially affected the financial
position or performance of the entity during that period; and any changes
in the related party transactions described in the last annual report
that could do so.
Mark Belton, Chief Executive Officer
Clare Foster, Chief Financial Officer
23 November 2020
Condensed consolidated interim income statement
Unaudited results for the six months ended 30 September 2020
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2020 2019 2020
Notes GBP000 GBP000 GBP000
--------------------------------------------- ------ ------------- ------------- ---------
Continuing operations
Revenue 3 81,018 103,107 200,221
Cost of sales (59,117) (73,461) (145,114)
--------------------------------------------- ------ ------------- ------------- ---------
Gross profit 21,901 29,646 55,107
Other operating income 299 165 424
Distribution expenses (1,955) (2,311) (4,627)
--------------------------------------------- ------ ------------- ------------- ---------
Administrative expenses before separately
disclosed items (15,692) (16,423) (32,815)
IFRS 2 share-based payment charge 2 (69) (581) (2,030)
Cost on exercise of executive share options 2 (24) (88) (307)
Acquired intangible amortisation 2 (718) (712) (1,409)
Project Atlas 2 (497) (1,267) (2,505)
Impairments in goodwill 2 - - (7,761)
Loss on assets in disposal group classified
as Held for Sale 2, 13 (35) - -
Equity raise costs 2, 12 (59) - -
Total administrative expenses (17,094) (19,071) (46,827)
--------------------------------------------- ------ ------------- ------------- ---------
Operating profit 3,151 8,429 4,077
--------------------------------------------- ------ ------------- ------------- ---------
Financial income 18 44 82
Financial expenses (517) (550) (1,117)
--------------------------------------------- ------ ------------- ------------- ---------
Net financing costs 3 (499) (506) (1,035)
--------------------------------------------- ------ ------------- ------------- ---------
Profit before tax 3 2,652 7,923 3,042
Taxation 4 (709) (1,938) (3,280)
--------------------------------------------- ------ ------------- ------------- ---------
Profit/(loss) for the period
(attributable to equity shareholders of
the parent company) 1,943 5,985 (238)
--------------------------------------------- ------ ------------- ------------- ---------
Earnings/(loss) per share
Basic 6 1.48p 4.92p (0.19)p
Diluted 6 1.48p 4.82p (0.19)p
--------------------------------------------- ------ ------------- ------------- ---------
Condensed consolidated interim statement of comprehensive
income
Unaudited results for the six months ended 30 September 2020
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
---------------------------------------------------------- ------------- ------------- ---------
Profit /(loss) for the period 1,943 5,985 (238)
Other comprehensive income:
Exchange differences on translation of foreign operations 1,562 3,439 1,342
Loss on a hedge of a net investment taken to equity (1,199) (1,142) (924)
---------------------------------------------------------- ------------- ------------- ---------
Other comprehensive income recognised directly in
equity, net of income tax 363 2,297 418
---------------------------------------------------------- ------------- ------------- ---------
Total comprehensive income recognised for the period
(attributable to equity shareholders of the parent
company) 2,306 8,282 180
---------------------------------------------------------- ------------- ------------- ---------
Condensed consolidated interim statement of changes in
equity
Unaudited results for the six months ended 30 September 2020
Share Share Merger Own shares Translation Retained Total
capital premium Reserve held reserve Earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------- -------- -------- -------- ---------- ----------- --------- -------
Balance at 1 April 2020 6,132 22,340 - (1,934) 14,406 74,716 115,660
Total comprehensive income
for the period:
Profit for the period - - - - - 1,943 1,943
Other comprehensive income
for the year - - - - 363 - 363
Total comprehensive income
for the period - - - - 363 1,943 2,306
--------------------------------- -------- -------- -------- ---------- ----------- --------- -------
Transactions with owners,
recorded directly
in equity:
Issue of share capital 664 18 14,807 - - - 15,489
Share based payment transactions
(net of tax) - - - - - 59 59
Movement in own shares
held - - - 372 - (372) -
Presentation transfer to
merger reserve* - - 1,521 - - (1,521) -
Dividends - - - - - (1,457) (1,457)
--------------------------------- -------- -------- -------- ---------- ----------- --------- -------
Total transactions with
owners 664 18 16,328 372 - (3,291) 14,091
--------------------------------- -------- -------- -------- ---------- ----------- --------- -------
Balance at 30 September
2020 6,796 22,358 16,328 (1,562) 14,769 73,368 132,057
--------------------------------- -------- -------- -------- ---------- ----------- --------- -------
*Previously the merger reserve was reported in retained earnings
at a consolidated level. Due to the additional merger reserve
created from the equity raise (see note 12) in the current period,
management now consider it appropriate to separately disclose the
merger reserve. Therefore, we have transferred the GBP1.5m
previously reported in retained earnings to the merger reserve.
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 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
----------------------------------- -------- -------- ---------- ----------- --------- -------
Condensed consolidated interim statement of financial
position
Unaudited results for the six months ended 30 September 2020
30 September 30 September 31 March
2020 2019 2020
Notes GBP000 GBP000 GBP000
-------------------------------------------- ----- ------------ ------------ --------
Non-current assets
Property, plant, and equipment 20,302 21,130 20,427
Right-of-use asset 12,598 14,732 13,788
Intangible assets 39,392 46,352 39,155
Deferred tax assets 2,114 2,251 1,926
-------------------------------------------- ----- ------------ ------------ --------
Total non-current assets 74,406 84,465 75,296
-------------------------------------------- ----- ------------ ------------ --------
Current assets
Inventories 59,005 63,271 59,187
Trade and other receivables 49,277 51,908 52,928
Cash and cash equivalents 14 29,822 25,027 28,727
Assets in disposal group classified as Held
for Sale 13 682 - -
-------------------------------------------- ----- ------------ ------------ --------
Total current assets 138,786 140,206 140,842
-------------------------------------------- ----- ------------ ------------ --------
Total assets 3 213,192 224,671 216,138
-------------------------------------------- ----- ------------ ------------ --------
Current liabilities
Other interest-bearing loans and borrowings 7 - 537 266
Trade and other payables 33,440 34,032 34,914
Right-of-use liabilities 7 2,873 2,933 3,113
Tax payable 2,403 1,748 1,817
Dividends payable 5 - 3,688 -
Liabilities in disposal group classified
as Held for Sale 13 204 - -
Total current liabilities 38,920 42,938 40,110
-------------------------------------------- ----- ------------ ------------ --------
Non-current liabilities
Other interest-bearing loans and borrowings 7 26,548 40,204 43,622
Right-of-use liabilities 7 11,056 13,115 11,996
Provisions 959 959 959
Deferred tax liabilities 3,652 3,777 3,791
-------------------------------------------- ----- ------------ ------------ --------
Total non-current liabilities 42,215 58,055 60,368
-------------------------------------------- ----- ------------ ------------ --------
Total liabilities 3 81,135 100,993 100,478
-------------------------------------------- ----- ------------ ------------ --------
Net assets 132,057 123,678 115,660
-------------------------------------------- ----- ------------ ------------ --------
Equity
Share capital 6,796 6,096 6,132
Share premium 22,358 21,937 22,340
Merger reserve 12 16,328 - -
Own shares held 10 (1,562) (3,019) (1,934)
Translation reserve 14,769 16,285 14,406
Retained earnings 73,368 82,379 74,716
-------------------------------------------- ----- ------------ ------------ --------
Total equity 132,057 123,678 115,660
-------------------------------------------- ----- ------------ ------------ --------
Condensed consolidated interim statement of cash flows
Unaudited results for the six months ended 30 September 2020
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2020 2019 2020
Notes GBP000 GBP000 GBP000
--------------------------------------------------- ----- ------------- ------------- ---------
Cash flows from operating activities
Profit /(loss) for the period 1,943 5,985 (238)
Adjustments for:
Depreciation, amortisation, and impairment 1,919 1,872 11,541
Right-of-use asset depreciation 1,616 1,487 3,118
Unrealised foreign currency loss/(gain) 74 (95) 89
Financial income (18) (44) (82)
Financial expense (excluding right-of-use
liabilities' financial expense) 361 378 752
Right-of-use liabilities' financial expense 156 172 365
Gain on sale of property, plant & equipment,
and investments - (3) (3)
Loss on assets in disposal group classified
as Held for Sale 35 - -
Equity settled share-based payment charge 59 539 1,981
Taxation charge 709 1,938 3,280
Costs incurred on issue of share capital 59 - -
Operating cash inflow before changes in
working capital
and provisions 6,913 12,229 20,803
Change in trade and other receivables 3,932 2,918 2,060
Change in inventories 339 (4,528) (1,217)
Change in trade and other payables (1,516) (3,469) (2,242)
Cash generated from operations 9,668 7,150 19,404
Tax paid (542) (2,159) (3,889)
--------------------------------------------------- ----- ------------- ------------- ---------
Net cash from operating activities 9,126 4,991 15,515
--------------------------------------------------- ----- ------------- ------------- ---------
Cash flows from investing activities
Proceeds from sale of property, plant &
equipment - - 7
Interest received 18 45 82
Acquisition of subsidiary, net of cash acquired - (503) (503)
Acquisition of property, plant and equipment,
and intangibles (1,547) (1,899) (4,594)
Net cash used in investing activities (1,529) (2,357) (5,008)
--------------------------------------------------- ----- ------------- ------------- ---------
Cash flows from financing activities
Net proceeds from the issue of share capital 12 15,430 24 447
Purchase of own shares - - (1,693)
Proceeds from new loan - 46,774 45,026
Repayment of borrowings (18,627) (46,638) (41,620)
Repayment of right-of-use liabilities (1,782) (1,729) (3,487)
Payment from finance leases - (17) (74)
Dividends paid (1,457) (1,447) (5,134)
Interest paid (275) (378) (752)
--------------------------------------------------- ----- ------------- ------------- ---------
Net cash used in financing activities (6,711) (3,411) (7,287)
--------------------------------------------------- ----- ------------- ------------- ---------
Net change in cash and cash equivalents 8 886 (777) 3,220
Cash and cash equivalents at 1 April 28,727 25,199 25,199
Effect of exchange rate fluctuations on
cash held 320 605 308
--------------------------------------------------- ----- ------------- ------------- ---------
Cash and cash equivalents at end of period 7,14 29,933 25,027 28,727
--------------------------------------------------- ----- ------------- ------------- ---------
NOTES TO THE HALF-YEARLY FINANCIAL REPORT
Unaudited results for the six months ended 30 September 2020
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
2020. 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 BDO LLP
and their Report is set out at the end of this document.
The comparative figures for the financial year ended 31 March
2020 are not the Company's statutory accounts for that financial
year and have been extracted from the full Annual Report and
Accounts for that financial year. Those accounts have been reported
on by the Company's auditor and delivered to the Registrar of
Companies. The Report of the Auditors was (i) unqualified, (ii) did
not include a reference to any matters to which the auditor drew
attention by way of emphasis without qualifying their Report, and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006.
These condensed consolidated interim financial statements have
been prepared on the basis of accounting policies set out in the
full Annual Report and Accounts for the year ended 31 March
2020.
Going concern
The Group's business activities, together with the factors
(including the impact of COVID-19) 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 27 to the Group's
previously published financial statements for the year ended 31
March 2020 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.
Current trading and forecasts show that the Group will continue
to be profitable and generate cash. The banking facilities and
covenants that are in place provide appropriate headroom against
forecasts. Considering the current forecasts, the Directors have a
reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future. Thus
they continue to adopt the going concern basis of accounting in
preparing the annual financial statements.
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 2020.
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 2020 consolidated financial statements, in note
14, specific disclosure was made around sensitivity to changes in
key assumptions relating to impairment testing for the
recoverability of goodwill relating to TR VIC (GBP3.1m). COVID-19
impacted short to medium-term cash flows as well as a higher than
usual discount rate at year end, resulting in an impairment. As at
30 September 2020, this discount rate had reduced to 9.3% (FY2020:
10.8%). 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 profit before tax and separately disclosed
items
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
----------------------------------------------------- ------------- ------------- ---------
Underlying profit before tax 4,054 10,571 17,054
Separately disclosed items within administrative
expenses:
IFRS 2 share-based payment charge (69) (581) (2,030)
Cost on exercise of executive share options (24) (88) (307)
Acquired intangible amortisation (718) (712) (1,409)
Project Atlas (497) (1,267) (2,505)
Impairment of goodwill - - (7,761)
Loss on assets in disposal group classified as
Held for Sale (35) - -
Equity raise costs (59) - -
Profit before tax 2,652 7,923 3,042
----------------------------------------------------- ------------- ------------- ---------
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
Underlying EBITDA 7,370 13,724 23,525
Separately disclosed items within administrative
expenses:
IFRS 2 share-based payment charge (69) (581) (2,030)
Cost on exercise of executive share options (24) (88) (307)
Project Atlas (497) (1,267) (2,505)
Impairment of goodwill - - (7,761)
Loss on assets in disposal group classified as
Held for Sale (35) - -
Equity raise costs (59) - -
EBITDA 6,686 11,788 10,922
----------------------------------------------------- ------------- ------------- ---------
Acquired intangible amortisation (718) (712) (1,409)
Depreciation (including right-of-use depreciation)
and non-acquired amortisation (2,817) (2,647) (5,436)
----------------------------------------------------- ------------- ------------- ---------
Operating profit 3,151 8,429 4,077
----------------------------------------------------- ------------- ------------- ---------
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 2020 and 2019 are disclosed
in the table below:
Central
costs,
assets
and
UK Europe USA Asia liabilities Total
September 2020 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------------- -------- -------- -------- -------- ------------ --------
Revenue*
Revenue from external customers 26,948 30,792 4,158 19,120 - 81,018
Inter segment revenue 1,875 577 84 3,262 - 5,798
-------------------------------- -------- -------- -------- -------- ------------ --------
Total revenue 28,823 31,369 4,242 22,382 - 86,816
-------------------------------- -------- -------- -------- -------- ------------ --------
Underlying operating profit
(see note 9) 617 2,291 (180) 3,222 (1,397) 4,553
Net financing costs (68) (56) (34) (25) (316) (499)
-------------------------------- -------- -------- -------- -------- ------------ --------
Underlying profit before tax 549 2,235 (214) 3,197 (1,713) 4,054
Separately disclosed items
(see note 2) (1,402)
-------------------------------- -------- -------- -------- -------- ------------ --------
Profit before tax 2,652
-------------------------------- -------- -------- -------- -------- ------------ --------
Specific disclosure items
Depreciation and amortisation (978) (1,417) (122) (969) (49) (3,535)
Assets and liabilities
Non-current asset additions 249 818 - 177 656 1,900
Segment assets^ 62,306 71,376 8,607 61,629 9,274 213,192
Segment liabilities (21,715) (16,043) (1,530) (13,552) (28,295) (81,135)
-------------------------------- -------- -------- -------- -------- ------------ --------
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
(see note 9) 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
Non-current asset additions 2,385 342 958 47 1,280 5,012
Segment assets^ 67,192 76,909 9,159 63,152 8,259 224,671
Segment liabilities (25,080) (16,487) (1,353) (13,319) (44,754) (100,993)
-------------------------------- -------- -------- -------- -------- ------------ ---------
* Revenue is derived from the manufacture and logistical supply
of industrial fasteners and category 'C' components
^ Goodwill associated with the UK acquisition of Serco-Ryan in
2005 of GBP4,083k has been reclassified from Central costs, assets
and liabilities to UK as this is considered a more appropriate
reflection of where the benefit of this asset is held
4. Taxation
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
-------------------------------------- ------------- ------------- ---------
Current tax on income for the period
UK tax - 134 59
Foreign tax 920 1,902 3,181
Deferred tax (income)/expense (328) (103) 172
Adjustments in respect of prior years 117 5 (132)
-------------------------------------- ------------- ------------- ---------
709 1,938 3,280
-------------------------------------- ------------- ------------- ---------
The HY2021 underlying effective tax rate (ETR) of 25.4% (HY2020:
23.4%) is broadly 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 increased to 26.7% (HY2020: 24.5%) due
to the adjustments in respect of prior years, partially offset by a
change in the mix of profits by legal entity.
5. Dividends
There is no dividend payable for HY2021 (FY2020: interim of
1.20p, final of 0.0p). For further details, see the Business
Review.
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 130,928,786 (net of own shares
held) (HY2020: 121,737,700, FY2020: 122,171,272).
The calculation of the fully diluted earnings per 5 pence
ordinary share is based on profit for the period after taxation. In
accordance with IAS 33 the weighted average number of shares in the
period has been adjusted to take account of the effects of all
dilutive potential ordinary shares (net of own shares held). The
number of shares used in the calculation amount to 130,933,814
(HY2020: 124,221,747 FY2020: 122,171,272).
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
2020 2019 2020
GBP000 GBP000 GBP000
----------------------------------------------------- ------------- ------------- ---------
Profit/(loss) after tax for the period 1,943 5,985 (238)
Separately disclosed items:
IFRS 2 share-based payment charge 69 581 2,030
Cost on exercise of executive share options 24 88 307
Acquired intangible amortisation 718 712 1,409
Project Atlas 497 1,267 2,505
Impairments of goodwill - - 7,761
Loss on assets in disposal group classified as
Held for Sale 35 - -
Equity raise costs 59 - -
Tax charge on adjusted items above (320) (536) (653)
Underlying profit after tax 3,025 8,097 13,121
----------------------------------------------------- ------------- ------------- ---------
Basic EPS 1.48p 4.92p (0.19)p
Diluted EPS 1.48p 4.82p (0.19)p
Underlying diluted EPS 2.31p 6.52p 10.54p
The impact of the equity raise on underlying EPS was a reduction
of c.0.34p against HY2020.
For diluted EPS there are potentially 2,273,827 dilutive share
options, however they are not included in the weighted average
calculation for FY2020 because they are anti-dilutive since there
is a loss after tax. These dilutive share options are considered in
the calculation for underlying diluted EPS above.
7. Analysis of net debt
At At At
30 September 30 September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
-------------------------------------------- ------------- ------------- ---------
Net cash and cash equivalents (see note 14) 29,933 25,027 28,727
-------------------------------------------- ------------- ------------- ---------
Debt due within one year (2,873) (3,470) (3,379)
Debt due after one year (37,604) (53,319) (55,618)
-------------------------------------------- ------------- ------------- ---------
Gross debt (40,477) (56,789) (58,997)
-------------------------------------------- ------------- ------------- ---------
Net debt (10,544) (31,762) (30,270)
-------------------------------------------- ------------- ------------- ---------
Right-of-use lease liabilities 13,929 16,048 15,109
-------------------------------------------- ------------- ------------- ---------
Adjusted net cash/(debt) 3,385 (15,714) (15,161)
-------------------------------------------- ------------- ------------- ---------
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
2020 2019 2020
GBP000 GBP000 GBP000
--------------------------------------------- ------------- ------------- ---------
Net change in cash and cash equivalents 886 (777) 3,220
Net change in right-of-use lease liabilities 1,180 (1,544) (742)
Net change in borrowings 18,627 (124) (3,406)
--------------------------------------------- ------------- ------------- ---------
20,693 (2,445) (928)
Exchange rate differences (967) (867) (892)
--------------------------------------------- ------------- ------------- ---------
Movement in net debt 19,726 (3,312) (1,820)
Opening net debt (30,270) (28,450) (28,450)
--------------------------------------------- ------------- ------------- ---------
Closing net debt (10,544) (31,762) (30,270)
--------------------------------------------- ------------- ------------- ---------
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 HY2021 income statement results (of
subsidiaries whose presentational currency is not sterling) using
HY2020 average exchange rates to provide a comparison which removes
the foreign currency translational impact. The impact of
translational gains and losses made on non-functional currency net
assets held around the Group have not been removed.
-- Underlying diluted EPS
A key measure for the Group 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
2020 2019 2020
GBP000 GBP000 GBP000
------------------------------------------------- ------------- ------------- ---------
Underlying EBIT/Underlying operating profit 4,553 11,077 18,089
Separately disclosed items within administrative
expenses:
IFRS2 share based payment charge (69) (581) (2,030)
Cost on exercise of executive share options (24) (88) (307)
Acquired intangible amortisation (718) (712) (1,409)
Project Atlas (497) (1,267) (2,505)
Impairments of goodwill - - (7,761)
Loss on assets in disposal group classified as
Held for Sale (35) - -
Equity raise costs (59) - -
Operating profit 3,151 8,429 4,077
------------------------------------------------- ------------- ------------- ---------
-- Underlying cash conversion as a percentage of underlying
EBITDA
This is another key metric used by investors to understand how
effective the Group was at converting profit into cash. Since the
underlying cash conversion is compared to underlying EBITDA, which
has removed the impact of separately disclosed items (see note 2),
the impact of these have also been removed from the underlying cash
conversion. The adjustments made to arrive at underlying cash
conversion from cash generated from operations are detailed below.
To reconcile operating profit to underlying EBITDA, see note 2.
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
--------------------------------------------- ------------- ------------- ---------
Underlying cash conversion 10,204 8,306 22,579
Cost on exercise of executive share options (8) (88) (289)
Expensed Project Atlas costs paid (528) (1,068) (2,383)
Deferred Consideration - - (503)
Cash generated from operations 9,668 7,150 19,404
--------------------------------------------- ------------- ------------- ---------
-- 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 cash/(debt) and adjusted net cash/(debt) to
Underlying EBITDA ratio
This removes the impact of IFRS16 from both net cash/(debt) and
Underlying EBITDA.
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
------------------------------------------------ ------------- ------------- ---------
Net debt (10,544) (31,762) (30,270)
Right-of-use lease liabilities 13,929 16,048 15,109
------------------------------------------------ ------------- ------------- ---------
Adjusted net cash/(debt) (see note 7) 3,385 (15,714) (15,161)
Underlying EBITDA 7,370 13,724 23,525
Operating lease rentals (1,733) (1,654) (3,505)
------------------------------------------------ ------------- ------------- ---------
Adjusted EBITDA 5,637 12,070 20,020
Net debt to annualised Underlying EBITDA ratio 0.65x 1.16x 1.31x
Adjusted net cash/(debt) to annualised adjusted
EBITDA ratio N/A 0.65x 0.80x
------------------------------------------------ ------------- ------------- ---------
10. Own shares held
The own shares held reserve comprises the cost of the Company's
shares held by the Group. At 30 September 2020 the Group held
830,610 of the Company's shares (HY2020: 1,317,378; FY2020:
1,028,191).
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 2020 UK Europe USA Asia Total
--------------------------------- ---- ------- ---- ----- ------
Electronics 5% 6% 2% 4% 17%
Automotive 5% 11% 3% 8% 27%
Domestic appliances 1% 13% - 8% 22%
Distributors 10% - - 2% 12%
General industrial 7% 3% - 1% 11%
Other 5% 5% - 1% 11%
--------------------------------- ---- ------- ---- ----- ------
Revenue from external customers
(AER) 33% 38% 5% 24% 100%
--------------------------------- ---- ------- ---- ----- ------
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% 4% - 1% 12%
Other 5% 3% - 1% 9%
--------------------------------- ---- ------- ---- ----- ------
Revenue from external customers
(AER) 36% 35% 5% 24% 100%
--------------------------------- ---- ------- ---- ----- ------
12. Equity raise - Project Lavender
In June 2020, the Company incorporated a Jersey registered "cash
box" company. This was used to facilitate the placing on 19 June
2020 of 12,448,132 ordinary shares of 5p, followed by a broker
option on 23 June 2020 of 830,000 ordinary shares of 5p each,
together at a placing price of 1.205p per share. The placing raised
GBP16.0m and the Company received cash proceeds of GBP15.4m, net of
expenses. The proceeds of the share issue were placed into the
"cash box" company which was then acquired by way of a share
exchange in circumstances which qualified for merger relief and so
avoided the need to recognise a share premium on the share issue.
The net amount booked to share capital and reserves was GBP15.5m,
GBP0.7m was allocated to nominal share capital and GBP14.8m was
recorded in the merger reserve in equity. Costs of GBP0.1m were
recognised in administrative expenses in separately disclosed
items. All shares are fully paid up.
13. Assets and liabilities classified as Held for Sale
In September 2020, following a strategic review of the Group's
businesses around the world, the Board made the decision to dispose
of our smallest manufacturing site, TR Formac (Malaysia) SDN Bhd.
In contrast to the rest of our production facilities, this business
is focused on more standard product manufacture and therefore was
no longer considered a good fit with the Group's strategic
direction.
Assets and liabilities are shown as Held for Sale in the 30
September 2020 statement of financial position:
GBP000
Assets Held for Sale
Trade and other receivables 325
Inventory 246
Cash 111
---------------------------- ------
Total 682
---------------------------- ------
GBP000
Liabilities Held for Sale
Trade and other payables 204
Total 204
-------------------------- ------
An impairment loss of GBP35k on the measurement of the disposal
group to fair value less cost to sell has been recognised and is
included in administrative expenses as a separately disclosed item.
The fair value of the nets assets has been derived from the sale
price agreed with the local Managing Director.
The disposal does not constitute a discontinued operation as it
does not represent the disposal of a separate major line of
business or geographical area of operation.
On 4 November 2020, the sale to the local Managing Director was
completed for proceeds of MYR 1.0m (c.GBP0.2m). Final calculations
are still being performed, however the loss on sale (including the
recycling of the relevant foreign exchange reserve) is expected to
be c.GBP0.3m.
14. Cash and cash equivalents
At At At
30 September 30 September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
----------------------------------------------- ------------- ------------- ---------
Cash and cash equivalents per the statement of
financial position 29,822 25,027 28,727
Cash included within Assets Held for Sale 111 - -
----------------------------------------------- ------------- ------------- ---------
Total cash and cash equivalents 29,933 25,027 28,727
----------------------------------------------- ------------- ------------- ---------
INDEPENDENT REVIEW REPORT TO TRIFAST PLC
Introduction
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 2020 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
notes.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
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 Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European Union. The
condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with International
Accounting Standard 34, "Interim Financial Reporting", as adopted
by the European Union.
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.
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 Financial Reporting Council for use
in the United Kingdom. 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. 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.
Conclusion
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 2020 is not prepared, in all material respects, in
accordance with International Accounting Standard 34, as adopted by
the European Union, and the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the Company in meeting its responsibilities in
respect of half-yearly financial reporting in accordance with the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority and for no other purpose. No person is
entitled to rely on this report unless such a person is a person
entitled to rely upon this report by virtue of and for the purpose
of our terms of engagement or has been expressly authorised to do
so by our prior written consent. Save as above, we do not accept
responsibility for this report to any other person or for any other
purpose and we hereby expressly disclaim any and all such
liability.
Anna Draper
BDO LLP
Chartered Accountants
Gatwick
23 November 2020
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
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END
IR UOVRRRSUAUUA
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