Annual report
for the year ended 31 March 2018
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Celebrating 45 years
Holding the world together
est. 1973
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Celebrating 45 years
Holding the world together
est. 1973
The Group continues to go from
strength to strength, all thanks to our
dedicated and skilled management and
staff who, from humble beginnings,
are now c. 1,300 colleagues working
in 31 divisions in 18 countries across
three continents
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1973-1983
1973
TR
Fastenings in
Uckfield, UK
established
by Mike
Timms and
Mike Roberts
Contents
Strategic report
TR – recognised as a market leader and
global brand
The world of Trifast
Chairman’s letter
Trifast culture
Our people
Global marketplace
Our business model
Innovation
Group strategy
Core strategy
Strategy in action
Investing in people
Investment driven growth
Continue to add value and differentiate
Acquisitions
Operational efficiencies
Project Atlas
Key performance indicators
Business review
Our Group performance
UK
Europe
USA
Asia
Corporate social responsibility
Trifast in the community
Marketing report
Developing our websites
Risk management
Introducing the lead team
My views on the role of…
Non‑Executive Director (NED)
Our governance
Directors’ report
Corporate governance
Audit Committee report
Nominations Committee report
Directors’ remuneration report
Statement of Directors’ responsibilities
Our financials
Independent auditors’ report
Consolidated income statement
Consolidated statement of comprehensive
income
Consolidated statement of changes in equity
Company statement of changes in equity
Statements of financial position
Statements of cash flows
Notes to the financial statements
Shareholder information
Glossary of terms
Five year history
Company and advisers
Financial calendar
Trifast plc top holdings
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1973-1983
1984-1995
1973
TR
Fastenings in
Uckfield, UK
established
by Mike
Timms and
Mike Roberts
1982
Acquired the rights
to the BINX Nut
and sole global
manufacturer
1992
Introduced
Vendor
Managed
Inventory into
the fastenings
industry (VMI)
1993
Acquired
Fastener
Techniques (UK)
1994
Obtained a full
listing on the
London Stock
Exchange
1996
Acquired
Magne Bjorlo
(Norway),
Microscrew
(UK)
1998
Acquired
Miller Holding
(Holland),
Lancaster
Fastener (UK),
Samson
Industries (USA)
2000
Set up
greenfield
distribution site
in Hungary
First UK in-house
manufacturing
facility established
and the Hank
name purchased
1976
Six new TR sites
opened across UK
1982-1990
Acquired Southern
Industrial Fasteners
(Southern Ireland)
1994
Acquired
Formac
Technologies
(Singapore),
Polyfasteners
(Malaysia)
1997
Acquired FCF
(Sweden)
1999
Acquired
SFE
(Taiwan)
2001
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1996-2007
2008-2018
2005
Acquired
Serco Ryan
(UK)
2009
Business
restructured
and new
strategy
implemented
2014
Acquired Viterie
Italia Centrale
(Italy)
2016
Set up
greenfield
distribution site
in Spain
2018
Acquired PTS,
East Grinstead,
UK
Acquired the
globally recognised
trademark of
Pozidriv
2003
Acquired
PowerSteel and
Electro-Plating
Works (Malaysia)
2011
Acquired Kuhlmann
Befestigungselemente
(Germany)
2015
The growth story is set to
continue…
• Organically and through our proactive
acquisition strategy
• Further strengthening of our geographical,
products and technical capabilities
• Innovation – being at the forefront of
fastener development
• Continue to add value and differentiate
• Investing in our people, plant and digital
infrastructure
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Leading international specialists in the engineering,
manufacturing and distribution of high quality industrial
fastenings to major global assembly industries
Our mission and vision
• To continue to grow profitability and improve stakeholder returns through organic and
acquisitive growth, and by driving continual efficiencies throughout the organisation
• To be acknowledged commercially as the market leader in industrial fastenings in terms of
service, quality, engineering support and brand reputation
• To promote an environment that is safe and fair, which motivates, develops and maximises
the contribution and potential of all TR employees
Invest in our key strengths
Design and application
engineering expertise
providing fastener solutions
to customer application
problems
High quality, competitive
manufacturing across eight
global locations forms the
foundation of our industry
reputation which is second
to none
Reliable distribution and
supply solutions around
the world that flex to fit our
customers’ needs
Continuous investment into
quality operations and supply
keeps us one step ahead of
our customers’ needs
A strong balance sheet and
flexible banking facilities
provide the confidence to
invest for growth
Progressive dividend
policy and creating
shareholder value
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Financial highlights
Revenue
+6.0 %
£161.4m
£154.7m
£129.8m
£197.6m
£186.5m
Underlying profit before tax*
+8.5 %
£16.0m
£14.3m
£9.2m
£22.2m
£20.5m
Operational highlights
The investment driven growth story
continues . . .
• Total revenue increase of 6.0% at Actual
Exchange Rate (AER), 4.0% at Constant
Exchange Rate (CER)
• Sales to multinational OEMs contribute
over 65% of Group turnover
• At 30.5% gross margin remains 50bps
2014
2015
2016
2017
2018
2014
2015
2016
2017
2018
above target
• Underlying profit before tax increased
8.5% at AER, 5.4% at CER
• Total dividend of 3.85p, an increase of
10% on the prior year
• An investment of up to £15.0m to
transform our IT infrastructure and
business processes has been approved,
underpinning our future growth and
generating an estimated ROI of >25% p.a.
at the point of full realisation
• Targeted warehouse expansions support
double digit growth in key locations
• Capital investment rises to £3.7m,
increasing our manufacturing capacity
and capabilities
• Precision Technology Supplies (PTS), a
key distributor of stainless steel fastenings
in the UK, acquired on 4 April 2018,
expected to be earnings enhancing in
FY2019
Visit our website www.trifast.com
Visit our technical and commercial site
www.trfastenings.com
@trfastenings
@trfastenings
tr-fastenings
Underlying diluted earnings
per share*
+7.5%
9.99p
8.68p
5.95p
13.78p
12.82p
Diluted earnings
per share
+17.3 %
10.40p
8.50p
7.07p
5.76p
12.20p
2014
2015
2016
2017
2018
2014
2015
2016
2017
2018
Return on capital employed*
Dividend per share
+20 bps
18.6%
18.5%
16.3%
19.9%
20.1%
+10.0 %
2.80p
2.10p
1.40p
3.85p
3.50p
2014
2015
2016
2017
2018
2014
2015
2016
2017
2018
Profit before tax
+6.7 %
£13.1m
£11.8m
£8.9m
£18.5m
£17.3m
2014
2015
2016
2017
2018
* Before separately disclosed
items (see note 2 in the financial
statements). The relevance of
these measures and calculations
are also discussed in note 2, note
25 and the glossary on page 160.
For reconciliations to equivalent
GAAP measures, please see note
34 in the financial statements and
the five year history on page 162.
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01
www.trifast.com Strategic report Contents
Strategic report
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Contents
TR – recognised as a market leader and
global brand
The world of Trifast
Chairman’s letter
Trifast culture
Our people
Global marketplace
Our business model
Innovation
Group strategy
Core strategy
Strategy in action
Investing in people
Investment driven growth
Continue to add value and differentiate
Acquisitions
Operational efficiencies
Project Atlas
Key performance indicators
Business review
Our Group performance
UK
Europe
USA
Asia
Corporate social responsibility
Trifast in the community
Marketing report
Developing our websites
Risk management
Introducing the lead team
My views on the role of…
Non-Executive Director (NED)
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www.trifast.comStrategic report
Strategic report TR – recognised as a market leader and global brand
TR – recognised
as a market leader
and global brand
Trifast is known commercially as TR to its customers
and suppliers in Europe, Asia and the Americas
We have a reputation as a market leading global engineering, manufacturer and distributor of industrial fastenings and category ’C’
components to a wide range of industries and customers. Around a third of our income derives from TR’s own manufacturing. The
key end markets in which products can be found are automotive, electronics and domestic appliances. Our customers are a mix of
multinational and national companies and distributors across the world.
Fasteners are all around us, they are used extensively in
our everyday lives. So much so, that many of us take them
completely for granted. But, what would happen if you were to
imagine a world without fasteners ... ?
Could you:
• comfortably drive a car with seats that don’t move; or
• safely spin your clothes in a washing machine where
the drum is not attached; or even
• keep your cool this summer without fans, refrigeration
or air con?
Wherever something needs to slide, rotate, expand,
vibrate, be repaired, replaced, or simply stay firmly in
place, you need the right fastener for the job and that’s
where TR comes in.
Whether it’s fasteners for space exploration or simply
for vacuuming your home, we have been supplying
specialised industrial fasteners to OEMs across Europe,
USA and Asia for 45 years.
We quite literally have been:
'holding the world together'
HOLDING TH
E
W
n i n g s s p e c i a list High quality manufacturin
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www.trifast.comStrategic report Strategic report The world of Trifast
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The world of Trifast
Our sites are based in 31 global locations:
UK
Belfast
Birmingham
East Grinstead*
East Kilbride
Manchester
Newton Aycliffe
Poole
Uckfield
Lancaster
Europe
Germany – Verl
Holland – Oldenzaal
Hungary – Szigetszentmiklos
Ireland – Mallow
Italy – Fossato di Vico
Norway – Skytta
Poland – Warsaw
Spain – Barcelona
Sweden – Nacka, Tidaholm & Gothenburg
* PTS acquisition on 4 April 2018
USA
Houston
Asia
China – Shanghai & Beijing
India – Bangalore & Chennai
Malaysia – Penang & Kuala Lumpur
Singapore
Taiwan – Kaohsiung
Thailand – Bangkok
Philippines – Manila
Revenue by region (including intercompany revenues)
Employees by region
3%
2%
27%
36%
44%
36%
34%
UK
Europe
Asia
USA
18%
Manufacturing & distribution
Customer sectors
66%
19%
16%
34%
10%
33%
22%
Manufacturing
Distribution
Electronics
Automotive
Domestic appliances
Distributors
Other
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www.trifast.comStrategic report Strategic report Chairman’s letter
“ As we acknowledge yet
another strong, progressive
and profitable year for
Trifast, I would like to
offer my sincere thanks,
admiration and gratitude to
all our colleagues across our
various locations within our
Group
08
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Chairman’s letter
A solid record of delivering growth
The commercial, political and macro-economic uncertainties of
this year have dominated all news media in such an unrelenting
negative stream that any semblance of positive news seems to
have been all but eclipsed.
However, as can be demonstrated within this report, global
manufacturing (upon which Trifast relies for its continuing annual
growth) has steadily flourished in the UK, Europe, Asia and North
America, thus supporting the rationale for, and subsequently
reinforcing, our decision to make extensive capital and personnel
investment across our entire customer service network over the
last couple of years.
Our solid record of delivering organic revenue growth in recent
times has provided the financial strength and confidence to
underpin the teams’ judgement that this is the optimum time in our
development to further strengthen our operating, manufacturing
and digital platforms across the world.
With over 65% of revenue deriving from multinational OEMs, we
have carefully examined what will continue to differentiate Trifast
from our competitors going forward and maintain our growth
momentum.
In addition to our excellent service levels and high quality products,
we have identified specialist worldwide sourcing together with
technical development for customer new designs through in-
house engineering and production resources, as “must haves”
within our service offering, all of which should future proof the
Trifast business.
To fully coordinate these facilities into a one-stop service offering
on a global scale, there has to be an integrated management
information system (MIS). This is where Project Atlas, our
significant investment in our IT infrastructure and business
processes, comes in so that a customer who requires identical
components for their assembly plants in say China, Germany
or the US can rely on just one of our customer support teams
based, for example, in Holland or Sweden, to organise the entire
supply and traceability function. This will ensure consistency
for our customers who assemble identical equipment in their
geographically spread plants. Likewise, our aim is to enable our
procurement managers based, say in Italy, to be able to pinpoint
an actual individual TR factory machine within the Group, that has
the optimum capacity at that moment in time to quickly satisfy an
urgent customer order, rather than the traditional process which
is to quote an average delivery time based on the entire factory
loading (typically some six to eight weeks). This is where our
markets are looking and so Trifast must be ready.
All these initiatives are aimed at Trifast remaining widely
acknowledged by the market as being truly world class. However,
no financial business investment will provide a realistic return
without the support of its people – which in turn can only come
Share price (p)
270.00
220.00
170.00
120.00
70.00
20.00
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from consistent care and attention, complemented by motivation
and appropriate training provided by our team leaders.
Therefore we have grown our HR team to ensure a strong focus,
which this year, for the first time, has included a Group wide staff
survey, further details are contained on page 28.
Following recent publicity about large scale outsourcing providers,
I am extremely reassured by our preference to retain key company
functions within the Group. This is reflected in our culture, which
shareholders recognise, which is very robust in developing skills
in-house. This is clearly demonstrated through our first-class
specialists who manage our IT, HR, Quality and Marketing
functions for the entire Group with very little recourse for external
help.
As we acknowledge yet another strong, progressive and profitable
year for Trifast, I would like to offer my sincere thanks, admiration
and gratitude to all our colleagues across the various locations
within our Group who have fully displayed their commitment and
abilities against the stretching challenges set by the Board on
behalf of all our shareholders.
Finally, on behalf of all stakeholders, I would like to thank all staff
for their hard work and dedication and congratulations on another
year of great achievement.
Malcolm Diamond MBE
Chairman
11 June 2018
www.trifast.com
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Strategic report
Strategic report Trifast culture / Core values
Trifast culture
The Trifast core values are at the forefront of our activities and our
relationships with our colleagues. Employees across all of our locations
are aware of TR values and these form part of our performance
management system across the Group
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Trifast plc Annual report 2018 Core values
Trust
Respectful of each others’ abilities
Integrity / open & honest
Fairness
Adding value and embedding quality in everything we do
Striving to achieve excellence / continual improvement
Team player acting for the good of the Group, recognising the bigger picture
People focused / handling with empathy
Leadership giving the empowerment to employees to take responsibility for their own actions
Commercially minded / entrepreneurial & innovative
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www.trifast.comStrategic report Strategic report Our people / Specialisation and focus - the keys to success
Our people continued
The lead team
1
2
3
4
5
6
7
8
1
Geoff Budd
Commercial Director &
European Managing Director
(retired from the Board 31 March 2018)
4
Mark Belton
Chief Executive Officer
7
Jonathan Shearman
Independent Non-Executive
Director
2
Glenda Roberts
Group Sales Director
3
Clare Foster
Chief Financial Officer
5
8
Malcolm Diamond MBE
Non-Executive Chairman
Scott Mac Meekin
Independent Non-Executive
Director
6
Neil Warner
Senior Independent
Non-Executive Director
Read the Director’s biographies on pages 72 and 73
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Trifast plc Annual report 2018 Specialisation and focus
– the keys to success
Recently, Geoff Budd represented TR at a global fastener
forum in Taiwan and he addressed a global audience of
manufacturers, distributors, customers and suppliers from
across the industrials space. This summarises Geoff’s
address:
“The evolution of the Taiwanese fastener industry also mirrors the
development of TR.
In the 1980’s I attended the original Taiwanese fastener show in
Taipei. It gave an opportunity to see numerous potential suppliers
in a short space of time. It became clear that there were several
traders, some large producers and many small manufacturers.
The traders played a crucial role at the time, offering overseas
customers a variety of products, from a network of smaller
producers who, for the most part depended on the language
skills and international knowledge the traders had gained, to
enable them to export. For many in the Taiwan industry at the
time, this forum opened the supply base in Taiwan, providing
new information on many potential suppliers and making price
comparisons between many factories basically producing the
same thing all too easy.
Another major difference between that forum and today’s
is that many of the then exhibitors have since dramatically
developed their businesses. Many of the traders have become
leading manufacturers with multiple sites - in Taiwan, China
and elsewhere. SFE, acquired by TR in 2001, also made that
important transition from trader to manufacturer.
Looking at the automotive sector for example, a key market
for TR. Over time the production of automotive fasteners has
become more and more important. In general, just as standard
production declined in Europe and moved to Asia – firstly to
Japan followed by Taiwan – so market forces and the relentless
search for low cost production, have led to China, Malaysia,
Philippines, Indonesia, and Vietnam all winning significant shares
in the supply of standard fasteners.
Taiwanese manufacturers, and TIFI, recognised it was essential to
raise their standard of quality and reliability, particularly to satisfy
automotive requirements. Initially, adopting ISO 9000 – 9002
and TS16949, many formed alliances and associations to make
higher value, licensed fasteners. This process also raised quality
standards - as the requirement of licences had to be attained.
The most successful companies today are those that have
become real specialists. That specialism is critical - the depth of
knowledge and expertise, technologies and skills to accurately
and consistently meet the exacting demands of the automotive
industry, which accounts directly or indirectly for more than a
quarter of all global fastener demand.
While it is probably the most important, it is not the only driver of
specialism. We expect to see Taiwanese producers successfully
following similar development routes - a few into aerospace or
medical, many more into construction products. What they all
have in common is the recognition that in this transparent world,
they must stand out from the others – and will only do so in
the long term through manufacturing and product excellence,
efficiency and productivity.
Within Europe there are still some very profitable and successful
companies which provide application solutions, often with high
levels of automation. Solutions that take cost out of the joint and
improve assembly efficiency.
Another way to achieve success is to make difficult-to-produce
parts, by investing in equipment that others do not have; the
more complex the part, the greater the added value providing a
more sustainable business at higher prices.
At SFE, we have focused on producing high volume automotive
parts for customers. We hold several licenses and have invested
in production equipment to offer a wide range of capabilities.
In the years to come people in our industry will look back at the
products made today and identify the development and evolution
that took place. One thing is certain, it will be a different world,
already electric vehicles are changing the shape of demand and
the machinery needed to make the fasteners required.
Openness and transparency between customer and suppliers,
entering a relationship of true mutual trust, ensures the best
possible outcomes. TR enjoys just such trust relationships
with many Taiwanese fastener producers and looks forward to
continuing to do so for many, many years.
“ We live at a time when
reducing the number of
vendors is a key objective to
many customers. Collaboration
with ‘trusted partners’ is a vital
ingredient, working together
to achieve the best supply
solutions for customers
Overall, Geoff has served the business for 42 years. Although,
relinquishing his PLC duties he remains working with the
operational team at TR focusing on commercial and technical
aspects of the business in the UK, Europe and Asia.
www.trifast.com
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Strategic report Strategic report Our people
Our people continued
Without our people we would not be able to achieve the results and have the success
that we do. All our employees contribute positively to our effectiveness and to our overall
performance.
We have c. 1,300 employees based in our 31 locations across the globe, all of whom deliver
high quality service, technical expertise and product quality to our customers.
Group
Colin Coddington
Group IT Director
Helen Toole
Group HR Director
Maddy Webb
Director of Quality
Martin Greenwood
Director of Supply Chain Development
Abi Burnett
Head of Marketing
Lyndsey Case
Company Secretary
“ We are working within a team that is positive, proactive and brilliant,
driving to improve our supply chain through positive communications
with the supply base creating information to help our suppliers work
smarter. Throughout the business there are innovative ideas, which are
discussed and implemented, and people are recognised for their input and
achievements
Martin Greenwood
Director of Supply Chain Development
Dan Griggs
Group Financial Controller
Ian Carlton
Head of Integrated Business
Leadership Processes
United Kingdom
Dave Fisk
Managing Director
TR Fastenings UK
Maria Johnson
Finance Director
TR Fastenings UK
Stevie Meiklem
Operations Director
TR Fastenings UK
Sam Wilson
Managing Director
Lancaster Fastener Company
Jason Collyer
Managing Director
Precision Technology Supplies
(acquired 4 April 2018)
“ The Lancaster Fastener division of the Trifast Group forms an essential
supporting stock interface between the fastener distributor and the
Asian manufacturer, reacting largely to the infill demands of the
global fastener distribution industry
Sam Wilson
Managing Director
Lancaster Fasteners
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Trifast plc Annual report 2018 USA
“ Our team is what TR Fastenings embodies as a strategy; a diverse,
energetic team, able to keep up with the global marketplace, leveraging
its global footprint while relying on its most important asset, its
employees. When someone asks who do you work for, we “all” proudly
respond TR Fastenings, our second family
Gary Badzioch
Managing Director
USA
Joe Haymes
Strategic Sales Manager
USA
Gary Badzioch
Managing Director, USA
HK Tan
General Manager
TR Formac, Malaysia
Phua Yong Sang
General Manager
China
Wilson Chen
General Manager
Taiwan
Ping Siong Tong
General Manager
TR PSEP, Malaysia
Victor Cheong
Country Manager
India
David Ng
Country Manager
Thailand
Endy Chin
General Manager
Singapore & Philippines
“ The best part about being part of a diverse team is having access
to a vast compendium of knowledge and experience, granting us
opportunities to collaborate on projects by synergising our specialities.
As TR Asia expands our business and venture into new markets, our
team strives to deliver the high standards of service quality that is
associated with the TR brand name
Charlie Foo
Managing Director, Asia
Hai Joo Toh
Financial Controller
Asian Region
Charlie Foo
Managing Director
TR Asia
Asia
Europe
Geoff Budd
Director
TR Europe
Dara Horgan
Location Head
Ireland
Jan-Erik Storvse
General Manager
Norway
Roberto Bianchi
Managing Director
Sweden
“ I have worked with TR for over 23 years. A rapidly growing location and an expanding team, I am
responsible for all aspects of Southern Ireland, contributing to the Group’s success. The Company’s
mission and objectives have always been clear and transparent. Being part of the TR Group brings its
own extensive global resources with the support of manufacturing in the UK, Europe and Asia. The
combination of these gives TR Southern Fasteners the edge to supply to a range of small, medium
and large Irish manufacturers
Dara Horgan
Location Head
Ireland
Ron Vlutters
Managing Director
Holland
Raul Fernandez
Commercial Director
Spain
Frank Niggebrügge
Managing Director
Germany
Peter Henning
Director
Germany
Francesco Cricco
Supply Chain Director
Italy
Karol Gregorczyk
Sales & Development Director
Italy
Zoltan Csengeri
Location Head
Hungary
15
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www.trifast.comStrategic report Strategic report Global marketplace
Global marketplace
We have produced another solid year’s figures and we are continuing to develop the sectors
where we have enjoyed success previously, particularly in our sales to European distributors,
global expansion in the automotive sectors and the new market opportunities that are
emerging. The next year is going to be anything but dull...
Extending our distributor base
Over the last ten years we have been developing sales to other
distributors and extending the range of TR Branded products that
we manufacture and distribute. This also assists in developing
our TR brand in the marketplace. Since Brexit we have seen
the sales of our products into our European distributors grow
robustly. This is due to the quality and service we are able to offer
as well as through developing and supporting new distributors in
territories including Russia, USA, Israel, Bulgaria, Latvia, Portugal
and Finland. We also ensure that we have well managed stock
levels available for fast shipment. We have enthusiastic sales teams
based in the UK both in Lancaster Fastener and in TR Uckfield,
who totally understand the needs of this industry sector. The TR
commodity and product teams support the self-clinch, sheet
metal fasteners, security products, the plastics range, and the
new enclosure product portfolio giving technical support to the
distributors.
“ Having our own
manufacturing, a global
footprint and being in a
position to give technical
support is a winning formula
South Carolina Mexico
Slovakia
Thailand
China
Japan
Heat map showing areas of growth for Trifast
16
Key sectors for TR
We have routes to market for each of the different sectors we
support and make a conscious effort to look after the smaller
SME’s that are often neglected. We see these as the “acorns to
oak trees’’ and they are a vital part in the promotion of our TR
Brands. They appreciate the ‘one-stop shop’ approach where
they come to TR for a comprehensive range of parts that are in
stock, supported by a well experienced dedicated team to look
after them.
Domestic appliances
We continue to develop sales to the domestic appliances sector,
particularly with our Italian company TR VIC and in TR in Asia.
Product development is key in this sector as many companies
strive to keep the cost of their product down in the traditional
products where competition is fierce. Working with them on
product rationalisation or smarter solutions is part of the supply
chain offering. However, the new product developments in
cordless vacuum cleaners has created a whole new market, and
we are fortunate enough to be manufacturing parts for the major
brands which has boosted our sales. Additionally, the craze for
everyone having their own coffee machine at home or in their
workspace has generated additional sales, and once again we are
in the major brands which has created a new and very buoyant
addition to this sector.
Electronics and technology
Lighting and LED is a large part of the product we supply in
Europe to facilities in Poland, Hungary and Spain. This can be for
use in street lighting, stadiums, architectural installations and for
domestic use with the LED transformation leading the way. The
IT enclosure market sector continues to grow fuelled by the need
for the cabinets that house the communications and IT systems in
offices and buildings; we are supplying the hardware for many of
the major brands. We primarily opened up TR España to develop
the automotive Tier1’s in this territory so we have been encouraged
by our success in securing electronics business with a number of
companies through being established in Spain.
Automotive
Automotive is our fastest growing sector to date and the potential
for the Group is significant. During 2017 the global automotive
sector grew by 3.4% and 2018 is anticipated to grow by 3.6%.
European manufacturers have produced 15 million cars for the first
time. China’s automotive market sales are expected to grow by
4.7% this year and they already produce over 28 million vehicles
a year. TR Shanghai is heavily involved with the Tier1’s, where we
have been supplying the same platform and product in Europe
as the builds have expanded to China thus creating additional
revenue for us. Automotive sales are now 36% of their turnover and
have grown rapidly from a very low base four years ago. Originally
TR Shanghai was involved solely in the European marques but
increasingly we are now supporting Chinese brands, and are rapidly
developing our business in Japan where we have begun supplying
our existing Tier 1 customers in their local branches.
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Trifast plc Annual report 2018 Global strategic team
Global Account Directors
Glenda Roberts
Group Sales Director
Chris Black
Director of Automotive
Business Development
Jeremy Scholefield
Director of Strategic
Business
Roberto Bianchi
Director of Swedish
OEM Development
Martin Greenwood
Director of Supply
Chain Development
Kevin Rogers
Plastic Products Sales
Development Manager
Phil Callaghan
Group Logistics
Manager
Jo Devlin
Head of Projects
Strategic Team
Spain produces 2.9 million vehicles, of which over 80% are
exported, this is expected to grow by a further 5.6% this year.
This growth will be helped by Ford agreeing to invest €880
million in Spain to manufacture the new KUGA this year. We
opened TR España in 2017 and we are delighted to have
already secured sizeable contracts for production builds thereby
justifying the capital investment. Being close to the clusters of
the automotive OEM’s and Tier1’s is essential. Many of the HQs
and design centres for the major Tier1’s are in Spain. This helps
us in the negotiations to secure business for the builds that are
manufactured outside of the country.
Many European and US car manufacturers are producing on three
continents on a common platform, JLR, BMW, VW, Ford and Volvo
to name a few.
When we are successful in winning the nomination to supply the
Tier 1 who might be manufacturing the seats, the IP console,
airbag assemblies etc., then TR is in pole position to secure that
business globally providing we remain competitive. The fact we are
approved to supply, have stock and can start supply with proven
product is a key factor in why we are securing more business
in Asia and the USA. Having our own manufacturing, a global
footprint and able to give technical support is a winning formula.
New opportunity for TR
The latest technology of electric vehicle ("EV") development,
autonomous driving and new motability concepts will shake the
market up and therefore it will open exciting avenues for us with
existing global customers and also newly emerging ones. One
example would be the EV charging units that will be needed in
the many thousands to support the EV development. We will be
seeing electronic highways developed across the world and these
EV charging units are fastener rich, and we have the capability to
be able to supply a high percentage of the parts that are used in
their assembly.
Enhancing the skills base to support growth
To support the continuing globalisation of many of the major OEM’s
there have been further developments to the concept of the global
strategic team which has been in place for 17 years. Currently we
have three Global Account Directors (GADs). Jeremy Scholefield
(electronics and technology), Chris Black (automotive development)
and Roberto Bianchi (Swedish OEM development). Each GAD
has a wealth of experience and their role is of strategic importance
working with our sites globally and the corporate HQs of the major
accounts we support.
Many of these customers have multiple sites and the coordination
of how we give consistent service and support at senior level,
through negotiations, and commercial activity is vital.
In addition, we have Strategic Account Managers (SAMs) who
report to the GADs. They work closely at regional or continent level
with the customer’s manufacturing sites and with our teams and
Business Development Managers (BDM’s) at local level ensuring the
information flow between all parties is at the optimum level. We are
recruiting additional SAMs, preferably with technical knowledge, to
compliment the necessary account management skills that this role
requires and our investment into our IT infrastructure and underlying
policies via Project Atlas will underpin this.
The Group sales strategy is firmly embedded in this structure and
is working well and is reflected in the results we have achieved with
the large multinational companies.
Glenda Roberts
Group Sales Director
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17
www.trifast.comStrategic report Strategic report Our business model
Our business
model
We are a 24/7 ‘full service provider’ offering ‘end-to-end’ support to all our
customers. Our success and ongoing growth is based on a unique blend of high
quality in-house manufacturing, our long-standing customer relationships, sourcing
know-how and adaptable, consistently reliable global logistics
Design and
application
Opportunities
for growth
High quality, low
cost manufacturing
Investing for
growth
Sourcing of
components
Flexible global
logistics
What we offer
TR is a recognised and established global brand across a wide
range of manufacturing sectors. We pride ourselves on the end-
to-end support that we offer to all customers. We don’t just sell
industrial fastenings – we design, we problem-solve, we engineer,
we manufacture, we source and we reliably deliver high quality,
often complex components and logistical solutions to production
lines across the world.
Our business model is specifically designed to make sure that we
are always building value for both our long established and ever
expanding customer base. Value created not just for today, but
also for the longer term.
So how do we do it?
18
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Design and application
Flexible global logistics
A large proportion of our sales are driven by customer specific
assembly components within the automotive, electronics and
domestic appliances sectors.
Our engineering teams, through their strong relationships with our
customers’ R&D departments, look to get involved from the start
of the enquiry and design process, helping our multinational OEM
customers to make the right fastener design decisions before full
scale production begins. While staff at our growing number of
Technical Innovation Centres around the world, work on creating
design solutions to proactively take to market.
Our engineering value add continues beyond design and enquiry
stage with our technically skilled engineers delivering cost savings
to customers throughout the supply relationship. Through specific
component design or process applications we add value and
generate efficiencies on an ongoing basis. Working with our
customers to reduce product volume, assembly time or weight,
this in turn helps us to manage price discounting demands, win
customer loyalty and further enhance our reputation.
We have been a global supplier of fasteners and related
components for 45 years. Over that time, we have established
secure and proven logistic networks across the world. We now
offer seamless and reliable supply to over 60 countries. From
complex VMI and ‘Just-in-Time’ delivery to local third party
warehousing and straightforward ex-works solutions, we are
able to provide the most cost-effective supply logistics to suit our
multinational OEMs’ needs.
With our core facilities in Asia, North America and Europe
mirroring the global spread of our customer base, we can meet
the challenging geographical requirements of our customers.
By offering logistic solutions from transportation, warehousing,
distribution, through to production lines, we can give our
customers a cost effective and efficient service.
It is these extensive and flexible networks that help to drive our
core organic growth strategy, allowing us to continue to increase
our revenues, profits and penetration across our key multinational
OEMs’ sites around the world.
High quality, low cost manufacturing
Investing for growth
Our eight manufacturing plants spread across Asia, Europe and
the UK provide reliable, timely and high quality product to our key
multinational OEMs around the world. The parts we choose to
manufacture in-house tend to require more complex manufacturing
processes and/or stricter quality requirements. This allows us to
make best use of our extensive engineering know-how to drive the
greatest value add for our customers.
Each of our factories provide a different combination of
manufacturing capabilities, from sector specialisms, specific quality
and certification requirements, to fastener sizing and secondary
processing. Having access to such a variety of manufacturing
capabilities means we are better able to meet the varied demands
of our existing global customers, whilst also providing us with the
widest opportunity for future growth.
Regardless of specialism, all our factories are regularly externally
audited, giving our customers complete confidence in the
continuing quality of our supply.
Nothing stands still in this ever-changing world. To make the
most of the opportunities for growth and to keep moving forward,
we must continue to invest in our business, whether this is in
our people, manufacturing capabilities and quality, our business
infrastructure or in finding the next successful acquisition.
Ongoing capital expenditure in new manufacturing and inspection
plants within our factories is almost routine, with recent investment
at our Italian and Taiwanese sites, and significant ongoing
investment into our Singaporean site. But it is not just about
investing in our manufacturing capacity, sustained growth in
several of our key distribution locations over the last few years is
driving investment into our warehousing in Northern Ireland, China,
Holland and looking ahead into the US as well. Whilst investment
in our people, not just via recruitment, but also through training
programmes and succession planning has become an important
part of our successful growth strategy.
Sourcing of components
Opportunities for growth
Two-thirds of the Group’s revenue is sourced from our established
network of world class external suppliers. This means we are not
restricted by what we can manufacture in-house, instead we are
able to offer our customers a truly ‘one-stop’ solution for all their
fasteners and related components.
Our experienced sourcing teams have the know-how to allow us
to operate as a buffer in our customers’ supply chains. Where
available sourcing options in the market are less mature and
reliable, we add value by working with suppliers and holding
intermediary stock levels to remove end supply problems for our
customers.
In a rapidly changing world, at both the micro and macro-
economic level, our established high quality supplier network, in
conjunction with our in-house manufacturing capacity, means we
can respond to both our customers’ urgent supply situations and
longer term market changes with equal success.
The strong relationships we have built with our key global
multinational OEMs over the last 45 years are considered a
significant asset to the Group. We continue to prioritise the
development, protection and maintenance of these relationships
to grow market share across the world. To further support this, a
significant investment project, Project Atlas, is currently underway
into our global enquiry portal systems, as well as the integration
of our wider IT infrastructure and business processes. This
investment will bring our global businesses closer together, to
ensure that we can continue to meet the ever increasing demands
of our multinational OEM customers.
But it is not just about existing relationships, we are also always
looking at how we can gain access to new customers. At any point
in time we will be working on a number of new multinational OEMs
– building networks and trust, developing a better understanding of
their needs and spotting the opportunities that will provide us with
that initial route to supply.
Whilst as a wider business, we also look beyond specific customer
relationships, our engineering, sales, marketing and innovation
teams are continuously tasked with searching the market to
identify the next ‘big thing’. Be it a specific product range, patented
technology, a new market focus or a geographical hot spot, we are
always working together to drive our ongoing growth.
19
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www.trifast.comStrategic report Strategic report Innovation - Technical, application and design engineering
Innovation
– Technical, application and design engineering
Partnering our customer
As a Full Service Provider (FSP) we engage at a deeper level with
our customers. This allows us the opportunity to be involved in
the early development of a new product or in problem solving
a new application. Over the last ten years we have consciously
focused on the recruitment of technical and application engineers
to support TR locations and Business Development Managers
(BDM’s). This early involvement and problem solving capability is
proving to be the added value that our customer base, particularly
the multinational OEMs that are the mainstay of our business,
require of us.
Adding value
We are in a unique situation, compared to competitors, of
having the knowledge and technical support of our own eight
manufacturing locations to provide additional support. We have
experienced increased activity with major customers interested in
seeing their product manufactured on site which is an invaluable
experience. This includes the numerous audits of our facilities
and capabilities where we are attaining high scores which assists
in securing nominations for new business and it builds their
confidence in TR.
Technical centres for the future
The next stage in this development is to open ‘technical and
innovation centres’ in the heart of automotive and electronics
clusters of manufacturing. Our Swedish team were given a brief
to find a campus environment, close to the design centres of
the major customers that we support there today, in a futuristic
building in Gothenburg. They exceeded the brief and during
November 2017 we moved in to serviced offices on the Docklands
and have three full-time Application Engineers based there. The
building we occupy is a ‘hot house’ purely for companies involved
in the automotive sector and electric vehicle (EV) development. The
design centres for Volvo, Geely, Ericsson and many more are within
walking distance of our centre, and the expanding city will be home
to another 7,000 people moving in to this area of engineering
excellence. The product designed in this city will influence their
OEM manufacturing sites globally and the Tier1’s that support
them. The TR team based in Gothenburg is engaging with other
TR teams in Europe, China, USA and India on an increasing basis
to ensure that we secure the business that we have been involved
in as and when it goes global.
We are also emulating this plan at our Waterside Park location,
located in Birmingham, in the next few months. The technical
centre, with a conference and training suite, is being housed in our
newly extended automotive facility adjacent to the main distribution
hub. This will enable our technical application engineers to invite
customers into the facility, discuss new projects and test product
real time into their components. Having the space and equipment
to invite customers’ engineers in to assist them will, we believe, be
invaluable. The HQ for our global quality team is also based there,
so the necessary testing and the latest measuring equipment will
be incorporated into that facility.
Electric vehicle development
The emergence of the EV development is the hottest topic at the
moment and we are already engaged with, and on the builds of,
prestigious models through the Tier1’s. The interiors of the vehicles
are becoming more futuristic, but they still require car seats, IP
console and air bag assemblies the same as a conventional diesel
or petrol engine car, so the vast majority of the parts we already
supply will remain the same. We are involved however with the
battery manufacturers and changing technology.
This has spawned a new business opportunity for us, best
illustrated in the diagram within this article. The EV charging units
create a completely new market as electronic highways will be
developed to support the anticipated electric car boom. If you can
imagine that, from the tip of Italy to the top of Norway, there will be
a huge network of charging points along that route. We are seeing
these at our service stations, in company forecourts etc. and, for
us, this is a perfect product opportunity as they are essentially
sheet metal cabinets filled with that industry’s technology. For TR,
it is product paradise, as the components used are products we
already supply to the sheet metal industry today and are stocked.
We can supply everything from the self-clinch fasteners, to the
cable management and enclosure products used in the assembly.
We have launched a major campaign globally to be seen as the
one-stop source for EV charging units. A dedicated industry page
on our technical website has been created to showcase our full
capabilities.
Plastic and cable management
It is five years since we launched our plastics and cable
management range. Kevin Rogers, TR Commodity Manager, has
been instrumental in developing the range with key vendors and
training our staff in the product and applications. This year the
sales have been substantial; we are selling this product, not just to
OEMs directly but, to distributors who appreciate the service we
provide, and the short lead times on special parts. We can tool up
for product in under five weeks where for our competitors often the
quote is 12-16 weeks.
Enclosure products
The enclosure product range was soft launched last year and
trialled in the UK and Southern Ireland. The interest in the product
is best expressed in the number of hits on our website – over
48,000 in a short space of time. This is a more technical sell and
we have been running training courses in the UK and Europe and
showcasing the product at exhibitions. We are starting to see the
activity and interest escalating. We are not the brand leaders but
are seeking to be designed in by sheet metal companies at the
same time as they are specifying the other products we already
supply them. This helps to reduce their vendor base and will also
give them a commercial benefit.
Our future lies in continuing to develop enhanced service and
product offerings to our growing and established customer
network.
Glenda Roberts
Group Sales Director
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General Fasteners
Security Fasteners
Locks & Locking Systems
Threadforming Screws
Gasketing
Hinges
Clamps
Cable Management
Fasteners for Plastic
Fasteners for Sheet Metal
21
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www.trifast.comStrategic report Strategic report Technical, application and design engineering
Innovation continued
– Technical, application and design engineering
TR retains level 2 JOSCAR status
Accreditation register is used by buyers in the defence,
aerospace and security sectors.
TR Fastenings has retained level 2 status in the Joint Supply
Chain Accreditation Register (JOSCAR), a database of firms
that have undergone accreditation to prove they have the
systems in place to supply to the aerospace, defence and
security industry.
The JOSCAR system was established to aid aerospace,
defence and security firms to select partners and suppliers as
prime contractors across their varying requirements. Vendors
are assessed on a number of issues such as business
continuity, counterfeiting, IT security, supply chain procedures
and modern slavery.
Having the accreditation register in place ensures that
potential vendors are assessed for risk, compliance and
quality of materials and services. Buyers have access to a
single source of accurate, comprehensive and quality data
relating to these factors, so they can make informed decisions
quickly and assuredly.
Kevin de Stadler, Director of Sales, UK and Ireland at
TR Fastenings, comments:
“We strive for the highest levels of quality in every sector that
we operate in, and we understand that for the aerospace,
defence, and security sectors there is an additional need to
assess their suppliers against key criteria due to the high-risk
nature of the work these firms carry out.
“Being part of the JOSCAR initiative is hugely important to us
and shows our customers in these industries that we take our
commitment to quality and standards very seriously, and we
are very proud to have retained level 2 accreditation.”
Full service provider
TR North East has invested in an ultrasonic wash
facility to meet the growing needs of one of its
telecommunications customers.
Due to our ever growing usage and reliance on technology,
there is an increased demand for better and faster wireless
and mobile phone signals (4G etc.), yet at a reduced cost.
This is the challenge that our customer is facing in the
production of their radio filter technology. Our customer had
a requirement for the brass components that we supply to be
cleaned to give an improvement in yield, a measurement that
is taken to validate the performance of the product. TR North
East worked alongside our customer to map the requirement
and have now invested in a cleaning facility on site at Newton
Aycliffe to help achieve this goal.
We reviewed the specification of the customer’s existing set
up and replicated it at our premises in Newton Aycliffe at no
additional cost to the customer. By replicating the existing
system, the customer fully understands and has confidence in
the process that we are carrying out on their product and we
can provide back-up assistance should their equipment fail.
The cleaning process consists of a hot ultrasonic wash in
a mild alkaline aqueous solution, removing any residual oil,
grease and general dirt from the parts. They are then rinsed
of any chemical residue in hot de-ionised water before drying,
cooling and bagging to preserve cleanliness.
The initial results have shown that the investment we made is
giving the customer a better product, and performance has
increased by 16% in comparison to the uncleaned product,
taking the measured yield to almost 100% on one of the filters
tested, proving that by “going the extra mile“ as a full service
provider we can add value to our customer.
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23
www.trifast.comStrategic report Strategic report Group strategy
Group strategy
Core strategy
Focus on multinational OEMs
Against the backdrop of forecast global economic growth, TR is in
a good position to continue to grow
This is further supported by expected global growth across all our
key sectors: in automotive, domestic appliances and electronics.
There are clearly some big changes already underway in the
automotive sector, for example, moving more to electric vehicles,
but with our focus firmly on the cabin and dashboard, as well
as our proactive approach, we view these changes as providing
further opportunities for growth.
Carrying on from FY2018, we see the next few years as being
a period of continued investment and growth. Using as a base
the strong foundations we have built and the investments we
have already made, we will continue to make carefully targeted
investments in the coming years. Working hard to ensure that we
are best able to seize the opportunity to grow alongside our key
global customers and markets for the long term.
Description
Our core business is supplying high volume assembly multinational
OEMs with fastenings and related components. Our customers
rely on us to deliver engineering know-how, consistent quality,
price and availability to supply automotive assemblies, white
goods, mobile phone base stations, computer enclosures, cash
dispensers and other equipment, often into numerous sister plants
around the world.
We are a value-add supplier of specialist component parts, with
over 75% of our revenues being derived from customer specific,
branded, or licensed products. We provide guaranteed quality and
reliability of global supply (sometimes for hundreds of parts at a
time), as well as the ability to solve complex and sometimes urgent
manufacturing challenges for our customers. Because of this, we
can avoid competing solely on price and therefore can retain and
build on our business relationships for the longer term.
Performance so far
We have trading relationships with over 100 multinational OEMs.
These relationships reflect where as a business we continue to see
great opportunities for growth. Our strategic accounts evolve in
line with the opportunities presented to us, as well as the relative
positioning of our customers’ underlying businesses. However,
at any point in time, these will always be made up of a mixture of
household names and Tier 1 manufacturers across the automotive,
domestic appliances and electronics sectors.
To maintain and develop the strength of these key customer
relationships, we have been reviewing our current sales and wider
cross functional teams to identify where focused recruitment and
investment will bring the greatest rewards. Head count and skills
gap analysis is already underway across all our global and local
teams. Specific key gaps have been successfully filled, but further
investment is required to continue to future-proof the business and
meet our multinational OEM customers’ evolving needs.
24
At the same time, over the course of the year under review, we
have made several investments into our customer relationship
management systems, most specifically via the ongoing
development of our global enquiry portal. Since its initial
development this tool has been instrumental in allowing us to
bring our teams around the world closer together so that we are
better able to approach the market in a consistent and integrated
manner.
Plans for the future
Over the coming years we will continue to drive investment in
both our sales and cross-functional teams to support the ongoing
development of our core strategy. In part this will be by increasing
head count to expand our sector expertise and knowledge across
different geographies and by ensuring that our sales teams work
closer together on a global basis to continue to improve site
penetration levels at our multinational OEMs.
To assist this, the ongoing investment and development of our
global enquiry portal is set to continue with our Group and local
teams working closely together to review existing functionality
against future requirements. This will be further supported by the
investments we are making as part of Project Atlas into developing
and integrating our wider IT and business infrastructure.
In the medium term we see our revenue to our top multinational
OEMs continuing to increase organically and for us to build
meaningful trading relationships with at least another ten
multinational OEMs over that same period to be identified as key
development accounts.
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Trifast plc Annual report 2018 Strategic pillar
KPI’s
Investing in
our people
• Group total revenue
• Key multinational OEM revenue
• Return on capital employed (‘ROCE’)
• Broaden skills of management
Link to strategy in action
Read more on
pages 26 to 29
Investment driven
growth
• Group total revenue
• Return on capital employed (‘ROCE’)
• Manufacturing to distribution ratio
• Underlying cash conversion as a % of underlying EBITDA
Continue to add value
and differentiate
• Group total revenue
• Key multinational OEM revenue
• Underlying operating margin enhancement
Acquisitions
• Group total revenue
• Return on capital employed (‘ROCE’)
• Underlying diluted earnings per share (‘EPS’)
• Manufacturing to distribution ratio
Operational
efficiencies
• Group total revenue
• Underlying operating margins enhancement
• Group underlying profit before tax
• Underlying diluted earnings per share (‘EPS’)
• Underlying cash conversion as a % of underlying EBITDA
Read about our Key Performance Indicators (KPIs) on page 44
Read more on
page 30
Read more on
page 32
Read more on
page 34
Read more on
page 36
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www.trifast.comStrategic report Strategic report Strategy in action
Strategy in action
Investing in our people
HR team
Helen Toole
Group HR Director
Rebecca Rutter
HR Representative
Luke Murphy
UK HR Manager
“ A positive working environment
can have a very positive impact
on employee performance.
We are continually reviewing
our working environments.
Where possible we will approve
investment requests to provide
our employees with the best
facilities that we can
Training and development
We continue to invest in our training provision for our employees
to ensure that we have the best skill sets that are relevant for
each of our job roles. Our team leader training continues to be
a highly successful programme allowing first time managers to
learn in a safe and confidential environment. The programme
comprises three modules, each run over two days. The
participants learn how to operate different styles of management
and carry out effective two-way communication as well as how to
take a structured approach to delegation. In addition to this they
participate in team working exercises and deliver a presentation
on a work-based project.
Our leadership training continues and, as mentioned in previous
reports, the programme is based on the theory of ‘Transactional
Analysis’, allowing the leaders and future leaders of our Company
to create a shared understanding and language around the
management of their teams. It also allows those in senior positions
to share experiences and to take part in coaching sessions to
further develop their skills.
As many of our training courses as possible bring together our
employees from different locations which creates a very powerful
network across the Group with colleagues creating good working
relationships and points of reference in different functions
and locations.
These training programmes, together with other training that goes
on around the Group, have allowed us to effectively develop our
succession planning. We are now in the positive position of having
an identified deputy for most of our senior managers, giving us
confidence in our ability to allow the most experienced employees
to work on strategic projects when the need arises, without the
day-to-day management of the business being affected.
Induction training is being re-designed to ensure that new
employees have the same experience in terms of their induction
no matter where they start with the Group, and we are developing
an ‘employee portal’ that will allow an interactive experience for
new employees and provide video content for new starters to fully
understand the Group and its global reach.
As part of Project Atlas, we are planning to invest in a new HR
system that will allow us to more effectively manage our people
information. A new system will also provide us with the opportunity
to update our performance management process and the
improved management of our training activity. We will also be able
to more easily report on the Human Resource, Environmental and
Health and Safety key performance indicators.
Integrated business leadership/planning
("IBL/IBP")
Part of our mission statement is ‘to create a safe and fair
environment to provide clear career development for staff across all
of our global operations’. All our activities regarding our people are
working towards the realisation of this vision.
Within the IBL/IBP framework we have been able to constructively
progress the development of our key performance indicators to
support this vision. We now regularly report on:
• Employee development
• Health and safety
• Environment
Through the introduction of a new HR system this process will
become increasingly efficient.
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Trifast plc Annual report 2018 Promotion
Maddy Webb
Director of Quality
Promotion
Ping Siong Tong
General Manager, TR PSEP, Malaysia
I joined Power Steel as a Production Executive after
freshly graduating from college as a Material Engineer in
July 1988.
During my career with the company, I have worked within
various departments; production (cold forging, thread rolling,
secondary process, heat treatment & surface treatment,
production planning), production engineering, quality, and
engineering support to customers before becoming Manager
in November 2017.
During my 30 years with Power Steel, I have visited various
overseas locations, including Japan, Belgium and the USA.
The training and experience that I have gained has been
invaluable in assisting me within the industry.
My biggest achievement within the Company was to assist
with the technical collaboration with a key automotive
customer in developing their first automobile engine. 90% of
the fasteners that were installed into this engine are made by
Power Steel.
Looking ahead, I would like to work and present TR PSEP
as a technology driven company that is able to assist
our customers in development of new products, cost
effectiveness and efficiency in application.
Ping Siong Tong
General Manager
TR PSEP Malaysia
I studied Metallurgy and Materials Engineering at the
University of Birmingham, specialising in Physical Vapour
Deposition (PVD) and Chemical Vapour Deposition (CVD)
on tool steels for my dissertation. I went on to work for
Bodycote heat treatment as a graduate engineer in the
Plasma Nitriding and PVD/CVD coating section before
becoming Laboratory Manager.
During my career I have worked as a Quality consultant
setting up ISO9001 and QS9000 systems in companies
across a range of industries, then moved to Lear Corporation
in Coventry where I was responsible for the Quality System
Management and the PPAP approval of the seat assemblies.
I joined TR Fastenings in 2000 as a location Quality Manager
at the Stringers site in Coventry and have enjoyed the
opportunities to work with teams at all sites on Quality Control
and Quality Assurance projects. As part of the Group Quality
team I have worked as both Supplier Quality Manager and
Customer Quality Manager, giving me a unique insight into the
expectations and needs of both our broad supply base and
our large cross section of customers.
Quality is ‘conformance to standard’ and Quality is
everybody’s responsibility
We are committed to continually improving our business and
we look for opportunities to adopt the highest standards
for our products; our services and our systems to support
the needs of our customers and the market sectors that we
supply into.
We recognise Quality in four key areas: Quality System;
Customer; Supplier and Product Quality. Our aims for these
areas are categorised below:
• To have a Global Quality System that forms the backbone
of our company and demonstrates commitment to
recognised Quality standards
• To have a Customer Quality focus that represents the
“Voice of the customer” within the business
• To have Supplier Quality processes that identify risk and
enables the business to make appropriate choices when
planning
• To have Product Quality processes that enable the
business through controls that are appropriate to the
industry sector, customer application and product risk level
Maddy Webb
Director of Quality
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www.trifast.comStrategic report Strategic report Strategy in action
Strategy in action
continued
Investing in our people continued
Apprenticeship programme
We continue to provide development opportunities through our
apprenticeship programme. This is a successful programme in
that the majority of our apprentices find permanent positions within
our business at the end of their apprenticeship. This year, we have
taken on Ben Rees-Webbe at Bellbrook Park (sales apprentice),
Lydia Ball (HR apprentice within Group HR) and one of our
warehouse operatives, Bradley McCord, within our Belfast location
has successfully become a sales office apprentice.
Apprenticeship levy
In April 2017 the UK Government introduced the ‘Apprenticeship
Levy’ for employers of a certain size. We are now paying
into this levy and will use some of the funds to spend on
our apprenticeships and pay our training providers for the
apprenticeship qualifications.
Employee engagement
Since the publication of our last Annual Report the Company has
embarked upon a regular employee survey programme, managed
by an external organisation.
The first, baseline, survey was issued to all of our employees
and we received an encouraging number of responses. This
survey covered a range of topics so that we could begin to
gauge opinions and feelings in a number of different areas. Each
subsequent survey has concentrated on the matters that have
been most strongly commented upon.
The surveys allow employees to score certain statements and to
leave free text comments. All surveys are anonymously completed
but employees can identify themselves if they wish to, which allows
for meaningful engagement. The results of the survey are grouped
by the external provider so that we can receive scores against
each question for each location. Any suggestions or comments
that are left are linked to a location but not to an employee.
Each Entity Director receives an anonymised report for their
location that details the suggestions made by employees and
the scores for each question at that location. These reports have
prompted positive activity to address any pressing concerns.
The survey programme will continue as we see it as a positive way
to engage with our people across the Group.
In addition to the employee survey, we have also introduced
an independent ‘Whistleblowing’ hotline. Whilst employees are
encouraged to resolve issues informally and internally as often
as possible, this externally provided hotline is available to all our
employees for them to report anything they feel uncomfortable
about. The service is multi-lingual, completely confidential and any
reported incidents are fed back to the Company anonymously.
Ben Rees-Webbe
Lydia Ball
Bradley McCord
Equality
We have a respectful culture and want to encourage an inclusive
environment where everyone feels comfortable to be themselves.
We work and grow together and view laughing together as a sign
of enjoyment of our roles and of a lively, busy environment. We
need to be mindful of how our humour and comments can affect
others, but we do want our working relationships to be as natural
and straightforward as possible.
All our employees are recruited, trained, developed and promoted
within a framework of equality. We support all our people to
achieve their full potential and all employment decisions are based
on the ability of the individual. Those decisions are free from any
form of unlawful or unfair discrimination and are made in a fair and
objective way.
Gender pay gap
The Equality Act 2010 (Gender Pay Gap Information) Regulations
2017 brought into effect a requirement for large employers, such
as ours, to report publicly each year on the differences in the
aggregate pay and bonuses for men and women. The Regulations
mandate how organisations in England, Scotland and Wales
with 250 or more employees must calculate a standard set of
key metrics on their gender pay and gender bonus gaps, and
the format and medium in which they must report them. The full
gender pay gap statement is included below.
Our latest gender pay gap report shows overall median and mean
gender pay and bonus gap based on hourly rates of pay, and
bonuses paid. Based on a median average, our female employees
are paid 2.17% more than our male employees. The mean average
displays our male employees are 2.5% higher paid than our female
employees. This result is significantly lower than the national
average of 18.1%.
Pay and bonus
Hourly pay
Bonus pay
Median
-2.17%
0.00%
Mean
2.58%
21.00%
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Trifast plc Annual report 2018 Gender pay gap report
Proportion of males who received a bonus
Proportion of females who received a bonus
1.92%
4.10%
98.08%
95.90%
Received a bonus
Did not receive a bonus
These charts illustrate a difference of 2.18% between the numbers of men and women being paid a bonus. As a Company we
reward all our employees, the only reason the statistics do not show 100% is due to the eligibility criteria for the bonus payments
at the time of the snapshot.
Lower quartile
15.96%
Lower middle quartile
45.26%
84.04%
54.74%
Upper middle quartile
33.68%
Upper quartile
30.85%
66.32%
69.15%
Male
Female
The above charts illustrate the proportion of male and female employees in each quartile band.
The first year of the gender pay reporting for TR Fastenings provides reassuring data that supports our reward and recruitment strategies.
Whilst these results are hugely encouraging we remain committed to ensuring equality throughout the Company and will be closely
monitoring these measures on an on-going basis to ensure continued good performance. In conclusion, the results are significantly
positive for TR Fastenings, reflecting our approach to equality in all aspects of our employment relationship.
29
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www.trifast.comStrategic report Strategic report Strategy in action
Strategy in action
continued
Investment driven growth
Description
At TR we are in a sustained period of growth with FY2018
representing another record breaking year for the Group.
Growth needs investment, not just in terms of our people, but also
via capital expenditure in our warehousing, manufacturing capacity
and our digital capabilities.
Performance so far
Over the last year we have continued to invest in our
manufacturing capabilities around the world. With significant
investments into our Italian site aimed specifically at building
manufacturing capacity following on from the successful installation
of a £1m state-of-the-art heat treatment plant in FY2017.
By far our biggest capital investment in the year has been the new
mezzanine extension within our well established and very profitable
Singapore site. An investment of c. S$1.2m has constructed a
mezzanine floor and allowed us to invest in additional machines.
This will increase local capacity by one third, following further
planned expenditure in plant and machinery.
Outside of our manufacturing sites, we have invested in our
distribution, warehousing and inspection facilities in Belfast,
Holland and Shanghai to support the growing revenues we are
seeing in these regions. Whilst our growing presence in Spain,
via our new greenfield site, is continuing to provide exciting
opportunities both to better service our existing customer base
and to access new multinational OEMs in the local marketplace.
Plans for the future
Looking ahead, we continue to see capital investment as a core
part of our ongoing strategy for growth with further investments
planned across all our manufacturing sites. By expanding our
manufacturing capabilities and capacities around the world, we
will not only reduce our reliance on purely distribution revenues,
but enable better absorption of fixed overheads as manufacturing
levels increase.
In addition, we will continue to invest in our distribution business,
with further warehouse expansions planned in the coming year,
most specifically to support the double-digit growth we have
seen in recent years at our Houston site (Hurricane Harvey
notwithstanding).
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Trifast plc Annual report 2018 TR España
New greenfield location in Barcelona
TR Formac, Shanghai
New laboratory and warehousing facility
We officially opened TR España at the end of 2016 in a
new greenfield site on the outskirts of Barcelona. We are
in an ideal location within a new modern facility which is
part of the Viladecans industrial development, four miles
from the airport and just off the main arterial road.
The rationale for opening was to support the global
automotive Tier 1 customers in Spain and Portugal, and
Barcelona was chosen due to the potential opportunities for
the Company with lots of Tier 1 customers close by. Spain is
the second largest automotive market in Europe, producing
c. 3 million cars per annum.
We are fully operational having started from “scratch” and
the new business won in both automotive and electronics
has already justified the set-up decision. Being part of a large
global organisation has meant that we can draw from other
TR people’s knowledge and experiences. The support we
have had has helped us "hit the ground running".
We passed the all-important ISO 9001, and have had
customer audits including one with an important Japanese
customer. Our pipeline is now healthy, and we have good
incremental growth.
On a personal note, I’m delighted to have joined the TR
organisation, having been in the fastenings industry for over
16 years. I am honoured to be part of an organisation that is
truly global, has its own manufacturing locations which give
us a leading edge, and to work with people where customers,
employees and quality always comes first.
Raul Fernandez
Commercial Director
TR España
To meet our business growth in China and North
Asia, and the increased quality expectation from our
multinational customers, Trifast has invested in a brand
new laboratory and warehousing facility in Shanghai.
New rack design and improved work flow
In order to improve efficiency and resolve conflicting logistic
requirements for the handling of high volume/low mix and
low volume/high mix parts at the same warehouse, the
multi-layer racks have been redesigned to allow efficient
storage and easy identification and picking of low volume
parts, while ensuring smooth transfer of high volume cargoes
within the warehouse. The rack design also allowed a new
work practice to be implemented which improved the work
efficiency in the warehouse.
Ensuring right products leave the warehouse
The improved rack design helped to free space for a new
laboratory within the same facility. New measuring and
inspection equipment has been installed with more being
procured and planned. This enhanced inspection capability
will allow the Shanghai operation to improve its service quality
and ensure that products meeting customers’ specifications
are delivered on a timely basis.
Phua Yong Sang
General Manager
TR Formac, Shanghai
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www.trifast.comStrategic report Strategic report Strategy in action
Strategy in action
continued
Continue to add value
and differentiate
Description
Our engineering knowledge and experience, supported by our
high quality manufacturing locations, means we can add real value
to our customers throughout the purchasing cycle. From initial
enquiry and product development, through to ongoing supply
management, we have the skills across the world to problem
solve, and to drive efficiencies throughout the life of the build.
Our reputation in the industry for quality is second to none at a time
when customers are beginning to focus more and more on this.
We are known for our commitment and ability to go the extra mile
for our customers, solving issues before they arise and stepping
in where competitors have fallen short. All this commitment is
supported by established supplier networks and valuable licences
that mean we can offer a full range of quality product to meet
our customers’ component requirements across a broad range
of sectors.
Plans for the future
Looking ahead we see investing in quality and engineering as an
ongoing requirement, as the demands our customers place on us
increase across all sectors of our business. We have a very strong
foundation to work from, with plans already in place to continue to
invest in and build our teams and capabilities around the world.
Having already invested in our website and our cyber security
in recent years, over the last year we have been performing
a thorough review of our overall digital strategy and are now
expecting to make significant additional investment in this area
over the next few years via Project Atlas. A key rationale for that
investment is to allow us to further differentiate ourselves in the
global market place. In a disaggregated market, one of the key
benefits we already offer to our multinational OEMs is our global
presence and a level of consistency in the way we do business
around the world.
Performance so far
In November 2017 we opened a TR Innovation and Technical
Centre situated in the heart of Sweden’s electric vehicle
development area, Lindholmen, Gothenburg. This is a very exciting
opportunity which will not only set us apart in the local market
place, but will also help to support our wider growth plans in the
electric vehicle space.
Our ongoing efforts to expand the products and markets we
supply to, continue to mark us out from the competition. We are
already seen as a market leader in the supply of certain plastic
fastener solutions, and our recent entry into enclosure products
continues to build our name in other parts of the market and drive
growth.
We continuously undergo and pass customer audits in our
manufacturing and distribution locations. With external recognition
also evident in the various awards we have once again received
during the year.
Through this investment we will bring the TR business even closer
together. We will drive more aligned internal processes, a more
consistent global approach to the market and allow real-time
sharing of key information to help better support, protect and grow
our multinational OEM customer base through automating data
exchange.
Our global customers are investing and evolving themselves, they
are becoming more internally joined up, and as they do so they will
be looking to their preferred global suppliers to evolve with them
and to be able to continue to respond to their changing needs.
We believe the integration that Project Atlas will bring, will put us
one step ahead of that curve, differentiating us in the now and
future proofing the business, so we stay fit and ready for the
challenges yet to come.
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Trifast plc Annual report 2018 TR Fastenings opens specialist facility
in Sweden
Awards and recognition
t
r
o
p
e
r
c
i
g
e
t
a
r
t
S
TR Fastenings’ USA team recognised for supplier excellence
by Yanfeng
Photo credit: On the Run Photography
Global intelligent products provider Flex honours TR with
preferred supplier award
TR Kuhlmann passes Kongsberg Automotive VDA 6.3 audit
with a score of 96%
TR Holland receives fourth 100% delivery award from Philips
Find out more: www.trfastenings.com/news/awards
In November 2017 TR Fastenings opened its Technical
and Innovation Centre in Gothenburg, the heart of
Sweden’s automotive industry.
The new facility is in the Lindholmen Science Park, which is
home to many of the key players developing forward-thinking
solutions for the automotive market, including electric vehicle
(EV) technology. From major OEM firms and IT software
developers to technical and engineering teams from Tier
1 manufacturers, Lindholmen is fast becoming a hub for
automotive innovation in Europe.
The specialist Centre will allow TR to achieve two main
objectives; to form and enhance working relationships with
key customers in the region, and to provide a showroom-style
location where existing and potential customers can visit, view
fastener products and discuss design and manufacturing
options with the highly experienced TR team.
TR’s Technical and Innovation Centre comprises a showroom
area, housing samples of TR products across 12 categories.
Customers can examine the products and see how they are
assembled and used in product applications. There is also
space to host meetings, where TR can discuss design and
manufacturing strategy with customers, partners and OEMs.
Manoj Parmar, Business Development Manager at
TR Sweden, comments:
“The Centre offers TR considerable potential in terms of
business development; having a base here at Lindholmen
sends a strong signal that we are committed to innovation,
manufacturing excellence and automotive development.
There are so many exciting and successful companies
operating in this space and already we’ve had excellent
feedback from businesses who are keen to find out more
about the role of fastening technology in the manufacturing
process, and how our expertise can assist them in their own
ventures.”
Eugen Kuhnl, Engineering Manager at TR Sweden, adds:
“It is so valuable for both us and our customers if we can be
involved early in the design process. We work closely with Tier
1 suppliers including assisting them with OEM requirements,
and our expertise allows us to advise them on using the
right fastening technology to get the best results. Having
this platform in Gothenburg is an excellent opportunity for us
to have those vital early conversations with customers and
enable them to make profitable decisions.”
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Strategic report Strategy in action
Strategy in action
continued
Acquisitions
Description
Trifast has consistently demonstrated its ability to deliver organic
growth. However, this is not enough to maximise the opportunities
available to us in what is a very fragmented industry, with no one
player having more than 5% of the market share.
We have a detailed acquisition strategy in place to identify key
criteria and geographies, which our in-house acquisition team are
using. Over the course of FY2018, this strategy has been further
developed by a comprehensive review and redesign of our internal
monitoring, reporting and decision making processes. This has
been specifically designed to allow decision making in this key part
of our growth strategy to operate as effectively and efficiently as
possible.
Performance so far
Reflecting a number of the key acquisition criteria mentioned
above, in April 2018, Trifast acquired PTS for an initial consideration
of £8.5m, subject to adjustment based on the net cash in the
business at completion.
Based in East Grinstead, UK, PTS was founded in 1988 and
employs 27 staff. It is a highly regarded distributor of stainless
steel industrial fastenings and precision turned parts, primarily
to the electronics, medical instruments, petrochemical, defence
and robotics sectors. Its emphasis is on delivering high quality
products and services, currently selling into c. 80 countries directly
through its well-established distributor network, as well as digitally
through its newly developed, fully integrated commercial website
which lists over 43,000 products for sale.
This two-pronged approach has enabled PTS to continue to
deliver strong sales growth over the last three years.
The management team and previous owners, Jason Collyer,
Andy Edwards, and Andy Knight will continue to run the business
on a day to day basis, alongside the current PTS operational
management team and wider staff base. PTS will run as a stand-
alone business within the TR family of businesses. Although as with
other brands within the TR portfolio, we will be working closely with
PTS management to unlock supply chain opportunities and via the
Group’s marketing and global sales services to open PTS up to
further international markets and access to TR’s wider customer
network.
TR has experienced a growing demand for stainless steel
fastenings from a number of our global OEM customers. Adding
the PTS product portfolio will widen our global stock range to
enhance the Group’s customer offering and provide further support
to our distributor sales (currently c.10% of Group revenue).
We believe that this acquisition will be earnings enhancing in the
financial year-ending 31 March 2019.
Plans for the future
Following on from our successful purchase of PTS, acquisitions
will continue to be a significant part of our investment strategy in
the coming years. However, there can be no doubt that some of
our key acquisition geographies are more difficult to access than
others for a number of reasons. This can include a lack of publicly
available information, a different local business environment, as well
as the sheer scale of the opportunities that are potentially available
to us in certain geographies.
Now that we have our internal acquisition structure firmly
established, over the current financial year our acquisition team will
be working on how we can make the best use of external support
options. These will be utilised to supplement our own internal
capabilities and capacities and to ensure we are able to continue
to be successful in this very important area of investment.
“ TR adds established
stainless steel fastener
supplier to its portfolio, to
drive global product range
extension and ongoing
growth
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www.trifast.comStrategic report Strategic report Strategy in action
Strategy in action
continued
Operational efficiencies
For TR PSEP, we have been working much closer together as
a global team to ensure we make better use of their unique
capability within the Group to manufacture very high quality
safety critical automotive parts. Our intercompany sales from this
site have increased to 9.1% (FY2017: 0.6%), increasing overall
production levels in the plant, thereby better covering our semi-
fixed overheads and allowing us to continue to build the business
globally in the face of a more challenging domestic market. Our
internal quoting times have been significantly shortened and the
direct involvement of the PSEP team with end customers has
helped us to win and continue to grow substantial additional
business, most notably in Japan and America.
Plans for the future
In terms of our manufacturing efficiency, in the medium term we
expect to see ongoing efficiencies across all our sites as a result
of the investments we have made. With one of the most exciting
opportunities being our investment in Singapore where, as a result
of the mezzanine expansion, we will see capacity increase by one
third. This additional production will allow us to bring third party
supply back in-house and make quality procedures more efficient.
But it not just about manufacturing. One of the key wins coming
out of Project Atlas, our planned investment in our IT infrastructure
and business processes will be to automate many of our standard
processes. Be that operationally in sales, production, sourcing
and quality, or across our back office functions in finance, human
resources and IT itself.
Over the current year, we will be designing what those processes
will look like in the future, establishing how best we can drive
efficiencies, how we can free up more of our people’s time so it can
be spent on value-adding tasks, how we can use our increased
integration to make improvements to our supplier relationship
management structures and improve input costs, and how we
can improve and automate reporting to help us drive the business
forward and make better and quicker decisions in the context of
real-time information.
This major investment is about far more than IT infrastructure, it is
providing us with the opportunity to look at our business and how
it operates in its entirety. Allowing us to drive out inefficiencies and
growth opportunities across every element of those operations,
whilst at the same time bringing us closer together, and turning TR
into a world class international business.
Description
As a Group, TR is committed to continuous improvement.
We are always looking for ways to make our processes more
efficient, whether that is by improving our manufacturing capacity
and utilisation, working with our vendor base to manage costs,
increasing our available warehousing space or improving our
management and business information systems. We understand
the importance of an efficient and effective cost structure, to best
future proof the business and to support our strategy for growth.
Performance so far
The significant investments we have made in our Italian and
Singaporean factories over the last two years have increased
capacity and, in the long term, will help improve efficiencies and
maintain gross margins as in-house production levels increase.
Across our wider manufacturing sites, we have been investing in
plant and machinery to improve efficiency wherever possible. In
Italy we have invested in automated packaging machinery, whilst
in Malaysia these investments have been focused on additional
sorting technologies.
36
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www.trifast.comStrategic report Strategic Report Project Atlas
Project Atlas
Stevie Meiklem
Project Lead
Niall McClure
Programme Director
“ An investment that will
underpin our ongoing
organic and acquisitive
growth strategy and
further integrate our global
business to create the
Trifast of tomorrow
As a business, we have been successfully investing for growth in a
number of areas over the last few years. And whilst that investment
has focused to date on increasing our manufacturing capabilities
and supporting our ongoing organic distribution growth, it has
become more and more apparent over that time that one area
where we also need to turn our attention to, is in developing our
MIS, IT infrastructure and the underlying business processes that
stand alongside it.
This is not only to ensure that our systems are able to continue to
support our planned business growth long into the future, but also
to future proof the business and give us the opportunity to take full
advantage of the significant pace of development that has been
made in digital technologies in recent years.
As a result, over the course of FY2018 we have been on a
journey of research and discovery. This process started with a
consideration of how we could best join up our global sales and
enquiry processes to support the other investments we have been
making into this area of the business, but has subsequently led
to a more complete review of our Enterprise Resource Planning
processes and systems around the world.
The result of this comprehensive review is Project Atlas,
a significant planned investment into the integration and
development of the Group’s IT business platform and underlying
processes. This project is considered an essential part of our
ongoing growth plans, both organic and acquisitive, and will allow
us to continue to meet the evolving needs of our multinational OEM
customers.
The four key drivers for this investment are:
• Supporting our core strategy – underpinning our ongoing growth
plans and allowing us to differentiate ourselves in our core
markets
• Operational efficiencies and integration – driving efficiency gains,
increased automation and lowering operational gearing to
support our ongoing growth story
• Improving our management information and data management
– leading to better decision making, more globalised supplier
management and a more proactive approach to opportunities
and challenges
• Building an adaptable, scalable, stable environment – flexible,
rapidly deployable and widely supported systems and processes
that will form the backbone of our growing global business
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Trifast plc Annual report 2018 1. Supporting our core strategy
2. Operational efficiencies and
“ A globally consistent approach to market, supported by
an integrated IT platform, will differentiate us from the
competition”
• Improved Group wide access to customer activity data
will allow us to better support our increasingly joined up
multinational OEM customer base
• A fully integrated and more automated global enquiry
process will reduce quote times and drive additional sales
success
• An improved understanding of past lessons learned will
continue our ongoing evolution, keeping us fit for purpose
• A state of the art IT solution will enable us to offer
innovative integrated digital solutions to our key strategic
customers
integration
“ Transforming our operating model will drive greater
efficiency and a decrease in operational gearing,
underpinning our ongoing growth”
• This investment will allow the improvement, and where
relevant the automation, of our standard processes across
our operational and support functions around the world
• Improved clarification of roles, governance, decision making
and operational degrees of freedom will help to eliminate
procedural bottle-necks
• Review and redesign of our rules, policies and processes to
ensure we drive out inefficiencies and free up time for more
value-add activities
• A globally consistent way of working across an integrated
• Enhanced customer service and relationship management
business platform will bring us closer together
will help to further drive the TR sales culture
• Direct ordering and document exchange systems will
facilitate more efficient ordering and delivery processes for
us and our customers
Read about our 'Core strategy' on page 24 and
'Continue to add value and differentiate strategy'
on page 32
• Greater integration and automation at enquiry level will
facilitate increased in-house manufacturing levels, more
effective utilisation of available capacity and a lower external
spend
• Specific investments into warehousing technology will drive
down picking errors and manual checking procedures
• A cutting edge IT platform will allow us to operate smarter
and more automated VMI and logistics processes
Read about our Operational efficiencies strategy
on page 36
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www.trifast.comStrategic report Strategic report Project Atlas
Project Atlas continued
3. Improving our management information
and data management
• Accelerating the speed of business and automating
operational decision making will allow us to be more
proactive not reactive
" Information is power. What we know, who we know and how
together we will leverage that information is the difference
between winning and losing in today’s competitive market”
• Improved access to real-time, Group wide management
information will allow better decision making and an
increased ability to capture opportunities and manage
challenges in a changing world
• As a business we will spend less time on generating and
reporting data and more time on growing the business
• Improved access to our Group wide product and supplier
data will help us further develop and globalise our supplier
networks and reduce input costs
• Improved customer demand planning capabilities will help us
to limit stock holding increases as we continue to grow
• Enhanced group wide product data management processes
will drive more effective stock ordering and holding levels
• Increased Group wide supply information will aid combined
logistics planning and access to greater efficiencies of scale
4. Building an adaptable, scalable and stable environment
“ The right IT platform and underlying processes will form the solid integrated backbone on which our global business
can continue to grow”
Before Atlas
After Atlas
Systems and processes have been built around an outdated
delivery model based on national customer relationships and
a geographic P&L bias, leading to workarounds to support
our ongoing core multinational OEM strategy to grow
An IT platform and underlying processes specifically
tailored to support the way we and our customers do
business across the world
Ageing equipment and software coming to end-of-life, leading
to increasingly high costs to maintain
Reliance on in-house technical capability in a number of key
locations
Non-scalable, inflexible, slow and expensive to change
Significant ongoing investment by our chosen leading
global software provider - automatic upgrades and
ever increasing connectivity will future proof our IT
infrastructure without significant additional investment
Cloud based technology, with widely available support.
Facilitating the implementation of global IT shared
services wherever possible
Flexible, scalable and rapidly deployable, supporting
both our acquisition strategy and ongoing organic
growth in an ever changing marketplace
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Trifast plc Annual report 2018 Outline timeline and scoping
Given the scale of this investment programme there are likely to be points of evolution and change during the course of the project as we
look to secure and build the best solution for the business and its future growth plans. Some key considerations will only be fully visible to
us as we move through the various stages of the project plan. In the context of this, we have set out below an overview of the programme
and the expected timetable.
Our timeline
Phase
Approximate timing of roll-out
1
2
3
4
Distribution entities currently using our bespoke software solution – Tribune
Years 2-3
Distribution entities using other IT platforms
Manufacturing entities
Year 3
Years 3-4
Transactional entities (in-fill stockists/ manufacturers)
Timing & scope still to be confirmed
Subsequent acquisitions
Post phase 3, and where appropriate,
within 90 days of completion
In FY2019, our first full year of the project, our key focus will be on the review, redesign and documentation of our underlying rules, policies
and processes Group wide. This is an important part of the overall project, as this will identify and develop our detailed requirements.
These will then go on to drive the design and build phase of a new IT platform that has been specifically tailored to best facilitate our
underlying business model and growth plans.
The current financial year will focus primarily on our distribution businesses, whilst keeping in close communication with our manufacturing
teams to ensure the design and build of our new business platform will be fit for purpose across the Group network.
And the scope…?
The scope of the investment programme is not just an IT implementation, it will incorporate a comprehensive review and redesign of our
entire ERP rules, policies and business processes around the Group.
Accelerated roll-out,
years 1 to 2
In line with location by location roll-out,
years 2 to 4
To follow distribution business roll-out,
years 3 to 4
B u s i n e s s intelligence and data management
Manufacturing
and production
planning
CRM
Demand planning
Warehouse stock and
management
Operational finance
Global enquiry
management
Group finance
and reporting
Quality
Human resources and performance ma n a g e m e n t
Outside of the above, we are also considering the timing and scoping for how this affects other areas of our business, including:
marketing, contracts management, acquisition activities, and document storage.
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www.trifast.comStrategic report
Strategic report Project Atlas
Project Atlas continued
High level cost-benefit analysis
This project clearly represents a major multi-year organic
investment programme for Trifast and after the necessary
consideration, the Board has signed off on a budget of up to £15m
(to cover phases 1 to 3). Given the scale and complexity of the
programme, this budget will be closely monitored and may be
subject to change as we further develop and refine the scope and
timings of this investment.
Projects of this nature often fail as a result of a focus on the ‘IT
box’ and an inadequate regard for the importance of bringing users
fully on board. At Trifast, we see this investment as being as much
about our people as our processes and therefore have assigned
a significant portion of the budget to this. This will help to ensure
not only the ongoing success and benefit realisation of the project,
but will also assist in bringing our Group-wide businesses closer
together.
As already noted, this project is about far more than an IT platform,
with this element representing only about a third of the overall cost.
A significant portion of the budgeted spend has been assigned to
a comprehensive review and redesign of our business processes
which in turn will drive improvements in our operating and
commercial effectiveness. In addition, we are planning a substantial
investment in change management, training and user adoption
to ensure our people are ready to adopt and deliver the expected
benefits.
Change management and adoption
“ Project Atlas is about far more than an IT system. This
project will fundamentally change the way that we operate
together as a business”
This is not just an investment in technology. Project Atlas is
also about investing in our people. The only way to secure the
full benefits from the project is to ensure the highest possible
levels of user adoption across the Group. This requires
fully educated and trained individuals around the Group
who understand the rationale for the changes taking place,
the functionality of the system and the rules, policies and
processes that will affect them.
We are safeguarding this engagement in a number of ways.
Our recently recruited Change Programme Manager has led
the development of a comprehensive change management
strategy and related Internal Communications Plan. This is
now being translated into a detailed training programme to be
rolled out across all levels of our business.
Read about our 'Investing in our people strategy'
on pages 26 to 29
The Board expects there to be material benefits from the
investment programme. The estimated ROI of >25% p.a., at the
point of full benefit realisation (FY2023), compares favourably to our
current ROCE of 20.1% and we are confident that this project has
the ability to create significant shareholder value in its own right as
well as creating the capacity for our expected ongoing growth
As a consequence of the work undertaken to date on this project,
we have incurred direct costs of £0.4m in FY2018, largely relating
to project team and consultancy costs. We have excluded these
costs from our underlying results, (see note 2), to reflect the
unusual scale and one-off nature of this project. We anticipate
continuing to do so in order to provide shareholders with a better
understanding of our underlying trading performance during this
period of significant investment.
Project Governance
" Such a significant investment demands the right team, with
extensive experience, and the very best in project governance"
As shareholders would expect with Trifast, we are not
underestimating the demands of delivering this significant
investment programme. We set out below the key elements of
project governance that we have put in place to ensure that this
project is able to stay both on track and on budget so as to secure
its full benefits in the coming years.
Key external advisors
We have been through a very rigorous tender process to identify
both our leading global software provider and, as a separate
exercise, also our global implementation partner. Moreover, we
have engaged an independent Project Assurance partner and they
will be responsible for routinely reviewing our progress and that of
our partners throughout the life of the project to help us to remain
on track.
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Trifast plc Annual report 2018 In-house Project Atlas team
To complement these external advisors, we have successfully established the main components of an experienced in-house project team.
Stevie Meiklem
Project Lead
Niall McClure
Programme Director
Stevie has worked for Trifast for 26 years.
Operations Director on the Board of TR Fastenings Limited (UK) and also oversees our TR
Hungary operations.
Stevie’s role is project lead, helping to drive support for the ongoing successful roll out of
the project in the wider business
Niall joined Trifast in April 2017
Very experienced Programme Director, with 22 years working on substantial projects
across a range of industries
Niall was recruited to oversee the initial scoping period and will go on to direct the ongoing
development and roll-out of the project
Other key project team members
Change Programme Manager
IT Project Manager
Recruited
Recruited
Project Management Officer
In place, internal re-allocation
Project Planner
Change analyst
Test and Training Manager
Business Analysts (x 5)
Recruited
To be recruited
Recruited
Recruited
Training and test team
To be recruited
“ With the Project Atlas
investment, Trifast will
transcend from being
a leading international
company into a truly World
Class global industrial player
Steering Committee
The Project Atlas Steering Committee, including all three Main
Board Executive Directors, as well as our Group HR Director and
Group IT Director, will be responsible for overseeing the overall
Atlas project.
Data Governance Board
There can be no doubt that data is a valuable asset to the
Group. In line with best practise, we have set up a separate Data
Governance Board with a detailed Data Strategy to ensure that as
a business we can properly understand, trust, share, secure and
keep up to date this most valuable resource.
Conclusion
The start of Project Atlas is a very exciting time for Trifast as a
business. The scale and scope of this multi-year investment
programme will change the way that we operate around the world.
It will underpin our ongoing growth story and ensure we are able
to continue to meet and exceed the ever evolving needs of our
Multinational OEM customers.
Post-Atlas, the Trifast of tomorrow will be a more streamlined,
integrated global business. Better able to leverage off our customer
and supplier relationships, faster to face the opportunities and
challenges of an ever changing world, and with a lower operational
gearing to support our future profitable growth story.
The benefits case for the project speaks for itself. The returns we
expect to see in the form of increasing sales, reducing input costs
and operational efficiencies made this project a logical investment
to approve.
The Board are fully committed to Project Atlas and we look forward
to providing regular updates as we progress and deliver the project
and the resulting benefits in the coming years.
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43
www.trifast.comStrategic report Strategic report Key Performance Indicators
KPIs
The Board and the Operational Management teams regularly monitor and develop a range
of financial and non-financial Key Performance Indicators (KPIs) to allow them to measure
performance against expected targets, which can be analysed under various categories
Where we refer to underlying this is defined as being before separately disclosed items. Where we refer to EBITDA this is defined as
earnings before interest, tax, depreciation and amortisation. For definitions and reconciliations to GAAP measures see note 2, note 25,
note 34 and the glossary.
The following represents a selection of these indicators:
Financial KPIs
Link to strategy
Group total revenue
Relevance and performance
Historic performance
Position on target?
Our clear strategy for growth makes turnover an important barometer of
the Group’s success.
Turnover has grown significantly from 2013, increasing by 62.7% to
£197.6m (2013: £121.5m), equating to 10.2% p.a.
Growth is about more than just the top line. Controlling our cost base is a
key part of our investment plans.
Reflecting our success in this area, underlying operating margin has
increased by 490bps, from 6.6% in 2013 to 11.5% in 2018. This represents
margin growth since 2013 of 11.8% p.a.
Underlying profit before tax is a key measure of the underlying performance
of the business.
Our underlying profit before tax has grown by over 204.6% (or 25.0% p.a.)
since 2013.
Our quality of earnings is reflected in our ability to consistently turn
underlying EBITDA in to underlying cash.
The Group continued to be cash generative in FY2018 with a normalised
conversion rate of 68.1%, increasing to 78.2% net of a £2.5m investment in
stock to normalise stock weeks (2013: 85.3%).
ROCE measures the return that we can provide to both our equity and debt
investors. Maintaining this continues to be a key focus of the Group.
Since 2013 our ROCE has grown by 10.7% p.a. to 20.1% (2013: 12.1%).
EPS is a key target for the Group. Our clear strategy for growth is focused
on increasing this ratio year-on-year.
Since 2013 underlying diluted EPS has increased by 9.05p to 13.78p
(2013: 4.73p).
Working to grow this revenue as well as building relationships with new
multinational OEMs is the backbone of our overall growth strategy.
2018
2017
2016
2018
2017
2016
2018
2017
2016
2018
2017
2016
2018
2017
2016
2018
2017
2016
2018
2017
£16.0m
68.1%
£197.6m
£186.5m
£161.4m
11.5%
11.3%
10.4%
£22.2m
£20.5m
97.3%
88.9%
20.1%
19.9%
18.5%
13.78p
12.82p
+14.1%
9.99p
+6.9%
Link to strategy
Relevance and performance
Historic performance
Position on target?
Training programmes continue to be developed that allow our
employees across the globe to learn together and share best practice.
These programmes include operational, functional and leadership
elements and are designed for our employees to enhance existing, and
acquire, new skills.
By maintaining and expanding our manufacturing capabilities and capacities
around the world, we will reduce our reliance on purely distribution revenues
and be better able to manage unit price production costs to maintain our
ongoing profitability.
Over the last five years, 26% of UK employees have
completed the management development programme.
2018
2017
2016
34%
35%
34%
66%
65%
66%
Underlying
operating margin
enhancement
Group underlying
profit before tax
Underlying cash
conversion as a
% of underlying
EBITDA
Return on capital
employed (‘ROCE’)
Underlying diluted
earnings per share
(‘EPS’)
Strategic
multinational
OEM revenue
Non-financial KPIs
Broaden skills of
management
Manufacturing to
distribution ratio
44
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Trifast plc Annual report 2018 Financial KPIs
Group total revenue
Underlying
operating margin
enhancement
Group underlying
profit before tax
Underlying cash
conversion as a
% of underlying
EBITDA
Return on capital
employed (‘ROCE’)
Underlying diluted
earnings per share
(‘EPS’)
Strategic
multinational
OEM revenue
Non-financial KPIs
Broaden skills of
management
Manufacturing to
distribution ratio
Link to strategy
Relevance and performance
Historic performance
Position on target?
Key to strategic pillar icons
Our clear strategy for growth makes turnover an important barometer of
the Group’s success.
Turnover has grown significantly from 2013, increasing by 62.7% to
£197.6m (2013: £121.5m), equating to 10.2% p.a.
Growth is about more than just the top line. Controlling our cost base is a
key part of our investment plans.
Reflecting our success in this area, underlying operating margin has
increased by 490bps, from 6.6% in 2013 to 11.5% in 2018. This represents
margin growth since 2013 of 11.8% p.a.
Underlying profit before tax is a key measure of the underlying performance
of the business.
since 2013.
Our underlying profit before tax has grown by over 204.6% (or 25.0% p.a.)
Our quality of earnings is reflected in our ability to consistently turn
underlying EBITDA in to underlying cash.
The Group continued to be cash generative in FY2018 with a normalised
conversion rate of 68.1%, increasing to 78.2% net of a £2.5m investment in
stock to normalise stock weeks (2013: 85.3%).
ROCE measures the return that we can provide to both our equity and debt
investors. Maintaining this continues to be a key focus of the Group.
Since 2013 our ROCE has grown by 10.7% p.a. to 20.1% (2013: 12.1%).
EPS is a key target for the Group. Our clear strategy for growth is focused
on increasing this ratio year-on-year.
Since 2013 underlying diluted EPS has increased by 9.05p to 13.78p
(2013: 4.73p).
Working to grow this revenue as well as building relationships with new
multinational OEMs is the backbone of our overall growth strategy.
2018
2017
2016
2018
2017
2016
2018
2017
2016
2018
2017
2016
2018
2017
2016
2018
2017
2016
2018
2017
£197.6m
£186.5m
£161.4m
11.5%
11.3%
10.4%
£22.2m
£20.5m
97.3%
88.9%
20.1%
19.9%
18.5%
13.78p
12.82p
+14.1%
£16.0m
68.1%
9.99p
+6.9%
Investing in our people
Investment in driven growth
Continue to add value and differentiate
Acquisitions
Operational efficiencies
Link to strategy
Relevance and performance
Historic performance
Position on target?
Training programmes continue to be developed that allow our
employees across the globe to learn together and share best practice.
These programmes include operational, functional and leadership
elements and are designed for our employees to enhance existing, and
acquire, new skills.
By maintaining and expanding our manufacturing capabilities and capacities
around the world, we will reduce our reliance on purely distribution revenues
and be better able to manage unit price production costs to maintain our
ongoing profitability.
Over the last five years, 26% of UK employees have
completed the management development programme.
2018
2017
2016
34%
35%
34%
66%
65%
66%
Key
Distribution
Manufacturing
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www.trifast.comStrategic report Strategic report Business review
Business review
Our Group performance
Unless stated otherwise, amounts and comparisons with prior year are calculated at constant currency (Constant Exchange Rate ‘CER’),
see note 34 for definition and explanation of rates used. Where we refer to ‘underlying’ this is defined as being before separately disclosed
items. Where we refer to 'EBITDA' this is defined as being earnings before interest, tax, depreciation and amortisation. For definitions and
reconciliations to GAAP measures see note 2, note 25, note 34 and the glossary.
Our Group performance:
Revenue
Gross profit
GP%
Underlying operating profit (‘UOP’)
UOP %
Operating profit ('OP')
OP%
Underlying EBITDA
Underlying EBITDA %
Underlying profit before tax
Profit before tax
Underlying diluted EPS
Diluted EPS
Underlying ROCE
Gross margin
30.5%
(2017: 31.1%)
Underlying diluted EPS at AER
13.78p
(2017: 12.82p)
46
FY 2018
CER
£193.9m
£59.2m
30.5%
£22.1m
11.4%
£18.4m
9.5%
£24.0m
12.4%
£21.6m
£17.9m
13.39p
11.82p
FY 2018
AER
£197.6m
£60.2m
30.5%
£22.7m
11.5%
£19.0m
9.6%
£24.7m
12.5%
£22.2m
£18.5m
13.78p
12.20p
20.1%
FY 2017
£186.5m
£58.0m
31.1%
£21.0m
11.3%
£17.9m
9.6%
£22.9m
12.3%
£20.5m
£17.3m
12.82p
10.40p
19.9%
Growth at
CER
+4.0%
+2.0%
-60bps
+5.1%
+10bps
+3.1%
-10bps
+4.9%
+10bps
+5.4%
+3.4%
+4.4%
+13.7%
Growth at
AER
+6.0%
+3.8%
-60bps
+8.1%
+20bps
+6.3%
+0bps
+7.8%
+20bps
+8.5%
+6.7%
+7.5%
+17.3%
+20bps
The Group has continued to perform well across all our regions,
delivering another year of strong organic growth. Revenues have
increased by 4.0% at CER and are up 6.0% to £197.6m at Actual
Exchange Rate (‘AER’) for FY2018.
The largest source of growth continues to be from our multinational
OEMs, with sales to these contributing over 65% of our Group
turnover.
We are particularly pleased to report that, despite the effects of
anticipated purchase price inflation and the upfront costs of our
ongoing investments into manufacturing capacity in our European
region, we have been able to maintain gross margins 50bps above
our 30.0% target at 30.5% (2017: 31.1%). Whilst good cost
control across the business, even in a period of investment driven
growth, has allowed our underlying operating margins to remain
at an historic high of 11.4% (2017: 11.3%), up 5.1% to £22.1m at
CER, 8.1% to £22.7m at AER (2017: £21.0m).
All of the above has helped to drive strong AER growth in both
our underlying PBT, up 8.5% to £22.2m (2017: £20.5m) and our
underlying diluted EPS, up 7.5% to 13.78p (2017: 12.82p).
GAAP measures commentary (at AER)
After considering separately disclosed items (see note 2), PBT
grew 6.7% to £18.5m (2017: £17.3m). The reduced growth, when
compared to that at underlying PBT, is due to increased IFRS2
charges and Project Atlas costs, partially offset by the profit on
disposal of the factory at PSEP (see note 2 for further details).
Diluted EPS increased by 17.3% at AER to 12.20p (2017: 10.40p).
The improved growth, when compared to that at underlying diluted
EPS, is mainly due to the finalisation of a fully provided historic
tax position in the UK, leading to a prior year corporation tax
adjustment of £0.9m (see the taxation section for further details).
Trifast plc Annual report 2018
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www.trifast.comStrategic report Strategic report Business review
Business review continued
Unless stated otherwise, amounts and comparisons with prior year are calculated at constant currency (Constant Exchange Rate ‘CER’), see note 34 for
definition and explanation of rates used. Where we refer to ‘underlying’ this is defined as being before separately disclosed items. Where we refer to 'EBITDA'
this is defined as being earnings before interest, tax, depreciation and amortisation. For definitions and reconciliations to GAAP measures see note 2, note 25,
note 34 and the glossary.
Given the ongoing weakening of sterling since June 2016, CER continues to be the best way of understanding the positive progress of our
underlying business. To aid understanding, the impact of this on our key metrics is illustrated in the graph below.
FX effects
Revenue
£3.7m
£13.9m
Underlying
PBT*
£0.6m
£2.4m
Underlying
diluted
EPS*
0.39p
1.54p
Normalised
net debt †
£1.3m
£0.5m
£193.9m
£172.6m
£21.6m
£18.1m
13.39p
11.28p
£6.1m
£7.1m
2018
2017
2018
2017
2018
2017
2018
2017
* Before separately disclosed items which are shown in the financial statements.
† Before outstanding NI and income tax on share options.
For PBT and diluted EPS, see page 52
AER
CER
Dividend policy
With a proven track record, a strong balance sheet and an
established strategy for growth we remain committed to a
progressive dividend policy.
As a result the Directors are proposing, subject to shareholder
approval, a final dividend of 2.75p per share. This together with the
interim dividend of 1.10p (paid on 12 April 2018), brings the total
for the year to 3.85p per share, an increase of 10.0% on the prior
year (2017: 3.50p). The final dividend will be paid on 12 October
2018 to shareholders on the register at the close of business on
14 September 2018. The ordinary shares will become ex-dividend
on 13 September 2018.
The 2018 final proposed dividend means that over the last five
years dividends have grown from 0.80p to 3.85p, equating to a
compound annual growth rate (‘CAGR’) of 37%.Over the same
time, dividend cover has fallen, now representing a cover of 3.6x.
Trifast plc, the parent company, is a non-trading company which
derives its distributable reserves from dividends paid by subsidiary
companies. The Board considers the dividend policy and
distributable reserves at least twice a year in line with announcing
results. For the medium term, we believe an appropriate level of
cover will continue to be in the range of 3x to 4x. As is always the
case, the actual dividend each year will need to take in to account
our ongoing strategy of investment driven growth, any acquisitions
and the working capital requirements of a growing business. The
distributable reserves at 31 March 2018 were £21.4m.
Dividend progression
Dividend cover
1
2018
2017
2016
2015
2014
2013
2018
3.6×
2017
3.7×
2016
3.6×
Interim
Final
2015
4.1×
2014
4.3×
5.9×2013
5.9×
0.00p
0.50p
1.00p
1.50p
2.00p
2.50p
3.00p
3.50p
4.00p
1. To be approved at the 2018 AGM
48
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Share price – recovery to growth:
The significant increase in our share price over the last five years illustrates the TR story of successful and sustainable growth (compound
annual growth rate: 34.9%).
Share price (p)
270.00
220.00
170.00
120.00
70.00
20.00
3
1
r
a
M
3
1
p
e
S
4
1
r
a
M
4
1
p
e
S
5
1
r
a
M
5
1
p
e
S
6
1
r
a
M
6
1
p
e
S
7
1
r
a
M
7
1
p
e
S
8
1
r
a
M
Revenue
As in 2017, this year’s key revenue message continues to be one
of consistent growth across all of our regions.
Our European operations have exited the year strongly, with
revenues in HY2 growing by 5.2% at CER (7.5% at AER) and
leading to a year-on-year revenue growth of 3.8% at CER, 8.6%
at AER (2017: 9.8% of which 4.6% was organic at CER). This
good regional performance is particularly commendable, as it
follows abnormally high sales volumes in our Italian domestic
appliances business in 2017, as we supported a global product
recall programme for one of our key accounts. Our most significant
trading gains in 2018 have arisen in the automotive sector in
Holland and Sweden, with both of these sites achieving double
digit CER revenue growth of 15.4% and 13.6% respectively.
In Asia, we have seen continued good growth, with a year-on-year
increase of 4.6% to £56.3m (6.3% at AER, 2017: 6.5%) coming
out of sustained high trading levels following a very strong first half
of the year. Trading has increased almost across the board, with
Shanghai showing the strongest individual growth at 9.6%. This is
mostly in the automotive sector as we expand into a number of our
multinational OEM customers both locally and into Japan.
For our UK businesses, despite the ongoing uncertainties
surrounding Brexit, it has been another year of strong growth.
Overall total revenues are up 5.4% to £73.0m (2017: 4.6% to
£69.3m). With the biggest increase continuing to be seen across
our European distribution businesses, growing 23.4% to £10.0m at
AER. Outside of this, growth has largely come from increased sales
to our core multinational OEMs across a number of sectors.
In the US, we are very pleased to report a return to higher growth
levels following a slow HY1 as a result of Hurricane Harvey. A very
strong HY2, predominantly in the automotive sector, has seen year-
on-year growth increase back up to 8.2%, £6.5m (6.8% at AER,
HY1 2018: 3.7%; 2017: 12.3%).
Revenue by region (CER)*
£6.5m
+8.2%
FY2018
£56.3m
+4.6%
†
£193.9m
+4.0%
£73.0m
+5.4%
£70.4m
+3.8%
£6.0m
£186.5m
†
£69.3m
FY2017
£53.8m
£67.8m
* Regional revenues include intercompany
† Group revenue, after eliminating intercompany
UK
Europe
Asia
USA
49
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Strategic report Business review
Business review continued
Unless stated otherwise, amounts and comparisons with prior year are calculated at constant currency (Constant Exchange Rate ‘CER’), see note 34 for
definition and explanation of rates used. Where we refer to ‘underlying’ this is defined as being before separately disclosed items. Where we refer to 'EBITDA'
this is defined as being earnings before interest, tax, depreciation and amortisation. For definitions and reconciliations to GAAP measures see note 2, note 25,
note 34 and the glossary.
Gross profit
The Group’s gross margin of 30.5% means we have remained a
comfortable 50bps above our long held, but only recently achieved,
30.0% target (2017: 31.1%).
The expected gross margin decrease from prior year is primarily
from our European operations. This is most specifically within
our Italian business where, as previously reported, the impact of
purchase cost increases in the second half of 2017 have continued
into 2018. In addition to this there was a planned increase in fixed
production costs as we invest in manufacturing capacity to support
future growth. Positive margin movements in other parts of our
European business have helped to offset the effect of this, reducing
the overall gross margin fall in the region by (150)bps.
Underlying operating margin
Underlying operating margins have remained broadly in line, up
10bps to 11.4% (11.5% at AER, 2017: 11.3%). This reflects strong
cost control at overhead level, offsetting the gross margin reduction
and generating an overall increase in underlying operating profit of
5.1% to £22.1m (AER: up 8.1% to £22.7m).
In Europe the underlying operating margin has reduced by 230bps
to 12.2% (12.3% AER, 2017: 14.5%) largely as the result of the
gross margin movements noted above. Whilst additional overhead
spend has mainly been incurred to support our new greenfield site
in Spain. With sales invoicing now firmly underway and a strong
pipeline of opportunities, TR Espana remains a very exciting area of
organic growth for us.
In the UK, gross margins have held steady, with the net impact
of purchase price inflation, following the protracted weakness of
sterling, having been relatively modest to date.
Whilst in Asia, gross margins have also remained consistent, as
growth driven production cost benefits have helped to successfully
offset the impact of e-bidding pricing pressures at one of our key
electronics multinational OEMs.
In the US gross margins have fallen by 560bps as the result of
product mix changes and an increased focus on the automotive
sector. The negative impact of this has been exaggerated in 2018
by reduced sales volumes due to Hurricane Harvey as well as one-
off set-up costs, relating to the start of production for one of the
region’s biggest automotive customers.
Offsetting the reduction in Europe, we have seen a 210bps
underlying operating margin increase in our UK region to 11.5%
(2017: 9.4%), reflecting the benefits of ongoing revenue growth
over a semi-fixed cost base.
In Asia, margins have remained consistent at 14.7% (14.7% at
AER, 2017: 14.9%). The benefits of increased sales have been
largely offset by a £(0.4)m foreign exchange loss on translation
of the balance sheet due to the recent weakening of the US$
(2017: loss of £(0.2)m). In conjunction with additional overhead
investments in the region to support ongoing growth, not least
of which is the new warehouse and inspection facilities at our
Shanghai location, opened in November 2017.
In our small, but fastest growing region, the USA, decreased gross
margins have fed directly down to underlying operating profit level.
However, as in prior periods, low underlying operating margins
continue to be expected in this region given the level of investments
for future growth being made here.
Underlying operating profit and margin by region (CER)*
FY2018
£8.3m
14.7%
£0.1m
0.9%
†
£22.1m
11.4%
FY2017
£8.0m
14.9%
£8.4m
11.5%
£8.6m
12.2%
* Before separately disclosed items which are shown in note 2
† After deducting central costs
UK
Europe
Asia
USA
50
£0.3m
5.6%
†
£21.0m
11.3%
£6.5m
9.4%
£9.8m
14.5%
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Net debt bridge (AER)
6.4m
1.2m
7.6m
23.8m
3.4m
7.4m
4.0m
6.6m
3.6m
1.6m
7.6m
t
b
e
d
t
e
N
h
s
a
c
t
e
N
£10.0m
£5.0m
0.0
-£5.0m
-£10.0m
-£15.0m
-£20.0m
Net Debt
31 March
2017
PY NI and
income tax
on share
options
Normalised
Net Debt
31 March
2017
Operating cash
inflow before
changes in
working
capital
Working capital
movements*
Capital
Expenditure
Fixed asset
proceeds
Interest, Tax
& Foreign
Exchange
Dividend less
proceeds
from share
issue
Treasury
shares
purchased
Net Debt
31 March
2018
* Excluding outstanding NI and income tax on share options
Underlying operating margin (continued)
GAAP measures commentary (at AER, refer to table
on page 52)
After considering separately disclosed items, the Group’s operating
margin at 9.6% (2017: 9.6%) is consistent with last year and
broadly in line with the 10bps increase at underlying operating
margin level. Operating margins in the UK have increased by
160bps to 10.7% (2017: 9.1%). The 50bps reduction from that
achieved at underlying operating margin level is due to increased
IFRS2 costs as there is now a full year’s charge for the Senior
Manager deferred bonus shares (2017: 3 months), (see note 22).
For Europe, the operating margins have reduced by 240bps to
10.5% (2017: 12.9%). This reduction is in line with the reduction
in underlying operating profit, as reduced amortisation charges
are offset by the profit on disposal of PPE in VIC last year and
an increase to the IFRS2 charge for the same reasons as noted
above. Asia’s operating margin has increased by 10bps to 14.7%
(2017: 14.6%), compared to a reduction at underlying operating
profit of 30bps, due to the profit on disposal of the factory in PSEP,
partially offset by an increase to the IFRS2 charge. USA operating
margins have reduced 530bps to 0.1% (2017: 5.4%), compared
to a reduction at underlying operating profit of 470bps, due to an
increase to the IFRS2 charge.
Net financing costs (at AER)
Interest costs remain at £0.5m (2017: £0.5m) reflecting a broadly
consistent average gross debt balance of around £30m year-on-
year, to support our ongoing investments for growth.
Taxation (at AER)
The 2018 effective tax rate ("ETR") of 18.5% is significantly lower
than our underlying 2018 ETR of 23.3%.
The main reason for this difference is due to the finalisation
of a fully provided historic tax position in the UK relating to a
combination of EU loss relief claims (£0.6m) for losses made
in the run up to the closure of TR France in 2007 and EU
dividend relief claims (£0.6m) to cover dividends paid up to
Trifast plc between the years of 2007 to 2009. The provision in
the accounts at 31 March 2017 was £1.2m whereas the final
settlement agreed on 7 September 2017 was £0.3m, leading to a
prior year corporation tax adjustment of £0.9m.
Due to the size and the nature of this amount we have removed
the net impact of these from our underlying ETR (see note 9).
The underlying Effective Tax Rate (‘ETR’) has remained in line at
23.3% (2017: 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.23-25% going forward.
Net debt
Our net debt position increased by £1.0m to £7.4m (2017: £6.4m).
Some £1.2m of this increase is due to the payment out of cash
held specifically at 31 March 2017 to settle the national insurance
and income tax payments relating to the Chairman, Malcolm
Diamond's, exercise of 1,000,000 share options on 17 February
2017.
Capital expenditure of £3.6m (net of £0.1m paid in April 2018) in
the period (2017: £2.9m) supports the Board's ongoing investment
in the business, most specifically within our manufacturing sites,
with the most significant additional capacity project in the final
stages of completion in Singapore via the construction of a new
mezzanine floor. In addition, £3.4m has also been used to acquire
1,500,000 5p ordinary shares on the open market via the Trifast
EBT.
In February 2018, we received an additional cash inflow relating
to the successful disposal of our second property in PSEP,
Malaysia. This office building had been rented out to the same
automotive Tier 1 company since before our acquisition of PSEP
in 2011. In August 2017, the property was vacated and as we
retained no ongoing commercial requirement for the additional
space, a decision was made to sell. The profit of £0.6m and the
net proceeds of £1.6m generated on disposal have been shown
outside of our underlying results (see note 3), but have impacted
positively on our year end net debt position.
Although our cash is held across a number of currencies around
the world, our gross debt continues to be held predominantly in €
and this has led to a £1.3m net increase in net debt mainly from
the relative strengthening of the Euro in the period.
Outside of these movements, as expected our cash generation
has reduced with a conversion rate of underlying EBITDA to
underlying cash of 68.1% (FY2017: 97.3%). Our investment in
gross stock in the period includes an extra £2.5m to normalise the
very low position we ended 2017 on. Without the impact of this,
our conversion rate of underlying EBITDA to underlying cash would
be higher at 78.2%.
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Strategic report Business review
Business review continued
Unless stated otherwise, amounts and comparisons with prior year are calculated at constant currency (Constant Exchange Rate ‘CER’), see note 34 for
definition and explanation of rates used. Where we refer to ‘underlying’ this is defined as being before separately disclosed items. Where we refer to 'EBITDA'
this is defined as being earnings before interest, tax, depreciation and amortisation. For definitions and reconciliations to GAAP measures see note 2, note 25,
note 34 and the glossary.
Banking facilities
As at 31 March 2018 the headroom on our banking facility was
£24.0m (2017: £18.9m). The reason for this marked increase is
that on 20 February 2018 and in preparation for the acquisition of
Precision Technology Supplies ('PTS') on 4 April 2018, we requested
the release of £11.0m from our Accordion facility with HSBC.
We continue to have access to a residual Accordion facility of
£9.0m within our Group banking facilities. This provides a degree
of potential flexibility to debt finance future acquisitions and further
investments as required.
However, following on from the successful acquisition of PTS in
April 2018 and given our significant investment plans under Project
Atlas into our Group business platform, we have already started
discussions in order to secure access to additional funds and
thereby maintain an appropriate degree of funding flexibility. This
process will be ongoing over the coming month.
Return on capital employed (at AER)
As at 31 March 2018, the Group’s shareholders’ equity had
increased to £110.3m (2017: £101.7m). This £8.6m movement
is made up of retained earnings of £13.3m, net of own shares
held by the EBT of £(3.4)m, share issues totalling £0.2m and a
foreign exchange reserve loss of £(1.5)m which arose due to a
relative strengthening of sterling against the US$ and our key Asian
currencies in the financial year.
Over this increased asset base, our very strong trading performance
has led to a higher underlying ROCE of 20.1% (2017: 19.9%).
Looking ahead
Group outlook:
Ongoing and future investment plans
As a Group, we continue to invest in our operations around the
world to support our ongoing growth story.
In manufacturing, our capital expenditure plans will continue
to increase capacity, most noticeably at both our Italian and
Singaporean sites. This will reduce our per-part production costs
by bringing more manufacturing in-house in the future.
On the distribution side of the business, we have already expanded
warehousing capacity in Shanghai and Northern Ireland to support
the strong growth we are seeing in both of these markets. In 2019
we will see further targeted expansions in some of our other of
high growth sites, including Holland. Moving into our new site in
the USA in April 2018, represents one of our biggest warehousing
investments in recent years. This has increased capacity
significantly, to not only better support existing trading levels
following a CAGR of 16% over the last five years, but also to future
proof the business for further growth.
In Europe, we will continue to invest into our rapidly expanding
greenfield distribution site in Spain. Whilst the successful setup
in November 2017 of a TR Innovation and Technical Centre
situated in the heart of Sweden's electric vehicle development
area, Lindholmen, Gothenburg, is already helping to develop our
presence in this important developing market.
GAAP measures
FX effect GAAP measures
PBT
£0.6m
£2.3m
DEPS
0.38p
11.82p
1.44p
8.96p
£17.9m
£15.1m
Operating profit and margin by region (AER)
Region
UK
Europe
Asia
USA
Total†
2018
Profit
£m
7.8
7.8
8.4
—
19.0
Margin
10.7%
10.5%
14.7%
0.1%
9.8%
2017
Profit
£m
6.3
8.7
7.9
0.3
17.9
Margin
9.1%
12.9%
14.6%
5.4%
9.6%
† After deducting central costs
2018
2017
2018
2017
AER
CER
52
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As ever, wider macroeconomic factors continue to exist that we
cannot fully mitigate, including the ongoing volatility in the foreign
currency and raw materials markets, the expected wash through of
input cost pressures in the UK due to the protracted weakness of
Sterling, as well as the wider potential implications of Brexit on our
business and the UK economy.
Notwithstanding the above, as an international business with over
70% of our revenues now being generated outside of the UK,
and a very well-balanced geographical and sector spread, the
Board remains confident we will continue to have the flexibility and
foresight to carry on successfully investing for growth, while facing
any challenges head on as and when they arise.
Complementing all above, we are continuing to invest in both
our global and local sales resources and supporting teams. With
specific plans for 2019 already approved for Holland, Shanghai,
Germany and the USA.
As previously highlighted, significant investments are also planned
to improve our digital and business management systems to help
facilitate the improved integration of our global business. A major
part of this investment is the commencement of Project Atlas,
an up to £15.0m multi-year project to significantly develop and
integrate our existing IT infrastructure and business processes
across the world. This project is essential to support our ongoing
growth plans and to meet the evolving needs of our multinational
OEM customers. It is expected to generate substantial cost and
growth benefits across the Group, providing a return on investment
of over 25% p.a. once fully implemented, and underpinning our
future growth strategy.
Acquisitions
We were delighted to announce the acquisition of PTS on 4 April
2018. Being able to successfully acquire such a high quality,
growing operation in a complementary part of the market was a
key win for us and we look forward to reporting back on the joint
successes that we expect to follow.
Our newly established internal acquisitions structure and team will
continue to drive our ongoing proactive and reactive activities in
this area. This will be supported by the use of external expertise
where appropriate, to improve our access to key acquisition
geographies.
Outlook
As expected, 2018 has delivered another year of strong growth,
with ongoing investment across all our regions. This, together with
a robust balance sheet, good banking relationships and access to
facilities as well as a proven track record of profitable investment,
means the Group is in a great position to keep moving forward.
The current year has started well, with a robust pipeline in place,
and the Board remains confident of delivering on its expectations.
There are, of course, some risks that we cannot fully control.
Competitive pricing pressures are, and always have been, a
factor in our industry but focusing on being a distributor and
manufacturer of specialist industrial fastenings, we are better
protected from some of the volatilities of the market. However, we
are not always immune from the behaviour that certain parts of the
industry periodically employ and whilst we are currently in a period
of sustained growth across all of our sectors, ultimately, we remain
susceptible on some level to the underlying success of our key
strategic accounts.
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53
www.trifast.comStrategic report Strategic report Business review
Business review continued
Unless stated otherwise, amounts and comparisons with prior year are calculated at constant currency (Constant Exchange Rate ‘CER’), see note 34 for
definition and explanation of rates used. Where we refer to ‘underlying’ this is defined as being before separately disclosed items. Where we refer to 'EBITDA'
this is defined as being earnings before interest, tax, depreciation and amortisation. For definitions and reconciliations to GAAP measures see note 2, note 25,
note 34 and the glossary.
UK
Revenue by sector
14%
29%
Electronics
Automotive
Domestic appliances
Distributors
Other
31%
Revenue•
Dave Fisk
Managing Director
TR Fastenings UK
Sam Wilson
Managing Director
Lancaster Fastener
21%
5%
Looking ahead
Two new product ranges have been recently
introduced in Lancaster with early enquiries
resulting in immediate sales on stock arrival. The
introduction of a range of “Castle” CRH drive
machine screws is expected to play a major part
in sales growth for this part of the business next
year with further product range development also
budgeted for 2019.
Notwithstanding the recent publicity around
reducing automotive production volumes in the
North-East as the result of lower diesel sales, we
continue to see the UK region as a good mature
market for us to operate in. There remain growth
opportunities in the distributor market as well as
across a number of our key sectors. And we look
forward to bringing PTS on board in the current
year and growing together.
Whilst the UK is not a focus area for our proactive
acquisition search, as always we will continue to
react positively to any opportunities that may arise to
ensure that we keep all options for growth open to us.
Currently the UK economy is continuing to perform
reasonably well despite the wider uncertainty that
exists as a result of the EU Referendum in June
2016. We will continue to monitor the situation
closely over the coming months to ensure we
are able to react quickly and appropriately to any
changes in circumstances. However as only one
part of an international business, we are confident
that the UK, in conjunction with the strength of the
wider Group, will have the flexibility to successfully
manage and adapt to any challenges and
opportunities as they arise.
“ Strong revenue growth of 5.4%
to £73.0m (2017: £69.3m) and
the successful acquisition of PTS
on 4 April 2018, means the UK
remains an exciting region for
future growth
Regional performance
This has been another very strong year for the
UK with revenues increasing by 5.4% to £73.0m
(2017: £69.3m). A key driver of that growth
continues to be sales into our European distributors
where our commitment to quality, product range
and reliable supply is helping to build growth.
Outside of that, we have seen increases at a
number of our key multinational OEMs, showing
that the core strategy continues to bear fruit.
Across the UK business we have seen only a
muted impact of purchase price inflation to date in
our gross margins. This is as a result of our ability
to defer negotiations, to pass pricing increases
on wherever possible and also due to the stock
holdings we maintain. We do expect the impact
of this to be more marked in the current year as
stocks wash through, although we will continue to
work hard to mitigate this as far as possible.
Underlying operating margins have performed
very well in the year, with a 210bps increase to
historically high levels of 11.5% (11.5% at AER,
2017: 9.4%). This reflects strong cost control,
despite the investments for growth that have been
made, and a growing sales line against what is a
relatively fixed cost base.
In our Lancaster operations, we have seen
remarkable double digit sales growth for the
Company resulting in an exceptional set of
figures up 12.5% on the prior year at £6.4m
(2017: £5.7m).
Here, it is export sales across most central
European and Scandinavian countries that have
produced the strongest growth at 19% and our
ranges of stainless steel product introduced to
specifically complement several of the carbon steel
ranges has provided strong sales figures. With the
acquisition of PTS completed just after the year
end, our penetration into the stainless steel part of
the market is only set to increase.
54
£74.0m
£73.0m
£72.0m
£71.0m
£70.0m
£69.0m
£68.0m
£67.0m
2018
2017
Underlying operating
profit
£9.0m
£8.0m
£7.0m
£6.0m
£5.0m
£4.0m
£3.0m
£2.0m
£1.0m
£0.0m
2018
2017
Operating profit
£8.0m
£7.0m
£6.0m
£5.0m
£4.0m
£3.0m
£2.0m
£1.0m
£0.0m
2018
2017
* Including intercompany
revenues
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Trifast plc Annual report 2018
Business review continued
Europe
Revenue by sector
17%
11%
1%
37%
Geoff Budd
Director
TR Europe
Electronics
Automotive
Domestic appliances
Distributors
Other
34%
Revenue*
“ A strong exit to the year, with HY2
generating 5.2% growth at CER
(7.6% at AER)
Regional performance
Revenue growth across the region has been good
at 3.8% to £70.4m (2017: £67.8m), reflecting a
much stronger exit to the year, with HY2 generating
5.2% of growth at CER. Sales were particularly
strong from our automotive divisions, most notably
in Sweden and Holland with both sites having an
outstanding year, and gaining more new business
primarily to a number of our strategic automotive
multinational OEMs. Our TR Kuhlmann operation
in Germany has continued to go from strength to
strength reporting revenue growth of 14.1% in the
year to £6.9m (2017: £6.0m) and strong underlying
operating margins.
In the domestic appliances sector we have
experienced a more challenging year following on
from abnormally high sales in 2017 as the result of
a global product recall program at one of our key
multinational OEMs. By the end of the financial year,
trading had returned to a more normalised level.
Despite its inherent challenges and competitive
pressures, we continue to see the domestic
appliances sector in the region as providing
ongoing opportunities.
TR Sweden opened a TR Innovation and Technical
Centre in Gothenburg, the heart of Swedish
electric vehicle car production. This is allowing us
to work more closely with key customers in this
very productive area. Our newly formed entity in
Spain commenced trading at the beginning of the
financial year and already we are seeing evidence
of the benefit of being in that location not only
with customers in Spain, but also across the
region. In particular our operations in Holland, are
cooperating well, helping to support automotive
sourcing requirements in Spain and follow up on
other business opportunities in the region.
Underlying operating margins have reduced in the
year, by (230)bps to 12.2% (2017: 14.5%). This fall
returns underlying operating margins for the region
to more normalised levels and has largely been felt
at gross margin level following decreases in our
Italian business due to known input pricing inflation
and investments for capacity growth ahead of
production volumes.
Looking ahead
Over the course of FY2018 our Italian operations
have continued to receive significant capital
expenditure (€1.0m). This has focused on
additional plant and machinery to make best
use of the growing capacity as a result of the
successful installation of the new heat treatment
plant in FY2017. This strategic investment plan will
continue to roll out in to FY2019, albeit at a lower
level, to drive production volumes and efficiencies
going forward. The achievement of TS16949
accreditation in FY2017 continues to open up
opportunities to grow and is helping to re-balance
our regional reliance on the domestic appliances
sector. Automotive growth in our Italian operations
has been high at 41.4% to €2.8m (2017: 72.5%,
€2.0m).
We continue to see Europe as a key growth market
for the Group across not just automotive, but
also our other key sectors. Although we do note,
that overall growth is forecast to reduce to below
0.5% in the region’s domestic appliances sector,
which may make conditions in this particular part
of the market place more challenging for us going
forward. Notwithstanding that, recent investments
are continuing to provide ongoing opportunities for
growth, whilst the planned warehouse expansion
in Holland will help to support both existing and
additional business.
On the non-organic side, we will carry on with our
proactive search for our next successful acquisition
with a particular eye on Eastern Europe and the
strong automotive markets operating there.
£75.0m
£74.0m
£73.0m
£72.0m
£71.0m
£70.0m
£69.0m
£68.0m
£67.0m
£66.0m
£65.0m
£64.0m
2018
2018
2017
Underlying operating
profit
£10.0m
£9.8m
£9.6m
£9.4m
£9.2m
£9.0m
£8.8m
£8.6m
£8.4m
£8.2m
£8.0m
2018
2018
2017
Operating profit
£9.0m
£8.5m
£8.0m
£7.5m
£7.0m
£6.5m
2018
2018
2017
* Including intercompany
revenues
• CER
• AER
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www.trifast.comStrategic report Strategic report Business review
Business review continued
Unless stated otherwise, amounts and comparisons with prior year are calculated at constant currency (Constant Exchange Rate ‘CER’), see note 34 for
definition and explanation of rates used. Where we refer to ‘underlying’ this is defined as being before separately disclosed items. Where we refer to 'EBITDA'
this is defined as being earnings before interest, tax, depreciation and amortisation. For definitions and reconciliations to GAAP measures see note 2, note 25,
note 34 and the glossary.
USA
Revenue by sector
6%
7%
Electronics
Automotive
Domestic appliances
Distributors
Other
Revenue*
41%
Gary Badzioch
Managing Director
TR Fastenings Inc.
46%
“ What a year? A Hurricane, a
major site move and double digit
growth in HY2
Regional Performance
This has been a very strong year of revenue growth
for our US region up 8.2% year-on-year to £6.5m
(2017: £6.0m), with a notable return to double digit
growth in HY2 following a slower start in HY1 due
to Hurricane Harvey.
As reported last year we have continued our focus
on the automotive sector seeing significant growth
from it. This now represents 46% (2017: 26%) of
our revenue.
We have found our niche in this buoyant USA
market, despite there being capable long
established vendors in position already. We are
a major supplier to the Tier1’s in Europe and the
knowledge we have gained in supplying to these
multinationals has put us in an advantageous
situation in the local market. We have knowledge of
and understand their stringent quality requirements
and finishes, and we hold stocks which has
enabled us to supply samples and support
prebuilds with very short lead times.
Having manufacturing within the Trifast Group gives
us a distinct advantage and flexibility over other
distributors, with PSEP, Malaysia becoming an
important part of our supply chain over the last 12
months.
Hurricane Harvey however was a distraction that
we could have done without in the first half of the
year. We had early warnings of its arrival so we
were able to ensure we had no interruption in our
supply to customers. We shipped early with their
agreement covering several weeks of product.
The roads were flooded and impassable but due
to our risk management planning our staff worked
from home fully connected to our systems so that
we had little customer impact. The building was
not flooded and we supported our team, some of
whom had been marooned for five days. However
the hurricane did impact on one of our major
electronics customers and their subcontractors.
They were not operational for four months and this
did affect our turnover, but we are now back in a
recovery and almost at previous revenue levels. We
have increased our internal/external sales teams to
support this important sector and, as a result, we
have had success in opening a number of new and
interesting accounts.
Underlying operating margins fell sharply in the
year by 470bps to 0.9% (2017: 5.6%) as a result
of the change in focus away from higher margin
electronics sales to the automotive sector. This
has been compounded by the issues at one of
our key multinational OEM customers following
the Hurricane as well as our ongoing investments
for growth. Looking ahead, underlying operating
profits will remain depressed for the medium term
while we continue to invest to grow this important
regional market.
Looking ahead
Mexico is of strategic importance to us and we
have exhibited at the Fastener show in Mexico
again in FY2018 with the aim to increase our sales
and gain TR brand awareness . This year we are
exhibiting at the Fastener Show in Cleveland for
the first time, and also at Automechanika in Mexico
City. Our biggest practical challenge in recent years,
following CAGR of 16% over the last 5 years,
has been space. The larger diameter product we
supply to automotive, and additional staff, have
necessitated a move to a new much larger facility.
This is a perfect showcase both to have space for
an enlarged quality and engineering workspace and
the all-important technical centre.
Looking ahead, there are several exciting
geographical markets in the USA presenting
opportunities for growth. We intend to exploit
such opportunities going forward not only to drive
growth, but also to ensure we keep a balanced
portfolio of both domestic and export business in
the current political environment.
With our stronger team and new premises, we
hope to cement our ability to continue growth at a
double digit rate for the foreseeable future.
£6.6m
£6.5m
£6.4m
£6.3m
£6.2m
£6.1m
£6.0m
£5.9m
£5.8m
£5.7m
2018
2018
2017
Underlying operating
profit
£0.4m
£0.3m
£0.2m
£0.1m
£0.0m
2018
2018
2017
Operating profit
£0.4m
£0.3m
£0.2m
£0.1m
2018
2018
2017
£0.0m
* Including intercompany
revenues
• CER
• AER
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Trifast plc Annual report 2018 Business review continued
Asia
Revenue by sector
9%
8%
Electronics
Automotive
23%
Domestic appliances
Charlie Foo
Managing Director
TR Asia
“ 2017 was an exciting year for
Asia, with key wins being seen
off the back of increasing Group
integration
Regional performance
Revenue growth has been strong with a year-on-
year increase of 4.6% to £56.3m (2017: £53.8m)
and higher trading being seen across almost
all sites. The strongest growth has been in our
Shanghai operations, where near double digit
growth predominantly into the automotive sector
has bolstered results. Our new warehouse and
inspection facility is helping to support that ongoing
growth and with the recruitment of a representative
in Japan, we are successfully pushing further into
this key regional market.
The world saw much change from two events in
the political arena: when America elected a new
President at end of 2016 and when a simple
majority of 51.9% caused Brexit in June 2016.
There is no doubt that all these major changes in
the world has caused much impact to the business
environment, particularly in the tremendous
fluctuation of all major currencies since then and
until now.
However, due to prudent cost control and sensible
investment, all our Asia manufacturing sites are
undeterred and continue to go from strength to
strength. Establishing new networks and offices in
various new locations has helped our customers
and us to grow in new directions in 2018. We
anticipate these new areas will contribute significant
new growth to our business.
Underlying operating profit margins in the region
remain the highest in the Group at 14.7% (2017:
14.9%) reflecting the benefit of similar gross margins
against a reduced overhead and distribution cost
base. With the successful construction of our
S$1.2m capital investment in the mezzanine floor at
our Singapore site, we expect per unit production
costs to decrease with more manufacturing being
brought in-house.
28%
32%
Another key change in the year has been the
marked increase in the level of intercompany
manufacturing that the region has been providing
to the wider Group. This is up by 18.6% against
the prior year to £7.9m at AER (2017: £6.7m). We
believe that there remains further to go with this
across certain of our sites, most specifically PSEP,
in Malaysia. Here we have seen a big increase
in the manufacturing support being provided for
key automotive wins in Shanghai and the USA.
This is already generating 9.1% (2017: 0.6%)
of local revenues, although ably assisted by our
investments in our IT infrastructure and business
processes via Project Atlas, we expect this number
to continue to grow in the coming years.
Looking ahead
To grow is to invest, a motto by our top
management. We will continue to actively invest
into human capital, production/quality equipment
and upgrading our system to serve our customers
faster in service, supply and cost effectiveness
globally.
There can be no doubt that our market remains
competitive, with an e-bidding process having
taken place at one of our key electronics
multinational OEMs in the year as well as
restructuring issues reducing demand for one
key domestic automotive customer in the region.
However these things are just a part of life in our
industry and with our good sector and geographical
reach across the region as well as the huge amount
of expertise and experience that we have within the
business, we continue to see the Asia region as a
driver for ongoing investment driven growth.
Looking beyond organic growth, Asia also remains a
region of great interest to us for potential non-organic
investment. As a result, at both a Group and local
level, we will continue to proactively identify and
review acquisition opportunities as they arise.
Distributors
Other
Revenue*
£58.0m
£57.0m
£56.0m
£55.0m
£54.0m
£53.0m
£52.0m
2018
2018
2017
Underlying operating
profit
£8.5m
£8.4m
£8.3m
£8.2m
£8.1m
£8.0m
£7.9m
£7.8m
2018
2018
2017
Operating profit
£8.5m
£8.4m
£8.3m
£8.2m
£8.1m
£8.0m
£7.9m
£7.8m
£7.7m
£7.6m
2018
2018
2017
* Including intercompany
revenues
• CER
• AER
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www.trifast.comStrategic report Strategic report Corporate social responsibility
Corporate social
responsibility
Health, Safety & Environmental team
Jenni Morland
European Health, Safety
and Environmental
Manager
Kelly Bennett
Environmental Health and
Safety Co-ordinator
Tracey Nixon-Mordica
Compliance Co-ordinator
Health, safety and environment
Trifast is committed to providing a safe and fair environment,
we enforce this commitment through our Health and Safety,
and Environmental Management systems and our continuous
improvement cycles surrounding them. We have now achieved
ISO14001:2015 accreditation in all our European and USA
facilities, and are setting our sights on achieving ISO45001
accreditation. Our sites in Asia are currently in transition over to
the new standard with three now accredited and the remaining
sites due for accreditation before October 2018.
We have completed an 18 month project to implement processes
and procedures in-line with ISO14001: 2015 Environmental
Management Systems standard, in our European and USA
facilities, this has given us a firm grasp on our businesses
environmental aspects and Impacts, allowing us to control and
minimise our effect on the global and local environment.
The ISO14001 project has now focused our mind on ongoing
objectives and targets for the company, we have targeted
ourselves to reduce our carbon footprint per owned or leased sqm
floor space by 5% by June 2020, and to reduce our waste streams
to landfill by 10% by June 2020. These are challenging targets,
but supported by the structure of ISO14001, we are confident of
achieving them.
We have a firm responsibilities and support framework in place for
our Health, Safety and Environmental management, which ensures
continuity of the company strategy from the CEO to the operational
staff, supported by the H, S & E team.
In November we held our annual Health, Safety and Environmental
Representatives meeting – again welcoming our colleagues from
around Europe to join. In this two day conference we discuss all
aspects relating to Health, Safety and Environment including the
current ISO14001 accreditation and the upcoming ISO45001
project, ensuring that we are meeting requirements, and providing
on the spot training, information, advice and support to all our
representatives. This meeting is proving to be very popular and
was attended by 25 colleagues.
Through firm policies on Health and Safety, Trifast commits to:
• Provide safe and healthy working conditions which aim for the
prevention of work related injury or ill health
• To eliminate hazards, so far as is reasonably practical, and
reduce occupational health and safety risk
• Conduct its activities in full knowledge of, and compliance with,
the requirements of applicable legislation, approved Codes of
Practice and other requirements agreed by top management
In addition to this, our Environmental Policy commits us to:
• Minimise energy consumption per full time equivalent ('FTE') and
square metre as is reasonably practical
• Prevent pollution as far as is reasonably practical
• Reduce the production of waste and develop effective waste
management and recycling procedures, as well as disposing
of unavoidable waste in such a way as to minimise its
environmental impact
• Minimise emissions when defined as having a significant impact
• Periodically review its environmental arrangements, and
performance against objectives to ensure that it remains relevant
and appropriate
• Encourage awareness of internal and external environmental
issues, and this Environmental Policy
• Reduce, control and where applicable prevent the use of
restricted substances
• Conduct its activities in full knowledge of, and compliance
with, the requirements of applicable environmental legislation,
Approved Codes of Practice and other environmental
requirements agreed by top management
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USA distribution
34 tonnes
(2017: 35 tonnes)
1.33 per FTE
0.037 per SQM
Asia distribution*
318 tonnes
(2017: 648 tonnes)
2.2 per FTE
0.036 per SQM
Europe distribution
1,090 tonnes
(2017: 1,095 tonnes)
2.32 per FTE
0.047 per SQM
Total distribution
1,442 tonnes
(2017: 1,778 tonnes)
2.28 per FTE
0.045 per SQM
Europe manufacturing
2,792 tonnes
(2017: 2,556 tonnes)
16.82 per FTE
0.235 per SQM
Trifast plc
7,968
(2017: 7,835)
6.6 per FTE
0.115 per SQM
Total manufacturing
6,526 tonnes
(2017: 6,057 tonnes)
11.5 per FTE
0.18 per SQM
Asia manufacturing
3,734 tonnes
(2017: 3,501 tonnes)
9.31 per FTE
0.153 per SQM
* Trifast has seen a reduction in its Asia distribution CO2e emissions, due to offices being moved to more efficient premises
Carbon footprint 2017–2018
Our emissions data includes all material emissions of the six Kyoto gases from direct sources, and from purchased electricity, heat and
steam and cooling where applicable. No direct source material emissions have been omitted.
Data period for reporting
Total scope 1 Emission
Purchased Fuels
Company Vehicle use
Total scope 2 Emission
Purchased Electricity
Total GHG Emissions
Figures are reported in tonnes of CO2e
(carbon dioxide equivalent)
Reports are calculated in the following ways:
• Tonnes of CO2e
• Tonnes of CO2e per FTE (Full Time Equivalent)
• Tonnes of CO2e per SQM (Square metres of floor space
occupied by the company)
Code of conduct
A new and updated Code of Conduct has been produced to allow
all the Group’s CSR policies and statements to be available in one
place. This is a hard copy document and is also available on our
website. Our updated Modern Slavery statement for 2017 can also
be found on our website.
01/04/2017 – 31/03/2018
1,840 tonnes CO2e
1,334 tonnes CO2e
506 tonnes CO2e
6,128 tonnes CO2e
6,128 tonnes CO2e
7,968 tonnes CO2e
01/04/2016 – 31/03/2017
1,710 tonnes CO2e
1,90 tonnes CO2e
520 tonnes CO2e
6,125 tonnes CO2e
6,125 tonnes CO2e
7,835 tonnes CO2e
Business and the community
Our HR Director continues in her role as an Enterprise Adviser for
a local Community College. This role is to encourage relationships
between the business and the local school community. Because
of this position, we have attended careers fairs and had positive
interaction with several pupils from the College, both in their own
environment and at our business premises. We have a continuing
dialogue with the senior management team at the College to
discuss future activities to encourage their pupils to learn about
business, engineering and manufacturing.
As a result of this relationship we have been able to sponsor one
of their pupils to go to the NASA Space Centre on an educational
trip. We are also providing some funding for their activity under the
Prince William Award. This worthwhile and challenging programme
supports children and young people in developing their skills and
abilities for their future years and provides wide support in the
areas of personal development, behaviour and welfare. We are
looking forward to being involved with some of these activities in
partnership with the College and to hearing about their successes.
We also maintain our sponsorship of local business awards and we
always like to sponsor the ‘Young Employee of the Year’ category
to encourage the young people within our local communities.
59
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www.trifast.comStrategic report Strategic report Trifast in the community
Trifast in the
community
GROUP:
ASIA:
EUROPE:
Newick “Scrummies” fall from the skies
Trifast’s Company Secretary, Lyndsey Case, was one of four Newick
RFC ‘scrummies’ (the nickname for wives and girlfriends of rugby
players) that decided to take to the skies and raise money for a local
charity. The ladies undertook a daring skydive in Headcorn and, despite
the unsettled weather adding to the challenge, they achieved their goal,
much to the delight of all involved. Together, Lyndsey, Sarah, Kerry and
Cecilia, raised £3,982 for Sussex-based charity, St.Peter & St James’
Hospice.
“Go Green” furniture donation
Every year, the PSEP team supports the “Go Green, Recycle for Charity”
initiative. Last year, employees donated unwanted office furniture to
the Pertubuhan Amal Seri Sinar charity home. A total of 30 items were
donated, from tables to cabinets and the objective was to give furniture to
those who needed it whilst also supporting a sustainable and recycling-led
community effort.
Stockholm students to design build and race electric car at
Silverstone
TR is assisting a team of mechanical design and engineering
students from Sweden to compete in Formula Student, Europe’s
most established educational motorsport contest. The team, from
Stockholm’s highly regarded KTH Royal Institute of Technology, is
designing and building an all-electric dual-engine single seater racing
car.
German team runs up a great total for charity
TR Kuhlmann, raised €300 for humanitarian projects in Uganda by
taking part in a charity run last summer.
Irish homeless charity benefit from double donation
Employees from TR Southern Fasteners have been busy taking part in
various activities to raise funds for local charity, Helping Hands Action
Group based in Cork, Southern Ireland. The amount raised was over
€700, which was topped up to €1,000 by TR.
UK – SOUTH EAST:
TR Uckfield score with football club
TR Fastenings has agreed a first-time sponsorship of Brighton & Hove
Albion Football Club. Known by its fans as the ‘Seagulls’ this local
club debuted in the UK Premier League for the first time in 2017. TR
is amongst a number of local businesses showing their support to the
club and the local community.
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UK – NORTH EAST:
“Likely Lads” complete gruelling bike ride for local boy
Regan Golightly and Troy Race from TR Newton Aycliffe successfully
completed a demanding 50-mile bike ride around the North-East
and, in the process raised £2,000 for 13 year-old local boy Kyran
Richmond who has Juvenile Batten Disease, a rare genetic metabolic
neurodegenerative condition with no cure currently known.
No valley too deep, no mountain too high for Avril
Avril McNeil, who works within the automotive strategic support at TR’s
North East division, completed an exhausting series of white-knuckle
zip wire challenges across sheer mountain faces and deep caverns in
the Welsh countryside. The challenge successfully smashing her target
raised over £600 for the Sir Bobby Robson Foundation.
NORTHERN IRELAND:
SCOTLAND:
GROUP SPORT SPONSORSHIPS:
All Ireland champions race onto the international kit car scene
Six students from Ballyclare secondary school represented Northern
Ireland in the Greenpower Educational Trust’s F24 Kit Car International
Final. The regional team at TR were delighted to assist and supplied
parts and components for the electric vehicle used by the team, who
secured their place in the international grand final by winning the
Northern Ireland heats and being crowned F24 All Ireland Champions.
TR's Scottish team pulls together to support local food bank
Staff at TR’s Scottish operation have pulled together and delivered
a generous donation to a local food bank, the team had undertaken
a food drive earlier in the year as one of the local food banks was
struggling to keep up with the demand for support in the area and this
initiative was welcomed by the community and its beneficiaries.
Tennis:
TR is proudly continuing its sponsorship of tennis prodigy 12 year-old
Amelia Devlin. Currently she is ranked no.2 for her age group in the
Sussex rankings. Amelia started playing tennis when she was four
and with the same coach trains five times a week after school and
competes regularly at a regional level. Under the sponsorship plan,
Amelia has been placed onto a new coaching plan under the team at
Brighton Virgin Active, led by Rhys Hanger, one of the most respected
tennis coaches in the UK.
Hockey:
As part of an initiative to support the community surrounding its
Oldenzaal site, TR Holland has embarked on sponsorship deals with
two local sports clubs, Hockey Bully and Oldenzaal Water Polo club.
For Hockey Bully, a girls’ hockey team, our dutch operation has joined
forces with other local firms to purchase jackets for the team, in
exchange for TR branding appearing alongside the pitch and on the
club’s website.
Handball:
TR Hungary has become a sponsor of the Dabas VSE handball club,
home to one of the 12 teams that play in the nation’s premier league.
The team is based just a short drive from TR’s distribution site in
Leshegy on the southern outskirts of Budapest.
Triathlon:
The Company has been delighted to continue its sponsorship of Jamie
Bedwell, a young star who following an accident in 2016 is successfully
returning to competitive racing.
www.trifast.com
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Strategic report
Strategic report Marketing report
Marketing report
The focus for the Marketing team is to support TR’s global growth strategy by working with
our worldwide locations to support them with relevant material they can circulate and
promote to their customers.
Marketing team
Abi Burnett
Head of Marketing
Sian Whitlock
Marketing Executive
Jessica D’Silva
Marketing Administrator
Tom Dewhurst
Marketing Projects
Assistant
Victoria Chappell
Creative Designer
Events
Exhibitions continue to be a key route to market for TR. We have
worked closely with our teams in the USA, Europe and Asia
to ensure we are covering all target areas. To support our key
automotive sector, we exhibited at Automechanika Birmingham,
Elmia Subcontractor in Sweden and Fastener Fair in Mexico
with great success. We have also been attending and exhibiting
at forums and ‘meet the buyer’ events for the automotive and
electronics industries throughout Europe. We have found these
focused events a huge success, enabling us to start positive
conversations with key contacts.
We have also exhibited at several end user and distributor events
to promote the ever-growing range of TR proprietary products and
specialist fasteners including Blech Expo, Fastener Fair Stuttgart
and the Taiwan International Fastener Show. We are excited to say
that we are exhibiting at the first ever Fastener Fair USA in 2018
and we are again returning to Fastener Fair Stuttgart in 2019 due
to our ongoing success with this prestigious event.
During FY2019, we have plans to exhibit again at Automechanika
in Birmingham (our third appearance at this successful event for us)
and, for the first time, we will also be exhibiting at Automechanika
in Mexico, with automotive team members from across the Group,
as well as attending a number of forums and trade events as they
proved so fruitful last year.
Multilingual marketing
To ensure our global teams always have access to the relevant
sales materials they need, we continue to grow the range of multi-
lingual literature we produce for distribution to our customers. This
year we have seen the ‘Introduction to TR’, ‘Enclosure Hardware’,
‘Self-Clinch’ and ‘Core Product’ brochures all available in German,
and after working with the teams in Asia and Europe, our
automotive brochure is also printed in German, Japanese, Chinese
and Spanish. We also highlight the key services offered by TR and
have produced a new manufacturing brochure for our Malaysian
plant, TR PSEP. Looking forward, we intend to produce a Group
manufacturing brochure showcasing the capabilities of our eight
factories across the globe.
Online marketing
A fundamental tool for our teams and customers is our global
technical and commercial website, which details the 50,000
products available including a new range of 3D models, interactive
installations and ‘how it works’ animations, all developed in-house.
With visitor numbers growing to over 350,000 and page views
increasing by 30%, the ongoing need to keep our data and
content relevant and up-to-date is vital - a task that is undertaken
by working closely with our website team.
62
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Product innovation has been a focal point, and we have developed
an additional section online to showcase how TR is growing as
an innovator in the market. Animations created in-house show
how the new products work and are installed. This asset library
will continue to grow as the team advances and develops new
techniques in 3D modelling.
The launch of our new enclosure hardware range increased our
product range by over 5,000 parts and visits to these pages on
our website have climbed to over 48,000. We worked with the
team in Ireland to promote this new range to their customers which
includes hinges, locking systems, clamps and terminals as well as
gaskets and accessories. The promotion achieved great success,
seeing over 690 website visits from Ireland in the few months after
marketing to their database began.
Digital marketing continues to grow as a key method of
communication. Our marketing campaigns are developing to fit
a range of media to give the customer the full experience. Email,
web, social media, advertising and PR are all disciplines we have
used for a long time. For example, when promoting exhibitions,
a typical campaign would include website promotion coupled
with emails to customers, regular updates and interaction on our
social media accounts including Facebook, Twitter and LinkedIn.
In addition, we actively distribute press releases to all relevant
publications and online advertising slots including newsletters and
show directory entries.
The seasonal campaigns we send out to our customer base, such
as ‘Find the hidden Easter eggs’ include email, social media and
web promotion. These campaigns increase visits to our website by
up to 48% in some areas. We also send product-focused emails
to key customer groups, which often see a 40% open rate, well
above the industry average, highlighting the need to be as targeted
as possible with our promotions.
The ongoing digital and printed press coverage we receive has
grown, reflecting a 49% increase since 2016. More and more we
have been studying trends in the marketplace which has helped us
to be more proactive to opportunities within industry topics, such
as writing opinion pieces on issues such as electric vehicles and
cybersecurity. TR has extensive knowledge across its global team
and we are continually looking at the many different channels we
can adopt to share our expertise and experiences such as social
media, online forums, on and offline press and our technical and
commercial website.
Branding
To embed the TR brand across all continents, we have been
working with locations to increase the amount of promotional
activity they conduct. We recently met with the Asian teams to
discuss their branding and promotional activities. Focusing on key
strengths for these locations and having an insight into the way
that they currently market to their customers enables us to really
target how we promote TR within Asia.
The Group marketing team has been working to update the
corporate imagery used within TR’s global sites. The Belfast
location is a prime example of how we worked together when
it relocated to larger premises which needed to be styled. We
worked with them directly to ensure that corporate guidelines were
followed as they have been developed to allow for all designs to
showcase the capabilities not only of the individual location but
that of the Group.
Our objective is to roll out a strong Group corporate identity
across the various disciplines, mediums and to all our operations
around the world that truly reflect TR as a united brand inspiring
confidence in those looking to use our services, whichever route
they have used to find us.
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63
www.trifast.comStrategic report Strategic report Developing our websites
Developing our
websites
TR website team
Glenda Roberts
Group Sales Director
Keith Gibb
Head of Web
Development
Peter Webb
Software Development
Manager
Anjie Baker
Web Project Manager
Technical and commercial website
for customers
The TR website
The TR website continues to go from strength to strength,
averaging over 50,000 visits per month.
In July 2017 we added over 700 interactive 3D models and
animations showing how our products work, which were viewed
over 22,000 times in the first six months.
In October 2017, we added a product innovation section to the
site which allows us to showcase new fastening technology and
gauge interest prior to major investment. The first two products to
be showcased in this way were:
Rotite®
A new helical thread that speeds up the assembly process
and offers weight and joint strength advantages over traditional
fastenings methods.
EPW
Designed and patented by TR VIC, EPW is a self-extruding thread
that can dramatically speed up the assembly process.
Both these products have been well received and may well be
added to our product portfolio soon.
In March 2018 we finished creating data output tools for our
website which allow us to use our data in other areas of the
business. At the heart of our website is a central database of
dimensional and performance data on over 50,000 products which
we will now be using to generate artwork for all our printed product
brochures. This will save us a huge amount of time as well as cut
down any potential errors in our printed material.
Looking ahead
We’ve got a lot planned for the next 12 months including:
Tim Vince
Software Developer
Abi Burnett
Head of Marketing
• More products
• More downloadable CAD models
• Artificial Intelligence (AI) interface for our fastener knowledgebase
• Detailed industry section animations on the home page to help
highlight the varied sectors we supply
• Enhanced support service pages
• Interactive product configurators
Jo Devlin
Head of Projects
Strategic Team
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Trifast plc Annual report 2018 IR website for investors
The Trifast website
With the number of regulatory changes recently, we are working
hard to ensure that we continue to have the opportunity to profile
our business, strategy and objectives to investors, customers,
colleagues and the media.
This year has involved reviewing the whole IR investor
programming and activities, studying how we do it now, can this
be improved, what materials should we enhance and revamp;
how do we ensure that everyone is able to continue to have
the opportunity to be kept up to date of developments and
opportunities.
Therefore, in the first instance we see our dedicated investor portal
supported by the technical and commercial website remain key
investor perception tools.
Technology advances at a pace and user habits change daily as
we all use a wider range of instruments through which we seek to
gain access to digital content quickly and effectively.
Following the successful technical and commercial site relaunch in
2016/17 we set about looking to ‘warm up’ the investor site. So,
this year, we have chosen to revamp the investor site bringing in
extra functionality and digital content to the web platform. We also
invited the operational teams around the business to contribute to
the project.
We researched and spent the last year reviewing our investor site
and feedback which with a few technical software subtle changes
has, since 2010 delivered a cost-effective well informed simple,
clean and informative window to the Trifast business. Indeed, it
has served us well and we have been delighted to pick up several
awards for it over the years.
In June this year we re-launched the investor platform to coincide
with the roll-out of our 45th anniversary marketing profiling. All the
images on the site have been taken in-house around the Group
and reflect our people. We will be continually working to provide
the right level of content to the reader which reflects the TR culture,
business model and performance.
We believe that the investor and technical and commercial
websites are ‘the window for new investors, customers and
commentators so it is important to strike the right balance across
the sites and we actively encourage our people to help with the
outcome, both internally and externally. We have always operated
an open door for visits and welcome constructive feedback from all
stakeholders, both current and potential – this we believe helps us
in providing the right level of profile and a better understanding of
our business, its people and investment opportunity.
With the change in the research landscape following MifiD it is
essential for small caps like us to keep the profile in the eye of
the investment community. At Trifast, we consider that we are
proactively achieving this through a mix of regulatory and corporate
news, digital comms, capital market days and investor roadshows.
We strongly believe the investor website supports these initiatives
and provides a solid, well informed understanding into the
workings of a specialist engineering group.
We aim to deliver an IR/ PR strategy concisely to ensure market
commentators and investors feel well informed on the business, its
people, strategy and future and overall understand the investment
proposition…. we hope you agree.
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www.trifast.comStrategic report Strategic report Risk management
Risk management
Global IT team
Colin Coddington
Group IT Director
Stephen Hopkins
IT Operations Manager
Ataur Rahman
Technical Manager
Peter Webb
Software Development
Manager
Kerry Moran
Support Desk Manager
John Paton
Global Security Architect
David France
Group Chief Privacy Officer
Damian White
Systems Engineer
Stephen Maxwell
Web Developer
Chris Tull
Support Desk Analyst
Alex Canham
Systems Engineer
Tim Vince
Software Developer
Lucy Sinden
Support Desk Analyst
Graham Morrison
Junior Technician
Dan Perrin
Support Desk Analyst
66
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2018 is going to be remembered for the introduction of the new
General Data Protection Regulation (GDPR), which is a major
change to the old Data Protection Act (DPA) that has remained
stagnant for the last 20 years. Trifast, with the help of its Group
IT, Group Legal, Group HR and Group Marketing departments,
identified the importance of aligning the business to this new
Regulation and have fully embraced the changes that will be
required by the business to comply with the new Regulations. With
the employment of a Global Security Architect whose responsibility
covers all things cyber and employment of Group Chief Privacy
Officer (DPO), we have implemented a comprehensive framework
of activities including due diligence, policy and procedure
development and supplier reviews that covers the identification of
the PII (Personally Identifiable Information) we hold, how we protect
it, how we control it and how we will respond if we have a data
breach.
Alongside GDPR, Group IT have introduced a clear annual Group
security governance program that includes IT policies, penetration
(PEN) tests and comprehensive health checks that not only cover
the IT Infrastructure but also includes auditing all aspects of
security, data, IT insurance and ISO27001.
We have also introduced an 'Information Security Awareness'
program for all staff that highlights the importance of protecting not
only the Company’s data but also the individual’s data and a GDPR
training programme for all staff involved with data processing. It is
crucial in any modern organisation that employees are educated
in information security awareness as the employee is often the first
and last line of defence against cyber security attacks.
Phishing attacks are becoming more and more frequent with
thousands of phishing emails received into the business every day.
Group IT have complex filtering software that manages to block
90% of these emails leaving the unsuspecting employee as the
last line of defence. Empowering the employees with knowledge
on how to identify and avoid activating these type of attacks
is crucial to keeping the business safe, which is why we are
introducing specific phishing attack software that not only identifies
if a suspicious mail/link has been activated but also trains the
employee on why they shouldn’t have clicked the link and how to
identify in the future.
The recent moves by local governments to shut down Botnets
(software that takes over computers and sends out malicious
emails by the millions) has shown a steep reduction in the email
traffic received by Trifast. Dropping from 37.5 million mails in
FY2017 to 25.3 million mails in FY2018.
Introduction of the GDPR (especially Articles 25 and 35) has
meant a fresh look has been taken at the data that is held by
Trifast and the new approaches (privacy by design and privacy by
default) needed when rolling out new systems and new locations
to incorporate these approaches. Not only does the type of data,
purpose it is held for, legal basis for the processing and location of
the data need to be identified, but also the need to ensure that it
is only held for the minimum required period. This means setting
up processes to automatically delete data in a secure manner that
has reached its ‘end-of-life’ and being able to respond to legitimate
user requests for their data to be removed.
It is essential that the existing security protocols are continually
monitored, maintained and reviewed in line with Article 32 of the
GDPR to ensure that TR is not subject to a data breach which now
brings with it potential severe penalties as well as the obvious loss
of intellectual confidence.
Cyber security has become a most important factor when planning
to roll out integrated computer systems both within the UK and
across the world and the Global IT team have been, and will
continue to be, heavily involved in the development of Project
Atlas, our significant planned investment into the Group's global IT
infrastructure.
Overview > incoming mail summary
Message category
Stopped by reputation filtering
Stopped as invalid recipients
Spam detected
Virus detected
Detected by advanced malware
protection
Messages with malicious URLs
Stopped by content filter
Total threat messages:
Marketing messages
Social networking messages
Bulk messages
Total graymails:
Clean messages
Total attempted messages:
%
88.6
0.8
1.1
0.0
0.0
0.1
0.0
90.6
1.8
0.2
0.7
2.7
6.7
100.0
Messages
22.4m
203.0k
272.7k
2,928
490
20.2k
10.6k
22.9m
461.3k
48.8k
177.1k
687.2k
1.7m
25.3m
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67
www.trifast.comStrategic report Strategic report Risk management
Risk management
continued
Viability statement
In line with provision C.2.2 of the code, the Directors have
assessed the prospects of the Company considering the current
position and principal risks to determine whether there is a
reasonable expectation that the Group will be able to meet its
liabilities as they fall due over a specified period of time.
The Directors have carried out this longer term viability
assessment over a period of three years as this aligns with the
Group’s detailed forecast which is approved at Board level.
Three years is considered an appropriate period for the Group
as it strikes the right balance between the need to plan for the
long term whilst considering the uncertainty that arises in relation
to assumptions the further you look ahead.
In assessing the prospects of the Group over the three year
period, the Directors have also considered the Group’s current
financial position as well as its financial projections in the context
of the Group’s debt facilities and associated covenants. These
financial projections are based on a bottom-up budgeting
exercise for FY2019 and FY2020 which has been approved by
the Board and a more top down view aligned to the Group’s
strategic objectives for FY2021. The Group’s base projections
indicate that debt facilities and projected headroom are
adequate to support the Group over the next three years.
In conducting the assessment, the Directors have considered
the principal risks outlined on pages 69 to 71 to perform stress
testing on the forecast to determine the impact on the financial
position and performance of the Group. These risks have
been identified by the Board, and are actively monitored on an
ongoing basis, the most significant of which are considered in
more detail below:
1. Potential impact that Brexit could have on the business due
to foreign exchange movements, the possibility of a general
downturn in the UK economy and/or the future impact of
WTO tariffs and customs arrangements. To date the impact
has largely been in the form of foreign exchange translation
tail winds, which have significantly increased our Group
results at AER in FY2017 and FY2018, although in time there
is a risk that this could reverse if the relative value of Sterling
were to increase again. We have also started to experience
some pricing pressures due to the extended weakness of
Sterling against the US Dollar and recent increases in raw
material pricing. In the longer term, as a global business with
worldwide logistics and over 70% of our revenue generated
outside of the UK, we consider we have the flexibility to
withstand any UK specific challenges by either adjusting
our supply routes in the medium term, or even potentially
following our customer base overseas if manufacturing moves
out of the UK in the longer term.
2. A serious quality issue occurring, both in terms of an
immediate reduction in revenue, and possible penalties
incurred, and longer term, considering the impact to our
reputation, including the possible risk that this could lead
to the loss of one or more of our key multinational OEM
customers. We have robust quality processes in place
around the world, both in terms of our own manufacturing
processes and our vendor assessment and sourcing policies.
In addition, our established global quality team and issue
resolution procedures ensure that any supply problems that
do arise are dealt with and resolved as soon as possible for
our customers, ensuring that the costs incurred by us and
the end customer are minimised as far as possible. However,
although this has not happened in our 45 year history, it is
possible to imagine a more significant quality issue arising
with a customer which could result in substantial recall costs
and penalties. In these circumstances, our comprehensive
global guarantee and recall insurance would be utilised
to cover any direct costs incurred, although the ongoing
negative impact on the business may still be significant whilst
the market builds back up its trust in the Group.
3. The risk of a significant cyberattack, or data security breach
could incur penalties and have a serious impact on the
Group’s ability to trade in the short term, with longer term
negative implications to our reputation in the marketplace and
therefore our ability to meet our growth targets in the medium
term. We have made substantial additional investments in to
our cyber security, including our back-up data storage and
power systems in recent years and have global IT policies
in place that are managed by a dedicated in-house team.
We continue to invest in IT security and are rolling out best
practice ISO 27001 around the world. However, in this
world of heightened cyber risk, it is not impossible that a
circumstance could arise where our trading results could be
negatively impacted as a result of a cyber threat or data loss.
The scenarios above are hypothetical and purposefully
severe for creating outcomes that have the ability to threaten
the viability of the Group. It is considered unlikely, but not
impossible, that the crystallisation of a single risk would test
the future viability of the Group. Our planned investment in
our digital infrastructure via Project Atlas will complement this.
However, as with many companies, it is possible to construct
scenarios where either multiple occurrences of the same risk,
or single occurrences of different risks could put pressure on
the Group’s ability to meet its financial covenants. In the case
of these scenarios arising, various options are available to the
Group to maintain liquidity to continue in operation such as:
accessing new external funding early; more radical short-term
cost reduction actions; and reducing capital expenditure. None
of these actions are assumed in our current scenario modelling.
After considering the risks identified and based on the
assessments completed, the Directors believe that there is
a reasonable expectation that the Company will be able to
continue to operate and meet its liabilities as they fall due over
the next three years.
68
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Trifast plc Annual report 2018 Risk table
How the business manages risk
As a Public Listed Company and in line with the UK Corporate Governance Code, “The Board is responsible for determining the nature
and extent of the principal risks it is willing to take in achieving its strategic objectives. The Board should maintain sound risk management
and internal control systems”. The Board recognises that the management of risk is required to enable the business to meet its objective
to create ‘stakeholder value’.
Risk management
Risk
Personnel &
resource
Description and
potential impact
Without both adequate
resource and appropriate
investment in our people
and succession planning
across all levels of the
business from the Board
down, we may not be
able to deliver our future
strategic plans and long
term success
Has the risk
materialised?
Trend
The Group enjoys
extremely high retention
levels with 51.2% of staff
having been in the Group
for more than ten years
and the average length
of service being over ten
years. All key succession
risks are appropriately
managed
Current mitigation
Our succession planning and
gap analysis processes identify
key employees and roles within
the business and are designed to
broaden and transfer our specialist
knowledge and skills base. We
invest heavily in our people via
ongoing training and our Group
wide Performance Development
Programme to ensure there is
adequate opportunity to allow our
people to ‘move up’ within TR.
Rewards are reviewed annually to
ensure they remain at levels that are
competitive within the marketplace
Quality and
manufacturing
We recognise that the
quality of our manufactured
and externally sourced
products is of critical
importance. Any major
failure will affect customer
confidence and may lead
to immediate financial
penalties
Our established global quality team
maintains our Group wide quality
compliance protocols. Quality
inspection processes across our
manufacturing and distribution sites
and vendor base are robust, allowing
us to offer zero-defect supplies
to customers where required and
appropriate insurance is maintained
and reviewed annually
The Group has not
experienced any
substantial quality issues.
Quality is moving further
up the agenda across all
sectors of our client base
and we are continuing to
invest to meet this
Foreign
exchange
volatility
A significant portion of the
Group’s revenue and profit
is generated outside of the
UK. Due to translation risk,
the Group results could
be adversely impacted by
an increase in the value of
Sterling relative to foreign
currencies. In addition, a
transactional risk exists as
the Group sources certain
products from the Far East
for sale across Europe
Transactional hedging is achieved
via the commercial matching of
transactions wherever possible.
Non-functional currency balance
sheet items are minimised, and net
investment hedging is used for any
significant acquisition finance
We regularly review our foreign
exchange mitigation strategies with
our advisors to ensure that these
remain fit for purpose in these
challenging times
Foreign exchange
volatility has remained
high with movements of
c. 5% across a basket
of the Group’s key
currencies
Our results have been
presented at CER
and AER to assist
our stakeholders’
understanding of the
underlying business.
Further information in
respect of the Group’s
policies on financial risk
management objectives
including policies
to manage foreign
exchange is given in
note 26
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69
www.trifast.comStrategic report Strategic report Risk management
Risk management
continued
Risk
Macro-
economics
Description and
potential impact
Traditionally distribution/
manufacturing sectors
bear the effect of inventory
reduction in challenging
economic periods earlier
than other industries
Loss of a
key customer
and debtor
exposure
Interruption
of supply
Good relationships with
our customers is key to
the business. Any lack
of holistic support or an
inconsistent approach
to the trading and
management of key
global customers across
the Group increases our
exposure to customer loss
Increased trading levels
lead to higher debtor
balances, raising our
exposure to customer
failure and bad debt write
downs
The Group sources
products both internally
and externally for
customers around
the world. If we were
unable to supply a
customer in line with their
ongoing manufacturing
requirements, the risk
both to our reputation
and in terms of potential
stoppage penalties would
be substantial
Has the risk
materialised?
Trend
The global economy
remains in a period of
growth
The Group has not in
recent years experienced
any substantial credit
issues and attrition of our
key multinational OEMs
remain very low
Current mitigation
By operating globally and across
several sectors, the Group is better
able to manage the risk of regional or
industry contractions. As customers
move, or expand, we have the
capability and flexibility to move with
them, whilst our first class customer
service works to protect us from rapid
supplier changeover
We hold less than 1% of a £25bn
target market meaning growth via
market share remains credible even in
a falling market
Our global multinational OEM focus
means we can build strong head
office and local relationships with
our key multinational customers.
Improving our supplier power
and helping us to retain and grow
key trading relationships for the
longer term
We maintain strong credit control
procedures from new customer set
up, through to regular monitoring as
trade develops. We also have global
catastrophe credit insurance cover
We hold appropriate stock levels
to service our customers’ needs at
all times. Our pan-global presence
means we are able to operate along
multiple transport routes, shielding
us from localised issues. For all
key products we maintain multiple
sources to ensure adequacy of
supply. Our approved vendor due
diligence processes also help to
mitigate the risk of a supply chain
breakdown. We ensure that our top
20 suppliers are visited at least every
year to maintain this
In recent times, political
and climatic instability
have increased in several
countries across in the
world. Where we have
encountered issues, our
established and flexible
logistics have allowed us
to continue to offer timely
and reliable supply to our
customers
70
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Trifast plc Annual report 2018 Current mitigation
Has the risk
materialised?
Trend
Stock management processes are
a key part of the Group’s internal
controls and stock weeks are a
KPI, monitored locally and at Board
level. We continue to invest in stock
management processes and systems
to ensure we keep optimum levels
across the world. Our multi-locational
set up, allows us to reduce lead
times, and therefore stock holding, as
far as possible
Customers’ requirement
and our product mix
are ever evolving. Our
tight stock management
and engineering know-
how allow us to view
these changes as an
opportunity to develop
and sell new lines, rather
than as a risk to the
business
Risk
Inventories
obsolescence
Cyber
security
Impact of
BREXIT:
Description and
potential impact
The Group holds
substantial inventory
balances across the
world. As the business
grows these levels will
increase to meet both
transactional needs
and the requirements of
our multinational OEM
customers. Higher stock
levels lead to an increased
exposure to obsolete
inventory
Unauthorised access to, or
a breach of, our systems,
networks or premises,
could immediately and
materially affect our
reputation with possible
implications for revenue
and growth over the short
to medium term. Such a
breach may also cause
financial loss
FX/ Transaction risk/
pricing pressures
The prolonged weakness
in Sterling has brought
inflationary pressures to
our imported purchase
costs into the UK
We have undertaken a review of our
cyber security controls worldwide.
Additional investment has been
made where required to manage our
risk. Our IT policies are managed
by a dedicated in-house team and
access to systems is strictly limited
to appropriate personnel. IT risk
reviews are routinely carried out
across all our sites and we hold ISO/
IEC 27001:2013 accreditation in our
Group IT function
We perform ongoing reviews of our
global supplier base as a matter of
course to manage pricing pressures
that arise. In the UK these reviews
have been designed to specifically
focus on the ongoing impact of
foreign exchange fluctuations to
ensure we continue to strike the best
deal with our suppliers
The Group has not to
date experienced any
significant cyber security
threats but at the macro-
level risk continues to
increase
We have started to see
input price increases
impacting our UK
margins over the second
half of FY2018.
However, if the more
recent relative weakening
of the US$ continues,
then we would expect
the impact of this to
begin to stabilise
The situation now is
increasingly unclear, but
a hard Brexit may lead
to a default to WTO
rules. We are currently
reviewing our options as
a business, in advance of
greater clarity
The UK economy
continues to grow. The
automotive sector is
our largest UK sector
and government led
discussions are ongoing
with several of the UK’s
major car manufacturers.
We have seen no
evidence of a Brexit-led
contraction in investment
to date, but we will
continue to monitor the
situation closely over the
coming months to ensure
we are able to react
quickly to any change in
circumstances
Post‑Brexit trading rules
(WTO)
A default to WTO rules
could have a negative
impact on trading between
our UK sites and the EU/
our EU sites and the UK
As a global group with several EU
subsidiaries we are in a strong
position to manage our supply chain
to allow trading routes that bypass
a UK-EU or EU-UK transfer to a
large extent. We see this challenge
as an opportunity to insert greater
efficiencies into our supply chain
UK macro‑economic
environment
Given the degree of
uncertainty in the wider
market, the extended
weakness in Sterling and
the risk of restrictions to
our ongoing access to
the single market the UK
economy may contract
in the medium term. If
we are unable to react
to a possible slow down
sufficiently quickly and
effectively, then temporary
trading/ restructuring
losses could be incurred
if the UK business needs
to resize
Regular quarterly forecasting and
sales trend analysis at UK level
will identify any issues as soon as
possible. Whilst our access to the UK
distribution market, acts as a good
barometer of the wider marketplace,
providing us with an early insight
in to toughening market conditions
and allowing us to react quickly and
effectively if a changing situation
demands it
In the short term, manufacturing
levels are protected by existing
manufacturing investments in the UK,
most specifically in the automotive
sector
In the long term, we are a global
business with the flexibility to follow
our customers wherever they may
end up following any prolonged
downturn in the UK manufacturing
industry
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www.trifast.comStrategic report Strategic report Introducing the lead team
Introducing
the lead team
Board biographies
Glenda Roberts
Group Sales Director
Length of service
28 years as Director of TR Fastenings
Limited (UK) and Director for TR Fastenings
Inc (USA) since July 2012; appointed to the
plc Board in 2010
Key areas of expertise
Global sales & marketing experience in logistics & global
supply chain, Key Account Management (KAM) and Customer
Relationship Management (CRM)
Committee membership
By invitation
Malcolm Diamond MBE
Non-Executive Chairman
Length of service
Total 43 years; appointed as Non-Executive
Chairman on 1 April 2017
Formerly, Trifast Executive Chairman after
being re-appointed in 2009, CEO for 18 years before retiring in
2002. 1984-2002 Managing Director, TR Fastenings Limited
Key areas of expertise
Significant commercial skills and leadership experience gained
from growing an international business covering sales and
marketing, strategic planning and implementation, business
development and investor relations
Other directorships
Non-Executive Chairman (appointed May 2014) at Flowtech
Fluidpower plc, the UK’s leading supplier of technical hydraulic
fluid power products (Ticker- AiM: FLO) and joined the Board of
discoverIE plc (formerly known as ACAL plc), a leading designer
and manufacturer of specialist electronic components (Ticker:
DSCV), in November 2015 before being appointed Non-Executive
Chairman in April 2017
Committee membership
Chairman of the Nominations Committee and by invitation
Mark Belton
Chief Executive Officer
Length of service
19 years; appointed to the plc Board in 2010
and CEO on 1 October 2015
Key areas of expertise
Over his career with Trifast, Mark has forged a wealth of knowledge
and great understanding of the industry, the TR model, key
sectors and our customer portfolio. As Group Finance Director, he
also played a pivotal role in the successful acquisitions of PSEP
in Malaysia, VIC in Italy and Kuhlmann in Germany. Other skills
include all aspects of strategic and financial planning, and investor
relations
Committee membership
Nominations Committee and by invitation
Clare Foster
Chief Financial Officer
Length of service
3 years; appointed to the plc Board on
1 October 2015
Key areas of expertise
All aspects of Trifast’s financial management, accounting
governance and strategic planning and implementation across
all levels
Committee membership
By invitation
Geoff Budd
Commercial Director & European Managing
Director
Length of service
42 years; appointed to the plc Board in 1986
(retired from the Board 31 March 2018)
Key areas of expertise
Geoff has extensive knowledge of the industry, European and
Asian markets particularly in sales & purchasing, manufacturing
management and quality. His role gives him responsibility of all
of the European operations but he also holds the responsibility
for the Group on all aspects of the commercial business,
specifically advising the Board on capex requirements for the
manufacturing sites
Committee membership
By invitation
72
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Trifast plc Annual report 2018 Jonathan Shearman
Independent Non-Executive Director
Length of service
9 years; appointed to the plc Board in 2009
Key areas of expertise
Investment Fund management, stockbroking
and investment banking, and charitable foundations
Other directorships
Non-executive director at AiM listed Orchard Funding Group
Committee membership
Chair of the Remuneration Committee and a member of the Audit
Committee and the Nominations Committee
Lyndsey Case
Company Secretary
Length of service
18 years; appointed as Company Secretary
1 April 2016
Key areas of expertise
Lyndsey joined the Group’s TR Fastenings UK Finance team in
2000 before moving to the Group finance team in 2006. She is
an FCCA and experienced in financial accounting, reporting and
compliance
Committee membership
Secretary to the Committees and by invitation
Neil Warner
Senior Independent Non-Executive Director
Length of service
3 years; appointed to the plc Board on 16
June 2015
Key areas of expertise
Experienced Senior Independent Director with strong City relations.
Extensive knowledge of international businesses gained over 30
years in commerce; solid understanding of key strategic drivers –
growing sustainable businesses globally, M&A, compliance, risk
management and IT
Other directorships
Non-Executive Director at Vectura Group plc (VEC) and of AiM
listed Directa plus (DCTA)
Committee membership
Chair of the Audit Committee and a Member of the Remuneration
Committee and the Nominations Committee
Scott Mac Meekin
Independent Non-Executive Director
Length of service
5 years; appointed to the plc Board in 2013
Key areas of expertise
30+ year career in both commercial and
corporate structures across all major continents and cultures
in finance, M&A, global logistics, technology, distribution and
manufacturing
Other directorships
Director at Morgan Legend Limited Hong Kong, Director at Tes-
Amm Private Limited, and CEO at Dearman Engine Company
Member of Harvard Alumni Association & National University
Singapore Alumni Association
Committee membership
Member of the Audit Committee and Remuneration Committee
Trifast plc
Board as at
31 March 2018
Executive and
senior managers
All other
employees
Trifast Executive
Board as at
31 March 2018
Female
25%
Male
75%
Female
28%
Male
72%
Female
32%
Male
68%
Female
50%
Male
50%
The Strategic report was approved by the Board of Directors on 11 June 2018 and signed on its behalf by:
Malcolm Diamond MBE
Non-Executive Chairman
Trifast House, Bellbrook Park,
Uckfield, East Sussex
TN22 1QW
Company registered number: 01919797
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www.trifast.comStrategic report Strategic report My views on the role of ... Non-Executive Director (NED)
My views
on the role of . . .
Non-Executive Director (NED)
My experience as a NED has been founded across a number of disciplines:
Nobo plc
Emperor Ltd
48 Fitzroy Ltd
Sytner plc
Centurion Electronics
Reliance plc
Dechra Pharmaceuticals
Group plc
Unicorn VCT fund plc
Jacksons Fencing Ltd
The Beauty Works Ltd
CWO Stonemasons Ltd
Flowtech Fluidpower plc*
discoverIE plc*
Trifast plc*
NB. * current
office communication equipment
creative marketing agency
creative marketing agency
prestige car dealer network
automotive rear seat entertainment systems
FM and security group
international specialist veterinary pharmaceuticals
Venture Capital Trust
major manufacturer of wood and steel fencing and gates
UK distributors of electrical hair treatment products
Royal Warrant holders
hydraulic & pneumatic specialist manufacturers &
distributors
global specialist electronic components
global industrial components for high volume assembly
Senior Independent Director
Chairman
Chairman
Senior Independent Director
Senior Independent Director
Senior Independent Director
Senior Independent Director
Non-Executive Director
Chairman
Senior Independent Director
Chairman
Senior Independent Director
Years in position?
2
3
4
1
4
10
3
9
2
9
9
4
Chairman
Chairman
3
See note †
† see Board biographies on page 72
It is widely accepted (and expected) that the key duty of a NED is
to safeguard the interests of the company’s shareholders, delivered
by focusing on not only the constant widening of the scope of
corporate governance, but also on recommended best practice
from City institutions and financial regulators.
This is best achieved by ensuring that the Board comprises the
relevant mix of appropriate skills and experience among the
incumbent independent directors.
This especially applies to the chairs of the Audit, Remuneration and
Nominations committees.
In addition to the prescribed disciplines is the need for relevant
business or sector experience to support or question the strategic
objectives being pursued by the executive directors.
More recently, corporate governance now requires robust and
clear codes of stipulated company practice regarding anti-slavery,
anti-bribery, gender equality and risk management. This has
considerably extended the duties of NEDs in support of the actions
required by the executive team.
However, all the above can be viewed simply as what is generally
expected, with no visible element of individual NED style or
interpretation as basic guidelines.
My view has always been that it is also important to maintain
a degree of pastoral care for the exec colleagues on my board
- especially the CEO and CFO. Not only are their roles highly
demanding, often on a 24/7 “open all hours” accessibility but can
be lonely and also vulnerable to anecdotal upward reporting from
subordinates who are either politically motivated or protecting their
own positions in the company.
There is an old saying “who gives the boss a stroke”? In other
words, everyone has a need for peer recognition and praise where
due (in any sphere of human interaction). Sadly, it seems to be
unusual for the “boss” to experience this from internal colleagues,
as it can be taken for granted by many that their status or level of
financial reward somehow alleviates their need for basic emotional
reassurance. Conversely, it is also rare for colleagues to openly
criticise their leader’s actions or decisions if they disagree, as they
assume it could imperil their ongoing career.
This is when balanced judgement and discretion is required by
the NEDs to react honestly, promptly and directly to the situation
- whether it is positively affecting the individual or business - or
indeed, negatively.
This is obviously why NED independence is assessed closely by
investors, and why several NEDs I have worked with in the past,
whilst highly qualified, sometimes adopted a stance of criticising
any perceived minor weakness or fault they encountered with the
exec team, to the extent that I have witnessed visible and audible
demotivation of those individuals affected.
On one occasion, I had a very discreet word to explain that it
perhaps could be counterproductive to openly police minor
issues, and maybe try to look for opportunities to praise good
performance on key performance measures. The response, I
am pleased to say, was positive in that my colleague had not
appreciated the negative effect he was having, and from then on
adopted a more balanced attitude.
To summarise, I feel that an NED not only requires a wide range of
commercial business experience (ideally having held exec positions
personally), but also has a sensitivity to inter personal relationships
and motivational importance at all levels - from front line to senior
management. Successful businesses thrive on respected and
valued staff and management that are rewarded fairly for their
efforts and skills; therefore, it is vital that NEDs do their best to
encourage their board to promote this winning company culture.
Malcolm Diamond MBE
Chairman
Trifast plc Annual report 2018
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Strategic report Our governance Contents
Our governance
76
Trifast plc Annual Report 2018
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Contents
Directors’ report
Corporate governance
Audit Committee report
Nominations Committee report
Directors’ remuneration report
Statement of Directors’ responsibilities
78
80
82
85
86
99
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www.trifast.comOur governance Our governance Directors’ report
Directors’ report
The Directors present their Annual Report on the affairs of the Group, together with the
Financial Statements and Auditor’s Report, for the year ended 31 March 2018
Results and proposed dividends
Total Group revenue from continuing operations was £197.6m
(2017: £186.5m) and the profit for the year before taxation was
£18.5m (2017: £17.3m). Underlying profit before tax for the Group
was £22.2m (2017: £20.5m); see note 2 for breakdown.
The Directors recommend a final dividend of 2.75p (2017: 2.50p)
per ordinary share to be paid on 12 October 2018 to shareholders
registered at the close of business on 14 September 2018. This
together with the interim dividend of 1.10p (paid on 12 April 2018)
(2017: 1.00p) brings the total of the year to 3.85p (2017: 3.50p).
The 2018 recommended final dividend has not been included
within creditors as it was not approved before the year end. The
2018 interim dividend is also unrecognised as it was paid post
year end.
The Strategic report provides a detailed analysis of the results
in the year and an indication of future developments.
Annual General Meeting
The Annual General Meeting will be held at 12 Noon on
Wednesday 25 July 2018 at Trifast House, Bellbrook Park,
Uckfield, East Sussex,
TN22 1QW.
Directors and Directors’ interests
The Directors who held office during the year were as follows:
Chairman
MM Diamond MBE
Non-Executive Director
Chairman of Nominations Committee
Executive Directors
MR Belton
CL Foster
GP Budd
GC Roberts
Chief Executive Officer
Chief Financial Officer
Commercial Director &
European Managing Director
(retired from the Board 31 March 2018)
Group Sales Director
Independent Directors (Non-Executive)
NW Warner
Senior Independent
Chairman of Audit Committee
Chairman of Remuneration Committee
JPD Shearman
SW Mac Meekin
The Directors’ remuneration and their interests in share capital
are shown in the Remuneration report on pages 86 to 98. Those
Directors who are retiring and, being eligible, offer themselves up
for re-election, are shown in the Corporate governance statement
on pages 80 to 81. Biographical details can be found in Board of
Directors on pages 72 to 73.
Substantial shareholdings
Details of the share structure of the Company are disclosed in note 24.
As at the year end on 31 March 2018, the Company was aware of the following material interests, representing 3% or more of the issued
share capital of the Company.
AXA Framlington Investment Managers
Schroder Investment Management
BlackRock Investment Management (UK)
Liontrust Asset Management
Hargreave Hale
Mr Michael Timms
Castlefield Investments
Hargreaves Lansdown Asset Management
No. of
shares held
11,520,241
10,850,000
9,162,926
9,144,320
7,428,029
7,000,000
4,212,500
3,736,918
% of
shareholding
9.49
8.94
7.55
7.53
6.12
5.77
3.47
3.08
As at 1 June 2018, material interests representing 3% or more of the issued share capital of the Company were:
AXA Framlington Investment Managers
Schroder Investment Management
Liontrust Asset Management
BlackRock Investment Management (UK)
Hargreave Hale
Mr Michael Timms
Castlefield Investments
Hargreaves Lansdown Asset Management
78
No. of
shares held
11,520,241
10,720,000
9,574,713
9,357,400
7,454,029
7,000,000
4,380,000
3,719,318
% of
shareholding
9.49
8.83
7.89
7.71
6.14
5.77
3.61
3.06
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Trifast plc Annual report 2018
Employees
The Group has a policy of offering equal opportunities to
employees at all levels in respect of the conditions of work.
Throughout the Group it is the Board’s intention to provide possible
employment opportunities and training for disabled people and
to care for employees who become disabled having regard
to aptitude and abilities. Our Corporate Social Responsibility
Statement can be found on our website www.Trifast.com and
further details are provided in the Strategic Report.
Regular consultation and meetings, formal or otherwise, are held
with all levels of employees to discuss problems and opportunities.
Information on matters of concern to employees is presented in
the in-house letters and publications.
Disclosure of information to auditor
The Directors who held office at the date of approval of this
Directors’ report confirm that, so far as they are each aware, there
is no relevant audit information of which the Company’s auditor
is unaware; and each Director has taken all the steps that they
ought to have taken as a Director to make themselves aware of
any relevant audit information and to establish that the Company’s
auditor is aware of that information.
Auditor
The Board has decided to propose KPMG LLP to be reappointed
as auditor of the Company and a resolution concerning their
appointment will be put to the forthcoming Annual General Meeting
of the Company.
By order of the Board
Lyndsey Case
Company Secretary
11 June 2018
Trifast House
Bellbrook Park
Uckfield
East Sussex
TN22 1QW
Company registration number: 01919797
Employee Benefit Trust (“EBT”)
During the year the Trifast EBT (as funded by the Group) acquired
1,500,000 of Trifast 5p ordinary shares on the open market
via to help meet future employee share plan obligations. The
consideration paid for the shares was £3.4m. These shares are
shown in the own shares held reserve within equity on the balance
sheet. The number of ordinary shares held by the Trifast EBT at
the 31 March 2018 was 1,500,000 (2017: nil) which represented
1.24% of the fully paid up share capital of the Company as at 31
March 2018 (2017: nil%).
Financial instruments
Information in respect of the Group’s policies on financial risk
management objectives including policies to manage credit risk,
liquidity risk and foreign currency risk are given in note 26 to the
financial statements.
Corporate governance
The Corporate governance statement on pages 80 to 81 should
be read as forming part of the Directors’ Report.
Takeover directive
Where not provided elsewhere in the Directors’ report, the following
provides the additional information required to be disclosed as a
result of the implementation of the Takeover Directive.
There are no restrictions on the transfer of ordinary shares in the
capital of the Company other than certain restrictions which may
from time to time be imposed by law (for example, insider trading
law). In accordance with the Listing Rules of the Financial Conduct
Authority, certain employees are required to seek the approval of
the Company to deal in its shares.
The Company is not aware of any agreements between
shareholders that may result in restrictions on the transfer
of shares or on voting rights.
No person has any special rights of control over the Company’s
share capital and all its shares are fully paid.
The rules governing the appointment and replacement of Directors
are set out in the corporate governance section of the Directors’
report on pages 80 to 81. The Company’s Articles of Association
may only be amended by a special resolution at a General Meeting
of shareholders.
The Company is party to a number of banking agreements that,
upon a change of control of the Company, could be terminable
by the bank concerned.
Outside of the extension of certain Directors’ rolling contract
periods and notice periods, there are no agreements between
the Company and its Directors or employees which provide for
compensation for loss of office or employment (whether through
resignation, purported redundancy or otherwise) that occurs
because of a takeover bid.
The Company is not aware of any contractual or other agreements
which are essential to its business which ought to be disclosed in
the Directors’ report.
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www.trifast.comOur governance Our governance Corporate governance
Corporate governance
(forming part of the Directors’ report)
With exceptions as highlighted below, the Company complied with the provisions
of the UK Corporate Governance Code issued by the Financial Reporting Council in
April 2016
The Senior Independent Non-Executive Director is Neil Warner,
who was chosen due to his executive and non-executive board
experience with other companies.
All Independent Non-Executive Directors have the authority to
meet with shareholders without first seeking approval from the
Chief Executive or the Chairman.
Upon appointment the Directors are required to seek election
at the first AGM following appointment. All Directors are
required to submit themselves for re-election at regular intervals
and a minimum of one third of Directors must be re-elected on
an annual basis.
The Board met six times during the period, with attendance
as follows:
MM Diamond
MR Belton
CL Foster
GP Budd (retired from the Board 31 March 2018)
GC Roberts
NW Warner
JPD Shearman
SW Mac Meekin
Attendance
in 2017/18
5
6
6
6
5
6
6
5
The Directors retiring by rotation are Mark Belton, Glenda Roberts,
Jonathan Shearman and Scott MacMeekin who, being eligible,
offer themselves for re-election at the forthcoming Annual General
Meeting. The Chairman and Senior Independent Non-Executive
Director confirm that following formal performance evaluation, the
individuals seeking election and re-election continue to be effective
and demonstrate commitment to the role.
The Company has separate posts of Chairman and Chief
Executive. The Chairman leads the Board and the Chief Executive
is responsible for the management of the Company, implementing
policies and strategies determined by the Board.
The Board acknowledges Malcolm Diamond is a Non-Independent
Non-Executive Chairman (Executive Chairman until 1 April 2017)
which does not comply with the requirements of section A.3.1 of
the Corporate Governance Code. However, the Board believes
that, given Mr Diamond sits as Chairman and is a non-executive
in other companies, his experience from these appointments and
his previous knowledge of Trifast is invaluable and can best be
delivered through the position of Chairman.
The Company has applied the principles set out in the Code,
including both the main principles and the supporting principles,
by complying with the Code as reported above. Further
explanation of how the principles and supporting principles have
been applied is set out below (including in the Audit Committee
and Nominations Committee reports and in the Directors’
remuneration report on pages 86 to 98 and in the Viability
statement on page 68). Details of substantial shareholdings
of the Company can be found on page 78.
The structure of the Board and its standing committees is
as follows:
The Board
During the year, the Board consisted of four Executive Directors
however, following Geoff Budd’s retirement from the Board on
31 March 2018, the Board currently consists of three Executive
Directors, three Independent Non-Executive Directors and a
Non-Executive Chairman. Taking into account the provisions
of the code, the Board has determined that, during the year
under review, each of the Non-Executive Directors remained
independent of management and free from any business or
other relationship which could interfere with the exercise of their
independent judgement for the purposes of the Code. Jonathan
Shearman has served nine years and, in line with the code, the
Nomination Committee has carried out a vigorous review of his
appointment. Following this review, the Board determined that
Jonathan Shearman remains independent and strongly considers
that he still performs his duties effectively, continuing to show
integrity and high ethical standards whilst maintaining sound,
independent judgement in respect of all decisions taken at Board
and Committee level. The Chairman, Malcolm Diamond, who
stepped to Non-Executive on 1 April 2018, is not considered by
the Board to be independent; his wise counsel continues and he
is recognised by the Board and stakeholders to add experience to
the mix.
The appointment, replacement and powers of the Directors are
governed by the Company’s Articles of Association, the Corporate
Governance Code, the Companies Act, prevailing legislation and
resolutions passed at the Annual General Meeting (‘AGM’) or other
general meetings of the Company.
80
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Trifast plc Annual report 2018 The contracts of appointment of Non-Executive Directors are
available for inspection on request to the Company Secretary.
The Independent Non-Executive Directors have full access to
the external auditor and to management and there is a formal
procedure for Directors to obtain independent professional advice
in the furtherance of their duties should this be necessary. All
Directors have access to the advice and services of the Company
Secretary.
Appropriate and relevant training is provided to the Directors as
and when required.
The Board meets a minimum of five times a year and is supplied
as early as practical with an agenda and appropriate papers.
Directors are appointed by the Board on recommendation from
the Nominations Committee. The Board monitors the financial
performance of the Group and approves and reviews major
projects and acquisitions. The Board has formally adopted a
schedule of matters which are reserved to the Board for decision,
thus ensuring that it maintains control over appropriate strategic,
financial, organisation and compliance issues to ensure the
long-term success of the Company.
The Board undertakes annual evaluation of its own performance,
that of its Committees and individual Directors and continues to
train and evaluate senior managers below Board level to maintain
its continuous succession policy. As part of this evaluation,
the Board considers the balance of skills, experience, the
independence and knowledge of the Board, its diversity, including
gender, and how effectively the Board works together
as a unit.
The Board has delegated specific responsibilities to the Audit,
Nominations and Remuneration Committees. Details are described
on pages 82 to 99.
The Directors have carried out a robust assessment of the principal
risks facing the Group, including those that would threaten its
business model, future performance, solvency or liquidity. The
principal risks have been disclosed on pages 68 to 71.
Internal audit
As detailed in the Audit Committee report on pages 82 to 99,
the Board, via the Audit Committee, formally considers the
requirement for internal audit on an annual basis as part of its
terms of reference. A formalised internal review process called
a ‘health check’ has been in operation for some years. Whilst the
Board recognises that this process does not constitute a fully
independent internal audit function, it believes that due to the
size of the Group, this provides appropriate comfort as to the
operational and financial controls in place.
Shareholder relations
The Group has a website, www.Trifast.com, which is regularly
updated to ensure that shareholders and other providers of capital
are fully aware of the Group’s activities. The Group’s Registrar,
Computershare, is linked to the Trifast website and offers services
for shareholders.
The Group also works with City specialists to ensure all levels of
shareholders receive Trifast information.
During the year being reported upon we engaged with:
Peel Hunt LLP — Stockbroker to the Company, Institutional
Fund Managers
TooleyStreet Communications — Investor Relations Analysts,
Private Client Brokers and Media
Edison Investment Research — Investment Research, available
on the Trifast website
The members of the Audit, Remuneration and Nominations
Committees will be available to speak to shareholders at the
AGM in order that they understand the views of the shareholders.
In addition, shareholders can contact them at any time by writing
to Trifast plc, Trifast House, Bellbrook Park, Uckfield, East Sussex,
TN22 1QW.
Going concern
After making enquiries, the Directors have reasonable expectations
that the Group has adequate resources to continue in operational
existence for the foreseeable future. Further information is given
in the Basis of Preparation, note 1 and the Viability statement on
page 62. For this reason, they continue to adopt the going concern
basis in preparing the financial statements.
By order of the Board
Lyndsey Case
Company Secretary
11 June 2018
Trifast House
Bellbrook Park
Uckfield
East Sussex
TN22 1QW
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www.trifast.comOur governance Our governance Audit Committee report
Audit Committee report
“ In a year of increased focus internally and externally on culture,
values and judgements made to support strategic growth, I
am pleased to report good progress in improving the quality of
people, processes and systems that underpin all these elements
Neil Warner
Chairman of the Audit Committee
Dear Shareholder,
I am pleased to present the Audit Committee (“the
Committee”) report for the year ended 31 March 2018, which
has been prepared by the Committee and approved by the
Board.
As a Committee, we have focused on the integrity,
completeness and clarity of financial reporting, the areas
where judgements and estimates are required in the
financial statements and the quality and effectiveness of
audit processes to complement the other risk management
activities.
The Board and Committee have also focused on the recently
introduced governance requirements regarding the Annual
Report and consider that, taken as a whole, the 2018 Annual
Report is fair, balanced and understandable with appropriate
references being made throughout the various sections,
which I hope you will find helpful in understanding the
information and disclosures contained within them.
The Committee meetings are held to coincide with key
dates within the financial reporting and audit cycle and I also
meet with management on an ad-hoc basis. I would like to
thank the Committee members, the executive management
team and our external auditor, KPMG LLP (‘KPMG’) for the
open discussions that take place at our meetings and the
importance they all attach to its work.
On behalf of the Audit Committee
Neil Warner
Chairman of the Audit Committee
11 June 2018
Committee membership and attendance
In accordance with the Code, the Audit Committee consists
entirely of the Independent Non-Executive Directors and met
three times in the year
Neil Warner (Chairman)
Jonathan Shearman
Scott Mac Meekin
Attendance
in 2017/18
2
3
3
Although it is only the Committee Chairman and its members
who are entitled to be at a meeting of the Committee, the external
auditor KPMG, the Non-Executive Chairman, the Chief Executive,
the Chief Financial Officer and the Company Secretary are also
invited to attend meetings.
The Board are satisfied that the members of the Committee have
the breadth of knowledge, experience and financial dynamics to
effectively fulfil their responsibilities. The Chairman, Neil Warner,
has significant, recent and relevant financial experience as a former
CFO of a FTSE 250 company and through his other Non-Executive
appointments. The Director’s summary biographies can be found
on pages 72 to 73 of this Report.
Role and responsibilities
The Committee operates within its terms of reference, which are
reviewed on an annual basis and are available on the Company’s
website or on request to the Company Secretary.
The role of the Committee is to assist the Board in fulfilling its
oversight responsibilities by reviewing and monitoring:
• the integrity and compliance of the financial information provided
to shareholders including the strategic report, financial results,
announcements and financial statements
• the appropriateness of accounting policies and the supporting
key judgements and estimates
• whether the Annual Report and Accounts, taken as a whole, is
fair, balanced and understandable
• the Company’s system of internal controls and risk management
including the identification of principal risks and their mitigation
and the requirement for a formal internal audit function (see
pages 69 to 71 for Risk Management)
• the external audit process and external auditors, making
recommendations to the Board on appointment, remuneration,
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Trifast plc Annual report 2018 performance, expertise, independence and objectivity, along
with the effectiveness of its scope, of the external auditor
• the processes for compliance with laws, regulations and ethical
codes of practice including procedures for detecting, monitoring
and managing the risk of fraud and the adequacy and security
for its employees in relation to whistleblowing
• The Board believes that the Independent Non-Executive
Directors who are members of the Audit Committee have
the knowledge and skills relevant to the Trifast business from
financial aspects through to manufacturing, distribution and
sales
Key matters considered and
activities during the year
During the year, the Committee met to agree the audit strategy
for the full year audit, reviewed the results of the external audit
for the financial year and reviewed the external auditor’s half year
review and the half year results. It also considered the results of the
internal review process (‘health checks’) carried out as part of the
cycle (more details of this process are given in the section ‘internal
audit’ below) and finally it reviewed the Annual Report and the
financial statements contained within it.
The Committee reports to the Board on how it has discharged its
responsibilities on a regular basis.
The Committee’s prime areas of focus have been:
• the integrity, completeness and consistency of financial reporting
and disclosures
• the areas where significant judgements (during the year at, and
post, the balance sheet date) and estimates are required in the
financial statements
• the materiality level to apply to the audit
• whether the going concern basis of accounting should continue
to apply in the preparation of the annual financial statements; and
• the appropriateness of the bases of disclosure in the company’s
viability statement
• the appropriateness of transactions separately identified and
disclosed as one-off to highlight the underlying performance for
the periods presented in the financial statements
• the appropriateness of transactions presented in Alternative
Performance Measures (APM’s) to compare relevant results for
the periods presented in the financial statements
• the key assumptions, judgements and estimates as detailed
in note 31 to the financial statements
• to review the Group’s cyber risk strategy to ensure controls and
testing are in place to mitigate the Group’s exposure to this
growing risk
Financial reporting and significant
financial risks
The Committee concluded that there were two significant financial
risks arising from the financial statements which would require
consideration during the year:
•
•
•
Valuation of customer-specific
specialised inventory (recurring)
The Group has significant inventory holdings which are
specific to individual customer requirements. The Board
recognises that as the business continues to grow the
Group is required to carry additional inventory to meet its
transactional and OEM business. This carries with it an
increased exposure to recoverability of these balances.
The Committee is satisfied that sufficient focus is given to
this whole area and in the adequacy of provisions made for
customer specific, slow moving and obsolete inventory.
Valuation of goodwill and
other intangible assets (recurring)
The determination of whether goodwill has been impaired
requires a review of the value in use of the asset. The main
judgements in relation to the review were the achievability of
the long-term business plan and the impact upon the plan
of macroeconomic and regulatory issues. In addition, the
Committee reviewed the discount rates used in projecting
future cash flows to ensure they were within an acceptable
range. The calculation of the value in use was undertaken
and the Committee reviewed the conclusion, including
sensitivity calculations. The Committee also held discussions
with KPMG. The Committee concurred with management’s
conclusion that goodwill is not impaired.
Parent Company: recoverability of investments in
subsidaries
The determination of whether the investments in subsidiaries
have been impaired requires a review of recoverable amounts
to see if it is greater than the carrying amounts. This review
was split into two parts, the first looking at subsidiaries’
balance sheets to see if their net assets were in excess
of their carrying amounts, and the second comparing
the amount of the investments with the current market
capitalisation of the Group. The Committee is satisfied that
the investments in subsidiaries are not impaired.
Internal audit
A formalised internal review process called a ‘health check’ has
been in operation for some years and all business units are the
subject of a health check on a rotational basis. The reviews,
covering both operational and financial controls, are carried out
by senior Group finance personnel, from Head Office, who are
separated from the day to day activities within the entity which is
the subject of the review. All health checks are presented by the
Chief Financial Officer to the Audit Committee and remedial actions
agreed. Whilst the Board recognises that this process does not
constitute a fully independent internal audit function, it believes that
due to the size of the Group, this provides appropriate comfort as
to the operational and financial controls in place.
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Audit Committee report continued
Internal control
The Board is ultimately responsible for the system of internal
control and for reviewing its effectiveness. The system of internal
control is designed to manage rather than eliminate the risk of
failure to achieve strategic business objectives and can only
provide reasonable and not absolute assurance against material
misstatement or loss.
The Corporate Governance Code requires that the Board reviews
the effectiveness of the system of internal controls, in accordance
with section C.2, including those of an operational and compliance
nature, as well as internal financial controls. Having done so, the
Committee is of the view that there is an appropriate ongoing
process for identifying, evaluating and managing significant risks.
Operating policies and controls are in place and have been in
place throughout the year under review and cover a wide range of
issues including financial reporting, capital expenditure, information
technology, business continuity and management of employees.
Detailed policies ensure the accuracy and reliability of financial
reporting and the preparation of Financial Statements including the
consolidation process.
The key elements of the Group’s ongoing processes are:
• a full detailed review of the business risks undertaken as part
of the ongoing day-to-day procedure of the business
• an organisational structure with clearly defined lines of
responsibility and delegation of authority
• that Group policies for financial reporting, accounting, financial
risk management, information security, capital expenditure
appraisal and Corporate Governance are well documented
• that detailed annual budgets and rolling forecasts are prepared
for all operating units and reviewed and approved by the Board
• that performance is monitored closely against budget and
material variances reported to the Board
• that the Committee is to deal with any significant control issues
raised by the auditor
• that a formal schedule of matters specifically reserved for
decisions by the Board is maintained
• that capital expenditure is controlled by the budgetary process with
authorisation levels in place. Any single item of capital expenditure
over £250,000 goes to the Board for approval with detailed written
proposals and financial analysis of expected returns
There were no significant control deficiencies identified during
the year.
External auditor
The external audit is a continuous process. At the start of the
audit cycle, KPMG present their audit strategy identifying their
assessment of the key risks for the purposes of the audit and the
scope of their work. For 2018 these risks were: the valuation of
customer-specific inventory and valuation of goodwill. More detail
is set out in KPMG’s report on pages 103 to 108. In a change from
last year, KPMG are now required to report on key audit matters
in their audit report for the parent Company as well as for the
Group. As such, the key audit matter identified for Trifast plc,
as a standalone entity, is the valuation of investments in
subsidiaries.
The FRC performed a thematic review of significant accounting
judgements and sources of estimation uncertainty on the Group’s
statutory accounts for the year ended 31 March 2017. The review
did not identify any substantive issues. The FRC’s review only
covered the specific disclosures relating to this thematic review and
provides no assurance that the report and accounts are correct in
all material respects; the FRC’s role is not to verify the information
provided but to consider compliance with reporting requirements.
KPMG reports to the Committee at both the half and full year,
setting out their assessment of the Group’s judgements and
estimates in respect of key risks and the adequacy of the reporting.
The Chairman of the Committee speaks to the lead audit director
before each meeting and the whole Committee meets with KPMG
in private at least once a year without executive management
present. The Committee reviews the external auditor’s performance
and ongoing independence and concluded that the external audit
process is operating effectively and KPMG continues to prove
effective in its role as external auditor.
Non-audit services provided by KPMG
To ensure the independence and objectivity of the external auditor,
the Committee has a policy which provides clear definitions of
services that the external auditor can and cannot provide. Tax
compliance and advisory services are currently provided by
another professional services firm PricewaterhouseCoopers LLP
(‘PwC’). The policy also establishes a formal authorisation process,
including either the tendering for non-audit services or pre-approval
by the Committee for allowable non-audit work.
The fees in relation to non-audit services are found in note 5 of
the Annual Report. These relate to tax compliance services for
PSEP, TR Formac in Malaysia, TR Formac in Singapore and TR
Asia Investment Holdings and due diligence work in relation to the
acquisition of PTS on 4 April 2018.
Reappointment of external auditor
Following the completion of the audit, the Committee reviews
the effectiveness and performance of KPMG with feedback from
Committee members, senior executive management and finance
personnel, covering overall quality, independence and objectivity,
business understanding, technical knowledge, responsiveness
and cost effectiveness.
The Committee acknowledges the new EU rules about auditor
rotation and the requirement for companies to put audit services
contracts out to tender at least every ten years (outside of
transitional rules). KPMG has been our auditor for over 20
years. The current lead audit director at KPMG was appointed
in September 2016 and will be required to stand down no later
than the Annual General Meeting in 2020. Accordingly, and in
line with the arrangements set out by the EU, the Committee
continues to recommend to the Board that the tendering of the
external contract should be either at the next rotation of audit lead
director or earlier if appropriate circumstances arise. There are no
contractual obligations which restrict the Audit Committee’s choice
of external auditor. The Committee and the Board have concluded
that KPMG provides an effective audit and have recommended
their reappointment at the 2018 AGM.
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Trifast plc Annual report 2018 Nominations Committee report
“ The Nominations Committee’s key focus is to evaluate and
examine the skills and characteristics that are needed in
Board members to ensure the leadership team has the right
balance of skills to deliver its progressive strategy for the
benefit of all stakeholders
Malcolm Diamond MBE
Chairman of the Nomination Committee
Succession planning
The Nominations Committee has always had a robust plan to
ensure that the Company’s successful culture, business model
and growth strategy firmly established by the Senior Executive
Board and the senior management team can be sustained well
into the future.
It is clearly evidenced that management development
throughout the Group has prospered based on promotion
from within.
With Mark Belton, CEO, and Clare Foster, CFO, now in their
successful third year of office, I suggested to the Board that
I could then justify moving from Executive to Non-Executive
Chairman in April 2017.
This not only fully acknowledged the firmly established new
leadership but reduced the Board remuneration costs, whilst
releasing more of my time for other directorship duties.
In summary, the leadership team has the right experience,
knowledge and determination to positively lead and take Trifast
to the next stage of its growth aspirations.
Malcolm Diamond MBE
Chairman of the Nominations Committee
11 June 2018
Role
To ensure their continued effectiveness the Committee regularly
reviews and evaluates the composition of the Board and its
Committees in order that they retain and reflect the appropriate
balance of skills, knowledge, experience and independence .
Although it is deemed to not comply with the Corporate
Governance code, the Board consider that the members
of the Nominations Committee are appropriate to the size
and complexity of the Company and feel that the balance of
members is correct. To support this, other Board members are
invited to the Nominations meetings as and when required.
Appropriate succession plans for the Non-Executive Directors,
the Executive Directors and the Group’s senior management
are also kept under review.
The Nominations Committee’s terms of reference are available
on the website or on request to the Company Secretary.
Committee membership and attendance
The Nominations Committee consists of two Independent
Non-Executive Directors, including the Senior Independent
Non-Executive Director, the Chairman and the CEO.
Boardroom diversity
Appointing the best people to the Board is critical to the
success of the Company. The Committee has therefore
concluded that while diversity, including gender diversity, is
important when reviewing the composition of the Board and
possible new appointees, the single most important factor
is to identify, recruit and develop people based on skills,
leadership and merit. Given our commitment to appointing
the best people and making sure that all employees have an
equal chance of developing their careers with the Group, the
Committee does not think it is appropriate to set targets for
Board appointments; however, the Executive Board during
FY2018 comprised a 50:50 gender balance.
Malcolm Diamond MBE (Chairman)
Neil Warner
Jonathan Shearman
Mark Belton
Attendance
in 2017/18
2
2
2
2
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Directors’ remuneration report
“ From a broader business context, despite now having many
years of continuous EPS improvement ‘under our belt’,
we push on, committed to the delivery of further growth
from both organic and acquisitive sources. We believe the
Executive team is in place for the job at hand and that they
are suitably motivated
Jonathan Shearman
Chairman of the Remuneration Committee
Dear Shareholder,
Introduction
As Chairman of the Trifast plc Remuneration Committee
(the ‘Committee’), I am pleased to introduce our
remuneration report for FY2018 which has been prepared
by the Committee in accordance with the relevant legal and
accounting regulations, then approved by the Board.
The role of the Committee is to ensure that the
remuneration provided to our Executive Directors motivates
them, aligns them with delivering our strategy and creates
shareholder value in a sustainable manner. In addition, it is
our task to ensure that the remuneration received by the
Executive Directors is proportionate to the performance
achieved and the returns received by you as shareholders.
Subsequent to last year’s review of the Directors’
remuneration Policy (‘Policy’), the Committee was delighted
that, following the consultation exercise, shareholders
showed a high level of support for the Policy at the 2017
AGM (94.8% vote in favour of the Policy). The new Policy
was operated for the first time in FY2018.
Company performance
Trifast has performed well this year, including progress when
considering our strategy, taking into account a need to balance
growth and investment in the business for future growth. Some
business highlights include:
• Revenue grew by 6.0%
• Underlying Group profit before tax grew by 8.5% slightly ahead
of expectations
• We delivered a 7.5% improvement in underlying diluted Earnings
per Share
• Major capital investment programmes have been successfully
implemented or commenced
The Group’s balance sheet continues to be robust with the
capacity to fund both our organic and acquisition growth and
although there are macroeconomic challenges that we cannot fully
mitigate, we remain confident in our growth prospects and the
Executives’ ability to execute the long-term strategy.
The positive business performance during the year together with
the future strategy has helped frame decisions and outcomes in
relation to current and future remuneration. Further details of which
are provided below.
Key FY2018 remuneration outcomes
Annual bonus
In arriving at the annual bonus for FY2018, the Committee
assessed the achievement of the Group’s financial performance
targets (75% weighting) and the Executive team’s performance
against the strategic and operational measures (25% weighting)
that were set at the beginning of the year:
• In line with the pay-out schedule, the Company’s organic
EPS growth of 7.49% contributed 59.7% of maximum for
this element and was also sufficient (above threshold) for the
strategic & operational measures elements to be considered
• The Committee established four strategic and operational
measures for FY2018, as set out below, and the Committee
determined that 100% of maximum for this element was
achieved (see page 92 for full details):
• ROCE: minimum of 15%
• Growth strategy: establish a fully functional acquisition team
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Trifast plc Annual report 2018 • Customer satisfaction: construct a detailed Strategic Account
Management (SAM) structure, identify personnel gaps and
infill as appropriate
Activities of the Committee
During the year, the main activities of the Committee during the
three meetings held were as follows:
• Consideration of the implementation of the new Director’s
Remuneration policy that was approved at the 2017 AGM
• Determination of the final remuneration outcomes for the year to
31 March 2018
• Consideration of the appropriate targets for the year to 31
March 2019
• Geoff Budd’s remuneration arrangements on stepping down
from the Main Board
• Consideration of our gender pay reporting summary
Looking ahead
We are fully committed to embracing new developments in
regulation and best practice, such as the proposed revisions to
the FRC Corporate Governance Code and will take the latter
into consideration once the new Code is finalised. However, the
Company already operates in line with many of the principles of
fairness and workforce engagement which are likely to form part of
the new Code.
We continue to be committed to creating an inclusive working
environment and to rewarding all our employees in a fair manner
and believe they should be able to share in the success of the
Company. For example, we operate a very popular Save As You
Earn (“SAYE”) share plan which is open to all UK employees and
our intention is to continue with this.
From a broader business context, despite now having many years
of continuous EPS improvement ‘under our belt’, we push on,
committed to the delivery of further growth from both organic and
acquisitive sources. We believe the Executive team is in place
for the job at hand and that they are suitably motivated. We look
forward to shareholders’ continued support.
Jonathan Shearman
Chairman of the Remuneration Committee
11 June 2018
• Risk mitigation: undertake a full initial scoping of the Group’s
MIS, IT infrastructure and underlying business processes;
ensure the correct team (internal and external) and Board
approved budget is in place to outwork any resulting
project(s).
Following the assessment of the financial performance targets
and the strategic and operational measures, the Committee
determined that a total annual bonus of 87.25% of salary was
warranted, equating to 69.8% of the maximum bonus opportunity.
The Committee is comfortable that the FY2018 annual bonus
outcome reflects the underlying performance of the Company and
is commensurate with the shareholder experience in FY2018. No
discretion was exercised by the Committee when determining the
bonus outcomes.
As the annual bonus is less than 100% of the Executives’ base
salary, and in accordance with the approved Policy, the amount will
be paid in cash and there is no deferred component.
Long-Term Incentive Plan
We made our first LTIP award to Executives during FY2018
and the vesting of these awards will be assessed over the three
year performance period beginning 1 April 2017. As such, the
Committee was not required to assess the vesting of any LTIP
awards during the year.
Implementation of Policy for FY2019
The Executive team recognises that FY2019 will be another year
of investment for Trifast and on this basis requested that the
Committee freeze their salaries for FY2019 instead of receiving the
inflation based increase provided to the wider UK workforce. As
a result, there was no salary increase awarded to the Executive
Directors.
In line with the commitment made last year, the fees for our
Non-Executive Chairman, Malcolm Diamond, have reduced from
£150,000 to £125,000 effective 1 April 2018. All other Non-
Executive fees remain unchanged.
This coming financial year will be another one during which
the Board seeks to balance current growth and investment for
the future, the annual bonus and LTIP targets alongside the
strategic and operational measures have been set with this in
mind. As a result, the EPS targets for the annual bonus and LTIP
remain unchanged as does the relative total shareholder return
(TSR) target in the LTIP (see page 97 for details). Strategic and
operational measures remain an important component of the
annual bonus and will ensure that the Executive team’s pay is
aligned with the successful execution of the strategic imperatives
for FY2019.
Changes to the Executive Directors
On 29 March 2018, the Group announced that Geoffrey Budd,
Commercial Director and European Managing Director stepped
down from the Main Board. Although Geoff has decided to
relinquish his Board duties he will remain an employee working
with the operational team at TR Fastenings with responsibilities for
the commercial and technical aspects of the business in the UK,
Europe and Asia. Details on Geoff’s remuneration are set out on
page 94.
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Directors’ remuneration report continued
Directors’ remuneration Policy
This section of the remuneration report contains a summary of the Policy which was ratified by shareholders at the AGM on 27 July 2017
and its operation in FY2019. As set out in the Chairman’s statement, the Policy, full details of which are available in the 2017 Annual Report
(pages 73 – 80), has been developed to support the business strategy during the next stage of the Company’s growth.
1) Summary of the Policy
Element
Base salary
Summary of current Policy
Base salary levels are reviewed annually by the Committee, taking
account of Company performance, individual performance and levels
of increase for the broader Trifast employee population. The Committee
also considers the impact of any base salary increase on the total
remuneration package
Pension
and other
benefits
Executive Directors participate in defined contribution pension
arrangements. Executive Directors may request a pension allowance to be
paid in cash, after deducting employer National Insurance costs, in place
of defined contribution arrangements
The Company also provides the following ongoing benefits:
Operation for FY2019
Base salaries for FY2019 have been
frozen as set out below:
Mark Belton: £300,000
Clare Foster: £230,000
Glenda Roberts: £210,000
20% of salary pension contribution
plus the cost of providing the benefits
• Company car (or car allowance)
• Private medical insurance
• Permanent health insurance
• Critical illness cover and life cover
In addition, the Company pays additional benefits when specific business
circumstances require it
Annual
bonus
Each year Executive Directors are eligible to participate in the annual
bonus
The annual bonus rewards Earnings Per Share (‘EPS’) growth and
Strategic and Operational performance as set out below:
• 75% of maximum bonus opportunity will be based on organic underlying
EPS growth and
• 25% of maximum bonus opportunity will be based on a basket of
strategic and operational measures. This basket will include measures
relating to the following themes:
• financial and operational excellence
For the FY2019 financial year the
potential annual bonus pay-outs for all
Executive Directors will be as follows:
Maximum: 93.75% - 125% of salary
On target: 56.25% - 87.50% of salary
Threshold: 12.50% - 43.75% of salary
The full list of performance conditions
for the annual bonus will be disclosed
in the FY2019 Annual Report on
Remuneration
• growth strategy
• customer satisfaction
• people and
• risk mitigation
The Committee will determine the three or four most appropriate targets
each year in line with the business plan and at least 40% of these
measures will be based on quantifiable metrics
A financial underpin will apply such that in order for a payment under the
strategic and operational element to be made the Company will need to
achieve at least the threshold level of EPS growth
The maximum annual award is 125% of base salary. Any pay-out in
excess of 100% of salary will be satisfied in equity with a 3 year deferral
period
Malus will apply during the bonus year and the share deferral period and
clawback will apply for a period of two years post bonus payment and/or
share vesting
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Trifast plc Annual report 2018 Element
LTIP
Summary of current Policy
The Committee may make an annual award of shares to each Executive
Director in the form of nil-cost options under the Long-Term Incentive Plan
(LTIP). The Committee will select performance measures at the time of
grant taking into account the Company’s long-term business strategy. The
performance measures will be tested over three financial years
On vesting after three years, 50% of after tax vested awards may be sold
immediately. Thereafter, 25% of after tax vested awards will be subject
to a one year holding period and the remaining 25% of after tax vested
awards will be subject to a two year holding period
Malus will apply during the vesting period and clawback will apply for a
period of two years post vesting
SAYE
The Trifast Savings Related Share Option Scheme is HMRC approved.
The Scheme offers three and five year savings contracts which provide an
option to purchase shares after maturity at a discount to the share price
on the date the contract is taken out (the maximum discount is 20% of
midmarket price)
Shareholding
requirement
A 200% of salary shareholding requirement for all Executive Directors. This
is to be built up over five years from 27 July 2017
Non-
Executive
Director Fee
levels
Non-Executive Directors are paid a base fee and additional fees for
Committee membership and chairmanship. An additional fee is also
payable to the Senior Independent Director
Operation for FY2019
The FY2019 LTIP award to each
Executive Director will be equal to
150% of base salary
Performance will be measured
against EPS growth and relative Total
Shareholder Return (TSR) targets over
three financial years as set out below:
• 70% of the LTIP award will be based
on EPS growth; and
• 30% of the LTIP award will be
based on relative TSR versus the
FTSE Small Cap Index (excluding
investment trusts)
Operated in line with HMRC guidance
The Committee will annually review the
progress against achievement of these
guidelines
In line with the commitment made last
year, the Non-Executive Chairman’s
fees have reduced from £150,000 to
£125,000 for FY2019
All other Non-Executive fees for
FY2019 have been frozen
The Policy also provides the Committee with a general discretion providing it with the ability to scale incentives outcomes upwards or
downwards taking into account corporate performance, amongst other things. However, it is the Committee’s Policy that there should be
no element of reward for failure and any upward discretion will only be applied in exceptional circumstances.
Legacy incentive awards
All unvested legacy awards granted under the deferred equity arrangement will continue to be operated as per our previous Directors’
Remuneration Policy approved by shareholders.
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Directors’ remuneration report continued
2) Illustration of remuneration Policy
The chart below illustrates how applying our remuneration Policy would lead to levels of pay that vary with performance for each of the
Executive Directors in FY2019:
£1,400,000
£1,200,000
£1,000,000
£800,000
£600,000
£400,000
£200,000
0
£1,199,000
£870,875
38%
32%
25%
31%
£374,000
£923,500
£671,938
37%
32%
25%
31%
£291,000
£850,500
£620,813
37%
32%
24%
31%
£273,000
100%
43%
31%
100%
43%
32%
100% 44%
32%
m
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i
Mark Belton
Clare Foster
Glenda Roberts
Fixed*
Annual variable
Multiple reporting periods
*‘Fixed’ includes salary, pension payments and all benefits (as detailed on page 91)
The assumptions used in determining the level of pay-outs are set out in the table below:
Scenario
Base salary, benefits and pension
The value of these elements is
set out in the policy table and the
implementation of proposed Policy
for the financial year ending 31 March
2019 in this report
Minimum
Target
Maximum
Notes
Annual bonus
0% of maximum
(0% of salary)
57.5% of maximum
(71.88% of salary)
100% of maximum
(125% of salary)
LTIP
0% of maximum
(0% of salary)
62.5% of maximum
(93.75% of salary)
100% of maximum
(150% of salary)
• The minimum pay-out scenario assumes no incentive pay-out
• For annual bonus, the target pay-out is 57.5% of maximum (this is the mid-point of the target pay-out range of 45% to 70% of maximum). For LTIP, the
target pay-out is 62.5% of maximum (the mid–point between threshold vesting (25%) and maximum vesting (100%))
• The maximum pay-out scenario assumes all incentives pay-out
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Trifast plc Annual report 2018 Annual Report on remuneration — audited information
This section of the remuneration Report contains details as to how the Company’s remuneration Policy was implemented during the year
ended 31 March 2018.
1) Executive Director single figure for remuneration
Annual bonus1
Salary
£000
N/A
200
300
250
230
200
210
200
210
200
950
1,050
Taxable
benefits2
£000
N/A
21
14
14
15
15
17
17
21
20
67
87
Deferred
equity (face
value)
£000
N/A
200
—
250
—
200
—
200
—
200
—
1,050
Cash
£000
N/A
200
262
250
201
200
183
200
183
200
829
1,050
LTIP6
—
—
—
—
—
—
—
—
—
—
—
—
Pensions3
£000
N/A
—
53
47
41
36
36
34
38
36
168
153
Total
£000
N/A
621
629
811
487
651
446
651
452
656
2,014
3,390
MM Diamond4
Prior year
MR Belton
Prior year
CL Foster
Prior year
GP Budd5
Prior year
GC Roberts
Prior year
Totals
Prior year totals
1. See additional details for variable pay element of remuneration below
2. Taxable benefits consisted of the cost of providing a Company car (or car allowance), private medical insurance and critical illness cover
3. Mark Belton, Clare Foster, Geoff Budd and Glenda Roberts were members of the Company’s non-contributory pension plan in FY2018 (FY2017: Mark
Belton, Clare Foster, Geoff Budd and Glenda Roberts). This is an HMRC approved defined contribution scheme. The rate of Company contribution to this
scheme is 20% of base salary. From 1 April 2016, the Executives were provided the option to take pension payments in the form of a cash allowance, after
a deduction for Employer’s National Insurance
4. Malcolm Diamond transitioned from Executive Chairman to Non-Executive Chairman as of 1 April 2017
5. Geoff Budd stepped down as an Executive Director on 31 March 2018, as such his FY2018 single figure for remuneration represents a full year of service
as a Director
6. Additional details on LTIP awards are set out below under sections 1 (ii)
Additional details for variable pay element of remuneration
i. Annual bonus for year ended 31 March 2018
For the year end 31 March 2018 the Executive Directors had a maximum annual bonus opportunity of 125% of base salary. For each
Executive Director, the FY2018 annual bonus determination was based 75% on performance against organic underlying Group EPS
growth targets and 25% based on a basket of strategic and operational measures. The table below provides information on the targets for
each measure, actual performance and the resulting bonus payment for each Executive Director:
Performance required
Actual performance
% of
maximum
payable
Bonus Value £’000
Achievement
as % salary
MR
Belton
CL
Foster
GP
Budd
GC
Roberts
Weighting Threshold On-target Maximum Actual
75%
5.00%
7.50% 10.00% 7.49% 59.70%
56.00%
168
129
117
117
25%
Objectives based on strategic and
operational targets
See
below
100%
31.25%
94
72
66
66
Measure
Organic
underlying
EPS
growth*
Strategic
and
Operational
measures
* the impact of current and previous year acquisitions and share buybacks will be excluded from the calculation
The FY2018 bonuses for Executive Directors will be 87.25% of salary (FY2017:100% of salary) and given bonuses are less than 100% of
salary, in line with the approved Policy, they will be paid in cash with no deferral into shares in relation to FY2018 (FY2017: 100% of salary).
Total bonus
achieved in FY2018
87.25% 262
201
183
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Directors’ remuneration report continued
The Committee introduced the strategic and operational element of the annual bonus for FY2018 as set out in the Policy approved by
shareholders. Targets relate to the delivery of our strategic and operational measures as set out in the Annual Report on page 97 and
provide balance to the EPS performance targets. The maximum opportunity under this element of the annual bonus is 31.25% of salary for
the Executive Directors. The performance conditions and resulting awards as determined by the Committee are as follows:
Objective
ROCE:
Minimum of 15%
Link to strategy
ROCE is a financial key
performance indicator
Achievement
• ROCE of 20.1%
Growth strategy:
Establish fully functional acquisition
team
Part of Trifast’s strategy is to
derive growth both organically and
from suitable acquisitions
Customer satisfaction:
Construct a detailed Strategic Account
Management (SAM) structure, identify
personnel gaps and infill as appropriate
Continuing to grow large global
accounts
• An acquisition team was established
during FY18 - this has resulted in
the creation of processes to identify
acquisition targets, undertake acquisitions
and integrate newly-acquired companies
• Our purchase of PTS was successfully
managed using this process and the
subsequent integration is underway
• A full Global Account Director (GAD) and
Strategic Account Management (SAM)
structure has been mapped out taking
account of both key sectors and global
OEM customers
• Personnel gaps in the structure have
been identified
• Some internal transfer of resource
undertaken
Outcome
Achieved
Achieved
Achieved
Identification of areas that require
long-term investment
Risk mitigation:
Undertake a full initial scoping of the
Group’s MIS, IT infrastructure and
underlying business processes; ensure
the correct team (internal and external)
and Board approved budget is in place
to outwork any resulting project(s)
• Necessary scoping undertaken.
Achieved
Resulting investment will incorporate a
comprehensive review and overhaul of
our Enterprise Resource Planning process
and systems around the world
• Further details on ‘Project Atlas’ are
available on pages 38 to 43
Overall, the Committee determined that the strategic and operational objectives had been achieved at 100% of maximum. The Committee
approved a 31.25% of salary pay-out for this element of the bonus to each Executive Director on the basis that the threshold EPS target
underpin, as set out above, had been achieved.
The Committee has reviewed the overall bonus outcomes against corporate performance and believe that the bonus pay-out (69.8% of
maximum payable) is commensurate with the shareholder experience in FY2018. No discretion was exercised by the Committee when
determining the bonus outcomes.
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Trifast plc Annual report 2018 ii. LTIP awards granted in the year ended 31 March 2018
The table below sets out the details of the LTIP awards granted on 30 September 2017 where vesting will be determined according to the
achievement of certain performance measures.
Director
MR Belton
CL Foster
GP Budd
GC Roberts
Maximum
award as % of
base salary
Type of award
Nil-cost
option
150%
Face value of
award £000s
450
345
315
315
No. of shares
under option Vesting period
216,346
165,865
151,442
151,442
3 years
from grant
The awards will vest subject to achieving the following targets:
Measure
Underlying diluted EPS growth
(70% weighting)
Relative TSR2 vs FTSE Small Cap index
(excluding Investment Trusts)
(30% weighting)
Notes
Performance period
3 financial years from
1 April 2017
3 Financial years from
1 April 2017
Performance target Vesting (% of award)1
nil
Less than 5% p.a.
25%
5% p.a.
100%
15% p.a.
nil
Below index return
25%
Equal to index return
100%
8% p.a. in excess of index return
1. Vesting between the threshold and maximum based on the sliding scale
2. TSR growth for Trifast and the FTSE Small Cap Index (excluding investment trusts) will be measured using a three month average prior to the start and the
end of the three year performance period
2) Non-Executive Director single figure for remuneration
Malcolm Diamond1
Prior year
NW Warner
Prior year
JPD Shearman
Prior year
SW Mac Meekin
Prior year
Totals
Prior year totals
Chairing of
Audit or Rem
Committee
£000
—
—
8
5
8
5
—
—
16
10
Committee
membership
£000
—
—
5
5
5
5
8
5
18
15
Senior
Independent
Director
£000
—
—
5
5
—
—
—
—
5
5
Core fee
£000
150
—
42
40
42
40
42
40
276
120
Total
£000
150
—
60
55
55
50
50
45
315
150
1. Malcolm Diamond transitioned from Executive Chairman to Non-Executive Chairman as of 1 April 2017
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Directors’ remuneration report continued
3a) Payments to past Directors and for loss of office
No such payments were made in the year to 31 March 2018
3b) Payments for loss of office
As announced on 29 March 2018 and set out in the Company’s Section 430(2b) Companies Act 2006 disclosure, GP Budd stepped
down from the Main Board on 31 March 2018, although he will remain as an employee of the Company at TR Fastenings with
responsibilities for the commercial and technical aspects of the business in the UK, Europe and Asia. We set out below the implications for
Geoff’s future remuneration:
• Geoff will receive a bonus in respect of FY2018 to reflect his Directorship throughout the financial year ending 31 March 2018
• On the basis that Geoff will remain an employee of the Company and in line with the Company’s Directors’ Remuneration Policy, all in-
flight awards made to him under the Deferred Equity Bonus Scheme (2015, 2016 and 2017 awards) and the Long-Term Incentive Plan
(FY2018 award) will continue to vest on their normal dates. In addition, the FY2018 LTIP award will only vest subject to the achievement
of the performance conditions (set out above) over the performance period. The number of in-flight awards that will vest in future years
is set out in the table below
• Geoff will not participate in the Executive Director annual bonus and LTIP schemes for FY2019 and future years
The table below sets out Geoff’s in-flight awards, their vesting dates and the numbers of awards outstanding:
Type of Award
Deferred Equity
Deferred Equity
Deferred Equity
LTIP
4) Statement of Directors’ shareholdings
Year of Award
Vesting date
FY2015 September 2018
July 2019
FY2016
FY2017
July 2020
FY2018 September 2020
Number of
Awards
182,622
161,721
95,219
151,442
Shareholding
Requirement1
Current
beneficial
holding2
Deferred
shares
without
performance
measures
Current
shares which
count toward
shareholding
requirements3
LTIP awards
subject to
performance
conditions
Total of all
interests
at 31
March
2018
SAYE
Options4
Shareholding
requirement
met?
Executive
Directors
Mark Belton
Clare Foster
Geoff Budd5
Glenda Roberts
Non-Executive
Directors
Malcolm Diamond
Neil Warner
Jonathan Shearman
Scott Mac Meekin
232,558
178,294
162,790
162,790
350,000
—
232,264
220,000
N/A 1,053,800
22,750
N/A
N/A
N/A
N/A
N/A
502,769
180,335
439,562
421,438
457,685
N/A
N/A
N/A
852,769
180,335
671,826
641,438
216,346
165,865
151,442
151,442
16,822
16,822
—
17,571
1,085,937
363,022
823,268
810,451
N/A
N/A
N/A
N/A
16,982
N/A
N/A
N/A
1,528,467
22,750
N/A
N/A
YES
YES
YES
YES
N/A
N/A
N/A
N/A
1. A 200% of salary shareholding requirement for all Executive Directors. This is to be built up over five years. Share price based on 31 March 2018
2. Including options exercised in the year
3. Total of current beneficial holding and deferred equity awards subject to continued employment only
4. As at 31 March 2018 all SAYE options were unvested with the exception of Glenda Roberts who had 9,000 vested options. These were subsequently
exercised on 13 April 2018
5. Retired 31 March 2018
The aggregate gains made on exercising share options in the year totalled £1.77m (2017: £2.03m).
Outside of the exercise of 9,000 vested SAYE options by Glenda Roberts on 13 April 2018, there have been no changes in the interests of
the Directors between 31 March 2018 and the finalisation of this Annual Report and Accounts.
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Trifast plc Annual report 2018 Annual report on remuneration — Unaudited information
5) Performance graph
The graph below sets out the Total Shareholder Return performance of the Company compared to the FTSE Small Cap Index and FTSE
All-Share Industrial Engineering Index over a nine year period from 31 March 2009. The Remuneration Committee believes it is appropriate
to monitor the Company’s performance against these indices as the Company is a constituent of both.
Total Shareholder Return from 31 March 2009
x
e
d
n
I
R
S
T
3,400
3,200
3,000
2,800
2,600
2,400
2,200
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Trifast plc
FTSE Small Cap Index
FTSE All-Share Industrial Engineering Index
6) Performance and pay
The table below shows the single figure remuneration and levels of bonus and equity pay-out’s for the Group CEO during the past nine
years:
Year
2018
2017
2016
2015
2014
2013
2012
2011
2010
Total
remuneration
£000
629
811
641†
766
643
1,263
327
265
176
Annual cash
bonus pay-
out
against
maximum
69.8%
100%
50%
100%
80%
30%
35%
45%
N/A*
Equity award
pay-out
against
maximum
n/a***
100%**
100%**
100%**
100%**
100%*
N/A*
N/A*
N/A*
* This was a year considered as part of the performance period for the 2009 option scheme
** This is the vesting of the deferred equity awards under the previous policy
*** Additional details on LTIP awards are set out above under sections 1 (ii)
† Includes a full year of CEO remuneration; including remuneration paid to JC Barker for 1 April 2015 to 30 September 2015 and remuneration for MR Belton
from 1 October 2015 to 31 March 2016
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Our governance Directors’ remuneration report
Directors’ remuneration report continued
7) Percentage change in CEO remuneration
The table below compares the percentage increase in the CEO’s total pay (excluding pension) with that of the UK division which is the
most appropriate allowing a consistent tax regime and inflationary environment. In both cases, salaries are reviewed annually in April:
Group CEO
Mark Belton
UK employees
Salary
Taxable benefits
Annual bonus — cash
Annual bonus — deferred
Salary
Taxable benefits
Annual bonus
2018
£000
300
14
262
—
11,350
492
881
2017
£000
250
14
250
250
10,565
457
1,058
Change
20.00%
—
4.80%
(100.00)%
7.43%
7.66%
(16.73)%
8) Relative importance of spend on pay
The following table shows the relative spend on pay during the past two financial years when compared to other disbursements from
profit:
Dividend distributions
Group spend on pay (including Directors)
Other payroll costs (including bonus)
Disbursements
from profit
during year to
31 March 2018
£4.22m
£28.27m
£9.14m
Disbursements
from profit
during year to
31 March 2017
£3.31m
£26.00m
£9.48m
Change
27.49%
8.73%
(3.59%)
The Company continues to distribute dividends, whilst it has kept a tightly controlled spend on pay and other payroll costs
9) Implementation of proposed Policy for the financial year ending 31 March 2019
The remuneration Policy’s implementation for the forthcoming year is summarised as follows:
Element
Structure
Policy
Base salaries/total fees effective 1 April 2018 are as follows:
Mark Belton (Chief Executive Officer)
Clare Foster (Chief Financial Officer)
Glenda Roberts (Group Sales Director)
Malcolm Diamond (Non-Executive Chairman)
Neil Warner (Non-Executive Director)
Jonathan Shearman (Non-Executive Director)
Scott Mac Meekin (Non-Executive Director)
— £300,000
— £230,000
— £210,000
— £125,000
— £60,000
— £55,000
— £50,000
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Trifast plc Annual report 2018 Element
Structure
Policy
Annual bonus:
Maximum opportunity: 125% of base salary for each of the Executive Directors. Any bonus award above 100% of
base salary will be deferred into Trifast shares for three years
• Performance measures: 75% of maximum bonus opportunity will be based on organic underlying EPS growth, and
25% of maximum bonus opportunity based on a range of strategic and operational measures (40% of the strategic
and operational measures will be linked to a minimum ROCE target).
• The table below sets out the percentage of the overall maximum bonus payable at each performance level.
Performance Level
Threshold
Target
Maximum
Threshold to maximum
% of maximum bonus opportunity achieved
Strategic & Operational
0%–25%
0%–25%
0%–25%
Straight line vesting between Threshold & Target and Target & Maximum
Total
10%–35%
45%–70%
75%–100%
EPS
10%
45%
75%
• The organic underlying diluted EPS growth targets will be 5% growth for threshold pay-out, 7.5% for target pay-out
and 10% growth for maximum pay-out with straight-line pay-out between these performance levels. The impact of
current and previous year acquisitions and share buybacks will be excluded from the calculation of EPS.
• A financial underpin will apply such that in order for a payment under the strategic and operational element the
Company will need to achieve at least the threshold level of organic EPS growth.
Thereafter, the Committee has defined the strategic and operational measures for FY2019 as follows;
the quantifiable metric will again be a minimum ROCE of 15%. Given the size and strategic importance of ‘Atlas’,
a financial and operational excellence measure has been included that will reward delivery of the next twelve
months of this project. Alongside these two measures, a further two measures have been established under the
headings of Growth strategy and Risk mitigation, both of which are deemed commercially sensitive
• Full disclosure of the measures, including those we consider to be commercially sensitive this year, the targets
and their achievement will be provided in the FY2019 Directors remuneration report
Long term incentive plan
Annual award of 150% of base salary for each of the Executive Directors
Performance measures: 70% of opportunity will be based on Underlying diluted Earnings Per Share growth, and
30% of opportunity based on a relative TSR versus the FTSE Small Cap Index (excluding investment trusts)
The performance targets will be as follows:
Vesting % of maximum
opportunity achieved
Below threshold (0%)
Threshold (25%)
Maximum (100%)
EPS growth p.a.
Below 5%
5%
15%
Performance required
Relative TSR*
Below FTSE Small Cap Index (excluding investment trusts)
Equal to FTSE Small Cap Index (excluding investment trusts)
8% p.a. outperformance of FTSE Small Cap Index (excluding
investment trusts)
Threshold to maximum
Straight line vesting between Thresholds & Maximums
* TSR growth for Trifast and the FTSE Small Cap Index (excluding investment trusts) will be measured using a three month average
prior to the start and the end of the three year performance period
Pension and Benefits
Pensions and benefits will be provided in line with the remuneration Policy for Executive Directors.
Discretion
The Committee will also consider whether it is appropriate to use any of its discretions in the operation of the
Policy for FY2019. In particular, it will consider whether to use the general discretion to scale incentives outcomes
upwards or downwards taking into account corporate performance.
Non-Executive Director fees effective 1 April 2018 are:
• Chairman fee (Malcolm Diamond): £125,000
• Non-Executive fee (Neil Warner): £60,000
• Non-Executive fee (Jonathan Shearman): £55,000
• Non-Executive fee (Scott Mac Meekin): £50,000
In line with policy, Non-Executive Directors only receive fees as set out above.
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Our governance Statement of Directors’ responsibilities
Directors’ remuneration report continued
10) Functioning of Remuneration Committee
The role of the Committee is to ensure that the remuneration arrangements for Executive Directors provide them with the motivation
to deliver our strategy and create shareholder value in a sustainable manner. In addition, it is our task to ensure that the remuneration
received by the Executive Directors is proportionate to the performance achieved and the returns received by you as shareholders.
The Committee is composed entirely of Non-Executive Directors. Members have no day-to-day involvement in the running of the business.
No Executive Director sits on the Committee. The Remuneration Committee is formally constituted with written Terms of Reference. A
copy of the Terms of Reference is available to shareholders by writing to the Company Secretary, whose details are set out on page 163
this publication.
Alongside numerous conference calls and meetings with advisors, the Committee had three formal meetings during the year. All members
of the Committee attended each of these meetings. On most occasions, the CEO and CFO were invited to attend to ensure the
Committee was in possession of all the relevant facts. During these meetings the Committee considered the implementation of the new
Directors’ Remuneration policy that was approved at the 2017 AGM. The other key activities the Committee undertook during the year
were; determining the final remuneration outcomes for the year to 31 March 2018, consideration of the appropriate targets for the year to
31 March 2019, consideration of Gender Pay reporting and determining Geoff Budd’s remuneration arrangements on stepping down from
the Main Board.
During the year the Committee received independent advice from PwC in relation to the remuneration Policy review. The fees paid by the
Company to PwC for services to the Committee during the financial year was £55,955 (excl. VAT). The Group also retains PwC with regard
to taxation services and consulting services in the ordinary course of business of Trifast. The Committee believes that this does not create
a conflict of interest and the advice they receive is independent and objective. PwC is a signatory to the Remuneration Consultants’ Code
of Conduct which requires its advice to be objective and impartial.
The Committee consults with the Company Secretary regarding issues on areas of remuneration and Corporate Governance. With regard
to senior Executives in the Company (excluding Board Directors), the Committee also takes advice from the Executive Board.
Jonathan Shearman (Chairman)
Malcolm Diamond
Neil Warner
Scott Mac Meekin
Attendance in
2017/2018
3
3
3
3
11) Statement of AGM voting
The Group is committed to ongoing shareholder dialogue and takes an active interest in voting outcomes.
The table below shows the actual voting on the 2017 remuneration report and the 2017 remuneration policy at the AGM held on 27 July
2017:
2017 remuneration report
2017 remuneration policy
Votes for
79,242,987
78,087,128
%
96.2
94.8
Votes
against
3,088,547
4,246,406
%
3.8
5.2
Votes
Withheld
2,400
400
This Report was approved by the Board of Directors and signed on its behalf by:
Jonathan Shearman
Chairman of the Remuneration Committee
11 June 2018
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Our governance Statement of Directors’ responsibilities
Statement of Directors’ responsibilities
in respect of the Annual Report and the Financial Statements
Responsibility statement of the directors
in respect of the annual financial report
We confirm that to the best of our knowledge:
• the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss of the
company and the undertakings included in the consolidation
taken as a whole; and
• the Strategic Report/Directors’ Report includes a fair review
of the development and performance of the business and the
position of the issuer and the undertakings included in the
consolidation taken as a whole, together with a description of
the principal risks and uncertainties that they face.
• we consider the annual report and accounts, taken as a
whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the group’s
position and performance, business model and strategy.
On behalf of the Board
Mark Belton
Chief Executive Officer
11 June 2018
Clare Foster
Chief Financial Officer
11 June 2018
The directors are responsible for preparing the Annual Report and
the group and parent company financial statements in accordance
with applicable law and regulations.
Company law requires the directors to prepare group and parent
company financial statements for each financial year. Under that
law they are required to prepare the group financial statements in
accordance with International Financial Reporting Standards as
adopted by the European Union (IFRSs as adopted by the EU) and
applicable law and have elected to prepare the parent company
financial statements on the same basis.
Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and
fair view of the state of affairs of the group and parent company
and of their profit or loss for that period. In preparing each of the
group and parent company financial statements, the directors
are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and estimates that are reasonable, relevant
and reliable;
• state whether they have been prepared in accordance with
IFRSs as adopted by the EU;
• assess the group and parent company’s ability to continue to
as a going concern, disclosing, as applicable, matters related to
going concern; and
• use the going concern basis of accounting unless they either
intend to liquidate the group or the parent company or cease
operations, or have no realistic alternative but to do so;
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the parent
company’s transactions and disclose with reasonable accuracy
at any time the financial position of the parent company and
enable them to ensure that its financial statements comply with
the Companies Act 2006. They are responsible for such internal
control as they determine necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error, and have general responsibility for
taking such steps as are reasonably open to them to safeguard
the assets of the group and to prevent and detect fraud and
other irregularities.
Under applicable law and regulations, the directors are also
responsible for preparing a Strategic Report, Directors’ Report,
Directors’ Remuneration Report and Corporate Governance
Statement that comply with that law and those regulations.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
company’s website. Legislation in the UK governing the
preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
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Our financials
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Contents
Independent auditors’ report
Consolidated income statement
Consolidated statement of comprehensive
income
Consolidated statement of changes in equity
Company statement of changes in equity
Statements of financial position
Statements of cash flows
Notes to the financial statements
103
109
110
111
112
113
114
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Trifast plc Annual report 2018 Independent
auditor’s report
to the members of Trifast plc
1. Our opinion is unmodified
We have audited the financial statements of Trifast
plc (“the Company”) for the year ended 31 March
2018 which comprise the Consolidated Income
Statement, Consolidated Statement of
Comprehensive Income, Consolidated Statement of
Changes in Equity, Company Statement of Changes
in Equity, Statements of Financial Position,
Statements of Cash Flows and the related notes,
including the accounting policies in note 1.
In our opinion:
— the financial statements give a true and fair
view of the state of the Group’s and of the
parent Company’s affairs as at 31 March 2018
and of the Group’s profit for the year then
ended;
— the Group financial statements have been
properly prepared in accordance with
International Financial Reporting Standards as
adopted by the European Union (IFRSs as
adopted by the EU);
— the parent Company financial statements have
been properly prepared in accordance with
IFRSs as adopted by the EU and as applied in
accordance with the provisions of the
Companies Act 2006; and
— the financial statements have been prepared in
accordance with the requirements of the
Companies Act 2006 and, as regards the Group
financial statements, Article 4 of the IAS
Regulation.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (“ISAs
(UK)”) and applicable law. Our responsibilities are
described below. We believe that the audit
evidence we have obtained is a sufficient and
appropriate basis for our opinion. Our audit opinion
is consistent with our report to the audit
committee.
We were appointed as auditor by the directors in 1995.
The period of total uninterrupted engagement is for the
24 financial years ended 31 March 2018. We have
fulfilled our ethical responsibilities under, and we
remain independent of the Group in accordance with,
UK ethical requirements including the FRC Ethical
Standard as applied to listed public interest entities.
No non-audit services prohibited by that standard were
provided.
Overview
Materiality:
group financial
statements as a
whole
Coverage
£0.90m (2017:£0.89m)
4.8% (2017: 5%) of normalised
profit before tax
100% (2017:100%) of group profit
before tax
Risks of material misstatement vs 2017
Recurring risks
Carrying amount of
customer specific
inventory
Recoverability of
goodwill
Parent company:
recoverability of
investments in
subsidiaries
◄►
◄►
◄►
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Our financials Our financials Independent auditor’s report
2. Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial
statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by
us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. We summarise below the key audit matters, in decreasing order of audit
significance, in arriving at our audit opinion above, together with our key audit procedures to address those matters and, as
required for public interest entities, our results from those procedures. These matters were addressed, and our results are
based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial statements as a
whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate
opinion on these matters.
Carrying amount of customer
specific inventory
(Customer specific inventory of
£27.2 million; 2017: £23.2 million)
Refer to page 83 (Audit Committee
Report), page 118 (accounting
policy) and page 135 (financial
disclosures).
The risk
Our response
Subjective estimate
Our procedures included:
A proportion of the group’s inventory is
manufactured to meet specific customer
requirements. There is a risk over the
recoverability of these balances if a
customer experiences financial stress or
there is a demand issue with a customer’s
product that includes a part manufactured
by Trifast.
— Historical comparisons: we assessed
whether old and slow moving inventory is
provided against in accordance with the group
accounting policy and in compliance with
accounting standards. We challenged the
appropriateness of the policy by comparing
amounts written off against previous provision
levels. We considered the estimation method
applied through historical trend analysis;
— Tests of detail: we inspected a sample of
service level agreements to compare
customers’ minimum purchase commitments
to year-end inventory levels and considered
any residual risk of recoverability. We
reviewed these customers’ trade receivable
levels for indicators of financial stress; and;
— Assessing transparency: we considered the
adequacy of the group’s disclosures about the
degree of estimation involved in arriving at the
inventory provision;
Our results
— We found the carrying amount of inventory to
be acceptable (2017 result: acceptable).
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Trifast plc Annual report 2018 Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial
statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by
us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. We summarise below the key audit matters, in decreasing order of audit
significance, in arriving at our audit opinion above, together with our key audit procedures to address those matters and, as
required for public interest entities, our results from those procedures. These matters were addressed, and our results are
based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial statements as a
whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate
opinion on these matters.
The risk
Our response
Carrying amount of customer
Subjective estimate
Our procedures included:
specific inventory
A proportion of the group’s inventory is
— Historical comparisons: we assessed
(Customer specific inventory of
manufactured to meet specific customer
whether old and slow moving inventory is
£27.2 million; 2017: £23.2 million)
requirements. There is a risk over the
provided against in accordance with the group
recoverability of these balances if a
accounting policy and in compliance with
Refer to page 83 (Audit Committee
customer experiences financial stress or
accounting standards. We challenged the
Report), page 118 (accounting
policy) and page 135 (financial
there is a demand issue with a customer’s
appropriateness of the policy by comparing
product that includes a part manufactured
amounts written off against previous provision
disclosures).
by Trifast.
levels. We considered the estimation method
applied through historical trend analysis;
— Tests of detail: we inspected a sample of
service level agreements to compare
customers’ minimum purchase commitments
to year-end inventory levels and considered
any residual risk of recoverability. We
reviewed these customers’ trade receivable
levels for indicators of financial stress; and;
— Assessing transparency: we considered the
adequacy of the group’s disclosures about the
degree of estimation involved in arriving at the
inventory provision;
Our results
— We found the carrying amount of inventory to
be acceptable (2017 result: acceptable).
2. Key audit matters: our assessment of risks of material misstatement
2. Key audit matters: our assessment of risks of material misstatement (continued)
Recoverability of Goodwill
Forecast based valuation
Our procedures included:
The risk
Our response
(£29.1 million; 2017: £29.3m)
Refer to page 83 (Audit Committee
Report), page 118 (accounting
policy) and pages 130 - 132 (financial
disclosures).
Parent company: recoverability of
investments in subsidiaries
(£41.4 million; 2017: £41.4m)
Refer to page 83 (Audit Committee
Report), page 117 (accounting
policy) and page 133 (financial
disclosures).
Volatility in certain of the group’s markets
has meant that recoverability of individual
elements of the group’s goodwill
presented a risk.
— Benchmarking assumptions: comparing the
group’s assumptions to externally derived data
in relation to key inputs such as cost inflation
and discount rates;
In addition as assessment of recoverability
is dependent on inherently uncertain
forecasting it was a key judgemental area
that our audit concentrated on.
In particular the recoverability of goodwill
relating to one CGU (PSEP) is more
sensitive to changes in forecast
assumptions than other components and
in the previous year had the lowest
financial headroom in management’s base
case projections.
— Sensitivity analysis: considering reasonable
possible changes in assumptions including
forecast revenue, margins and discount rate,
their impact on the outcome of the impairment
assessment and breakeven analysis;
— Our sector experience: challenging the
group’s assumptions by evaluating the
achievability of the growth forecasts used in
the impairment model
— Historical comparisons: evaluating the track
record of historical forecasts compared to
actual results achieved;
— Assessing transparency: assessing whether
the group’s disclosures about the sensitivity of
the outcome of the impairment assessment to
changes in key assumptions reflect the risks
inherent in the valuation of the PSEP goodwill:
Our results
— We found the resulting estimate of the
recoverable amount of goodwill to be
acceptable (2017 result: acceptable).
Low risk, high value
Our procedures included:
The carrying amount of the Parent
Company’s investments in subsidiaries
represents 53.4% (2017: 53.1%) of the
Parent Company’s total assets
respectively.
The recoverability is not at a high risk of
significant misstatement or subject to
significant judgement. However, due to
its materiality in the context of the parent
company financial statements, this is
considered to be the area that had the
greatest effect on our overall parent
company audit.
— Tests of detail: Comparing the carrying
amount of 100% of investments with the
relevant subsidiary’s draft balance sheet to
identify whether their net assets, being an
approximation of their minimum recoverable
amount, were in excess of their carrying
amount and assessing whether those
subsidiaries have historically been profit-
making;
— Assessing subsidiary audits: Assessing the
work performed by the subsidiary audit teams
and considering the results of that work on
those subsidiaries’ profits and net assets.
— Comparing valuations: For those subsidiaries
where the carrying amount exceeded the net
asset value, comparing the carrying amount of
the investment with the value of the
subsidiary derived from the current market
capitalisation of the group.
Our results
— We found the resulting estimate of the
recoverable amount of the parent company’s
investment in subsidiaries to be acceptable
(2017 result: acceptable).
[We continue to perform procedures over [identify key audit matter]. However, following [explain why risk is less significant this
year], we have not assessed this as one of the most significant risks in our current year audit and, therefore, it is not separately
identified in our report this year. ]
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www.trifast.comOur financials Our financials Independent auditor’s report
3. Our application of materiality and an overview
of the scope of our audit
Profit before tax (normalised)
£18.7m (2017: £17.9m)
Group Materiality
£900k (2017: £890k)
Materiality for the group financial statements as a
whole was set at £900,000 (2017: £890,000),
determined with reference to a benchmark of group
profit before tax normalised to exclude costs of
exercise of executive share options, expensed IT
development and business acquisition costs and
profit on sale of fixed assets, of £18.7m of which it
represents 4.8% (2017: £17.9m of which it
represents 5%).
Materiality for the parent company financial
statements as a whole was set at £675,000 (2016:
£800,000), determined with reference to a
benchmark of total assets and chosen to be lower
than materiality for the group financial statements
as a whole. It represents 0.9% (2017: 1.0%) of the
stated benchmark.
We agreed to report to the Audit Committee any
corrected or uncorrected identified misstatements
exceeding £45,000, in addition to other identified
misstatements that warranted reporting on
qualitative grounds.
Of the group’s 22 (2017: 22) reporting components,
we subjected 11 (2017: 10) to full scope audits for
group purposes. We conducted specified risk-
focussed audit procedures at a further 10 (2017: 8)
non-significant components. The components for
which we performed work other than audits for
group reporting purposes were not individually
significant but were included in the scope of our
group reporting work in order to provide further
coverage over the group’s results.
The components within the scope of our work
accounted for the percentages illustrated opposite.
The group team instructed component auditors as
to the significant areas to be covered, including the
relevant risks detailed above and the information to
be reported back. The Group team approved the
component materialities which ranged from
£154,000 to £675,000 (2017: £111,000 to
£800,000), having regard to the mix of size and risk
profiles of the Group across the components. The
work on 8 out of 21 reporting components subject
to audit or specified risk-focussed audit procedures
(2017: 8 out of 18) was performed by component
auditors and the rest, including the audit of the
parent company, was performed by the Group
team. The Group team performed procedures on
the items excluded from normalised group profit
before tax.
The group team visited 1 (2017: 1) component
location in Holland (2017: Italy). Telephone
conference meetings were also held with that
component auditor and others that were not
physically visited. At these visits and meetings the
findings reported to the Group team were
discussed in more detail, and any further work
required by the Group team was then performed by
the component auditor.
Key:
£900k
Whole financial
statements materiality
(2017: £900k)
£675k
Range of materiality at 22
components (£154k-£675k)
(2017: £111k to £800k)
Profit before tax
(normalised)
Group materiality
£45k Misstatements reported
to the audit committee (2017:
£43k)
Group revenue
Group profit before tax
13
14
100%
(2017 100%)
86
87
9
13
100%
(2017 100%)
87
91
Group total assets
12
17
100%
(2017 99%)
82
88
Full scope for group audit purposes 2018
Specified risk-focused audit procedures 2018
Full scope for group audit purposes 2017
Specified risk-focused audit procedures 2017
Residual components
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Trifast plc Annual report 2018 3. Our application of materiality and an overview
of the scope of our audit
Profit before tax (normalised)
£18.7m (2017: £17.9m)
Group Materiality
£900k (2017: £890k)
Materiality for the group financial statements as a
whole was set at £900,000 (2017: £890,000),
determined with reference to a benchmark of group
profit before tax normalised to exclude costs of
exercise of executive share options, expensed IT
development and business acquisition costs and
profit on sale of fixed assets, of £18.7m of which it
represents 4.8% (2017: £17.9m of which it
represents 5%).
Materiality for the parent company financial
statements as a whole was set at £675,000 (2016:
£800,000), determined with reference to a
benchmark of total assets and chosen to be lower
than materiality for the group financial statements
as a whole. It represents 0.9% (2017: 1.0%) of the
stated benchmark.
We agreed to report to the Audit Committee any
corrected or uncorrected identified misstatements
exceeding £45,000, in addition to other identified
misstatements that warranted reporting on
qualitative grounds.
Of the group’s 22 (2017: 22) reporting components,
we subjected 11 (2017: 10) to full scope audits for
group purposes. We conducted specified risk-
focussed audit procedures at a further 10 (2017: 8)
non-significant components. The components for
which we performed work other than audits for
group reporting purposes were not individually
significant but were included in the scope of our
group reporting work in order to provide further
coverage over the group’s results.
The components within the scope of our work
accounted for the percentages illustrated opposite.
The group team instructed component auditors as
to the significant areas to be covered, including the
relevant risks detailed above and the information to
be reported back. The Group team approved the
component materialities which ranged from
£154,000 to £675,000 (2017: £111,000 to
£800,000), having regard to the mix of size and risk
profiles of the Group across the components. The
work on 8 out of 21 reporting components subject
to audit or specified risk-focussed audit procedures
(2017: 8 out of 18) was performed by component
auditors and the rest, including the audit of the
parent company, was performed by the Group
team. The Group team performed procedures on
the items excluded from normalised group profit
before tax.
The group team visited 1 (2017: 1) component
location in Holland (2017: Italy). Telephone
conference meetings were also held with that
component auditor and others that were not
physically visited. At these visits and meetings the
findings reported to the Group team were
Key:
discussed in more detail, and any further work
required by the Group team was then performed by
the component auditor.
Profit before tax
(normalised)
Group materiality
£45k Misstatements reported
to the audit committee (2017:
£43k)
Group revenue
Group profit before tax
£900k
Whole financial
statements materiality
(2017: £900k)
£675k
Range of materiality at 22
components (£154k-£675k)
(2017: £111k to £800k)
13
14
100%
(2017 100%)
86
87
9
13
100%
(2017 100%)
87
91
Group total assets
12
17
100%
(2017 99%)
82
88
Full scope for group audit purposes 2018
Specified risk-focused audit procedures 2018
Full scope for group audit purposes 2017
Specified risk-focused audit procedures 2017
Residual components
4. We have nothing to report on going concern
Disclosures of principal risks and longer-term viability
We are required to report to you if:
— we have anything material to add or draw attention to in
relation to the directors’ statement in note 1(b) to the
financial statements on the use of the going concern
basis of accounting with no material uncertainties that
may cast significant doubt over the Group and
Company’s use of that basis for a period of at least
twelve months from the date of approval of the financial
statements; or
— the related statement under the Listing Rules set out on
page 68 is materially inconsistent with
our audit knowledge.
We have nothing to report in these respects.
5. We have nothing to report on the other information in
the Annual Report
The directors are responsible for the other information
presented in the Annual Report together with the financial
statements. Our opinion on the financial statements does
not cover the other information and, accordingly, we do not
express an audit opinion or, except as explicitly stated
below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in
doing so, consider whether, based on our financial
statements audit work, the information therein is materially
misstated or inconsistent with the financial statements or
our audit knowledge. Based solely on that work we have
not identified material misstatements in the other
information.
Strategic report and directors’ report
Based solely on our work on the other information:
— we have not identified material misstatements in the
strategic report and the directors’ report;
— in our opinion the information given in those reports for
the financial year is consistent with the financial
statements; and
— in our opinion those reports have been prepared in
accordance with the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration
Report to be audited has been properly prepared in
accordance with the Companies Act 2006.
Based on the knowledge we acquired during our financial
statements audit, we have nothing material to add or draw
attention to in relation to:
— the directors’ confirmation within the directors’ viability
statement (page 68) that they have carried out a robust
assessment of the principal risks facing the Group,
including those that would threaten its business model,
future performance, solvency and liquidity;
— the Principal Risks disclosures describing these risks
and explaining how they are being managed and
mitigated; and
— the directors’ explanation in the viability statement of
how they have assessed the prospects of the Group,
over what period they have done so and why they
considered that period to be appropriate, and their
statement as to whether they have a reasonable
expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the
period of their assessment, including any related
disclosures drawing attention to any necessary
qualifications or assumptions.
Under the Listing Rules we are required to review the
directors’ viability statement. We have nothing to report in
this respect.
Corporate governance disclosures
We are required to report to you if:
— we have identified material inconsistencies between the
knowledge we acquired during our financial statements
audit and the directors’ statement that they consider
that the annual report and financial statements taken as
a whole is fair, balanced and understandable and
provides the information necessary for shareholders to
assess the Group’s position and performance, business
model and strategy; or
— the section of the annual report describing the work of
the Audit Committee does not appropriately address
matters communicated by us to the Audit Committee.
We are required to report to you if the Corporate
Governance Statement does not properly disclose a
departure from the eleven provisions of the UK Corporate
Governance Code specified by the Listing Rules for our
review.
We have nothing to report in these respects.
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6. We have nothing to report on the other matters on
which we are required to report by exception
Under the Companies Act 2006, we are required to report
to you if, in our opinion:
— adequate accounting records have not been kept by the
parent Company, or returns adequate for our audit have
not been received from branches not visited by us; or
— the parent Company financial statements and the part of
the Directors’ Remuneration Report to be audited are
not in agreement with the accounting records and
returns; or
— certain disclosures of directors’ remuneration specified
by law are not made; or
— we have not received all the information and
explanations we require for our audit.
We have nothing to report in these respects.
7. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page
99, the directors are responsible for: the preparation of the
financial statements including being satisfied that they give
a true and fair view; such internal control as they determine
is necessary to enable the preparation of financial
statements that are free from material misstatement,
whether due to fraud or error; assessing the Group and
parent Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern;
and using the going concern basis of accounting unless
they either intend to liquidate the Group or the parent
Company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or other
irregularities (see below), or error, and to issue our opinion
in an auditor’s report. Reasonable assurance is a high level
of assurance, but does not guarantee that an audit
conducted in accordance with ISAs (UK) will always detect
a material misstatement when it exists. Misstatements can
arise from fraud, other irregularities or error and are
considered material if, individually or in aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial
statements.
A fuller description of our responsibilities is provided on the
FRC’s website at www.frc.org.uk/auditorsresponsibilities.
Irregularities – ability to detect
We identified areas of laws and regulations that could
reasonably be expected to have a material effect on the
financial statements from our sector experience and
through discussion with the directors and other
management (as required by auditing standards).
We had regard to laws and regulations in areas that directly
affect the financial statements including financial reporting
(including related company legislation) and taxation
legislation. We considered the extent of compliance with
those laws and regulations as part of our procedures on the
related financial statement items.
In addition we considered the impact of laws and
regulations in the specific area of health and safety
recognising the nature of the group’s manufacturing and
distribution activities. With the exception of any known or
possible non-compliance, and as required by auditing
standards, our work in respect of these was limited to
enquiry of the directors and inspection of regulatory and
legal correspondence.
We communicated identified laws and regulations
throughout our team and remained alert to any indications
of non-compliance throughout the audit. This included
communication from the group to component audit teams
of relevant laws and regulations identified at group level,
with a request to report on any indications of potential
existence of non-compliance with relevant laws and
regulations (irregularities) in these areas, or other areas
directly identified by the component team.
As with any audit, there remained a higher risk of non-
detection of irregularities, as these may involve collusion,
forgery, intentional omissions, misrepresentations, or the
override of internal controls.
8. The purpose of our audit work and to whom we owe
our responsibilities
This report is made solely to the Company’s members, as a
body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the Company’s members those
matters we are required to state to them in an auditor’s
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 and the
Company’s members, as a body, for our audit work, for this
report, or for the opinions we have formed.
Mark Sheppard (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
1 Forest Gate
Brighton Road
Crawley
RH11 9PT
11 June 2018
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Trifast plc Annual report 2018 6. We have nothing to report on the other matters on
We had regard to laws and regulations in areas that directly
which we are required to report by exception
affect the financial statements including financial reporting
Consolidated income statement
for the year ended 31 March 2018
Continuing operations
Revenue
Cost of sales
Gross profit
Other operating income
Distribution expenses
Administrative expenses before separately disclosed items
IFRS2 charge
Acquired intangible amortisation
Net acquisition costs
Project Atlas
Profit on sale of fixed assets
8. The purpose of our audit work and to whom we owe
our responsibilities
Costs on exercise of executive share options
Total administrative expenses
Operating profit
Financial income
Financial expenses
Net financing costs
Profit before taxation
Taxation
Profit for the year (attributable to equity shareholders of the Parent Company)
Earnings per share
Basic
Diluted
The notes on pages 115 to 157 form part of these financial statements
Note
3
4
2, 22
2, 12
2, 32
2
2
2
5, 6, 7
8
8
2, 3
9
25
25
2018
£000
2017
£000
197,632
(137,386)
186,512
(128,495)
60,246
467
(4,068)
(33,932)
(2,194)
(1,363)
(110)
(375)
556
(244)
(37,662)
18,983
60
(540)
(480)
18,503
(3,417)
15,086
12.54p
12.20p
58,017
395
(3,964)
(33,430)
(1,512)
(1,273)
—
—
195
(567)
(36,587)
17,861
60
(581)
(521)
17,340
(4,642)
12,698
10.72p
10.40p
— certain disclosures of directors’ remuneration specified
by law are not made; or
legal correspondence.
Under the Companies Act 2006, we are required to report
to you if, in our opinion:
— adequate accounting records have not been kept by the
parent Company, or returns adequate for our audit have
not been received from branches not visited by us; or
— the parent Company financial statements and the part of
the Directors’ Remuneration Report to be audited are
not in agreement with the accounting records and
returns; or
— we have not received all the information and
explanations we require for our audit.
We have nothing to report in these respects.
7. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page
99, the directors are responsible for: the preparation of the
financial statements including being satisfied that they give
a true and fair view; such internal control as they determine
is necessary to enable the preparation of financial
statements that are free from material misstatement,
whether due to fraud or error; assessing the Group and
parent Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern;
and using the going concern basis of accounting unless
they either intend to liquidate the Group or the parent
Company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or other
irregularities (see below), or error, and to issue our opinion
in an auditor’s report. Reasonable assurance is a high level
of assurance, but does not guarantee that an audit
conducted in accordance with ISAs (UK) will always detect
a material misstatement when it exists. Misstatements can
arise from fraud, other irregularities or error and are
considered material if, individually or in aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial
statements.
A fuller description of our responsibilities is provided on the
FRC’s website at www.frc.org.uk/auditorsresponsibilities.
Irregularities – ability to detect
We identified areas of laws and regulations that could
reasonably be expected to have a material effect on the
financial statements from our sector experience and
through discussion with the directors and other
management (as required by auditing standards).
(including related company legislation) and taxation
legislation. We considered the extent of compliance with
those laws and regulations as part of our procedures on the
related financial statement items.
In addition we considered the impact of laws and
regulations in the specific area of health and safety
recognising the nature of the group’s manufacturing and
distribution activities. With the exception of any known or
possible non-compliance, and as required by auditing
standards, our work in respect of these was limited to
enquiry of the directors and inspection of regulatory and
We communicated identified laws and regulations
throughout our team and remained alert to any indications
of non-compliance throughout the audit. This included
communication from the group to component audit teams
of relevant laws and regulations identified at group level,
with a request to report on any indications of potential
existence of non-compliance with relevant laws and
regulations (irregularities) in these areas, or other areas
directly identified by the component team.
As with any audit, there remained a higher risk of non-
detection of irregularities, as these may involve collusion,
forgery, intentional omissions, misrepresentations, or the
override of internal controls.
This report is made solely to the Company’s members, as a
body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the Company’s members those
matters we are required to state to them in an auditor’s
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 and the
Company’s members, as a body, for our audit work, for this
report, or for the opinions we have formed.
Mark Sheppard (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
1 Forest Gate
Brighton Road
Crawley
RH11 9PT
11 June 2018
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109
www.trifast.comOur financials
Our financials Consolidated statement of comprehensive income / Consolidated statement of changes in equity
Consolidated statement of
comprehensive income
for the year ended 31 March 2018
Profit for the year
Other comprehensive (expense)/income for the year:
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
Loss on a hedge of a net investment taken to equity
Other comprehensive (expense)/income recognised directly in equity
Total comprehensive income recognised for the year
(attributable to the equity shareholders of the Parent Company)
2018
£000
15,086
(846)
(680)
(1,526)
2017
£000
12,698
8,486
(2,155)
6,331
13,560
19,029
110
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Trifast plc Annual report 2018 Consolidated statement of
changes in equity
for the year ended 31 March 2018
Balance at 31 March 2017
Total comprehensive income for the
year:
Profit for the year
Other comprehensive income for
the year
Total comprehensive income
recognised for the year
Issue of share capital (note 24)
Share based payment transactions
(including tax)
Own shares acquired
Dividends (note 24)
Share
capital
£000
6,014
Share
premium
£000
21,378
—
—
—
54
—
—
—
—
—
—
201
—
—
—
Total transactions with owners
Balance at 31 March 2018
54
6,068
201
21,579
Own shares
held
£000
Translation
reserve
£000
Retained
earnings
£000
Total
equity
£000
—
—
—
—
—
—
(3,437)
—
(3,437)
(3,437)
14,900
59,406
101,698
—
15,086
15,086
(1,526)
(1,526)
—
—
—
—
—
13,374
—
(1,526)
15,086
(41)
2,472
—
(4,218)
(1,787)
72,705
13,560
214
2,472
(3,437)
(4,218)
(4,969)
110,289
Consolidated statement of
changes in equity
for the year ended 31 March 2017
Balance at 31 March 2016
Total comprehensive income for the year:
Profit for the year
Other comprehensive income for the year
Total comprehensive income recognised for
the year
Issue of share capital (note 24)
Share based payment transactions (including tax)
Dividends (note 24)
Total transactions with owners
Balance at 31 March 2017
—
—
—
177
—
—
177
6,014
Share
capital
£000
5,837
Share
premium
£000
21,161
Translation
reserve
£000
8,569
—
6,331
6,331
—
—
—
—
Retained
earnings
£000
48,183
12,698
—
12,698
(53)
1,888
(3,310)
(1,475)
Total
equity
£000
83,750
12,698
6,331
19,029
341
1,888
(3,310)
(1,081)
—
—
—
217
—
—
217
21,378
14,900
59,406
101,698
111
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www.trifast.comOur financials
Our financials Company statement of changes in equity / Statements of financial position
Company statement of
changes in equity
for the year ended 31 March 2018
Balance at 31 March 2017
Total comprehensive income for the
year:
Profit for the year
Total comprehensive income
recognised
for the year
Issue of share capital (note 24)
Share based payment transactions
(including tax)
Own shares acquired
Dividends (note 24)
Total transactions with owners
—
—
54
—
—
—
54
Balance at 31 March 2018
6,068
Share
capital
£000
6,014
Share
premium
£000
21,378
Own shares
held
£000
—
—
—
—
—
(3,437)
—
(3,437)
(3,437)
Merger
reserve
£000
1,521
Retained
earnings
£000
19,222
Total
equity
£000
48,135
—
—
—
—
—
—
—
1,521
4,677
4,677
4,677
(41)
2,213
—
(4,218)
(2,046)
21,853
4,677
214
2,213
(3,437)
(4,218)
(5,228)
47,584
—
—
201
—
—
—
201
21,579
Company statement of
changes in equity
for the year ended 31 March 2017
Balance at 31 March 2016
Total comprehensive income for the year:
Profit for the year
Total comprehensive income recognised for
the year
Issue of share capital (note 24)
Share based payment transactions (including tax)
Dividends (note 24)
Total transactions with owners
Balance at 31 March 2017
Share
capital
£000
5,837
Share
premium
£000
21,161
Merger
reserve
£000
1,521
Retained
earnings
£000
16,013
—
—
177
—
—
177
6,014
—
—
217
—
—
—
—
—
—
—
217
21,378
—
1,521
4,814
4,814
(53)
1,758
(3,310)
(1,605)
19,222
Total
equity
£000
44,532
4,814
4,814
341
1,758
(3,310)
(1,211)
48,135
112
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Trifast plc Annual report 2018 Statements of
financial position
at 31 March 2018
Non-current assets
Property, plant and equipment
Intangible assets
Equity investments
Deferred tax assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Other interest-bearing loans and borrowings
Trade and other payables
Tax payable
Provisions
Total current liabilities
Non-current liabilities
Other interest-bearing loans and borrowings
Provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Own shares held
Reserves
Retained earnings
Total equity
Note
10, 11
12, 13
14
15, 16
17
18
19, 26
3
20, 26
21
23
20, 26
23
15, 16
3
Group
2018
£000
20,013
38,401
—
2,355
60,769
49,199
52,466
26,222
127,887
188,656
21,912
38,697
1,811
76
62,496
11,741
845
3,285
15,871
78,367
2017
£000
19,258
39,682
—
2,359
61,299
41,926
49,360
24,645
115,931
177,230
14,872
37,145
2,471
76
54,564
16,221
1,111
3,636
20,968
75,532
110,289
101,698
6,068
21,579
(3,437)
13,374
72,705
110,289
6,014
21,378
—
14,900
59,406
101,698
Company
2018
£000
2,493
—
41,440
767
44,700
—
33,257
477
33,734
78,434
17,393
2,429
—
—
19,822
10,896
—
132
11,028
30,850
47,584
6,068
21,579
(3,437)
1,521
21,853
47,584
2017
£000
2,574
—
41,440
685
44,699
—
31,382
2,587
33,969
78,668
11,077
4,362
—
—
15,439
14,930
—
164
15,094
30,533
48,135
6,014
21,378
—
1,521
19,222
48,135
The notes on pages 115 to 157 form part of these financial statements.
These financial statements were approved by the Board of Directors on 11 June 2018 and were signed on its behalf by:
Mark Belton
Director
Clare Foster
Director
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113
www.trifast.comOur financials Our financials Statements of cash flow / Notes to the financial statements
Statements of cash flows
for the year ended 31 March 2018
Cash flows from operating activities
Profit for the year
Adjustments for:
Depreciation, amortisation and impairment
Unrealised foreign currency (gain)/loss
Financial income
Financial expense
Gain on sale of property, plant and equipment and investments
Dividends received
Equity settled share based payment charge
Taxation charge
Operating cash inflow/(outflow) before changes in working
capital and provisions
Change in trade and other receivables
Change in inventories
Change in trade and other payables
Change in provisions
Cash generated from/(used in) operations
Tax paid
Net cash from/(used in) operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Interest received
Acquisition of subsidiary, net of cash acquired
Acquisition of property, plant and equipment and intangibles
10, 11, 12
Dividends received
Net cash (used in)/from investing activities
Cash flows from financing activities
Proceeds from the issue of share capital
Purchase of own shares
Proceeds from new loan
Repayment of borrowings
Proceeds/(payment) from finance leases
Dividends paid
Interest paid
Net cash used in financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at 1 April
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at 31 March
24
24
19
19
Group
2018
£000
2017
£000
Company
2018
£000
2017
£000
Note
15,086
12,698
4,677
4,814
3,300
3,123
(66)
(60)
540
(560)
—
2,107
3,417
165
(60)
581
(184)
—
1,512
4,642
87
—
(12)
397
—
76
—
(28)
350
(9,494)
(10,814)
989
—
23,764
22,477
(3,356)
(2,536)
(7,674)
1,677
(266)
14,965
(4,849)
10,116
1,650
61
—
(3,566)
—
(1,855)
214
(3,437)
5,542
(3,773)
66
(4,218)
(540)
(6,146)
2,115
24,645
(538)
26,222
(3,075)
(273)
3,764
(6)
22,887
(5,136)
17,751
198
60
(1,471)
(2,948)
—
(4,161)
341
—
2,236
(7,030)
(6)
(3,310)
(581)
(8,350)
5,240
17,581
1,824
24,645
(91)
—
(1,934)
—
(5,381)
—
(5,381)
—
12
—
(6)
9,494
9,500
214
(3,437)
4,854
(3,245)
—
(4,218)
(397)
(6,229)
(2,110)
2,587
—
477
1,145
402
(4,055)
4,653
—
(1,361)
—
(763)
—
(763)
—
26
—
(288)
10,814
10,552
341
—
2,100
(5,120)
—
(3,310)
(346)
(6,335)
3,454
(867)
—
2,587
114
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Trifast plc Annual report 2018
Notes to the financial statements
for the year ended 31 March 2018
1 Accounting policies
a) Significant accounting policies
Trifast plc (‘the Company’) is a company incorporated in the United Kingdom. The registered office details are on page 163.
The Consolidated financial statements consolidate those of the Company and its subsidiaries (together referred to as the Group).
The Company financial statements present information about the Company as a separate entity and not about its Group. The profit
after tax for the Company is £4.7m (2017: £4.8m).
Statement of compliance
Both the Company financial statements and the Consolidated financial statements have been prepared and approved by the
Directors in accordance with International Financial Reporting Standards as adopted by the EU (‘Adopted IFRSs’) except as
explained below:
On publishing the Company financial statements here together with the Consolidated financial statements, the Company is taking
advantage of the exemption in s408 of the Companies Act 2006 not to present its individual income statement and related notes
that form a part of these approved financial statements.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these
Consolidated and Company financial statements.
b) Basis of preparation
The financial statements are prepared in Sterling, rounded to the nearest thousand. They are prepared on the historical cost basis
with the exception of certain items which are measured at fair value as disclosed in the accounting policies below.
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these
estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if
the revision affects current and future periods.
Judgements made by management in the application of Adopted IFRSs that have significant effect on the financial statements and
estimates with a significant risk of material adjustment in the next year are discussed in note 31.
Going concern
A review of the business activity and future prospects of the Group are covered in the accompanying Strategic report. The financial
position of the Group, its cash flows, liquidity position and borrowing facilities are specifically described in the Business review on
pages 46 to 57. Detailed information regarding the Group’s current facility levels, liquidity, credit, interest and foreign exchange risk
are provided in note 26.
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 our 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.
c) Basis of consolidation
i) Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to direct relevant activities of an entity
so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable or convertible are
taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that
control commences until the date that control ceases.
ii) Transactions eliminated on consolidation
Intra-Group balances, and any unrealised gains and losses or income and expenses arising from intra-Group transactions, are
eliminated in preparing the consolidated financial statements.
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115
www.trifast.comOur financials Our financials Notes to the financial statements
Notes to the financial statements
for the year ended 31 March 2018
1 Accounting policies (continued)
d) Foreign currency
i) Foreign currency transactions
Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies at the balance sheet date are translated to Sterling at the foreign exchange rate
ruling at that date. Foreign exchange differences arising on translation are recognised in the consolidated income statement. Non-
monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange
rate at the date of the transaction.
ii) Financial statements of foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated
to Sterling at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are
translated to Sterling at average rates of exchange for the period, where this rate approximates to the foreign exchange rates ruling
at the dates of the transactions.
Foreign exchange differences arising on retranslation are recognised in a separate component of equity, the translation reserve,
through other comprehensive income. They are released into the income statement as part of the gain or loss on disposal.
e) Hedge of net investment in foreign operations
The portion of the gain or loss on an instrument used to hedge a net investment in a foreign operation that is determined to be an
effective hedge is recognised directly in equity in the translation reserve. The ineffective portion is recognised immediately in the
income statement. The effective portion is recycled and recognised in the income statement upon disposal of the operation.
f) Property, plant and equipment
i) Owned assets
Property, plant and equipment are stated at cost or deemed cost less accumulated depreciation (see below) and impairment losses
(see accounting policy (j)).
Certain items of property, plant and equipment that had been revalued to fair value on or prior to 1 April 2004, the date of transition
to Adopted IFRS, are measured on the basis of deemed cost, being the revalued amount at the date of transition.
ii) Depreciation
Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of
property, plant and equipment. Land is not depreciated. The depreciation rates are as follows:
Freehold and long leasehold buildings
— 2% per annum on a straight-line basis or the period of the lease
Short leasehold properties
— period of the lease
Motor vehicles
— 20–25% on a straight-line basis
Plant and machinery
— 10–20% per annum on a straight-line basis
Fixtures, fittings and office equipment
— 10–25% per annum on a straight-line basis
When parts of an item of property, plant and equipment have different useful lives, those components are accounted for as separate
items of property, plant and equipment. Where relevant, residual values are reassessed annually.
iii) Leased assets
The rental charges on assets held under operating leases are taken to the profit and loss account on a straight-line basis over the life
of the lease.
Leases in which the Group assumes substantially all the risks and rewards of ownership of the leased asset are classified as finance
leases. Where land and buildings are held under leases the accounting treatment of the land is considered separately from that
of the buildings. Leased assets acquired by way of finance lease are stated at an amount equal to the lower of their fair value and
the present value of the minimum lease payments at inception of the lease, less accumulated depreciation and less accumulated
impairment losses. Lease payments are accounted for as described in accounting policy (o).
116
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Trifast plc Annual report 2018
1 Accounting policies (continued)
iv) Subsequent costs
The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item
when that cost is incurred, if it is probable that the future economic benefits embodied within the item will flow to the Group and the
cost of the item can be measured reliably. All other costs are recognised in the income statement as an expense as incurred.
g) Intangible assets
i) On business combinations
All business combinations are accounted for by applying the acquisition method. In respect of business combinations that have
occurred since 1 April 2004, goodwill represents the difference between the fair value of the consideration transferred and the fair
value of the net identifiable assets acquired. Identifiable intangibles are those which can be sold separately or which arise from legal
rights regardless of whether those rights are separable.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities are expensed as incurred.
Any contingent consideration payable is recognised at fair value at the acquisition date. For non-equity amounts any subsequent
changes to the fair value are recognised in the profit and loss.
Positive goodwill arising on acquisitions is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-
generating units and is not amortised but is tested annually for impairment (see accounting policy (j)).
Goodwill arising on acquisitions before 1 April 1998 was written off to reserves in the year of acquisition. Under IFRS1 and IFRS3,
this goodwill will now remain eliminated against reserves. Goodwill arising on acquisitions after 1 April 1998 but before 31 March
2004 is included on the basis of its deemed cost, which represents the amortised amount recorded under UK GAAP as at 31
March 2004. The classification and accounting treatment of business combinations that occurred prior to 1 April 2004 has not been
reconsidered in preparing the Group’s year-end balance sheets.
Negative goodwill arising on an acquisition is recognised directly in profit or loss.
ii) Other intangible assets
Intangible assets other than goodwill that are acquired by the Group are stated at cost less accumulated amortisation (see below)
and impairment losses (see accounting policy (j)).
Expenditure on internally generated goodwill and brands is recognised in profit or loss as an expense as incurred.
iii) Subsequent expenditure
Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied
in the specific asset to which it relates. All other expenditure is expensed as incurred.
iv) Amortisation
Amortisation is charged to the consolidated income statement on a straight-line basis over the estimated useful lives of intangible
assets, unless such lives are indefinite. Goodwill and intangible assets with an indefinite useful life are tested systematically for
impairment at each annual balance sheet date.
The amortisation rates of other intangible assets per annum are as follows:
Customer relationships — 6.7% to 12.5%
Technology
— 6.7% to 10%
Order backlog
— 100%
Other
— 20% to 33%
h) Non-derivative financial instruments
i)
Investments in subsidiaries are held in the Company balance sheet at historic cost net of any impairment (see accounting policy (j)).
Investments in subsidiaries
ii) Trade and other receivables
Trade and other receivables are recognised initially at their fair value, and subsequently at amortised cost less impairment losses
(see accounting policy (j)).
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Our financials Notes to the financial statements
Notes to the financial statements
for the year ended 31 March 2018
1 Accounting policies (continued)
iii) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less. Bank
overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component of
cash and cash equivalents only for the purpose of the Statements of cash flows.
Interest-bearing borrowings
iv)
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition,
interest-bearing borrowings are stated at amortised cost.
v) Trade and other payables
Trade and other payables are recognised initially at fair value. Subsequently they are measured at amortised cost.
Inventories
i)
Inventories are stated at the lower of cost and net realisable value with provision being made for obsolete and slow moving items.
In determining the cost of raw materials, consumables and goods purchased for resale, a first-in first-out purchase price is used
and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. For work in
progress and finished goods manufactured by the Group, cost is taken as production cost, which includes an appropriate proportion
of attributable overheads based on normal operating capacity.
Impairment
j)
The carrying amounts of the Group’s assets, other than inventories (see accounting policy (i)), and deferred tax assets (see
accounting policy (p)), are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any
such indication exists, the asset’s recoverable amount is estimated.
Financial assets are considered to be impaired if objective evidence indicates that one or more events has had a negative effect on
the estimated future cash flows of that asset.
For goodwill and other intangible assets that have an indefinite useful life, the recoverable amount is estimated at each annual
balance sheet date.
An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable
amount. Impairment losses are recognised in the consolidated income statement unless the asset is recorded at a revalued amount
in which case it is treated as a revaluation decrease.
Impairment losses recognised in respect of cash generating units are allocated first to reduce the carrying amount of any goodwill
allocated to cash generating units and then to reduce the carrying amount of the other assets in the unit on a pro rata basis. A cash
generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows
from other assets or groups of assets.
i) Calculation of recoverable amount
The recoverable amount is the greater of net selling price and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value
of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable
amount is determined for the cash generating unit to which the asset belongs.
ii) Reversals of impairment
An impairment loss in respect of goodwill is not reversed. An impairment loss on any other asset is assessed at each reporting date
and is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no impairment loss had been recognised.
k) Share capital
i) Dividends
Dividends to the Company’s shareholders are recognised as a liability and deducted from shareholders’ equity in the period in which
the shareholders’ right to receive payment is established.
ii) Classification of share capital issued by the Group
Share capital issued by the Group is treated as equity as it is a non-derivative that confers no contractual obligations upon the
Company or the Group to deliver cash or other financial assets with another party under conditions that are potentially unfavourable.
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Trifast plc Annual report 2018 1 Accounting policies (continued)
l) Employee benefits
i) Defined contribution plans
The Group operates Defined Contribution Pension Schemes which include stakeholder pension plans. The assets of these schemes
are held separately from those of the Group in independently administered funds. The amount charged against profits represents the
contributions payable to the schemes in respect of the accounting period. The Group pays fixed contributions and will have no legal
or constructive obligation to pay further amounts.
ii) Share based payment transactions
The grant-date fair value of equity-settled share-based payment arrangements granted to employees is generally recognised as an
expense, with a corresponding increase in equity, over the vesting period of the awards. The amount recognised as an expense is
adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be
met, such that the amount ultimately recognised is based on the number of awards that meet the related service and non-market
performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant-date fair value
of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and
actual outcomes.
The fair value of the amount payable to employees in respect of cash settled awards is recognised as an expense with a
corresponding increase in liabilities over the period during which the employees become unconditionally entitled to payment. The
liability is remeasured at each reporting date and at settlement date based on the fair value of the award. Any changes in the liability
are recognised in profit or loss.
Where the Company grants awards over its own shares to the employees of its subsidiaries it recognises, in its individual financial
statements, an increase in the cost of investment in its subsidiaries equivalent to the share based payment charge recognised in its
consolidated financial statements with the corresponding credit being recognised in equity or liabilities depending on the method of
settlement. Amounts recharged to the subsidiary are recognised as a reduction in the cost of investment in the subsidiary.
iii) Termination benefits
Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic possibility of
withdrawal, to a formal plan to terminate employment before the normal retirement date.
m) Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a
past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material,
provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments
of the time value of money and, when appropriate, the risks specific to the liability.
n) Revenue
Revenue from the sale of goods rendered is recognised net of VAT in the consolidated income statement when the significant risks
and rewards of ownership have been transferred to the buyer. In accordance with normal practice, this will be on dispatch of goods
or at the point of customer acceptance where appropriate.
o) Expenses
i) Operating lease payments
Payments made under operating leases are recognised in the consolidated income statement on a straight-line basis over the term
of the lease. Lease incentives received are recognised in the consolidated income statement as an integral part of the total lease
expense.
ii) Finance lease payments
Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance
charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining
balance of the liability.
iii) Net financing costs
Net financing costs comprise interest payable on borrowings calculated using the effective interest rate method and interest
receivable on funds invested. Interest income is recognised in the consolidated income statement as it accrues, using the effective
interest method. Net finance costs also include the amortisation of arrangement fees and related costs.
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www.trifast.comOur financials Our financials Notes to the financial statements
Notes to the financial statements
for the year ended 31 March 2018
1 Accounting policies (continued)
p) Taxation
Tax on the profit or loss for the period presented comprises current and deferred tax. Tax is recognised in the consolidated income
statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the
balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary
differences are not provided for: the initial recognition of goodwill not deductible for tax purposes, the initial recognition of assets or
liabilities that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that
they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner
of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the
balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the
asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be
realised.
Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related
dividend. Information as to the calculation of income tax on the profit or loss for the period presented is included in note 9.
q) Operating segment reporting
A segment is a distinguishable component of the Group that engages in business activities from which it may earn revenues and
incur expenditure (including revenues and expenses relating to transactions with other components of the same entity), whose
operating results are regularly reviewed by the Group’s Chief Operating Decision Maker (the Board) in order to make decisions about
allocating resources and to assess its performance, and for which discrete financial information is available.
The Group operates in a number of geographical economic environments. The Company only operates in one business segment,
being the manufacture and logistical supply of industrial fasteners and category ‘C’ components.
r) Financial guarantee contracts
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within its Group,
the Company considers these to be insurance arrangements, and accounts for them as such. In this respect, the Company treats
the guarantee contract as a contingent liability until such time as it becomes probable that the Company will be required to make a
payment under the guarantee.
s) Earnings per share
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the
profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding
during the period. Diluted EPS is determined by adjusting the weighted average number of ordinary shares outstanding for the
effects of all dilutive potential ordinary shares, which comprise share options and deferred equity awards granted to employees.
t) Underlying measure of profits and losses
The Group believes that underlying operating profit and underlying profit before tax provide additional guidance to statutory
measures to help understand the underlying performance of the business during the financial period. The term ‘underlying’ is not
defined under Adopted IFRS. It is a measure that is used by management to assess the underlying performance of the business
internally and is not intended to be a substitute measure for Adopted IFRSs’ GAAP measures. The Group defines these underlying
measures as follows:
Underlying profit before tax is profit before taxation and separately disclosed items (see note 2).
Underlying profit after tax is profit after taxation but before separately disclosed items (see note 2) and is used in the calculation of
underlying earnings per share.
Underlying operating and segment results (see note 3) are operating and segment profit before separately disclosed items.
It should be noted that the definitions of underlying items being used in these financial statements are those used by the Group and
may not be comparable with the term ’underlying’ as defined by other companies within the same sector or elsewhere.
Separately disclosed items are included within the income statement caption to which they relate.
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Trifast plc Annual report 2018 1 Accounting policies (continued)
u) Separately disclosed items (see note 2)
Separately disclosed items are those significant items which in management’s judgement should be highlighted by virtue of their size
or incidence to enable a full understanding of the Group’s financial performance.
v) Own shares acquired by Employee Benefit Trust
The Employee Benefit Trust (“EBT”) provides for the issue of shares to Group employees under share based payment arrangements.
The Company is the sole funder of the EBT, and all shares and assets held by the EBT are held under a trust arrangement for the
benefit of Group employees and the Company, and the Company therefore accounts for the EBT as an extension to the Company in
the financial statements.
Repurchased shares (classified as own shares acquired) are recognised at the amount of consideration paid, which includes directly
attributable costs, as a deduction from equity. They are presented separately in equity as own shares held. When the shares are
subsequently sold or used to settle future equity award commitments, the amount received is recognised as an increase in equity
and the resulting surplus or deficit on the transaction is presented within share premium.
w) Asset held for sale
Non-current assets, or disposal groups comprising assets and liabilities, are classified as held for sale if it is highly probably that they
will be recovered primarily through sale rather than continuing use.
Such assets, or disposal groups, are generally measured at the lower of their carrying amount and fair value less costs to sell. Any
impairment loss on a disposal group is allocated first to goodwill, and then to the remaining assets and liabilities on a pro rata basis,
except that no loss is allocated to inventories, financial assets, deferred tax assets or employee benefit assets, which continue to
be measured in accordance with the Group's other accounting policies. Impairment losses on initial classification as held-for-sale or
held-for-distribution and subsequent gains and losses on remeasurement are recognised in profit and loss.
x) Adopted IFRS not yet applied
The following Adopted IFRSs have been issued but have not been applied in these financial statements. Their adoption is not
expected to have a material effect on the financial statements unless otherwise indicated:
•
IFRS 9 Financial Instruments (effective date 1 January 2018)
IFRS 9 is not expected to have a material impact on the primary statements and therefore management do not expect a transition
adjustment on adoption. However, changes in disclosure are expected.
•
IFRS 15 Revenue from Contracts with Customers (effective date 1 January 2018)
IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces
existing revenue recognition guidance, including IAS 18.
It is effective for annual periods beginning on or after 1 January 2018, with early adoption permitted. This means that it will be
effective for the year ending 31 March 2019 for Trifast. As the majority of the Group's revenue is derived from arrangements in
which the transfer of risks and rewards coincides with the fulfilment of performance obligations and transfer of control as defined
by IFRS15, no material changes in respect of timing and amount of revenue currently recognised by the Group are expected.
Management therefore do not expect a transition adjustment will be presented on adoption, in the primary statements. Management
does, however, expect to make changes to revenue related disclosures, including further disaggregation of revenue, and updates to
the accounting policy to reflect new terminology under IFRS15.
•
IFRS 16 Leases (effective date 1 January 2019)
IFRS 16 introduces a single, on-balance sheet accounting model for lessees. A lessee recognises a right-of-use asset representing
its right to use the underlying asset and a lease liability representing its obligation to make lease payments. There are optional
exemptions for short-term leases and leases of low value items.
IFRS 16 replaces existing leases guidance including IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease,
SIC-15 Operating Leases—Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.
The standard is effective for annual periods beginning on or after 1 January 2019. Early adoption is permitted for entities that apply
IFRS 15 Revenue from Contracts with Customers at or before the date of initial application of IFRS 16. This will be effective for Trifast
in the year ending 31 March 2020. The Group is currently performing a detailed assessment of the impact of IFRS 16 on the financial
statements and will provide further details in the next Annual Report. Given the value of the Group’s operating lease commitments, it
is expected it will have a material impact on the values of gross assets and gross liabilities recognised in the financial statements as
well as a less significant impact on the recognition and classification of costs in the income statement.
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121
www.trifast.comOur financials Our financials Notes to the financial statements
Notes to the financial statements
for the year ended 31 March 2018
2 Underlying profit before tax and separately disclosed items
Underlying profit before tax
Separately disclosed items within administrative expenses
IFRS2 share based payment charge
Acquired intangible amortisation
Net acquisition costs
Project Atlas
Profit on sale of fixed assets
Costs on exercise of executive share options
Profit before tax
Underlying EBITDA
Separately disclosed items within administrative expenses
IFRS2 share based payment charge
Net acquisition costs
Project Atlas
Profit on sale of fixed assets
Costs on exercise of executive share options
EBITDA
Acquired intangible amortisation
Depreciation and non-acquired amortisation
Operating profit
Note
22
12
32
Note
22
32
2018
£000
22,233
(2,194)
(1,363)
(110)
(375)
556
(244)
18,503
2018
£000
24,650
2017
£000
20,497
(1,512)
(1,273)
—
—
195
(567)
17,340
2017
£000
22,868
(2,194)
(1,512)
(110)
(375)
556
(244)
22,283
(1,363)
(1,937)
18,983
—
—
195
(567)
20,984
(1,273)
(1,850)
17,861
There were no separately disclosed items in 2018 (2017: £nil) other than the amounts detailed above.
Recurring items
During the period the IFRS2 charge increased due to Senior Manager deferred bonus shares being included in the results for a
full year, offset by a lower charge for Director shares due to the grant date for the new LTIP structure being later in the year (30
September 2017). £0.7m (2017: £1.1m) relates to the Board deferred equity bonus scheme of which £0.2m (2017: £0.1m) relates to
retiring Directors. £0.2m (2017: £nil) relates to the new LTIP structure for the Directors. £1.1m (2017: £0.3m) represents the charge
for the Deferred Bonus Award scheme for senior managers. The remaining £0.2m (2017: £0.1m) relates to the SAYE scheme.
Acquired intangible amortisation has remained in line with prior year.
During the year the 2014 Board deferred equity bonus shares were exercised and the Company incurred £0.2m of employer's
National Insurance in relation to these exercises. Last year, the remaining 2m options granted under the 2009 executive share option
and the accelerated 2014, 2015 and 2016 Deferred Equity Bonus awards were exercised resulting in the Company incurring £0.6m
of employer's National Insurance.
Event driven/one-off items
Net acquisition costs of £0.1m (2017: £nil) were incurred ahead of year end in relation to the acquisition of PTS on 4 April 2018.
Project Atlas is a multi-year investment into our IT infrastructure and underlying business processes, budgeted to cost up to £15.0m.
As a consequence of the work undertaken to date on this project, we have incurred direct costs of £0.4m in FY2018, largely relating
to project team and consultancy costs. We have excluded these costs from our underlying results, to reflect the unusual scale and
one-off nature of this project. We anticipate continuing to do so in order to provide shareholders with a better understanding of
our underlying trading performance during this period of investment. This will happen as a combination of capital expenditure and
separately disclosed items, dependent on accounting convention.
A factory, previously rented to an automotive Tier 1 company, in PSEP was sold during the year for £1.7m, generating a profit of
£0.6m. Last year, obsolete plant and machinery was sold in our Italian manufacturing company Viteria Italia Centrale. The sales price
and profit recorded on this sale was £0.2m.
Management feel it is appropriate to remove the one off costs and certain non-trading items discussed above to better allow the
reader of the accounts to understand the underlying performance of the Group. Further reconciliations of underlying measures to
GAAP measures can be found in note 34.
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Trifast plc Annual report 2018
3 Operating segmental analysis
Segment information, as discussed in note 1 (q), is presented in the consolidated financial statements in respect of the Group’s
geographical segments. This reflects the Group’s management and internal reporting structure, and the operating basis on which
individual operations are reviewed by the Chief Operating Decision Maker (the Board). Performance is measured based on each
segment’s underlying profit before finance costs and income tax as included in the internal management reports that are reviewed
by the Chief Operating Decision Maker. This is used to measure performance as management believes that such information is the
most relevant in evaluating the results of certain segments relative to other entities that operate within the industry.
Inter-segment pricing is determined on an arm’s length basis.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a
reasonable basis.
Goodwill and intangible assets acquired on business combinations are included in the region to which they relate.
Geographical operating segments
The Group is comprised of the following main geographical operating segments:
— UK
— Europe:
includes Norway, Sweden, Hungary, Ireland, Holland, Italy, Germany, Spain and Poland
— USA:
includes USA and Mexico
— Asia:
includes Malaysia, China, Singapore, Taiwan, Thailand and India
In presenting information on the basis of geographical operating segments, segment revenue and segment assets are based on the
geographical location of our entities across the world, and are consolidated into the four distinct geographical regions, which the
Board use to monitor and assess the Group.
March 2018
Revenue
Revenue from external
customers
Inter segment revenue
Total revenue
Underlying operating result
Net financing costs
Underlying segment result
Separately disclosed items
(see note 2)
Profit before tax
Specific disclosure items
Depreciation and amortisation
Assets and liabilities
Segment assets
Segment liabilities
UK
£000
Europe
£000
USA
£000
Asia
£000
70,286
2,689
72,975
8,410
(100)
8,310
72,721
938
73,659
9,085
(52)
9,033
6,271
162
6,433
52
—
52
48,354
8,838
57,192
8,426
55
8,481
Common
costs
£000
—
—
—
(3,260)
(383)
(3,643)
Total
£000
197,632
12,627
210,259
22,713
(480)
22,233
(3,730)
18,503
267
1,713
17
1,215
88
3,300
44,561
(19,350)
75,729
(16,211)
3,788
(408)
60,392
(11,592)
4,186
(30,806)
188,656
(78,367)
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123
www.trifast.comOur financials Our financials Notes to the financial statements
Notes to the financial statements
for the year ended 31 March 2018
3 Operating segmental analysis (continued)
March 2017
Revenue
Revenue from external
customers
Inter segment revenue
Total revenue
Underlying operating result
Net financing costs
Underlying segment result
Separately disclosed items
(see note 2)
Profit before tax
Specific disclosure items
Depreciation and amortisation
Assets and liabilities
Segment assets
Segment liabilities
UK
£000
Europe
£000
USA
£000
Asia
£000
66,825
2,443
69,268
6,538
(145)
6,393
67,231
613
67,844
9,818
(73)
9,745
5,900
123
6,023
334
—
334
46,556
7,262
53,818
8,005
20
8,025
Common
costs
£000
—
—
—
(3,677)
(323)
(4,000)
Total
£000
186,512
10,441
196,953
21,018
(521)
20,497
(3,157)
17,340
423
1,626
25
973
76
3,123
40,348
(19,535)
68,289
(13,689)
3,742
(294)
58,876
(11,581)
5,975
(30,433)
177,230
(75,532)
There were no material differences in Europe and USA between the external revenue based on location of the entities and the
location of the customers. Of the UK external revenue £14.9m (2017: £11.3m) was sold into the European market. Of the Asian
external revenue, £4.7m (2017: £4.6m) was sold into the American market and £5.9m (2017: £5.5m) sold into the European market.
Revenue is derived solely from the manufacture and logistical supply of industrial fasteners and category ‘C’ components.
4 Other operating income
Rental income received from freehold properties
Other income
2018
£000
57
410
467
2017
£000
152
243
395
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Trifast plc Annual report 2018 5 Expenses and auditor’s remuneration
Included in profit for the year are the following:
Depreciation and non-acquired amortisation
Amortisation of acquired intangibles
Operating lease expense
Net foreign exchange loss/(gain)
Project Atlas (IT and business processes)
Gain on disposal of fixed assets
For more details on Project Atlas see pages 38 to 43 and note 2.
Auditor’s remuneration:
Audit of these financial statements
Audit of financial statements of subsidiaries pursuant to legislation
Taxation compliance services
Other assurance services
Other services relating to transaction services
6 Staff numbers and costs
Note
10,12
12
27
2018
£000
1,937
1,363
3,302
420
375
(560)
2018
£000
66
225
15
29
30
2017
£000
1,850
1,273
2,529
(46)
—
(184)
2017
£000
38
222
15
28
—
The average number of people employed by the Group (including Directors) during the year, analysed by category, was as follows:
Office and management
Manufacturing
Sales
Distribution
The aggregate payroll costs of these people were as follows:
Wages and salaries (including bonus)
Share based payments
Social security costs
Contributions to defined contribution plans (see note 22)
Group
Number of employees
2018
108
321
184
603
1,216
Group
2018
£000
32,392
2,194
3,106
1,918
39,610
2017
107
318
182
597
1,204
2017
£000
30,873
1,512
2,811
1,795
36,991
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www.trifast.comOur financials Our financials Notes to the financial statements
Notes to the financial statements
for the year ended 31 March 2018
7 Directors’ emoluments
Directors’ emoluments
Deferred equity (face value)
Company contributions to money purchase pension plans
Pension cash payments
2018
£000
2,161
—
138
30
2,329
2017
£000
2,337
1,050
107
46
3,540
The emoluments of individual Directors, as well as the total gain on exercise of share options by Directors, are shown in the
Remuneration Report on pages 86 to 98.
The aggregate of emoluments of the highest paid Director was £0.63m (2017: £0.81m), which included no vested LTIP or deferred
equity award (2017: deferred equity at face value of £0.25m), Company pension contributions of £0.04m (2017: £0.03m) made to
a money purchase scheme on his behalf and pension cash payments of £0.01m (2017: £0.02m). During the year, no SAYE share
options were exercised by the highest paid Director (2017: 18,000 exercised), 209,877 deferred equity shares were exercised by the
highest paid director (2017: nil).
The annual IFRS2 charge relating to Board deferred equity bonuses given in 2015, 2016 and 2017 was £0.76m (2017: £1.13m).
The annual IFRS2 charge relating to Board LTIP shares in 2018 was £0.18m (2017: £nil). The highest paid Director’s element of this
charge was £0.24m (2017: £0.23m).
Retirement benefits are accruing to the following number of Directors under
money purchase schemes
The number of Directors who exercised share options was
See pages 86 to 98 of the Remuneration Report for more details.
Directors’ rights to subscribe for shares in the Company are also set out in the Remuneration report.
8 Financial income and expense
Financial income
Interest income on financial assets
Financial expenses
Interest payable on bank loans and hire purchase liabilities
Number of Directors
2018
2017
4
4
4
2
2018
£000
60
540
2017
£000
60
581
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Trifast plc Annual report 2018 9 Taxation
Recognised in the income statement
Current UK tax expense:
Current year
Adjustments for prior years
Current foreign tax expense:
Current year
Adjustments for prior years
Total current tax
Deferred tax expense (note 15):
Origination and reversal of temporary differences
Reduction in tax rates
Adjustments for prior years
Deferred tax income
Tax in income statement
Tax recognised directly in equity
Current tax recognised directly in equity — IFRS2 share based tax credit
Deferred tax recognised directly in equity — IFRS2 share based tax (credit)/charge
Total tax recognised in equity
Reconciliation of effective tax rate (‘ETR’)
and tax expense
Profit for the period
Tax from continuing operations
Profit before tax
Tax using the UK corporation tax rate of 19% (2017: 20%)
Tax suffered on dividends
Retention tax
Non-deductible expenses
Tax incentives
Non-taxable receipts
IFRS2 share option (credit)/charge
Deferred tax assets not recognised
Different tax rates on overseas earnings
Adjustments in respect of prior years
Tax rate change
Total tax in income statement
2018
£000
15,086
3,417
18,503
3,516
319
—
222
(82)
(100)
53
107
467
(1,038)
(47)
3,417
ETR
%
19
2
—
1
—
(1)
—
1
2
(6)
—
18
2018
£000
597
(983)
(386)
4,186
(35)
4,151
3,765
(281)
(47)
(20)
(348)
3,417
2018
£000
(239)
(127)
(366)
2017
£000
12,698
4,642
17,340
3,468
264
102
190
(274)
—
(1)
511
540
(180)
22
4,642
2017
£000
520
(8)
512
4,756
(138)
4,618
5,130
(454)
—
(34)
(488)
4,642
2017
£000
(522)
130
(392)
ETR
%
20
2
1
1
(2)
—
—
3
3
(1)
—
27
Reductions in the UK tax rate from 20% to 19% (effective from 1 April 2017) and to 18% (effective 1 April 2020) were substantively
enacted on 26 October 2015, and an additional reduction to 17% (effective 1 April 2020) was substantively enacted on 6 September
2016. This will reduce the Company’s future current tax charge accordingly. Deferred tax has been calculated based on these
enacted rates.
The tax rate change in Italy (IRES reduced from 27.5% to 24%) has reduced our tax charge by £0.2m, whilst due to brought forward
losses, the tax rate change in the USA (federal tax rate reduced from 34% to 21%) has increased our tax charge by £0.2m.
During the year the open tax enquiry was settled for £0.3m. This resulted in a £0.9m release of the £1.2m provision on the balance
sheet at 31 March 2017. The amount recognised in the Company financial statements is £nil (2017: £nil).
127
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www.trifast.comOur financials Our financials Notes to the financial statements
Notes to the financial statements
for the year ended 31 March 2018
10 Property, plant and equipment — Group
Land and
buildings
£000
Leasehold
improvements
£000
Cost
Balance at 1 April 2016
Additions
Disposals
Effect of movements in
foreign exchange
Balance at 31 March 2017
Balance at 1 April 2017
Additions
Disposals
Effect of movements in
foreign exchange
Balance at 31 March 2018
Depreciation and
impairment
Balance at 1 April 2016
Depreciation charge for the
year
Disposals
Effect of movements in
foreign exchange
Balance at 31 March 2017
Balance at 1 April 2017
Depreciation charge for the
year
Disposals
Effect of movements in
foreign exchange
Balance at 31 March 2018
Net book value
At 1 April 2016
At 31 March 2017
At 31 March 2018
16,270
319
—
911
17,500
17,500
727
(1,178)
42
17,091
4,653
262
—
308
5,223
5,223
268
(132)
17
5,376
11,617
12,277
11,715
933
30
(103)
54
914
914
129
(65)
(10)
968
703
65
(103)
44
709
709
72
(65)
(18)
698
230
205
270
Plant and
equipment
£000
Fixtures &
fittings
£000
Motor
vehicles
£000
26,160
2,174
(792)
1,955
29,497
29,497
1,786
(340)
(67)
30,876
5,355
349
(490)
194
5,408
5,408
973
(302)
(2)
6,077
613
31
(80)
54
618
618
112
(32)
(15)
683
Total
£000
49,331
2,903
(1,465)
3,168
53,937
53,937
3,727
(1,917)
(52)
55,695
22,144
4,146
514
32,160
947
(786)
1,607
23,912
23,912
1,135
(339)
(58)
24,650
4,016
5,585
6,226
500
(482)
146
4,310
4,310
376
(280)
1
4,407
1,209
1,098
1,670
47
(80)
44
525
525
49
(11)
(12)
551
99
93
132
1,821
(1,451)
2,149
34,679
34,679
1,900
(827)
(70)
35,682
17,171
19,258
20,013
Included in the net book value of land and buildings is £9.8m (2017: £10.9m) of freehold land and buildings, and £1.9m (2017:
£1.4m) of long leasehold land and buildings.
128
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Trifast plc Annual report 2018 11 Property, plant and equipment — Company
Cost
Balance at 1 April 2016
Additions
Balance at 31 March 2017
Balance at 1 April 2017
Additions
Balance at 31 March 2018
Depreciation and impairment
Balance at 1 April 2016
Depreciation charge for the year
Balance at 31 March 2017
Balance at 1 April 2017
Depreciation charge for the year
Balance at 31 March 2018
Net book value
At 1 April 2016
At 31 March 2017
At 31 March 2018
Land and
buildings
£000
Fixtures &
fittings
£000
3,563
288
3,851
3,851
6
3,857
1,216
74
1,290
1,290
85
1,375
2,347
2,561
2,482
571
—
571
571
—
571
556
2
558
558
2
560
15
13
11
Total
£000
4,134
288
4,422
4,422
6
4,428
1,772
76
1,848
1,848
87
1,935
2,362
2,574
2,493
Included in the net book value of land and buildings is £2.5m (2017: £2.6m) of freehold land and buildings. This is provided as
security over the property loan. See note 26 for further details.
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129
www.trifast.comOur financials Our financials Notes to the financial statements
Notes to the financial statements
for the year ended 31 March 2018
12 Intangible assets – Group
Cost
Balance at 1 April 2016
Additions
Effect of movements in foreign exchange
Balance at 31 March 2017
Balance at 1 April 2017
Additions
Disposals
Effect of movements in foreign exchange
Balance at 31 March 2018
Amortisation and impairment
Balance at 1 April 2016
Amortisation for the year
Effect of movements in foreign exchange
Balance at 31 March 2017
Balance at 1 April 2017
Amortisation for the year
Disposals
Effect of movements in foreign exchange
Balance at 31 March 2018
Net book value
At 1 April 2016
At 31 March 2017
At 31 March 2018
Goodwill
£000
41,462
—
2,298
43,760
43,760
—
—
(402)
43,358
14,025
—
414
14,439
14,439
—
—
(208)
14,231
27,437
29,321
29,127
Other
£000
14,294
45
945
15,284
15,284
30
(238)
380
Total
£000
55,756
45
3,243
59,044
59,044
30
(238)
(22)
15,456
58,814
3,472
1,302
149
4,923
4,923
1,400
(238)
97
6,182
10,822
10,361
9,274
17,497
1,302
563
19,362
19,362
1,400
(238)
(111)
20,413
38,259
39,682
38,401
The amortisation charge is recognised in administrative expenses in the income statement. Of the £1.4m charge in the year, £1.4m
relates to amortisation on acquired intangibles.
Other intangible assets are made up of:
• Customer relationships acquired as part of the acquisition of PSEP. The remaining amortisation period left on these assets is
5.75 years
• Customer relationships, technology know-how and technology patents acquired as part of the acquisition of VIC. The average
remaining amortisation period on these assets is 9.8 years.
• Customer relationships acquired as part of the acquisition of Kuhlmann. The average remaining amortisation period on these
assets is 7.50 years.
130
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Trifast plc Annual report 2018 12 Intangible assets – Group (continued)
The following cash generating units have carrying amounts of goodwill:
Special Fasteners Engineering Co. Ltd (Taiwan)
TR Fastenings AB (Sweden)
Lancaster Fastener Company Ltd (UK)
Serco Ryan Ltd (within TR Fastenings Ltd) (UK)
Power Steel and Electro-Plating Works SDN Bhd (PSEP) (Malaysia)
TR Viterie Italia Centrale (VIC) (Italy)
TR Kuhlmann GmbH (Germany)
O ther
2018
£000
10,305
1,063
1,245
4,083
779
10,007
1,541
104
29,127
2017
£000
10,834
1,063
1,245
4,083
763
9,731
1,498
104
29,321
The £0.28m, £0.04m and £0.02m increases in the goodwill of VIC, Kuhlmann and PSEP and the £0.53m decrease in the goodwill
of SFE respectively refer to foreign exchange gains or losses as these investments are held in Euros, Malaysian Ringits and
Singaporean Dollars.
The Group tests goodwill annually for impairment. The recoverable amount of cash generating units is determined from value in use
calculations.
Value in use was determined by discounting the future cash flows generated from the continuing use of the unit. In this method,
the free cash flows after funding internal needs of the subject company are forecast for a finite period of four years based on actual
operating results, budgets and economic market research. Beyond the finite period, a terminal (residual) value is estimated using an
assumed stable cash flow figure.
The values assigned to the key assumptions represent management’s assessment of future trends in the fastenings market and are
based on both external and internal sources of historical data. Further information on sources of data used can be found in each
description of the key assumptions below.
The recoverable amount of Special Fasteners Engineering Co. Ltd (Taiwan), TR Viterie Italia Centrale (Italy) and Serco Ryan Ltd
(within TR Fastenings Ltd) (UK) have been calculated with reference to the key assumptions shown below:
Long term revenue growth
rate
Discount rate — post-tax
Discount rate — pre-tax
Terminal EBIT margin
SFE
VIC
Serco
2018
2017
2018
2017
2.0%
9.2%
11.1%
16.0%
2.0%
8.2%
9.9%
16.0%
2.0%
9.4%
13.1%
17.6%
2.0%
8.9%
12.4%
17.4%
2018
2.0%
7.9%
9.8%
9.8%
2017
2.0%
6.8%
8.5%
11.0%
Long term revenue growth rate
Four year management plans are used for the Group’s value in use calculations. Long term growth rates into perpetuity have been
determined as the lower of:
•
the nominal GDP rates for the country of operation
•
the long term compound annual growth rate in EBITDA in years six to ten estimated by management.
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131
www.trifast.comOur financials Our financials Notes to the financial statements
Notes to the financial statements
for the year ended 31 March 2018
12 Intangible assets – Group (continued)
Post-tax risk adjusted discount rate
The discount rate applied to the cash flows of each of the Group’s operations is based on the Weighted Average Cost of Capital
(‘WACC’) (using post-tax numbers). The cost of equity element uses the risk free rate for ten year bonds issued by the government
in the respective market, adjusted for a risk premium to reflect both the increased risk of investing in equities and the systemic risk of
the specific Group operating company.
In making this adjustment, inputs required are the equity market risk premium (that is, the increased return required over and above a
risk-free rate by an investor who is investing in the market as a whole) and the risk adjustment, beta, applied to reflect the risk of the
specific Group operating company relative to the market as a whole.
In determining the risk adjusted discount rate, management has applied an adjustment for the systemic risk to each of the Group’s
operations determined using an average of the betas of comparable listed fastener distribution and manufacturing companies and,
where available and appropriate, across a specific territory. Management has used a forward-looking equity market risk premium that
takes into consideration studies by independent economists, the average equity market risk premium over the past ten years and
the market risk premiums typically used by investment banks in evaluating acquisition proposals.
To calculate the pre-tax discount rate we have taken the post-tax discount rate and divided this by one minus the applicable tax
rate. We consider this an appropriate approximation of the pre-tax rate as there are no significant timing differences between the tax
cash flows and tax charges. The table above discloses the discount rate on a post and pre-tax basis. This takes into account certain
components such as the various discount rates reflecting different risk premiums and tax rates in the respective regions. Overall, the
Board is confident that the discount rate adequately reflects the circumstances in each location and is in accordance with IAS36.
Terminal EBIT margin
The margins used in the value in use calculations are based on historic performance adjusted for any known or expected changes to
occur to existing operations based on management plans. Key adjustments relate to known efficiency gains from increased volumes
achieved in the business as well as the transactional foreign exchange impact based on forecast rates.
Sensitivity to changes in assumptions
The impairment test carried out on PSEP assumes a compound annual sales growth rate over the four year period cash flows are
projected of 4.2%, reducing to 2.0% for the terminal year. The sales growth relates to increased Intercompany sales as part of a
Group initiative to bring more supply in-house, supported by increased sales from extending relationships with existing multinational
OEM customers.
Using the assumptions above for sales growth, a terminal EBIT margin of 12.0% and a post-tax discount rate of 10.8% (pre-tax
discount rate 14.2%) the recoverable amount of the CGU was estimated to be higher than its carrying amount by £1.7m.
The timing of revenue growth is a major sensitivity in ensuring the recoverable amount of the unit is greater than the carrying amount.
The year to 31 March 2018 has seen sales grow, excluding those to one key customer, in excess of 6.0% as the initiative to bring
supply in-house comes to fruition. However, it is possible the estimated start of production dates for newly awarded sales contracts
could be delayed or new follow on business might come through at lower levels than predicted. If PSEP continued with sales equal
to that of FY2018 throughout the period management project cash flows and also in the terminal year, i.e. assuming that growth is
significantly below expected long-term regional GDP forecasts (5.1% per Moody's Investor Service), with terminal EBIT margin and
discount rates remaining the same as the above, this would lead to the unit's recoverable amount being equal to its carrying amount.
At this point, if any other assumptions move unfavourably from that forecast, it would require an impairment to be recognised in the
financial statements.
Excluding PSEP, management believe that no reasonably possible change in any key assumptions would cause the carrying value of
any other cash generating unit to exceed its recoverable amount.
132
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Trifast plc Annual report 2018 13 Intangible assets – Company
Cost
Balance at 1 April 2016, 31 March 2017 and 31 March 2018
Amortisation and impairment
Balance at 1 April 2016, 31 March 2017 and 31 March 2018
Net book value
At 1 April 2016, 31 March 2017 and 31 March 2018
14 Equity investments – Company
Investments in subsidiaries
Cost
Balance at 1 April 2016, 31 March 2017, 1 April 2017 and 31 March 2018
Provision
Balance at 1 April 2016, 31 March 2017, 1 April 2017 and 31 March 2018
Net book value
Balance at 1 April 2016, 31 March 2017 and 31 March 2018
Other
£000
62
62
—
£000
42,585
1,145
41,440
Details of principal subsidiary and associate undertakings, country of registration and principal activity are included in note 33.
All subsidiaries have a reporting date concurrent with Trifast plc, except TR Formac (Shanghai) Pte Ltd which has a reporting date of
31 December due to local regulatory requirements.
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133
www.trifast.comOur financials Our financials Notes to the financial statements
Notes to the financial statements
for the year ended 31 March 2018
15 Deferred tax assets and liabilities – Group
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Property, plant and equipment
Intangible assets
Inventories
Provisions/accruals
IFRS2 Share based payments
Tax losses
Tax (assets)/liabilities
Tax set-off
Net tax (assets)/liabilities
Assets
Liabilities
Net
2018
£000
(70)
(118)
(694)
(560)
(1,142)
(270)
(2,854)
499
(2,355)
2017
£000
(81)
(115)
(774)
(537)
(835)
(457)
(2,799)
440
(2,359)
2018
£000
1,695
1,752
—
337
—
—
3,784
(499)
3,285
2017
£000
1,697
2,191
—
188
—
—
4,076
(440)
3,636
2018
£000
1,625
1,634
(694)
(223)
(1,142)
(270)
930
—
930
2017
£000
1,616
2,076
(774)
(349)
(835)
(457)
1,277
—
1,277
A potential £2.0m (2017: £2.1m) deferred tax asset relating to the Company’s trapped management losses was not recognised on
the grounds that recovery of these losses is highly unlikely.
The tax rate change in Italy (IRES reduced from 27.5% to 24%) has reduced our deferred tax liabilities relating to intangible assets
by £0.2m, whilst due to brought forward losses, the tax rate change in the USA (federal tax rate reduced from 34% to 21%) has
reduced our deferred tax assets by £0.2m.
Movement in deferred tax during the year
Property, plant and equipment
Intangible assets
Inventories
Provisions/accruals
IFRS2 Share based payments
Tax losses
Movement in deferred tax during the prior year
Property, plant and equipment
Intangible assets
Inventories
Provisions/accruals
IFRS2 Share based payments
Tax losses
1 April
2017
£000
1,616
2,076
(774)
(349)
(835)
(457)
1,277
Recognised in
income
£000
(18)
Recognised in
equity^
£000
27
31 March
2018
£000
1,625
(498)
58
140
(180)
150
(348)
56
22
(14)
(127)
37
1
1,634
(694)
(223)
(1,142)
(270)
930
1 April
2016
£000
Recognised in
income
£000
Recognised in
equity^
£000
31 March
2017
£000
1,673
2,187
(737)
(168)
(903)
(539)
1,513
(135)
(270)
15
(188)
(62)
152
(488)
78
159
(52)
7
130
(70)
252
1,616
2,076
(774)
(349)
(835)
(457)
1,277
^ Amounts recognised in equity include the deferred tax on IFRS2 share based payments and the equity element of foreign exchange differences taken
to reserves
134
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Trifast plc Annual report 2018 16 Deferred tax assets and liabilities – Company
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Property, plant and equipment
Provisions/accruals
IFRS2 Share based payments
Tax (assets)/liabilities
Assets
Liabilities
Net
2018
£000
—
(1)
(766)
(767)
2017
£000
—
(1)
(684)
(685)
2018
£000
132
—
—
132
2017
£000
164
—
—
164
2018
£000
132
(1)
(766)
(635)
2017
£000
164
(1)
(684)
(521)
A potential £2.0m (2017: £2.1m) deferred tax asset relating to the Company’s trapped management losses was not recognised on
the grounds that recovery of these losses is uncertain.
Movement in deferred tax during the year
Property, plant and equipment
Provisions/accruals
IFRS2 Share based payments
Movement in deferred tax during the prior year
Property, plant and equipment
Provisions/accruals
IFRS2 Share based payments
17 Inventories — Group
Raw materials and consumables
Work in progress
Finished goods and goods for resale
1 April
2017
£000
Recognised in
income
£000
Recognised
in equity
£000
31 March
2018
£000
164
(1)
(684)
(521)
(32)
—
(24)
(56)
—
—
(58)
(58)
132
(1)
(766)
(635)
1 April
2016
£000
Recognised in
income
£000
Recognised
in equity
£000
31 March
2017
£000
175
(39)
(797)
(661)
(11)
38
(24)
3
—
—
137
137
2018
£000
5,284
1,856
42,059
49,199
164
(1)
(684)
(521)
2017
£000
4,903
1,972
35,051
41,926
In 2018, inventories of £125.0m (2017: £115.5m) were recognised as an expense during the year and included in cost of sales.
Inventories have been written down by £0.8m in the year (2017: £1.7m) in line with the Group’s stock provisioning policy. Such write-
downs were recognised as an expense during 2018. No significant specific stock provisions have been reversed in the year.
No inventories are pledged as security for liabilities.
The carrying amount of inventories carried at fair value less costs to sell is £0.8m (2017: £0.6m).
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135
www.trifast.comOur financials Our financials Notes to the financial statements
Notes to the financial statements
for the year ended 31 March 2018
18 Trade and other receivables
Trade receivables
Non trade receivables and prepayments
Amounts owed by subsidiary undertakings
Group
Company
2018
£000
47,984
4,482
—
52,466
2017
£000
47,497
1,863
—
49,360
2018
£000
—
306
32,951
33,257
An explanation of credit risk and details of the security held over receivables is provided in note 26.
19 Cash and cash equivalents/bank overdrafts
Cash and cash equivalents per Statements of financial position
Bank overdrafts per Statements of financial position
Cash and cash equivalents per Statements of cash flows
20 Other interest-bearing loans and borrowings
Group
Company
2018
£000
26,222
—
26,222
2017
£000
24,645
—
24,645
2018
£000
477
—
477
2017
£000
—
183
31,199
31,382
2017
£000
2,587
—
2,587
This note provides information about the Group and Company’s existing interest-bearing loans and borrowings. For more information
about the security provided by the Group and Company over loans or the Group and Company’s exposure to interest rate, foreign
currency and liquidity risk, see note 26.
Initial loan value
Group
Rate
Maturity
Current
2018
£000
Asset based lending
VIC unsecured loan
Finance lease liabilities
Base + 1.49%
EURIBOR + 1.95%
Various
—
2020
2018-19
3,968
528
23
2017
£000
3,280
513
2
Non-current
2018
£000
2017
£000
—
792
53
—
1,283
8
EURIBOR + 1.50%
LIBOR/ EURIBOR
+ 1.50%
LIBOR + 1.25%
2021
2019/2021
2021
4,398
3,208
8,796
12,830
12,995
—
21,912
17,393
7,869
—
14,872
11,077
—
2,100
11,741
10,896
—
2,100
16,221
14,930
Group and Company
Facility A VIC
acquisition loan
Facility B Revolving
Credit Facility
Property Loan
Total Group
Total Company
136
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Trifast plc Annual report 2018 21 Trade and other payables
Trade payables
Amounts payable to subsidiary undertakings
Non-trade payables and accrued expenses
Other taxes and social security
Group
Company
2018
£000
21,400
—
15,396
1,901
38,697
2017
£000
19,302
—
15,322
2,521
37,145
2018
£000
—
325
1,979
125
2,429
2017
£000
—
954
2,073
1,335
4,362
22 Employee benefits
Pension plans
Defined contribution plans
The Group operates a number of defined contribution pension plans, which include stakeholder pension plans whose assets are
held separately from those of the Group, in independently administered funds.
The total expense relating to these plans in the current year was £1.9m (2017: £1.8m) and represents contributions payable by the
Group to the funds.
At the end of the financial year, there were outstanding pension contributions of £0.1m (2017: £0.1m), which are included in
creditors.
Share based payments
The Group Share Options (including SAYE plans) provide for an exercise price equal to the average quoted market price of the
Group shares on the date of grant. In the case of SAYE, this price is discounted in line with HMRC limits. The vesting period is
generally three, five or seven years. The options expire if they remain unexercised after the exercise period has lapsed. Furthermore,
options are forfeited if the employee leaves the Group before the options vest, unless for retirement, redundancy or health reasons.
The options are equity settled.
The number and weighted average exercise prices of share options are as follows:
Outstanding at beginning of year
Granted during the year
Forfeited/lapsed during the year
Exercised during the year
Outstanding at the end of the year
Exercisable at the end of the year
2018
2017
Weighted
average
exercise
price
1.00
1.77
1.23
0.86
1.22
1.00
Options
3,486,706
438,175
(141,909)
(2,496,555)
1,286,417
—
Weighted
average
exercise
price
0.35
1.07
0.47
0.14
1.00
—
Options
1,286,417
359,233
(55,343)
(249,192)
1,341,115
14,760
The options outstanding at 31 March 2018 had a weighted average remaining contractual life of 1.8 years (2017: 1.7 years) and
exercise prices ranging from £0.45 to £1.77 (2017: £0.25 to £1.07).
The weighted average share price at the date of exercise for share options exercised in 2018 was 237.4p (2017: 173.0p).
The fair value of services received in return for share options granted is measured by reference to the fair value of share options
granted. The estimate of the fair value of the services received is measured based on the Black Scholes model.
The contractual life of the option is used as an input into this model.
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www.trifast.comOur financials Our financials Notes to the financial statements
Notes to the financial statements
for the year ended 31 March 2018
22 Employee benefits (continued)
Board deferred equity bonus shares
The Board deferred equity bonus shares have been discussed in more detail in the Remuneration report (pages 86 to 98).
The number of deferred equity bonus shares are as follows:
Outstanding at beginning of year
Granted during the year
2014 deferred equity bonus shares exercised
Outstanding at end of year
Deferred
equity bonus
shares
2,822,778
36,703
(820,989)
2,038,492
The above includes 36,703 shares for C Foo relating to his employment as TR Asia MD. He does not sit on the main plc Board.
These nil cost options are subject to a three year service period and the fair value has been calculated using the Discounted Dividend
model (DDM). This is based on expected dividends over the three year term. They are equity settled shares.
The weighted average share price at the date of exercise for share options exercised in 2018 was £2.16 (2017: £1.35).
The options outstanding at 31 March 2018 had a weighted average remaining contractual life of 0.9 years (2017: 1.6 years).
Senior manager deferred bonus shares
The number of deferred bonus shares is as follows:
Outstanding at beginning of year
Granted during the year
Lapsed during the year
Outstanding at end of year
Deferred
bonus shares
1,744,094
70,878
(15,748)
1,799,224
The shares granted are subject to a base award and a multiplier award. The base award requires a service period from date of grant
to 31 December 2019 to be achieved and is also subject to personal performance conditions being met during the performance
period. The multiplier award is determined by a non-market performance condition. This requires the Group’s underlying organic
profit before tax in the financial year 2019 to be £18.5m (representing a compound annual growth rate of 5.0% from 31 March 2016)
for the total payout to be 1.5x the base award. A maximum payout of 2.0x the base award can be achieved if this metric is £21.3m
(representing a compound annual growth rate of 10.0% from 31 March 2016). If it falls between £18.5m and £21.3m the multiplier
applied is calculated on a straight line basis to determine the number of awards. If it is below £18.5m the multiplier used is 1.0x.
The awards were granted on 30 December 2016 and 24 November 2017 and are due to vest in December 2019. The method
of settlement for these shares are a mixture of equity and cash settled. The fair value has been calculated using the Discounted
Dividend model. This was at grant date for the equity settled awards. The fair value for the cash settled awards are remeasured at
the reporting date.
Board LTIP shares
The Board LTIP shares is part of the new remuneration policy approved at last year's AGM and has been discussed in more detail in
the Remuneration report (pages 86 to 98). The maximum number of Board LTIP shares are as follows:
Outstanding at beginning of year
Granted during the year
Outstanding at end of year
Board LTIP
shares
—
685,091
685,091
These nil cost options are subject to performance (EPS growth and TSR performance) and service conditions over a three year
period. The fair value for the EPS element has been calculated using the DDM whilst the fair value for the TSR element has been
calculated using the Monte-Carlo simulation. They are equity settled shares. In line with IFRS2 the amount recognised as an expense
has been adjusted to reflect the number of awards for which the service and non-market performance conditions are expected to
be met.
The options outstanding at 31 March 2018 had a weighted average remaining contractual life of 2.5 years.
138
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Trifast plc Annual report 2018 22 Employee benefits (continued)
Date of
grant
Type of
instrument
01/10/2011 SAYE 7 Year
01/10/2012 SAYE 7 Year
01/10/2013 SAYE 5 Year
01/10/2014 SAYE 3 Year
01/10/2014 SAYE 5 Year
01/10/2015 SAYE 3 Year
01/10/2015 SAYE 5 Year
01/10/2016 SAYE 3 Year
01/10/2016 SAYE 5 Year
01/10/2017 SAYE 3 Year
01/10/2017 SAYE 5 Year
Valuation
model
Black
Scholes
Black
Scholes
Black
Scholes
Black
Scholes
Black
Scholes
Black
Scholes
Black
Scholes
Black
Scholes
Black
Scholes
Black
Scholes
Black
Scholes
No. out-
standing
on
31 March
2018
Share
price on
date of
grant
(£)
Exercise
price
(£)
Expected
volatility
%
Vesting
period
(yrs)
Expected
life
(yrs)
7,920
0.41
0.45
47.63
7.00
7.00
Risk-
free
rate
%
0.56
Expected
annual
dividend
%
0.00
Fair
value
(£)
0.19
5,280
0.46
0.35
48.08
7.00
7.00
1.93
1.09
0.24
21,000
0.68
0.50
46.06
5.00
5.00
1.55
1.19
0.31
14,760
1.05
1.00
35.76
3.00
3.00
1.23
1.33
0.26
111,201
1.05
1.00
35.76
5.00
5.00
1.73
1.33
0.33
324,478
1.14
1.05
35.20
3.00
3.00
0.77
1.84
0.28
111,991
1.14
1.05
34.60
5.00
5.00
1.17
1.84
0.33
341,519
1.72
1.07
33.83
3.00
3.00
0.36
1.63
0.68
57,018
1.72
1.07
32.80
5.00
5.00
0.66
1.63
0.71
241,389
2.24
1.77
26.64
3.00
3.00
0.57
1.56
0.59
104,559
2.24
1.77
31.18
5.00
5.00
0.82
1.56
0.72
Total Share Options
1,341,115
09/09/2015 Board deferred
DDM
740,098
1.16
equity
15/07/2016 Board deferred
DDM
761,791
1.35
equity
26/07/2017 Board deferred
DDM
536,603
2.14
equity
30/12/2016 SM deferred
bonus equity
DDM
1,625,984
2.05
30/12/2016 SM deferred
DDM
102,368
2.58
bonus cash
24/11/2017 SM deferred
bonus equity
DDM
70,872
2.45
30/09/2017 Board LTIP shares
DDM
479,565
2.08
- EPS growth
30/09/2017 Board LTIP shares
- TSR element
Monte-Carlo
simulation
205,526
2.08
Total
5,863,922
*Fair value at the reporting date
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
2.56
2.56
2.71
2.71
4.00
4.00
3.00
3.00
3.00
3.00
2.10
2.10
n/a
n/a
n/a
n/a
n/a
n/a
1.81
1.11
2.07
1.28
1.40
2.05
1.46
1.96
1.40
2.52*
1.47
2.37
3.00
3.00
0.53
1.68
1.98
25.7
3.00
3.00
0.53
1.68
0.80
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www.trifast.comOur financials Our financials Notes to the financial statements
Notes to the financial statements
for the year ended 31 March 2018
22 Employee benefits (continued)
Expected volatility was determined by calculating the historic volatility of the Group’s share price over one, two and three years back
from the date of grant. The expected life used in the model has been adjusted, based on management’s best estimate for the effects
of non-transferability, exercise restrictions and behavioural considerations.
The Group recognised total charges of £2.2m and £1.5m in relation to share based payment transactions in 2018 and 2017
respectively. Of this, £88k (2017: £16k) relates to cash settled awards to which a liability is recognised on the balance sheet. The
remaining amount relates to equity settled awards.
As at 31 March 2018, outstanding options to subscribe for ordinary shares of 5p were as follows:
Grant date/employees entitled
Number of
instruments
Contractual life of options
01/10/11/SAYE
01/10/12/SAYE
01/10/13/SAYE
01/10/14/SAYE
01/10/15/SAYE
01/10/16/SAYE
01/10/17 SAYE
Total outstanding options
Board deferred equity bonus shares
Senior manager deferred bonus shares
Board LTIP shares
Total
7,920
5,280
21,000
125,961
436,469
398,537
345,948
1,341,115
2,038,492
1,799,224
685,091
5,863,922
Oct 2018
Oct 2019
Oct 2018
Oct 2017, 2019
Oct 2018, 2020
Oct 2019, 2021
Oct 2020, 2022
Sep 2018, Jul 2019, 2020
Dec 2019
Sep 2020
All options require continued employment from grant date to the later of vesting date or exercise date.
23 Provisions
Group
Balance at 31 March 2017
Provisions utilised during the year
Provisions released during the year
Balance at 31 March 2018
Restructuring
costs
£000
Dilapidations
£000
76
—
—
76
1,111
(5)
(261)
845
Total
£000
1,187
(5)
(261)
921
The restructuring provision relates to onerous leases arising from the ‘right-sizing’ of our portfolio of properties within the UK.
Dilapidations also relate to properties. Both will be utilised by vacation.
In respect of onerous leases and dilapidation provisions, external advisors were used to provide estimates of potential costs and
likelihood of sub-letting. The future cash flows were then discounted using risk free rates over the length of the leases.
All amounts represent a best estimate of the expected cash outflows although actual amounts paid could be lower or higher.
Group
Non-current (greater than 1 year)
Current (less than 1 year)
Balance at 31 March
In respect of the Company there are £nil provisions (2017: £nil).
Restructuring
costs
£000
—
76
76
Dilapidations
£000
845
—
845
2018
Total
£000
845
76
921
2017
Total
£000
1,111
76
1,187
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Trifast plc Annual report 2018 24 Capital and reserves
Capital and reserves – Group and Company
See Statements of changes in equity on pages 111 and 112.
Reserves
The translation reserve comprises all foreign exchange differences arising from the translation of foreign operations, as well as from
the translation of liabilities that hedge the Group’s net investment in foreign subsidiaries.
The merger reserve has arisen under Section 612 Companies Act 2006 and is a non-distributable reserve.
During the year the Group acquired 1,500,000 5p ordinary shares on the open market via the Trifast EBT to help meet future
employee share plan obligations. These shares are in the own shares held reserve. The number of ordinary shares held at the 31
March 2018 was 1,500,000 (2017: nil).
Share capital
In issue at 1 April
Shares issued
In issue at 31 March — fully paid
Number of ordinary shares
2017
2018
120,294,486
1,070,181
116,747,887
3,546,599
121,364,667
120,294,486
The total number of shares issued during the year was 1,070,181 for a consideration of £0.2m (2017: 3,546,599 shares for £0.3m).
In FY2018, all shares were issued for cash, excluding 820,989 shares (2017: 1,050,044) as part of the Board deferred equity bonus
scheme.
Allotted, called up and fully paid
Ordinary shares of 5p each
2018
£000
2017
£000
6,068
6,014
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share
at meetings of the Company.
Dividends
During the year the following dividends were recognised and paid by the Group:
Final paid 2017 — 2.50p (2016: 2.00p) per qualifying ordinary share
Interim paid 2017 — 1.00p (2016: 0.80p) per qualifying ordinary share
2018
£000
3,015
1,203
4,218
2017
£000
2,376
934
3,310
After the balance sheet date a final dividend of 2.75p per qualifying ordinary share (2017: 2.50p) was proposed by the Directors and
an interim dividend of 1.10p (2017: 1.00p) was paid in April 2018.
Final proposed 2018 — 2.75p (2017: 2.50p) per qualifying ordinary share
Interim paid 2018 — 1.10p (2017: 1.00p) per qualifying ordinary share
2018
£000
3,296
1,319
4,615
2017
£000
3,007
1,203
4,210
Subject to Shareholder approval at the Annual General Meeting which is to be held on 25 July 2018, the final dividend will be paid on
12 October 2018 to Members on the register at the close of business on 14 September 2018. The ordinary shares will become ex-
dividend on 13 September 2018.
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www.trifast.comOur financials
Our financials Notes to the financial statements
Notes to the financial statements
for the year ended 31 March 2018
25 Earnings per share
Basic earnings per share
The calculation of basic earnings per share at 31 March 2018 was based on the profit attributable to ordinary shareholders of
£15.1m (2017: £12.7m) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2018 of
120,313,586 (2017: 118,493,886), calculated as follows:
Weighted average number of ordinary shares
Issued ordinary shares at 1 April
Effect of shares issued/purchased
Weighted average number of ordinary shares at 31 March
2018
2017
120,294,486
116,747,887
19,100
1,745,999
120,313,586
118,493,886
Diluted earnings per share
The calculation of diluted earnings per share at 31 March 2018 was based on profit attributable to ordinary shareholders of
£15.1m (2017: £12.7m) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2018 of
123,678,854 (2017: 122,143,769), calculated as follows:
Weighted average number of ordinary shares (diluted)
Weighted average number of ordinary shares at 31 March
Effect of share options on issue
Weighted average number of ordinary shares (diluted) at 31 March
2018
2017
120,313,586
3,365,268
123,678,854
118,493,886
3,649,883
122,143,769
The average market value of the Company’s shares for the purposes of calculating the dilutive effect of share options was based on
quoted market prices for the period that the options and deferred equity awards were outstanding.
Underlying earnings per share
2018
EPS
2017
EPS
EPS (total)
Profit after tax for the financial
year
Separately disclosed items:
IFRS2 share based
payment charge
Acquired intangible
amortisation
Net acquisition costs
Costs on exercise of
executive share options
Profit on sale of fixed
assets
Project Atlas
Tax charge on adjusted
items above
Tax adjusted items
Underlying profit after tax
Earnings
£000
Basic
Diluted
Earnings
£000
Basic
Diluted
15,086
12.54p
12.20p
12,698
10.72p
10.40p
2,194
1,363
110
244
(556)
375
(802)
(967)
17,047
1.83p
1.13p
0.09p
1.77p
1.10p
0.09p
0.20p
0.20p
(0.46p)
0.31p
(0.67p)
(0.80p)
14.17p
(0.45p)
0.30p
(0.65p)
(0.78p)
13.78p
1,512
1,273
—
567
(195)
—
(609)
418
15,662
1.28p
1.07p
—
1.24p
1.04p
—
0.48p
0.46p
(0.17p)
—
(0.51p)
0.35p
13.22p
(0.16p)
—
(0.50p)
0.34p
12.82p
The ‘underlying diluted’ earnings per share is detailed in the above tables. In the Directors’ opinion, this best reflects the underlying
performance of the Group and assists in the comparison with the results of earlier years (see note 2).
The tax adjusted items includes the release of the tax provision from the open tax enquiry and the tax rate changes in Italy and the
USA respectively. See notes 9 and 15 for further details.
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Trifast plc Annual report 2018
26 Financial instruments
(a) Fair values of financial instruments
There is no significant difference between the fair values and the carrying values shown in the balance sheet.
(b) Financial instruments risks
Exposure to credit, interest rate and currency risks arises in the normal course of the Group’s business, and the Group continues
to monitor and reduce any exposure accordingly. Information has been disclosed relating to the individual Company, only where a
material risk exists.
(i) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group’s receivables from customers.
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis.
Credit evaluations are performed on all customers requiring credit over a predetermined amount. Bad debt insurance is taken out
on all key accounts where the cost is appropriate given the risk covered. All overdue debts are monitored regularly and customers
are put on credit hold if payments are not received on time. The carrying amount of trade receivables represents the maximum credit
exposure for the Group. Therefore, the maximum exposure to credit risk at the balance sheet date was £48.0m (2017: £47.5m),
being the total carrying amount of trade receivables net of an allowance. Management does not consider there to be any significant
unimpaired credit risk in the year-end balance sheet (2017: £nil).
At the balance sheet date there were no significant geographic or sector specific concentrations of credit risk.
Amounts less than 90 days past due
Amounts more than 90 days past due
2018
£000
47,368
616
47,984
2017
£000
46,911
586
47,497
For balances neither past due nor impaired, credit quality is considered good and no credit exposures have been identified (2017:
nil).
When the Group is satisfied that no recovery of the amount owing is possible, at that point the amounts considered irrecoverable are
written off against the trade receivables directly.
Impairment losses
The movement in the allowance for impairment in respect of receivables during the year was as follows:
Balance at 1 April
Impairment movement
Balance at 31 March
2018
£000
(875)
(22)
(897)
2017
£000
(803)
(72)
(875)
There are no significant losses/bad debts provided for specific customers. Impairments are recognised where a credit exposure has
been identified whether amounts are past due or not.
(ii) Liquidity and interest risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Group holds net debt and hence its main interest and liquidity risks are associated with the maturity of its loans against cash
inflows from around the Group. The Group’s objective is to maintain a balance of continuity of funding and flexibility through the use
of loans and banking facilities as applicable.
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143
www.trifast.comOur financials Our financials Notes to the financial statements
Notes to the financial statements
for the year ended 31 March 2018
26 Financial instruments (continued)
The Group banking facilities with HSBC comprise:
• a term loan facility of €25.0m (‘Facility A’) used to fund the acquisition of VIC (balance at 31 March 2018: €15.0m)
• a revolving multi-currency credit facility (‘RCF’) of up to £26.0m with an option to increase the facility by £9m (‘Facility B’)
(balance at 31 March 2018: £13.0m)
• a property loan of £2.1m (balance at 31 March 2018: £2.1m)
The obligations of Trifast under Facility A and Facility B are guaranteed by the UK non-dormant subsidiaries of the Company.
Interest on facility A and B is charged at the aggregate rate of LIBOR/EURIBOR plus a margin of 1.50%, in accordance with a
formula incorporating the ratio of consolidated net debt against the consolidated underlying EBITDA of the Group. Interest on the
property loan is charged at LIBOR plus a margin of 1.25%.
Facilities A and B were restructured in October 2016. At the same time, the property loan was taken out, secured on the Group’s
premises in Uckfield.
In addition the Group has an Asset Based Lending (‘ABL’) facility providing up to a maximum of £15.0m secured over the receivables
of TR Fastenings Limited. This facility charges a marginal interest rate of 1.49% above base.
In June 2015, VIC took out a €3m repayment loan with MPS in Italy to part fund the de-factoring of their receivables. Interest is
charged at 1.95% above EURIBOR until maturity in 2020.
Covenant headroom
The current and modified UK term facilities are subject to quarterly covenant testing as follows:
Interest cover:
Debt Service cover:
Net Debt cover:
Underlying EBITDA to net interest to exceed a ratio of three.
Underlying EBITDA to debt service to exceed a ratio of one.
Total net debt to underlying EBITDA not to exceed a ratio of 2.75.
These covenants currently provide significant headroom and forecasts indicate no breach is anticipated.
Liquidity tables
The following are the contractual maturities of the existing financial liabilities, excluding bank overdrafts and finance lease liabilities:
2018
Carrying
amount/
contractual
cash flows^
£000
Less than
1 year
£000
1 to 2
years
£000
2 to 5
years
£000
5 years
and over
£000
13,194
12,995
2,100
28,289
3,968
1,320
33,577
4,398
12,995
—
17,393
3,968
528
21,889
4,398
—
—
4,398
—
528
4,926
4,398
—
2,100
6,498
—
264
6,762
—
—
—
—
—
—
—
Non-derivative financial liabilities
Company
Facility A — VIC acquisition loan
Facility B — Revolving credit facility
Property loan
Total Company
Group
Asset based lending
VIC unsecured loan
Total Group
^ Excluding interest charges
144
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Trifast plc Annual report 2018 26 Financial instruments (continued)
The Group banking facilities with HSBC comprise:
26 Financial instruments (continued)
Finance lease liabilities at 31 March 2018 are £0.08m (2017: £0.01m).
• a term loan facility of €25.0m (‘Facility A’) used to fund the acquisition of VIC (balance at 31 March 2018: €15.0m)
• a revolving multi-currency credit facility (‘RCF’) of up to £26.0m with an option to increase the facility by £9m (‘Facility B’)
(balance at 31 March 2018: £13.0m)
• a property loan of £2.1m (balance at 31 March 2018: £2.1m)
The obligations of Trifast under Facility A and Facility B are guaranteed by the UK non-dormant subsidiaries of the Company.
Interest on facility A and B is charged at the aggregate rate of LIBOR/EURIBOR plus a margin of 1.50%, in accordance with a
formula incorporating the ratio of consolidated net debt against the consolidated underlying EBITDA of the Group. Interest on the
property loan is charged at LIBOR plus a margin of 1.25%.
Facilities A and B were restructured in October 2016. At the same time, the property loan was taken out, secured on the Group’s
premises in Uckfield.
In addition the Group has an Asset Based Lending (‘ABL’) facility providing up to a maximum of £15.0m secured over the receivables
of TR Fastenings Limited. This facility charges a marginal interest rate of 1.49% above base.
In June 2015, VIC took out a €3m repayment loan with MPS in Italy to part fund the de-factoring of their receivables. Interest is
charged at 1.95% above EURIBOR until maturity in 2020.
Covenant headroom
The current and modified UK term facilities are subject to quarterly covenant testing as follows:
Interest cover:
Underlying EBITDA to net interest to exceed a ratio of three.
Debt Service cover:
Underlying EBITDA to debt service to exceed a ratio of one.
Net Debt cover:
Total net debt to underlying EBITDA not to exceed a ratio of 2.75.
These covenants currently provide significant headroom and forecasts indicate no breach is anticipated.
Liquidity tables
The following are the contractual maturities of the existing financial liabilities, excluding bank overdrafts and finance lease liabilities:
2018
Carrying
amount/
contractual
cash flows^
£000
Less than
1 year
£000
1 to 2
years
£000
2 to 5
years
£000
5 years
and over
£000
13,194
12,995
2,100
28,289
3,968
1,320
33,577
4,398
12,995
—
17,393
3,968
528
21,889
4,398
—
—
4,398
—
528
4,926
4,398
—
2,100
6,498
—
264
6,762
—
—
—
—
—
—
—
Non-derivative financial liabilities
Company
Facility A — VIC acquisition loan
Facility B — Revolving credit facility
Property loan
Total Company
Group
Asset based lending
VIC unsecured loan
Total Group
^ Excluding interest charges
Carrying
amount/
contractual
cash flows^
£000
Less than
1 year
£000
16,038
7,869
2,100
26,007
3,280
1,796
31,083
3,208
7,869
—
11,077
3,280
513
14,870
2017
1 to 2
years
£000
4,276
—
—
4,276
—
513
4,789
2 to 5
years
£000
5 years
and over
£000
8,554
—
2,100
10,654
—
770
11,424
—
—
—
—
—
—
—
Non-derivative financial liabilities
Company
Facility A — VIC acquisition loan
Facility B — Revolving credit facility
Property loan
Total Company
Group
Asset based lending
VIC unsecured loan
Total Group
^ Excluding interest charges
Liquidity headroom
Trading forecasts show that the current facilities provide sufficient liquidity headroom. The Group continues to maintain positive
relationships with a number of banks and the Directors believe that appropriate facilities will continue to be made available to the
Group as and when they are required.
Available existing facilities at 31 March 2018 (excluding bank overdrafts and finance lease liabilities):
Available
facilities
£000
2018
Utilised
facilities
£000
Un-utilised
facilities
£000
Available
facilities
£000
2017
Utilised
facilities
£000
Un-utilised
facilities
£000
Company
Facility A — VIC acquisition
loan
Facility B — Revolving credit
facility
Property loan
Total Company
Group
Asset based lending
VIC unsecured loan
Total Group
13,194
13,194
—
16,038
16,038
26,000
2,100
41,294
15,000
1,320
57,614
12,995
2,100
28,289
3,968
1,320
33,577
13,005
—
13,005
11,032
—
24,037
15,000
2,100
33,138
15,000
1,796
49,934
7,869
2,100
26,007
3,280
1,796
31,083
—
7,131
—
7,131
11,720
—
18,851
In addition, there is a remaining accordion facility of £9.0m, as part of the main HSBC RCF facility agreement, providing potential
additional finance under currently agreed terms subject to credit approval.
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Notes to the financial statements
for the year ended 31 March 2018
26 Financial instruments (continued)
Interest risk
The Group monitors closely all loans outstanding which currently incur interest at floating rates. When interest rate exposure risk
becomes significant the Group makes use of derivative financial instruments, including interest rate swaps and caps. The only
instrument held at the balance sheet date relates to Facility A, where a cap of 1.0% EURIBOR is in place (2017: 1.0%). The Group
will continue to review this position going forward.
In respect of income-earning financial assets and interest-bearing financial liabilities, the following table indicates the split between
fixed and variable interest rates at the balance sheet date.
Further details of the rates applicable on interest-bearing loans and borrowings is given in note 20.
All assets and liabilities in place at year end bear interest at a floating rate and therefore may change within one year.
Interest rate table (including bank overdraft and finance lease liabilities)
Group
Variable rate instruments
Financial assets
Financial liabilities^
2018
£000
26,222
(33,653)
(7,431)
2017
£000
24,645
(31,093)
(6,448)
Company
2018
£000
477
(28,289)
(27,812)
2017
£000
2,587
(26,007)
(23,420)
^ £13.2m of the variable rate financial liability balance in the Group and the Company relates to Facility A and has a 1.0% EURIBOR interest rate cap
in place
Sensitivity analysis
A change of one point in interest rates at the balance sheet date would change equity and profit and loss by £0.3m (2017: £0.3m).
This calculation has been applied to risk exposures existing at the balance sheet date.
This analysis assumes that all other variables, in particular foreign currency rates, remain consistent and considers the effect of
financial instruments with variable interest rates. The analysis is performed on the same basis for the comparative period.
(iii) Foreign currency risk
The Group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other than local functional
currency. The Group faces additional currency risks arising from monetary financial instruments held in non-functional local
currencies.
Operational foreign exchange exposure
Where possible the Group tries to invoice in the local currency at the respective entity. If this is not possible, then to mitigate any
exposure, the Group tries to buy from suppliers and sell to customers in the same currency.
Where possible the Group tries to hold the majority of its cash and cash equivalent balances in the local currency at the respective
entity.
Monetary assets/liabilities
The Group continues to monitor exchange rates and buy or sell currencies in order to minimise open exposure to foreign exchange
risk. The Group does not speculate on exchange rates. No foreign exchange derivative financial instruments are held at the balance
sheet date.
The €25m VIC acquisition loan and the RCF utilised facility of €12.5m (£11.0m) are net investment hedged against the net asset
value of VIC and TR Kuhlmann. Therefore all foreign exchange movements that are being hedged are taken to the translation
reserve. All other loans are held in the local currency of the relevant company and so are excluded from the analysis below.
146
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Trifast plc Annual report 2018 26 Financial instruments (continued)
The Group’s exposure to foreign currency risk is as follows (based on the carrying amount for cash and cash equivalents held in non-
functional currencies):
31 March 2018
Cash and cash equivalents exposure
31 March 2017
Cash and cash equivalents exposure
Sterling
£000
1,091
Sterling
£000
733
Euro
£000
2,847
Euro
£000
3,213
US Dollar
£000
5,451
US Dollar
£000
5,895
Singapore
Dollar
£000
530
Singapore
Dollar
£000
290
Total
£000
9,919
Total
£000
10,131
Sensitivity analysis
Group
A 1% change in significant foreign currency balances against local functional currency at 31 March 2018 would have changed equity
and profit and loss by the amount shown below. This calculation assumes that the change occurred at the balance sheet date and
had been applied to risk exposures existing at that date.
This analysis assumes that all other variables, in particular other exchange rates and interest rates, remain constant. The analysis is
performed on the same basis for the comparative period.
Foreign currency
Local currency
EURO
US Dollar
US Dollar
Sterling
Singapore Dollar
Taiwanese Dollar
Equity & profit or loss
2018
£000
(10)
(20)
(26)
2017
£000
(19)
(31)
(20)
(c) Capital management
The Group’s objectives when managing capital are to ensure that all entities within the Group will be able to continue as going
concerns, while maximising the return to shareholders through the optimisation of the debt and equity balance. We regularly review
and maintain or adjust the capital structure as appropriate in order to achieve these objectives, consistent with the management
of capital for previous periods. The Group has various borrowings and available facilities (see section (b) (ii) Liquidity and interest
risk) that contain certain external capital requirements (‘covenants’) that are considered normal for these types of arrangements. As
discussed above, we remain comfortably within all such covenants.
Identification of the total funding requirement is achieved via a detailed cash flow forecast which is reviewed and updated on a
monthly basis.
The capital structure of the Group is presented below:
Cash and cash equivalents (note 19)
Borrowings (note 20)
Net debt
Equity
Capital
2018
£000
26,222
(33,653)
(7,431)
(110,289)
(117,720)
2017
£000
24,645
(31,093)
(6,448)
(101,698)
(108,146)
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www.trifast.comOur financials Our financials Notes to the financial statements
Notes to the financial statements
for the year ended 31 March 2018
27 Operating leases
Non-cancellable operating lease rentals are payable as follows:
Less than one year
Between two and five years
More than five years
Total
Group
2018
£000
3,181
5,008
3,117
2017
£000
2,910
5,023
3,047
11,306
10,980
Company
2018
£000
30
30
—
60
2017
£000
31
37
—
68
The Group leases a number of offices, warehouse and factory facilities under operating leases.
Group
During the year £3.3m was recognised as an expense (2017: £2.5m) in the income statement in respect of operating leases.
Company
During the year £0.05m (2017: £0.04m) was recognised as an expense in the income statement in respect of operating leases.
28 Contingent liabilities
Company
The Company has cross guarantees on its UK banking facilities with its three UK subsidiaries. The amount outstanding at the end of
the year was £nil (2017: £nil).
29 Related parties
Group and Company
Compensation of key management personnel of the Group
Full details of the compensation of key management personnel are given in the Directors’ remuneration report on pages 86 to 98.
Transactions with Directors and Directors’ close family relatives
During 2018 a relative of the Chairman provided IT/Marketing consultancy services totalling £12,000 (2017: £12,000) on an arm’s
length basis and with terms similar to other third party suppliers. The outstanding balance at 31 March 2018 was £1,000 (2017:
£1,000).
There were no other related party transactions with Directors, or Directors’ close family relatives in the year (2017: £nil).
Related party transactions
Details of principal subsidiary undertakings, country of registration and principal activities are included in note 33.
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Trifast plc Annual report 2018 29 Related parties (continued)
Company related party transactions with subsidiaries – income/expenditure 2018
Income
management
fees
£000
Expenditure
management
fees
£000
TR Fastenings Ltd
TR Southern
Fasteners Ltd
TR Norge AS
TR Fastenings AB
TR Miller BV
Lancaster Fastener
Co Ltd
TR Hungary Kft
Viterie Italia
Centrale SPA
TR Kuhlmann GmbH
TR Asia Investments
Pte Ltd
TR Fastenings Inc
TR Fastenings
España – Ingenieria
Industrial, S.L.
TR Fastenings
Poland Sp Zoo
Rent
income
£000
290
—
—
—
—
—
—
—
—
—
—
—
—
290
Rent
income
£000
290
—
—
—
—
—
—
—
—
—
—
—
TR Fastenings Ltd
TR Southern
Fasteners Ltd
TR Norge AS
TR Fastenings AB
TR Miller BV
Lancaster Fastener
Co Ltd
TR Hungary Kft
Viterie Italia
Centrale SPA
TR Kuhlmann GmbH
TR Asia Investments
Pte Ltd
TR Fastenings Inc
TR Fastenings
España – Ingenieria
Industrial, S.L.
TR Fastenings
Poland Sp Zoo
410
22
24
51
69
32
86
104
67
633
38
54
—
1,590
470
17
21
49
67
29
49
104
49
569
55
—
Total
income
£000
700
22
24
51
75
32
86
104
67
633
38
61
Total
income
£000
760
17
21
49
93
29
49
104
49
569
55
1
Loan
interest
£000
—
—
—
—
6
—
—
—
—
—
—
7
—
13
Loan
interest
£000
—
—
—
—
26
—
—
—
—
—
—
1
1
28
Company related party transactions with subsidiaries – income/expenditure 2017
Income
management
fees
£000
—
1,893
—
473
Expenditure
management
fees
£000
473
—
—
—
—
—
—
—
—
—
—
—
399
—
—
—
—
—
—
—
—
—
—
—
Loan
interest
£000
—
—
—
—
—
—
—
5
—
—
—
—
—
5
Loan
interest
£000
—
—
—
—
—
—
—
3
—
—
—
—
—
3
Total
expense
£000
473
—
—
—
—
—
—
5
—
—
—
—
—
478
Total
expense
£000
399
—
—
—
—
—
—
3
—
—
—
—
—
402
149
—
290
—
1,479
1
1,797
—
399
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Notes to the financial statements
for the year ended 31 March 2018
29 Related parties (continued)
2018
2017
TR Fastenings Ltd
TR Southern Fasteners Ltd
TR Norge AS
TR Fastenings AB
TR Miller Holding B.V.
Lancaster Fastener Company Ltd
TR Hungary Kft
Viterie Italia Centrale SPA
TR Kuhlmann GmbH
TR Fastenings Inc
TR Asia Investments Holdings Pte Ltd
TR Formac Pte Ltd
TR Formac (Malaysia) SDN Bhd
TR Formac (Shanghai) Pte Ltd
Special Fasteners Engineering Co Ltd
Power Steel & Electro-Plating Works SDN Bhd
TR Fastenings España - Ingenieria Industrial, S.L.
TR Fastenings Poland Sp Zoo
Non-trading dormant subsidiaries
Trifast Overseas Holdings Ltd
Trifast Holdings B.V.
Balances
receivables
£000
1,373
13
31
78
46
32
22
87
78
440
847
147
41
48
52
89
867
35
—
28,102
523
32,951
Balances
payables
£000
Balances
receivables
£000
Balances
payables
£000
56
—
—
—
—
—
—
2
—
—
—
—
—
—
—
—
—
—
267
—
—
325
812
4
6
16
408
26
6
23
16
14
472
26
8
8
10
15
350
30
—
28,496
453
31,199
—
—
—
—
—
—
—
687
—
—
—
—
—
—
—
—
—
—
267
—
—
954
All related party transactions are on an arm’s length basis.
30 Subsequent events
There are no material adjusting events subsequent to the balance sheet date. There was one material non-adjusting event which
relates to the acquisition of Precision Technology Supplies Limited (PTS), see note 32 for further information.
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Trifast plc Annual report 2018
31 Accounting estimates and judgements
The preparation of financial statements in conformity with Adopted IFRSs requires management to make judgements, estimates
and assumptions that affect the application of policies and reported annual amounts of assets and liabilities, income and expenses.
Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period,
or in the period of the revision and future periods if the revision affects both current and future periods.
Key judgements
In preparing the financial statements and applying the Group's accounting policies, no key judgements have been made, other than
those involving estimations, that have a significant effect on the amounts recognised in the financial statements.
Sources of estimation uncertainty
The source of estimation uncertainty that Management have identified which may result in a material adjustment to the carrying
amount of assets and liabilities in the next financial year is inventory valuation.
Inventories are stated at the lower of cost and net realisable value with a provision being made for obsolete and slow moving items.
Initially, management makes a judgement on whether an item of inventory should be classified as standard or customer specific.
This classification then determines when a provision is recognised. Management then estimates the net realisable value of the stock
for each individual classification. A provision is made earlier for customer specific stock (compared to standard) because it carries
a greater risk of becoming obsolete or slow moving given the fastenings are designed specifically for an individual customer. The
amount of write downs recognised as an expense in the period relating to this estimate is detailed in note 17.
The carrying amount of inventory at year end was £49.2m of which £27.2m related to customer specific stock (2017: carrying value
£41.9m, customer specific stock £23.2m).
The key sensitivity to the carrying amount of customer specific inventory relates to the future demand levels for specific products
stocked for individual customers. In the event that an individual customer’s demand for products specific to them unexpectedly
reduced, the company might be required to increase the inventory provision. Although one customer taking such action is unlikely to
result in a material adjustment, multiple customers taking such action over a short timescale could result in a material adjustment.
Changes to key judgements and sources of estimation uncertainty from last year
Income taxes, fair values for IFRS2 charge and recoverable amount of goodwill have been removed as sources of estimation
uncertainty from the prior year. Income taxes was removed as the open enquiries with a tax authority have been settled in the year
(see note 9) and therefore the estimation uncertainty no longer exists. Fair values for IFRS2 charge and recoverable amount of
goodwill are no longer considered a source of estimation uncertainty as they are unlikely to result in a material adjustment to the
carrying amount of assets and liabilities in the next financial year.
Whilst the recoverability of goodwill is unlikely to result in a material adjustment in the next financial year, there are longer term risks
involved which could result in a material adjustment to the carrying amounts of assets and liabilities. These estimates depend upon
the outcome of future events and may need to be revised as circumstances change (see note 12).
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Notes to the financial statements
for the year ended 31 March 2018
32 Acquisition of Precision Technology Supplies Limited (‘PTS’)
On 4 April 2018, the Group acquired PTS for an initial consideration of £8.5m, subject to adjustment based on the net cash in the
business at completion. The initial amount was paid on completion in cash. Contingent consideration of up to £2.5m in cash is
based on the achievement of significant earn out targets, and will be deferred for 12 months. The targets require PTS to achieve
a minimum adjusted PAT for FY2019 to receive a further £0.5m consideration. Then for every £1 of adjusted PAT in excess of the
minimum an extra £3.77 will be payable subject to a maximum of £2.0m. This contingent consideration will also serve as a retention
against which any potential warranty and indemnity claims can be offset at the end of the earn out period. The cash consideration
has been met from the Company's existing bank facilities via a drawdown of part of the Accordion facility with HSBC.
Based in East Grinstead, UK, PTS was founded in 1988 and employs 27 staff. It is a highly regarded distributor of stainless steel
industrial fastenings and precision turned parts, primarily to the electronics, medical instruments, petrochemical, defence and
robotics sectors. Its emphasis is on delivering high quality products and services, currently selling into c.80 countries directly
through its well-established distributor network, as well as digitally through its newly developed, fully integrated commercial website
which lists over 43,000 products for sale. This approach has enabled PTS to continue to deliver strong sales growth over the last
three years.
For the year ended 31 March 2017, PTS reported revenue of £5.1m and profit before tax of £0.7m. Gross assets at that date were
£3.6m. These figures were not audited.
TR has experienced a growing demand for stainless steel fastenings from a number of our global OEM customers. Adding the PTS
product portfolio will widen our global stock range to enhance our customer offering and provide further support to our distributor
sales (currently c.10% of Group revenue).
As the acquisition completed so close to 31 March 2018, a full fair value exercise is still to be completed and therefore the amounts
disclosed below are given for information puposes only. The fair value exercise will be completed as part of the completion accounts
process and updated consolidated values will be disclosed in the Half-Yearly Report for 30 September 2018.
Property, plant and equipment
Intangible assets
Inventories
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Deferred tax liabilities
Net identifiable assets and liabilities
Consideration paid:
Initial cash price paid
Contingent consideration at fair value
Total consideration
Goodwill on acquisition
£000
253
4,816
2,417
1,324
632
(1,218)
(861)
7,363
8,781
598
9,379
2,016
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Trifast plc Annual report 2018 32 Acquisition of Precision Technology Supplies Limited (‘PTS’) (continued)
Intangible assets that arose on the acquisition include the following:
• £3.7m of customer relationships, with an amortisation period deemed to be 15 years
• £1.1m of marketing related intangibles, with an amortisation period deemed to be 12 years
Goodwill is the excess of the purchase price over the fair value of the net assets acquired and is not deductible for tax purposes.
It mostly represents potential synergies, e.g. cross-selling opportunities between PTS and the Group, and PTS's assembled
workforce.
Effect of acquisition
The Group incurred costs of £0.2m up to 31 March 2018 in relation to the PTS acquisition of which £0.1m have been included in
administrative expenses in the Group’s consolidated statement of comprehensive income and form part of separately disclosed
items, see note 2. The remaining £0.1m relates to the arrangement fee to drawdown part of the Accordion facility and this is
recognised on the balance sheet and will be expensed to the consolidated statement of comprehensive income over the term of the
facility.
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153
www.trifast.comOur financials Our financials Notes to the financial statements
Notes to the financial statements
for the year ended 31 March 2018
Country of
incorporation
or registration
Issued and fully
paid share
capital
Principal activity
Group Company
Office Address
Percentage of
ordinary
shares held
33 Trifast plc subsidiaries
Name
Europe
Trifast Overseas Holdings Ltd
Trifast Qualifying Employee
Share Ownership Trustee Ltd
Trifast Holdings B.V.
TR Fastenings Ltd
TR Southern Fasteners Ltd
TR Norge AS
TR Miller Holding B.V.
TR Fastenings AB
TR Hungary Kft
TR Fastenings Poland Sp. Z o.o
Viterie Italia Centrale SPA
VIC Sp. Z o.o.
TR Kuhlmann GmbH
TR Fastenings España -
Ingenieria Industrial, S.L.
Asia
TR Asia Investment Holdings Pte Ltd
TR Formac Pte Ltd
TR Formac (Malaysia)
SDN Bhd
TR Formac (Shanghai) Pte Ltd
Lancaster Fastener Company Ltd
United Kingdom
United Kingdom
United Kingdom
Netherlands
United Kingdom
Republic of
Ireland
Norway
Netherlands
Sweden
Hungary
Poland
Italy
Poland
Germany
Spain
£112
£2
Holding Company
Investment Company
€18,428
Holding Company
£10,200 Manufacture and distribution of fastenings
€254
Distribution of fastenings
NOK 300,000
€45,378
£40,000
SEK 1,500,000
HUF 68,257,300
PLN 50,000
Distribution of fastenings
Distribution of fastenings
Distribution of fastenings
Distribution of fastenings
Distribution of fastenings
Distribution of fastenings
€187,200 Manufacture and distribution of fastenings
Distribution of fastenings
Distribution of fastenings
Distribution of fastenings
PLN 50,000
€25,000
€3,085
Singapore
Singapore
S$4
Holding Company
S$315,000 Manufacture and distribution of fastenings
Malaysia
MYR 480,000 Manufacture and distribution of fastenings
China
US$200,000
Distribution of fastenings
Special Fasteners Engineering Co Ltd
Taiwan
TW$100,000,000 Manufacture and distribution of fastenings
TR Formac Fastenings Private Ltd
India
INR 18,850,000
Distribution of fastenings
Power Steel & Electro-Plating
Works SDN Bhd
TR Formac Co. Ltd
Americas
TR Fastenings Inc
Dormants
Trifast Systems Ltd
Ivor Green (Exports) Ltd
Charles Stringer’s Sons & Co.Limited
Fastech (Scotland) Ltd
Micro Screws & Tools Ltd
Trifast International Ltd
Rollthread International Ltd
TR Group Ltd
Fastener Techniques Ltd
Trifix Ltd
Serco Ryan Ltd
TR Europe Ltd
KNH Verwaltungs GmbH
Malaysia
MYR 4,586,523 Manufacture and distribution of fastenings
Thailand
THB 20,000,000
Distribution of fastenings
— 29/1, Piya Place Langsuan, 6th Floor, Unit no.6H, Soi Langsuan, Ploenchit Rd., Lumpini,
Patumwan, Bangkok 10330 Thailand
USA
US$1,168,063
Distribution of fastenings
100%
— 11255 Windfern Road, Houston, TX. 77064
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Germany
£100
£5,000
£18,000
£100
£1,000
£2
£10,000
£100
£73,939
£100
£3,000
£2,500
€1
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
100% Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
100% Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
100% Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
100% International House, Stanley Boulevard, Hamilton Intnl Technology Park,
Blantyre, Glasgow, Scotland, G72 0BN
100% Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
100% Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
100% Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
100% Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
100% Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
100% Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
100% Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
100% Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
— Lerchenweg 99, 33415 Verl, Germany
All of the above subsidiaries have been included in the Group’s financial statements.
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100% Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
100% Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
— Prins Bernhardplein 200, 1097 JB Amsterdam, Netherlands
— Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
— Mallow Business & Technology Park, Mallow, Co. Cork, P51 HV12, Republic of Ireland
— Masteveien 8, NO-1481 Hagan, Norway
— Kelvinstraat 5, 7575 AS, Oldenzaal, Netherlands
— Stevant Way, Northgate, White Lund Industrial Estate, Morecambe, LA3 3PU, UK
— Box 4133, Smedjegatan 6, 7tr, SE-131 04 Nacka, Sweden
— Szigetszentmiklós, Leshegy út 8, 2310 Hungary
100% Al Jerozolimskie 56c, 00-803 Warszawa, Poland
— Via Industriale, 19, 06022 Fossato Di Vico (PG), Italy
— Wroclaw, ul Wiosenna 14/2, Poland
— Lerchenweg 99, 33415 Verl, Germany
— Calle De La CiIencia 43, Viladecans, Barcelona, CP 08840, Spain
— 57 Senoko Road, Singapore 758121
— 57 Senoko Road, Singapore 758121
— 1 & 3 Lorong lks Juru 11, Taman Industri Ringan Juru, 14100 Simpang Ampat,
Seberang Perai (S), Pulau Pinang, Malaysia
— No. 1222, JinHu Road, Pudong, Shanghai, PR China. 201206
— 9F.-3 No. 366, Bo Ai 2nd Rd., Kaohsiung 81358, Taiwan, R.O.C
— Plot No:180, Door No:2, 10th Cross Street, Mangala Nagar, Porur, Chennai-600 116, India
— Jalan Pengapit 15/19, Section 15, 40000 Shah Alam, Selangor Darul Ehsan, Malaysia
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Trifast plc Annual report 2018 Country of
Issued and fully
incorporation
or registration
paid share
capital
United Kingdom
United Kingdom
Netherlands
United Kingdom
Republic of
Ireland
Norway
Netherlands
Sweden
Hungary
Poland
Italy
Poland
Germany
Spain
£112
£2
€18,428
€254
NOK 300,000
€45,378
£40,000
SEK 1,500,000
HUF 68,257,300
PLN 50,000
PLN 50,000
€25,000
€3,085
£10,200 Manufacture and distribution of fastenings
Holding Company
Investment Company
Holding Company
Distribution of fastenings
Distribution of fastenings
Distribution of fastenings
Distribution of fastenings
Distribution of fastenings
Distribution of fastenings
Distribution of fastenings
Distribution of fastenings
Distribution of fastenings
Distribution of fastenings
€187,200 Manufacture and distribution of fastenings
Lancaster Fastener Company Ltd
United Kingdom
Singapore
Singapore
S$4
Holding Company
S$315,000 Manufacture and distribution of fastenings
Malaysia
MYR 480,000 Manufacture and distribution of fastenings
TR Formac (Shanghai) Pte Ltd
China
US$200,000
Distribution of fastenings
Special Fasteners Engineering Co Ltd
Taiwan
TW$100,000,000 Manufacture and distribution of fastenings
TR Formac Fastenings Private Ltd
Power Steel & Electro-Plating
India
INR 18,850,000
Distribution of fastenings
Malaysia
MYR 4,586,523 Manufacture and distribution of fastenings
Thailand
THB 20,000,000
Distribution of fastenings
33 Trifast plc subsidiaries
Name
Europe
Trifast Overseas Holdings Ltd
Trifast Qualifying Employee
Share Ownership Trustee Ltd
Trifast Holdings B.V.
TR Fastenings Ltd
TR Southern Fasteners Ltd
TR Norge AS
TR Miller Holding B.V.
TR Fastenings AB
TR Hungary Kft
TR Fastenings Poland Sp. Z o.o
Viterie Italia Centrale SPA
VIC Sp. Z o.o.
TR Kuhlmann GmbH
TR Fastenings España -
Ingenieria Industrial, S.L.
Asia
TR Formac Pte Ltd
TR Formac (Malaysia)
SDN Bhd
TR Asia Investment Holdings Pte Ltd
Works SDN Bhd
TR Formac Co. Ltd
Americas
TR Fastenings Inc
Dormants
Trifast Systems Ltd
Ivor Green (Exports) Ltd
Charles Stringer’s Sons & Co.Limited
Fastech (Scotland) Ltd
Micro Screws & Tools Ltd
Trifast International Ltd
Rollthread International Ltd
TR Group Ltd
Fastener Techniques Ltd
Trifix Ltd
Serco Ryan Ltd
TR Europe Ltd
KNH Verwaltungs GmbH
Principal activity
Group Company
Office Address
Percentage of
ordinary
shares held
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100% Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
100% Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
— Prins Bernhardplein 200, 1097 JB Amsterdam, Netherlands
— Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
— Mallow Business & Technology Park, Mallow, Co. Cork, P51 HV12, Republic of Ireland
— Masteveien 8, NO-1481 Hagan, Norway
— Kelvinstraat 5, 7575 AS, Oldenzaal, Netherlands
— Stevant Way, Northgate, White Lund Industrial Estate, Morecambe, LA3 3PU, UK
— Box 4133, Smedjegatan 6, 7tr, SE-131 04 Nacka, Sweden
— Szigetszentmiklós, Leshegy út 8, 2310 Hungary
100% Al Jerozolimskie 56c, 00-803 Warszawa, Poland
— Via Industriale, 19, 06022 Fossato Di Vico (PG), Italy
— Wroclaw, ul Wiosenna 14/2, Poland
— Lerchenweg 99, 33415 Verl, Germany
— Calle De La CiIencia 43, Viladecans, Barcelona, CP 08840, Spain
— 57 Senoko Road, Singapore 758121
— 57 Senoko Road, Singapore 758121
— 1 & 3 Lorong lks Juru 11, Taman Industri Ringan Juru, 14100 Simpang Ampat,
Seberang Perai (S), Pulau Pinang, Malaysia
— No. 1222, JinHu Road, Pudong, Shanghai, PR China. 201206
— 9F.-3 No. 366, Bo Ai 2nd Rd., Kaohsiung 81358, Taiwan, R.O.C
— Plot No:180, Door No:2, 10th Cross Street, Mangala Nagar, Porur, Chennai-600 116, India
— Jalan Pengapit 15/19, Section 15, 40000 Shah Alam, Selangor Darul Ehsan, Malaysia
— 29/1, Piya Place Langsuan, 6th Floor, Unit no.6H, Soi Langsuan, Ploenchit Rd., Lumpini,
Patumwan, Bangkok 10330 Thailand
USA
US$1,168,063
Distribution of fastenings
100%
— 11255 Windfern Road, Houston, TX. 77064
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Germany
£100
£5,000
£18,000
£100
£1,000
£2
£10,000
£100
£73,939
£100
£3,000
£2,500
€1
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100% Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
100% Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
100% Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
100% International House, Stanley Boulevard, Hamilton Intnl Technology Park,
Blantyre, Glasgow, Scotland, G72 0BN
100% Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
100% Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
100% Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
100% Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
100% Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
100% Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
100% Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
100% Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
— Lerchenweg 99, 33415 Verl, Germany
All of the above subsidiaries have been included in the Group’s financial statements.
155
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www.trifast.comOur financials Our financials Notes to the financial statements
Notes to the financial statements
for the year ended 31 March 2018
34 Alternative Performance Measures
The Annual Report includes both GAAP 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 pages 44 and 45 for Key Performance Indicators)
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 Annual 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 2018 income statement results (of
subsidiaries whose presentational currency is not sterling) using FY2017 average annual 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, as disclosed in the
Directors’ remuneration report. The calculation has been disclosed in note 25.
• 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 detailed in the Glossary on page 160. The numerator is underlying EBIT which has been reconciled to operating profit
below. Note 2 explains why the separately disclosed items have been removed to aid understanding of the underlying performance
of the Group.
Underlying EBIT/Underlying operating profit
Separately disclosed items within administrative expenses
IFRS2 share based payment charge
Acquired intangible amortisation
Net acquisition costs
Project Atlas
Profit on sale of fixed assets
Costs on exercise of executive share options
Operating profit
• Normalised net debt
Note
22
32
2018
£000
22,713
(2,194)
(1,363)
(110)
(375)
556
(244)
2017
£000
21,018
(1,512)
(1,273)
—
—
195
(567)
18,983
17,861
The calculation, assumptions, use and relevance are disclosed in the net debt section of the Business review on page 51.
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Trifast plc Annual report 2018
34 Alternative performance measures (continued)
• Underlying cash conversion as a percentage of underlying EBITDA
This is another key metric used by investors to understand how effective the Group were 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 (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.
Underlying cash conversion
Costs on exercise of executive share options
Movement in trade payables due to exercise of share options
Project Atlas
Cash generated from operations
2018
£000
16,789
(244)
(1,205)
(375)
14,965
2017
£000
22,249
(567)
1,205
—
22,887
The movement in trade payables due to exercise of share options relates to payment out of cash held specifically at 31 March 2017
to settle the national insurance and income tax payments relating to the Chairman, Malcolm Diamond's exercise of 1,000,000 share
options on 17 February 2017.
• 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.
One off tax adjustments have also been removed from the calculation as they are unlikely to repeat and therefore do not reflect
recurring trading performance. In FY2018 the one off adjustments include the release of the tax provision from the open tax enquiry
and the tax rate changes in Italy and the USA respectively. See notes 9 and 15 for further details. In FY2017 the one-off adjustment
relates to a deferred tax asset not recognised for losses in the year due to significant tax deductions available from the exercise of
executive share options.
Profit before tax
Separately disclosed items
Tax adjusted items
Underlying profit before tax
2018
Profit impact
£000
Tax impact
£000
18,503
3,730
—
22,233
(3,417)
(802)
(967)
(5,186)
ETR
%
18.5
21.5
—
23.3
35 Reconciliation of net cash flow to movement in net debt
Net increase in cash and cash equivalents
Proceeds from new loan
Repayment of borrowings
Proceeds/(payment) from finance lease liabilities
Net (proceeds)/repayment from borrowings
Decrease in net debt before exchange rate differences
Exchange rate differences
(Increase)/decrease in net debt
Opening net debt
Closing net debt
2017
Profit impact
£000
Tax impact
£000
17,340
3,157
—
20,497
(4,642)
(609)
418
(4,834)
2018
£000
2,115
(5,542)
3,773
(66)
(1,835)
280
(1,263)
(983)
(6,448)
(7,431)
ETR
%
26.8
19.3
—
23.6
2017
£000
5,240
(2,236)
7,030
6
4,800
10,040
(492)
9,548
(15,996)
(6,448)
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157
www.trifast.comOur financials
Shareholder information Contents
Shareholder
information
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Contents
Glossary of terms
Five year history
Company and advisers
Financial calendar
Trifast plc top holdings
160
162
163
164
164
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159
www.trifast.comShareholder information Shareholder information Glossary of terms
Glossary of terms
AER
Actual Exchange Rate.
Assets
Anything owned by the Company having a monetary value; e.g.
fixed assets such as buildings, plant and machinery, vehicles (these
are not assets if rented and not owned) and potentially including
intangibles such as trademarks and brand names, and current
assets, such as inventory, debtors and cash.
Average capital employed
Averaged using month-end balances and opening capital
employed. Capital employed is the sum of net assets and net debt.
Balance sheet (or Statements of financial
position)
These provide a ‘snapshot’ at a date in time of who owns what in
the Company, and what assets and debts represent the value of
the Company.
The balance sheet is where to look for information about short-
term and long-term debts, gearing (the ratio of debt to equity),
reserves, inventory values (materials and finished goods), capital
assets, cash, and the value of shareholders’ funds. The balance
sheet equation is:
Capital + Liabilities (where the money came from)
= Assets (where the money is now)
CAGR
Compounded Annual Growth Rate.
Cash flow
The movement of cash in and out of a business from day-to-
day direct trading and other non-trading effects, such as capital
expenditure, tax and dividend payments.
Category ‘C’ components
Low value components that are wrapped up into our supply
proposition for a customer.
CER
Constant Exchange Rate.
Current assets
Cash and anything that is expected to be converted into cash
within 12 months of the balance sheet date. For example, debtors
or inventory.
Current liabilities
Money owed by the business that is generally due for payment
within 12 months of balance sheet date. For example: creditors,
bank overdrafts or tax.
Depreciation
The proportion of cost relating to a capital item, over an agreed
period, (based on the useful life of the asset), for example, a piece
of equipment costing £10,000 having a life of five years might be
depreciated over five years at a cost of £2,000 per year.
This would be shown in the income statement as a depreciation
cost of £2,000 per year; the balance sheet would show an asset
value of £8,000 at the end of year one, reducing by £2,000 per
year; and the cash flow statement would show all £10,000 being
used to pay for it in year one.
Dividend
A dividend is a payment made per share, to a company’s
shareholders and is based on the profits of the year, but not
necessarily all the profits. Normally a half year dividend is
recommended by a company board whilst the final dividend for
the year is proposed by the board of directors and shareholders
consider and vote on this at the Annual General Meeting.
Dividend cover
Underlying diluted earnings per share over proposed dividend per
share in the year.
Earnings before
There are several ‘Earnings before….’ ratios. The key ones being:
• PBT
• EBIT
• EBITDA
Profit/earnings before taxes
Earnings before interest and taxes
Earnings before interest, taxes, depreciation,
and amortisation
• Underlying
Profit before separately disclosed items (see
note 2)
Earnings relate to operating and non-operating profits (e.g. interest,
dividends received from other investments).
GAAP
Generally Accepted Accounting Practice.
Gearing
The ratio of debt to equity, usually the relationship between long-
term borrowings and shareholders’ funds.
GDPR
The General Data Protection Regulation is a regulation by which
the European Parliament, the Council of the European Union, and
the European Commission intend to strengthen and unify data
protection for all individuals within the European Union. It also
addresses the export of personal data outside the EU.
160
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Trifast plc Annual report 2018
Goodwill
Any surplus money paid to acquire a company that exceeds its net
assets fair value.
ICAEW
Institute of Chartered Accountants in England & Wales.
Intellectual Property (‘IP’)
This is an intangible asset such as a copyright or patent.
Copyright is the exclusive right to produce copies and to control an
original work and is granted by law for a specified number of years.
A patent is a government grant to an inventor, assuring the inventor
the sole right to make, use and sell an invention for a limited
period.
Legal Entity Identifier (LEI)
An LEI is a unique identifier for persons that are legal entities or
structures including companies, charities and trusts. The obligation
for legal entities or structures to obtain an LEI was endorsed by the
G20 (the leaders of the 20 largest economies). Further information
on LEIs, including answers to frequently asked questions, can be
found at https://www.gleif.org/en/about-lei/questions-and-answers
MiFid
MiFID applied in the UK from 2007, and was revised by MiFID II,
in January 2018, to improve the functioning of financial markets
in light of the financial crisis and to strengthen investor protection.
MiFID II extended the MiFID requirements in a number of areas -
new market structure requirements including:
• new and extended requirements in relation to transparency
• new rules on research and inducements
• new product governance requirements for manufacturers and
distributers of MiFID ‘products’
• introduction of a harmonised commodity position limits regime
for more visit https://www.fca.org.uk/markets/mifid-ii
Multinational OEMs
We use this term to include all Original Equipment Manufacturers
(OEMs), Tier 1 suppliers in the automotive sector and relevant key
sub-contractors in the other sectors we service.
P/E ratio (price per earnings)
The P/E ratio is an important indicator as to how the investing
market views the health, performance, prospects and investment
risk of a plc. The P/E ratio is arrived at by dividing the share price
by the underlying diluted earnings per share.
Profit
The surplus remaining after total costs are deducted from total
revenue.
Profit and loss account (P&L)
(or income statement)
The P&L shows how well the company has performed in its trading
activities and would cover a trading account for a period.
The P&L shows profit performance and typically shows sales
revenue, cost of sales/cost of goods sold, generally a gross profit
margin, fixed overheads and/or operating expenses, and then a
profit before tax figure (‘PBT’).
Retained profit/earnings
Business profit which is after tax and dividend payments to
shareholders; retained by the business and used for reinvestment.
Reserves
The accumulated and retained difference between profits and
losses year-on-year since the company’s formation.
Return on Capital Employed (‘ROCE’)
A fundamental financial performance measure. A percentage figure
representing earnings before interest and tax against the money
that is invested in the business.
Underlying EBIT ÷ average capital employed (net assets + net
debt) × 100 = ROCE
Statements of cash flow
The statements of cash flows show the movement and availability
of cash through and to the business over a given period. For
any business ‘cash is king’ and essential to meet payments for
example to suppliers, staff and other creditors.
Share capital
The balance sheet nominal value paid into the company by
shareholders at the time(s) shares were issued.
Shareholders’ funds
A measure of the shareholders’ total interest in the company,
represented by the total share capital plus reserves.
Stock Code
A stock code is used to find a listing on the regulatory market such
as the London Stock Exchange. Trifast’s stock code is TRI
Trademark
The name or a symbol used by a manufacturer or dealer to
distinguish its products from those of competitors. A registered
trademark is one that is officially registered and legally protected.
Working capital
Current assets less current liabilities, representing the required
investment, continually circulating, to finance inventory, debtors,
and work in progress.
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161
www.trifast.comShareholder information Shareholder information Five year history / Company and advisers
Five year history
Five year history - ‘A growth story’
Revenue
GP%
Underlying operating profit*
Underlying operating profit margin*
Operating profit
Operating profit margin
Underlying EBITDA*
Underlying PBT*
PBT
Underlying ROCE %*
Dividend per share
Dividend increase %
Dividend cover*
Underlying diluted EPS*
Diluted EPS
Net debt
Underlying cash conversion % of underlying EBITDA*
Share price at 31 March
* Before separately disclosed items, see note 2
2014
£129.8m
27.7%
£9.7m
7.5%
£9.4m
7.2%
£10.8m
£9.2m
£8.9m
16.3%
1.40p
75.0%
4.3×
5.95p
5.76p
(£2.0m)
109.5%
87p
2015
£154.7m
2016
£161.4m
2017
£186.5m
2018
£197.6m
29.0%
£15.3m
9.9%
£12.8m
8.3%
£16.5m
£14.3m
£11.8m
18.6%
2.10p
50.0%
4.1×
8.68p
7.07p
£13.4m
50.2%
103p
29.7%
£16.8m
10.4%
£13.9m
8.6%
£18.2m
£16.0m
£13.1m
18.5%
2.80p
33.3%
3.6x
9.99p
8.50p
£16.0m
88.9%
127p
31.1%
£21.0m
11.3%
£17.9m
9.6%
£22.9m
£20.5m
£17.3m
19.9%
3.50p
25.0%
3.7x
12.82p
10.40p
£6.4m
97.3%
211p
30.5%
£22.7m
11.5%
£19.0m
9.6%
£24.7m
£22.2m
£18.5m
20.1%
3.85p
10.0%
3.6x
13.78p
12.20p
£7.4m
68.1%
255p
162
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Trifast plc Annual report 2018 Company and advisers
Trifast plc
Incorporated in the United Kingdom
Registered number: 01919797
LSE Premium Listing: Ticker: TRI
LEI REFERENCE: 213800WFIVE6RWK3CR22
Head office and registered office
Trifast House, Bellbrook Park,
Uckfield, TN22 1QW
Telephone: +44 (0)1825 747366
Audit committee
Neil Warner (Chairman)
Jonathan Shearman
Scott Mac Meekin
Remuneration committee
Jonathan Shearman (Chairman)
Neil Warner
Scott Mac Meekin
Malcolm Diamond MBE
Nominations committee
Malcolm Diamond MBE (Chairman)
Jonathan Shearman
Neil Warner
Mark Belton
Company Secretary
Lyndsey Case
Advisers
Registered Auditors
KPMG LLP
1 Forest Gate, Brighton Road,
Crawley, RH11 9PT
Corporate stockbroker
Peel Hunt LLP
Moor House, 120 London Wall
London, EC2Y 5ET
Solicitors
Charles Russell Speechlys, LLP
Compass House, Lypiatt Road, Cheltenham, GL50 2QJ
Registrars
Computershare Investor Services plc
The Pavilions, Bridgwater Road, Bristol, BS13 8AE
Financial PR
TooleyStreet Communications Limited
Regent Court, 68 Caroline Street, Birmingham, B3 1UG
Trifast Annual Report 2018 FINANCIALS.indd 163
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163
www.trifast.comShareholder information Shareholder information Financial calendar / Trifast plc top holdings
Financial calendar
AGM
Final dividend payment date
Half-yearly results
Trading update
Financial year end
Pre-close trading update
Preliminary results
12noon, Wednesday 25 July 2018
12 October 2018
November 2018
February 2019
31 March 2019
April 2019
June 2019
Trifast plc top holdings
as at 1 March 2018
Beneficial owner by geography
2%
2%
5%
UK
Europe
Americas
USA
Beneficial owner by sector type
8%
2%
2%
2%
7%
14%
10%
14%
164
Issue share capital
Total voting rights (TVR)
Treasury shares
Shareholder
AXA Framlington Investment Managers
Schroder Investment Management
BlackRock Investment Management (UK)
Liontrust Asset Management
Hargreave Hale
Michael Timms (founder)
Castlefield Investments
Hargreaves Lansdown Asset Management
Threadneedle Investments
JP Morgan Asset Management
Slater Investments
Standard Life Investments
Polar Capital Partners
Legal & General Investment Management
Interactive Investor Services
Barclays Direct Investing
Investec Asset Management
F&C Investments
Dimensional Fund Advisors (DFA)
Mr Michael Roberts (founder)
Allianz Global Investors GmbH
121,363,947
0
Holding
11,520,241
10,900,000
9,220,227
8,757,605
7,428,029
7,000,000
3,860,000
3,713,349
3,500,658
3,335,000
2,999,927
2,938,890
2,903,100
2,586,028
1,982,678
1,898,822
1,832,092
1,765,715
1,721,178
1,575,000
1,300,000
% of TVR
9.49%
8.98%
7.60%
7.22%
6.12%
5.77%
3.18%
3.06%
2.88%
2.75%
2.47%
2.42%
2.39%
2.13%
1.63%
1.56%
1.51%
1.45%
1.42%
1.30%
1.07%
Investment &
Unit Trusts
Pensions &
Mutuals
Other
Retail -
Private Client
Insurance &
Life Insurance
Individuals &
Directors
OEIC
SICAV
ESOP
91%
41%
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Trifast Annual Report 2018 STRATEGIC.indd 8
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8
Trifast House,
Bellbrook Park,
Uckfield,
East Sussex,
TN22 1QW
Tel: +44 (0)1825 747366
Fax: +44 (0)1825 747368
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Proof 12