Annual Report for the year ended 31 March 2020
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Our fastenings enable innovation today
to build a better tomorrow
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Welcome to the
Annual Report
Our purpose
To provide T rusted Reliability at every turn to our
customers in global industry, empowering them to
deliver products and solutions that add value to
society. Our fastenings enable innovation today to
build a better tomorrow
Our culture drives our performance
c.1,300
Employees
33
Global locations
8
Global
manufacturing
sites
Read more about Investing in
our people on pages 42 to 47
Read more about The world
of Trifast on pages 06 to 07
Read more about How we create value
on pages 38 to 39
Our mission and vision
To promote an environment that
is safe and fair, which motivates,
develops and maximises the
contribution and potential of all
employees
To be acknowledged commercially
as the market leader in industrial
fastenings in terms of service,
quality, design, engineering support,
together with brand reputation
To continue to grow profitability,
improve stakeholder returns through
organic and acquisitive growth, and
by driving continual efficiencies
throughout the organisation
Our 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
and innovative
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Report overview
Trifast plc (TR) is an international specialist in the design, engineering, manufacture and
distribution of high quality industrial and Category ‘C’ components principally to major global
assembly industries.
As a full-service provider to multinational OEMs and Tier 1 companies spanning several
sectors, TR delivers comprehensive support to its customers across every requirement,
from concept design through to technical engineering consultancy, manufacturing, supply
management and global logistics.
We hope that stakeholders will find this publication interesting and informative. This year
we would like to direct you to the key sections in the report which we consider will give you
an understanding of the business, particularly in this current environment, as well as good
news and the future.
Past
A resilient performance in the face of challenging
market conditions
Read more about:
FY2020 Business review on pages 70 to 75
FY2020 Financial statements on pages 124 to 181
Present
COVID-19 – impact and our response to protect our
people and the business
Read more about:
Culture & values continue to drive performance on pages 00 and 04
COVID-19 and our response on pages 10 to 13
£16m Equity Placing of shares on page 14
Medical & other opportunities on pages 31 and 37
Viability statement on page 60
Future
Investment for growth
Read more about:
Project Atlas transformational multi-year systems & process investment
on pages 18 to 19
New colleagues across the business on pages 21 to 25
Investment in M&A a key element of our growth strategy on pages 25
High growth geographies winning market share on pages 26
Our Group strategy
Our strategic pillars
Read more about our Group strategy on pages 40 to 53
Contents
Welcome
Report overview
Letters to shareholders
Our culture
The world of Trifast
Invest in our key strengths
Highlights
COVID-19 and the business
Equity Placing
01 Strategic report
Trifast – building a better tomorrow
Good news and the future
Succession planning
Introducing our new Operational
Executive Board (OEB)
Investment in supplier relationship
management and supply chain resilience
Acquisitions
Our fastest growing geographies
Global marketplace
Innovation
How we create value
Our Group strategy
Strategy in action
Core strategy
Investing in our people
Investment driven growth
Continue to add value and differentiate
Operational efficiencies
Corporate social responsibility
Trifast in the community
Risk management
Key performance indicators
Business review
02 Our governance
Introducing the plc team
Corporate governance report
Nomination Committee report
Audit Committee report
Directors’ remuneration report
Directors’ remuneration policy
Directors’ report
Statement of directors’ responsibilities
03 Financial statements
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
04 Shareholder information
Glossary of terms
Five year history
Company and advisers
Financial calendar
01
01
02
04
06
08
09
10
14
18
20
23
24
25
26
28
36
38
40
41
42
48
50
52
54
58
60
68
70
78
80
86
88
92
108
119
121
124
130
131
132
133
134
135
136
184
186
187
188
01
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Trifast plc Annual Report 2020 Letters to shareholders
After 45 years at Trifast, I have been able to retire knowing I have
offered commercial and strategic support and mentorship to the
next generation of TR’s leadership teams”
to COVID-19. This will form the basis of a
widespread roll-out following any bug fixes
that, hopefully, will be minimal.
As we have indicated from the start of this
major investment, the decrease in non-value
add activity incurred by our existing system,
plus the reduction in working capital will be
immense, and the emergence of even more
sophisticated supply chain and customer
service support will be convincingly market
leading.
Prior to the financial crash in 2008 Trifast
had enjoyed consistent years of growth
from the mid-nineties within the telecoms
and electronics sector, however, it became
clear in 2009 that this sector had lost much
of its attraction for us.
The decision was then taken to switch
our main strategy towards supplying
the automotive Tier 1 sector that made
sub-assemblies for the ultimate vehicle
manufacturers. Tier 1 customers are under
constant pressure to improve efficiencies
and costs and so TR offered them design
and assembly advice to aid component re-
engineering in order to reveal cost downs.
Our success grew automotive sector spend
to 30% of total revenue by 2018. UK and
European government policy change then
impacted diesel sales massively, followed by
strict environmental emissions constraints
and the rapid emergence of Electric Vehicles
(EV).
Our marketing and sales teams quickly
then began focusing on manufacturers of
EV batteries and charging stations, whilst
continuing to maintain efforts with seat and
console suppliers that had similar demand
for electric vehicles as from conventional
internal combustion engine power trains.
Although the automotive sector has seen
a demand reduction in the past 12 months
or so, Trifast revenues remained relatively
stable reflecting our improved market
penetration during the period.
Malcolm Diamond MBE
Chair
(Retired 31 March 2020)
Dear shareholder
Clearly, the main COVID-19 focus of the
Board in recent months has been on
conserving cash, protecting and retaining
staff with a combination of furloughing and
home working, and sustaining essential
staffing for customers.
I sincerely hope that by the time you read
this report COVID-19 will at least be having a
much-reduced impact on our daily lives – let
alone business and investments.
Without detracting from the global fight and
the focus to protect all our staff, family and
friends against COVID-19, I would like to take
this opportunity to review last year’s financial
performance to March 2020, my last letter to
you as shareholders before I retire.
FY2020 was another progressive year
forTrifast in terms of internal efficiency
improvements with Project Atlas continuing
to roll-out data cleansing, new operational
processes, and specialised training of
front-line sales and administrative staff.
The first system installation trial was
originally planned and ready to go live for
spring in Ireland, but unfortunately has had
to be pushed back until the autumn due
02
Looking towards the USA and Spanish
locations, these have enjoyed good
organic growth during this time, which has
underpinned our continued efforts with
automotive – despite it falling out of favour
recently with analysts.
As announced in November last year,
succession planning for the plc Board was
publicised, including my retirement on 31
March 2020. Trifast has always preferred
promotion from within wherever feasible,
and it is my pleasure, that following the
appropriate process, I am handing over to my
colleague Jonathan Shearman. Since being
with TR he has shared his knowledge and
financial acumen superbly. His approach and
style strongly match the qualities required of
being Non-Executive Chair, especially at this
challenging period in our Company’s history.
The Board remains committed to good
corporate governance and ensuring
there is a broad range of skill, diversity and
experience that it can draw upon and on 31
March 2020 Trifast also announced two new
NEDs.
I would also like to acknowledge and thank
all my immediate colleagues, staff, and
our long-standing shareholders, for their
support, loyalty and commitment over my
45 years with TR.
I could not have wished for more.
I now pass the baton over to Jonathan
to add his personal input to you as
shareholders, customers, suppliers and our
wonderful staff.
Yours sincerely
Malcolm Diamond MBE
Chair
Read more about our Equity Placing
on page 14
Read more about our two new NEDs
on page 21
Read more about our s172 statement
on page 81
Read more about our OEB
on page 23
Read more about our designated NED
on pages 84, 92 and 118
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Trifast plc Annual Report 2020
Jonathan Shearman
Chair
(Appointed 1 April 2020)
Dear shareholder
As I start my tenure as Chair, it is fitting that I pause,
express gratitude and celebrate the past. I have
had the privilege of working with and learning from
Malcolm so I can safely say that although he will be
missed, he retires leaving behind a legacy.
When I first interviewed for the role of Trifast NED,
the pain that Malcolm felt, was palpable. Those
darker days have passed, and it has been a joy to
watch TR’s people and culture be revitalised. This
is in no small part down to Malcolm and the lead
teams’ unwavering and tenacious approach.
Mark Belton
Chief Executive Officer
Dear shareholder
As you will have read in Malcolm’s letter he
retired at the end of March 2020. It has been a
privilege to both work with and develop a mutual
respect and friendship with Malcolm over my own
20+-year career with the Group. He has played
a key mentoring role from which I and many
of the senior team have been lucky enough to
gain invaluable commercial, plc experience and
stakeholder engagement.
As we move into this new financial year, at
plc Board level, I am delighted that Jonathan
Shearman accepted the role as Chair; his wise
counsel on many different facets of business
and his understanding of our culture will continue
to play an important role in the Trifast story. I am
also very pleased to welcome our two new NED’s
Claire Balmforth who joined us in April 2020 and
As shareholders, you have seen this translate
into millions of pounds worth of value creation,
and as a staff, together, we have created
a business that we should be proud of. For
customers and suppliers alike, we trust you
have also felt a part of this.
In our recent trading updates, we have sought
to keep all stakeholders updated in as much
detail as possible, especially with regard to the
impacts of COVID-19. Malcolm has highlighted
our approach which has spanned people,
supply lines and financial viability.
I want to extend my gratitude to Mark, Clare,
Glenda, my fellow NEDs and the senior team
for their approach in going above and beyond
for many consecutive weeks. It is indeed no
small feat that, in conjunction with our suppliers,
we have not faltered in supporting customers
during the most disruptive period of my working
career. Moreover, Trifast’s culture has come to
the fore during these recent months. I have been
delighted to witness how our people, across the
globe, have pulled together and supported each
other in a truly Group fashion.
Alongside Project Atlas, I also want to mark our
approach to people, training & development,
and future succession. From the Main Board,
Clive Watson who joined us on 30 July 2020 and
will take up his post, replacing Neil Warner who
retired on 31 July 2020.
On behalf of all stakeholders, I thank Malcolm
and Neil for their contribution to the success of
the business over the years. We continue to be
extremely fortunate to have, three NEDs who add
extensive skills, experience and insight to the Board
and I look forward to working with them as we drive
the business strategy forward to the next level.
Part of this strategy has been the creation of an
Operational Executive Board (OEB). This strong
global and cross-functional senior leadership
team below the plc Board will form the foundation
of strategic leadership within the business. The
OEB comprises a wealth of experience both from
our home-grown talent as well as newly appointed
external industrial recruits. I am excited that the
OEB will bring the Group even closer together
and be part of the driving force to deliver the
efficiency benefits from Project Atlas. Although
Glenda Roberts chose to retire from the plc Board
in March 2020 after 30 years of service to TR we
are delighted she agreed to stay with the business
and join the OEB to provide mentorship, guidance
and support to TR’s operational teams around the
business for the next twelve months.
Despite the rapidly changing developments
regarding COVID-19, our business remains solid.
Our priority has been to ensure a safe working
environment for all our employees around the
world. Over the last three months we have all
had to adapt, understand, and work together, to
through to the newly created Operating Executive
Board (OEB), and into the workforce, numerous
structural changes have been made, including
recruiting external talent. These developments
are key and an essential part of fully maximising
the opportunities that lie ahead for the business.
I look forward to meeting all the new faces and
those who have been part of TR for many years,
once allowed to travel the business.
There is no doubt that the last financial year was a
challenging period. However, as is often the case
in such circumstances, there are opportunities
a plenty. As the team charged with bringing
leadership, we are grabbing these with both hands.
Our ability to build on the foundations laid by the
previous generation using a people and process
centric approach, gives us the capability to walk
forward into ‘new normal’ with great confidence.
Finally, on behalf of myself and the Trifast team,
may I express condolences to those who have
unexpectedly and suddenly lost dear friends and
loved ones during the past few months. To all of us
– let’s be kind, to ourselves and others.
Yours sincerely
Jonathan Shearman
Chair
protect our businesses, our supply chains and
partnerships but key, has been protecting our
strongest asset, the physical and mental health
and safety of our workforce.
I would like to take this opportunity to say to all our
employees across the TR network, whether you
are working from home, working reduced hours,
furloughed, or have been continuing to work
throughout at our sites, thank you for sticking
with it and adjusting so well in such unusual and
challenging circumstances.
I would also like to welcome new colleagues who
have joined the TR family over the last year, all
new shareholders who joined the register over
the last 12 months and, thank those long-term
investors for their continued support.
TR is made up of a team of people who are
collaborating to deliver engineering skills, a first-
class sales and logistics service 24/7 around
the globe and ultimately shareholder value. My
colleagues and I hope that you will find the Report
interesting and that it gives you a feel for our
business and its culture.
As a Company, our hearts go out to all those who
have been affected by or tragically lost the fight in
this invisible war. In these challenging times, stay
safe and look after yourselves, your friends, and
your families.
Yours sincerely
Mark Belton
Chief Executive Officer
Trifast plc Annual Report 2020
03
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Our culture
The Trifast culture continues to drive our
performance and has been invaluable
in dealing with the recent pandemic and
the issues associated with it. With teams
pulling together and supporting each
other through such difficult times, we have
been able to maintain the commitment
and motivation of our people.
The Group is lucky to be able to operate
in so many different cultures across the
world.
The culture starts at the very top of the
Group and permeates through every
location.
Our own Trifast culture sits alongside
and has helped us to develop our unique
brand. Wherever you go in the world to
visit a Trifast location, you can be sure of
a positive, helpful and friendly welcome.
What makes Trifast different
is our people and the
commitment that they bring
to deliver exemplary service
to our customers”
Helen Toole
Global HR Director
The Board would like to thank
each and every one of our
TR colleagues around the
world for their hard work,
flexibility and dedication over
the last six months. By pulling
together and supporting
each other so well in such
extraordinary times we
have been able to keep our
business, our customers and
ourselves safe and ready
to face the challenges and
opportunities that are still
to come”
Mark Belton
CEO
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Trifast plc Annual Report 2020 Read more about Investing in
our people on pages 42 to 47
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Trifast plc Annual Report 2020 The world of Trifast
TR’S GLOBAL
SUPPLY NETWORK
THINK GLOBAL, NETWORK
REGIONALLY AND SUPPLY LOCALLY
Anticipating the needs of global customers
TR has the ability to service customers in many different parts of the
world and this sets us apart from many of our competitors. We respond to
major customers’ needs to be in new territories to support them as they
expand into these regions.
Broadening our operational footprint
Most recently this has seen us open locations in Spain, Thailand,
Gothenburg and the Philippines. In addition, we have been able to support
swiftly in opening logistics operations utilising 3PLs (third party logistics) in
areas such as Slovakia and the Carolinas.
We will continue this strategy of developing our global TR
footprint as it is a key USP.
Link to strategy
Manufacturing and distribution sites
Head office Trifast plc
TR Asia Headquarters
Manufacturing & distribution sites
Distribution sites
Technical & innovation centres
USA
Houston
South Carolina
Read more about Group
strategy on page 40
Read more about our Global
marketplace on page 28
Read more about innovation
on page 36
06
Trifast plc Annual Report 2020
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UK
Trifast plc & Group
Services – Uckfield
Belfast
Birmingham
East Grinstead
East Kilbride
Lancaster
Manchester
Newton Aycliffe
Poole
Europe
Germany — Verl
Holland — Oldenzaal
Hungary —
Szigetszentmiklos
Ireland — Mallow
Italy — Fossato di Vico
Norway — Skytta
Poland — Warsaw
Spain — Barcelona
Sweden — Nacka, Tidaholm
& Gothenburg
Asia
TR Asia headquarters –
Singapore
China — Shanghai & Beijing
India — Bangalore, Chennai & Pune
Malaysia — Penang & Kuala Lumpur
Philippines — Manila
Taiwan — Kaohsiung
Thailand — Bangkok
18Countries
33Global
facilities
8
Manufacturing
sites
3
Technical &
innovation
centres
Trifast plc Annual Report 2020
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Invest in our key strengths
We are proud to report that
every location is back open
for business, ready and able
to operate at full capacity as
demand returns”
Clare Foster
Chief Financial Officer
01 04
Global logistics
network
Reliable distribution and supply solutions
around the world that flex to fit our
customers’ needs
Strong
financials
A strong balance sheet, flexible banking
facilities and a successful equity raise
provide the confidence to invest for
growth
02 05
Technical and
design expertise
Design and application engineering
expertise providing fastener solutions to
customer application problems
Generating
returns
As a Board, we are keen that dividends
play their part in our TSR as soon as is
practical
03 06
Strong investment
record
Continuous investment into quality
operations and supply keeps us one step
ahead of our customers’ needs
Advanced
manufacturing abilities
High-quality, competitive manufacturing
across eight global locations forms the
foundation of our industry reputation
which is second to none
08
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Trifast plc Annual Report 2020 Highlights
Financial highlights
Revenue
(4.2)%
.
m
0
9
0
2
£
.
m
6
7
9
1
£
.
m
2
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0
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.
m
5
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.
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(27.5)%
.
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Underlying diluted earnings per share*^
Return on capital employed*^
(27.5)%
p
3
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1
.
p
8
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.
p
2
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(680)bps
%
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Operational highlights
•
Resilient performance maintains
revenues of £200m, despite challenging
market conditions
• Ongoing market share wins offset
automotive downturn
•
•
•
•
•
•
Underlying operating profit margin holds
up well at 9.0% (FY2019: 11.6%)
Strong cash conversion at 95.9% of
UEBITDA reinforces the Group’s financial
position
Balance sheet further strengthened by
£16m equity raise in June 2020, providing
confidence to invest in significant long-
term growth opportunities
Swift and effective action in response
to COVID-19 reduces impact on the
business
Project Atlas ended FY2020 on track
and on budget, the impact of COVID-19
will continue to be monitored as
circumstances evolve
Pipeline of opportunities and activity
levels remain encouraging
• M&A opportunities increase in uncertain
market conditions
Read our Business review
on pages 70 to 75
GAAP measures
Diluted earnings per share^
Profit before tax^
Dividend per share
(71.8)%
p
5
2
4
.
p
5
8
3
.
p
0
5
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.
p
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2
.
(101.9)%
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−
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(81.5)%
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*
^
Before separately disclosed items which are shown in the financial statements
Presented after adoption of IFRS16 Leases in FY2020. For Underlying EBITDA and Underlying EBITDA%, the impact has been an increase of £3.5m and 170bps at CER (before
IFRS16: £20.0m and 10.0%) and £3.5m and 170bps at AER (before IFRS16: £20.0m and 10.0%). For ROCE (AER) the impact has been a reduction of 100bps (before IFRS16: 13.0%).
Less significant impacts on the remaining metrics have been explained in a separate table shown in the Business Review
09
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Trifast plc Annual Report 2020
COVID-19 and the business
Risk One – Our people
a. COVID-19 could put the ongoing health (physical and mental), safety and security of our people at risk
b. Without adequate support our people may be unable or unwilling to work in the short-term, or it may be difficult for the business to
retain and motivate experienced resource in the longer term
c. A perception of unfair treatment could lead to individuals feeling undervalued, reducing productivity levels and long-term loyalty to
the business
The initial impacts
Over the course of the last six weeks of
FY2020 and the first quarter of FY2021
we have seen the impact of the COVID-19
pandemic significantly widen, leading to
government mandated temporary site closures
in Singapore, Malaysia, Italy, Spain and India,
and customer production line shutdowns
predominantly in the automotive sector. This,
in conjunction with a general reduction in
manufacturing volumes across almost all
end markets, has reduced trading levels and
forecasts.
However, despite these challenges, we have
been working extremely hard to ensure that
we understand the risks we are facing now
and expect to face in the future. We are acting
proactively to manage and mitigate those
risks, we are looking after our most important
resource of all – our people. We are continuing
to protect and build the business for both
sustainability in the short-term and success in
the long-term.
Trifast’s risk mitigation strategy in action
One of the first things we did in response to the
global pandemic was to set up a cross-functional
global COVID-19 Task Force. This team, largely
made up of members from our new OEB (see
page 23), ‘met’ daily at 7.30am (BST) initially, and
now meets on a twice weekly basis.
Key responsibilities include developing and
implementing our COVID-19 action plan,
managing internal communications and driving
our responses and activities around the world.
This action plan is designed first and foremost to
help us to identify and mitigate the risks that the
TR business is facing in the short, medium and
longer term as a result of COVID-19.
Health and safety
Our first priority was always going to be
to ensure a safe working environment for
all of our employees around the world.
Because of the nature of our business, in
manufacturing and distribution, it is not
possible for everyone to work from home
and so the actions that we have taken
include a mixture of responses, including:
•
•
•
•
•
•
Immediately identifying and shielding
vulnerable employees
Facilitating home working (where
possible), helped by our Project Atlas
investments
Providing appropriate levels of PPE,
temperature guns and enhanced
cleaning at sites
Implementing staggered shift patterns
and increased spacing between
workers at our sites
Banning all non-essential visitor access
to all locations
Restricting all non-essential travel –
internal and cross border
• Closely monitoring and adhering to all
local government guidelines – including
full site lockdown and restricted staff
numbers where appropriate
A Group-wide employee
survey showed that 96% of
respondents were satisfied
with how the Group has handled
the COVID-19 pandemic”
At Trifast, we pride ourselves
on being a people business
and we believe our average
employee tenure of 11 years is
good evidence of our ongoing
commitment to this”
We are pleased to report that
every TR location is back open
for business, ready and able
to operate at full capacity as
demand returns”
Communication
However, it is not just what you do
that makes the difference. A big part
of managing the risk to our people is
in ensuring that we are regularly and
appropriately communicating with our
workforce around the world. This has been
a key focus for the COVID-19 Task Force,
including:
• Global COVID-19 SharePoint site
– regularly updated to ensure that
information and guidance remains
applicable
• Weekly worldwide update issued to all
staff
•
Regular virtual meetings using digital
technology, supported by Project Atlas
• Ongoing regular communications and
guidance on specific issues – including
maintaining mental wellbeing during
isolation, holiday entitlement guidance
and the impacts of furloughing (and
similar global schemes)
•
•
•
•
Regular video messages from the CEO
Posters placed at all sites detailing
location specific working practises
Regular contact with line managers and
direct access to the local and global HR
functions for support
A Group wide employee survey showed
that 96% of respondents were satisfied
with how the Group has handled the
COVID-19 pandemic
A return to work
As we have seen all of our locations start to
return to full operation, the focus has shifted
to ensuring that we are providing the right
guidance and support to allow our people to
feel confident that they are coming back into
a safe working environment.
This has involved not only a step up in the
physical controls operating at our previously
closed locations, but also increased
communications and appropriate access to
physical and mental health support at what
can be a challenging time for our people.
10
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Trifast plc Annual Report 2020 Risk Two – Trading
a.
If we are unable to support and adapt to our customers changing requirements then this could impact on our short-term trading
levels, and our long-term reputation in the marketplace
b. Supplier lockdown and closures increase the risk of stock shortages or stoppages
c. Damage to our trusted external supplier relationships could affect short-term sustainability and our long-term growth
d. Specific logistical challenges in different parts of the world can make getting stock to the right place at the right time more difficult
That support is very much two-way,
including TR ordering in line with planned
volumes to support production capacities
in the short term and providing enhanced
forward-looking forecasts and re-scheduling
to allow improved longer-term production
planning. Whilst on the other side, our third-
party suppliers have been able to prioritise
TR supply and step in to provide alternative
sourcing options and support short-term
product needs in this rapidly evolving
situation.
Our world-class external supplier base is
hugely important to the ongoing success
and sustainability of our business and
we are proud to report that despite these
uncertain times, we have not looked
to extend credit terms with any of our
suppliers. We firmly believe that the best
way to get through this and succeed on the
other side is by working together fairly and
for the benefit of all our stakeholders.
We also successfully applied for essential
business lockdown exemptions in Italy,
Malaysia and Singapore to ensure that our
manufacturing sites were back open for
business as soon as possible to service our
local and global customer base.
Considerable work has been
undertaken with customers
and the supplier base to
minimise supply chain risks.
We are pleased to report
that we have been able to
keep supply routes open for
all our customers, despite
the unprecedented logistical
challenges around the world”
Trusted Reliability
There can be no doubt that COVID-19 has
brought with it a number of significant
challenges to supply chain management.
From the outset in China, and the
restrictions that were placed on this
relatively small part of our supplier base
(<10%), to the wider spread difficulties that
we have seen as further countries lockdown
and as our own manufacturing sites have
had to deal with mandatory reduced
production volumes.
However, it is circumstances like this, where
being a long established, experienced
distribution business, with a flexible supply
base and adaptable logistical solutions
comes into its own. There has been an
incredible amount of hard work that has
gone on behind the scenes here at TR to
ensure that, despite all of the uncertainty
and rapidly changing circumstances, we
have not, and we do not plan to let any
customer down.
Supporting our customers
Back in January and February 2020, we
were focusing on our Chinese business
and suppliers to ensure that we were able
to continue to supply and service our local
and global customers despite the lockdown.
As the pandemic spread, these efforts have
widened with our supply and sales teams
working closely together around the world
to ensure that we maintain adequate stock
on our shelves.
We are in regular communication with our
customers to understand their ongoing
needs, as they initially locked down and then
as they have wound volumes back up. This
has involved a mixture of increased stock
ordering to allow us to ride out any potential
supply chain blockages, moving stock
around the TR Group to the place of greatest
need, utilising alternative logistics solutions
and re-sourcing product where required. As
customers come back on line, we have been
working with them in advance to respond
to their evolving COVID-19 policies and
procedures and to fully support the ramp up
of manufacturing volumes.
Working with our suppliers
It is not just about the customer side. In
our business it is just as important that
we work closely with our established and
trusted supplier base. Again communication
has been key to understand the potential
impact of lockdown and closures on lead
times. To ensure that we can obtain the
stock we need, but also that we can support
and maintain our relationships with these
important business partners for the longer
term.
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11
Trifast plc Annual Report 2020 COVID-19 and the business
Risk Three – Access to cash
a. A lack of access to cash resources could undermine our ability to continue as a going concern in the short-term or damage our
longer-term viability
b.
In such uncertain and volatile times forecasting accuracy is inherently more difficult, raising the risk that insufficient/excessive
actions could be taken leading to damage to our going concern in the short-term, or our long-term success
As at the 31 March 2020, our adjusted net
debt was £15.2m, and our covenants are well
within requirements.
Strong cash conversion, a
significant facility headroom
and a successful equity raise
provide ongoing resilience in
uncertain times”
0.80x
Adjusted leverage
30.0x
Interest cover
At 31 March 2020 we had £28.7m of cash
in the business, this represents a slight
increase on previous years (five year
average: £24.5m) to provide a degree of
additional flexibility.
Looking ahead with confidence
Daily stress-testing and scenario planning
has been in place since the beginning of
March 2020 to ensure that we are able to
look ahead and make the right decisions
at the right times. This will not only allow
us to protect and sustain the business but
will also ensure that the actions we are
taking are measured and appropriate in
anticipation of trading conditions improving
in the longer term.
There is no doubt that these are very
volatile and uncertain times and therefore
being able to look ahead with certainty is
a very difficult thing. The assumptions that
are made about revenues, profitability and
cash generation can significantly impact
the outcome of our forecasting which can
then affect the timing and the nature of the
decisions that we make.
To manage this uncertainty risk, we have
introduced two main forecasting scenarios
into the business.
A good entry point
For TR, FY2019 represented the ninth
year of sustained growth, whilst over the
last five years, including into FY2020, we
have maintained strong cash generation
averaging c.80% of our underlying EBITDA.
In addition, in April 2019 we signed new four
year banking facilities with three banks –
HSBC, Citi and Natwest. These provide
access to £80m of RCF of which £35.7m
is undrawn as at 31 March 2020. The
£16m equity raise in June 2020 puts the
Group in a net cash position and provides
additional confidence to continue to
invest to maximise our long-term growth
opportunities, whilst at the same time
ensuring the Group retains a financial
position that manages risk and its strategic
flexibility. This amount is available for M&A
or business as usual purposes.
Under the new facilities we have only two
financial covenants (calculated quarterly):
•
•
Adjusted leverage* – Total net debt (pre-
IFRS16) to UEBITDA not to exceed a ratio
of three
Interest cover* – UEBITDA to net interest
(pre-IFRS16) to exceed a ratio of four
*Adjusted leverage and interest cover are defined in note
34 to the financial statements
12
Scenarios
•
Scenario #1 – ‘FY2021 base case’
An updated base case forecast that
reflects the Group’s most likely expected
revenue outturn. This scenario starts
from known customer and market
conditions in a bottom up exercise,
which is subsequently reviewed and
amended at regional and Group level.
This base case includes all Board
approved mitigating actions
•
Scenario #2 – ‘Extreme but plausible’
(aka ‘Reasonable Worse Case (RWC))’
– a deliberately extreme scenario
forecast, designed to reflect what is our
best guess at a worst case scenario.
This includes everything in scenario #1
with reduced trading plus additional and
more material mitigating actions
Both of these scenarios are updated daily
and are reported to the Main Board and
Operational Executive Board on a weekly
basis. Both scenarios forecast income
statement, balance sheet, cashflow and
banking covenants on a monthly basis for
the time period FY2021 through to FY2023.
Standing behind these scenarios we also
have a comprehensive and evolving list of
cash and profit conservation initiatives that
we can, and have, drawn on as required to
safeguard the short and long-term future of
the business.
To mitigate the challenges around
forecasting accuracy, actions are approved
when there still remains clear banking
covenant contingency in both scenarios and
well in advance of any forecast low points.
As a Board we have set a reduced
maximum net debt to UEBITDA ratio of
1.5x (FY2019: 2.0x) to better manage the
heightened level of uncertainty and risk in
the current environment.
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Trifast plc Annual Report 2020 a. Overly aggressive cost control and management could reduce or delay the business’ longer-term growth and development
b. An excessively inward looking focus, could lead to us missing specific opportunities that the current situation creates, both in the
short and longer-term as we come out of the other side
Risk Four – Future opportunities
Actions taken to date
We have already taken a number of specific
actions. This is obviously a constantly
evolving situation, but the main elements of
this as at the time of reporting are:
•
To protect our workforce and their ongoing
employment, we are making full use of all
available government backed job retention
and wage subsidy schemes
• Where this is not possible at certain sites,
some hours and pay reductions have been
put in place to ensure that all our people are
being impacted in a fair and balanced way
around the Group in response to the reduced
trading levels
The Main Board took a 20% salary/fee
decrease for Q1. No annual bonus and no
annual salary/fee rises will be paid for FY2021
All pay-rises across the world have been
deferred for HY1 of FY2021
A recruitment freeze (outside of specific
strategic hires) is in place for HY1 of FY2021
A ban on all non-essential travel is in place for
HY1 of FY2021
•
•
•
•
• We are working closely with all our businesses,
customers and suppliers to continue to
manage working capital effectively – including
stock purchase re-scheduling and enhanced
credit control procedures
• We have re-aligned the Project Atlas timetable
in the face of the current extensive travel
restrictions to defer roll-out until HY2 of FY2021
(see pages 18 and 19)
• We do not intend to propose a final dividend
for FY2020 at our forthcoming AGM
•
In June 2020 we completed a successful
c. £16m equity raise putting the business into a
net cash position (see pages 14)
Further actions will be taken, as appropriate
and as required, to deal with the changing
situation. This could include additional profit or
cash conservation initiatives being pulled. Or, if
circumstances begin to stabilise quicker than
our scenario forecasting is currently predicting,
then this could involve a relaxation of some of
the decisions already made.
We are constantly reviewing
what this ‘new normal’ will
look like and how we can best
address the challenges and
opportunities it will bring”
A measured response
Our scenario testing has been designed
with two things in mind. First and foremost to
keep us safe as a business and to maintain
our short-term going concern and longer-
term viability. But also to ensure that we
do not cut too soon or too deeply so as to
damage the business’ ability to grow and
develop for the longer term.
Sustainable growth will always need
investment. Even in uncertain times, it
remains just as important that we continue
to protect and build our competitive
advantage, ready for when a greater degree
of stability returns to the market. After all,
despite the rapidly changing developments
regarding COVID-19 our continued pipeline
of new wins and opportunities, means we
can afford to remain optimistic about the
medium to long-term future of the Group.
For further details on the targeted
investments we are still planning to make,
including our plans regarding Project
Atlas, M&A resource and Supply Chain
Management, see pages 18, 19, 24 and 25.
A time of opportunity
Situations like this, always bring both
opportunity and challenge. As a business we
are incredibly proud to be supporting several
global OEMs and subcontractors in the
medical sector, a market we have operated
in for a significant period of time and where
we continue to see ongoing opportunities
for us as a business (see case study on
page 31). Good examples are our fasteners
going into ventilators and medical grade
masks across the world, as well as hospital
beds here in the UK’s Nightingale Hospitals.
Our recent further expansion into general
industrial is another area of focus. Both of
these represent a good counter-balance to
the Group’s automotive business and are
areas that we plan to continue to invest in
and build in the coming years.
We consider it is imperative that we continue
to be mindful of the future. A post COVID-19
world will undoubtedly be different, however
it will also bring with it both organic and
M&A opportunities. We will continue to
closely monitor the competitive landscape,
to service our customers and support
our suppliers. Building and cementing our
reputation in the marketplace, to ensure that
we are always at the front of the queue as
new opportunities begin to surface.
We already have an established network of
trusted suppliers around the world, however
looking ahead we will be applying additional
focus to this (see page 24) to ensure that we
can maintain and enhance the geographical
breadth and resilience of our supplier base.
This will allow us to proactively respond to
changing market demands as businesses
start to look towards local as well as global
sourcing solutions.
Trifast is a global business
serving a broad and balanced
range of sectors and
geographies, with no one
customer representing greater
than 7% of revenue.
We are a full service provider
to our multinational customers,
delivering reliable product
engineering, quality and supply
via flexible global logistics
solutions. Even in uncertain
times, this gives a very good
base from which to keep moving
forward and delivering on our
future aspirations”
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Trifast plc Annual Report 2020 Equity placing to preserve strategic investment capability
and to maximise growth
On 19 June 2020 we provided an update to
the Company’s response to the COVID-19
outbreak and the intention to raise capital
through a Placing. This has ensured that the
Group could continue to invest in long-term
growth as well as short-term working capital
needs as markets recover.
The Placing allows the Board to proceed
with this programme in the near term, as well
as a further c.£2m of planned investment
in enhancing the Group’s M&A resourcing,
unlocking supply chain efficiencies and
supporting capacity investment in the
Group’s high growth operations (including in
the USA, Spain, Thailand and India).
programme. Whilst the Board will always act
prudently in assessing potential acquisitions
against its rigorous criteria, the Placing
will help to ensure that there is the scope
to act decisively should attractive ‘bolt-on’
opportunities present themselves.
Placing result
On 19 June, 12,438,132 new ordinary shares
of 5p each in the share capital of the
Company were placed with investors at a
price of 120.5p per placing share, raising
gross proceeds c.£15m. On 23 June, the
broker option was exercised in full, placing a
total of 830,000 new ordinary shares of 5p
each in the share capital of the Company,
raising gross proceeds of c.£1m.
The shares became effective on 23 June
2020. The detailed announcements can be
found on our website at www.trifast.com
The Company would like to thank
shareholders, staff and the founders of TR
who supported the Placing.
The Group has been able to retain its
operational capability and has the ability
to ramp up capacity quickly across all its
sites. As customer demand improves,
the rate at which the Group can respond
will be determined in part by its ability to
invest in working capital. Alongside the
ability to maintain its strategic investment
programme.
The fundraise will also allow the Group
to execute against both committed and
opportunistic organic investment initiatives,
whilst ensuring the business retains a
financial position that manages risk and
provides strategic flexibility.
Prior to the outbreak of COVID-19,
acquisitions formed a key part of the
Group’s strategy and the Board believes
that the disruption caused by COVID-19
may act as a catalyst to accelerate this
Following the Placing, material interests, representing 3% or more of the issued share capital
of the Company are shown below:
Shareholder
Castlefield Investments (Sanford DeLand)
AXA Framlington Investment Managers
Schroder Investment Management
Liontrust Asset Management
Hargreave Hale Ltd
Michael Timms (founder)
Threadneedle Asset Management
Franklin Templeton Investments
Holding % of TVR
19,100,000
13,410,375
12,491,510
8,397,204
7,729,192
7,000,000
4,906,547
4,598,800
14.05%
9.87%
9.19%
6.18%
5.69%
5.15%
3.61%
3.38%
Total voting rights (TVR): 135,929,041
The up-to-date investor profile can also be found on our website at www.trifast.com
Equity Placing
The key ways in which these funds will be
used are:
•
•
•
To maintain current year investment of
c.£5m in Project Atlas and other growth
enablers
To deploy up to £10m of incremental
working capital investment to accelerate
growth
Ensures the Group will emerge from the
crisis with a stronger balance sheet,
capable of providing a platform to
support further organic and acquisition
growth
Activity levels showed an improvement
during May and into June and the Group
has the ability to ramp up to full production
across all its locations as demand returns.
Reasons for the Placing
The Group responded quickly and effectively
to the COVID-19 outbreak, reducing the
financial and operational impacts on the
business whilst also reinforcing its financial
position. Whilst the Board believes that
its existing resources were sufficient to
manage through this period of disruption,
the current uncertainty meant that, without
additional funding in the short-term, it could
have been necessary to defer important
investment in the business which could
impact future growth prospects.
Project Atlas, the Group’s transformational
multi-year systems and process investment
programme, represents a critical part of
the Board’s long-term strategic plan and is
approaching the roll out phase. To maintain
momentum in this programme will require
£3-4m of investment over the coming
months.
14
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15
Trifast plc Annual Report 2020 ENABLING
INNOVATION
WITHIN
AUTOMOTIVE
A key challenge for many of our customers
involved in the automotive sector is
electrification.
Read more about Automotive and
Electric vehicle on pages 29 to 30
Fast forward a handful of years and not only how we power
vehicles will have changed, but how they move from A to B will
have changed.
Autonomous delivery vehicles moving goods over large distances,
zero emission delivery vehicles in our city centres and cars that
will do more of the driving for us will be in our daily lives at some
point in the near future.
With all of this change happening so fast, our customers have
a huge challenge to deliver something different. Our purpose is
to be fully aligned to these changes and work in parallel with our
customers as they look to introduce change. Change could simply
be an electric battery replacing the traditional combustion engine,
a more luxurious interior, or one that’s more functional, allowing
the occupant to work whilst on the move, or all of these. These
changes are unprecedented in the evolution of automotive history,
but through our customer relationships, our engineering know-
how and our historic focus outside of the combustion engine, TR
are well positioned to support these changes across the world.
i
c
g
e
t
a
r
t
S
t
r
o
p
e
r
01
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Strategic report
Contents
Trifast – building a better tomorrow
Good news and the future
Succession planning
Introducing our new Operational
Executive Board (OEB)
Investment in supplier relationship
management and supply chain resilience
Acquisitions
Our fastest growing geographies
Global marketplace
Innovation
How we create value
Our Group strategy
Strategy in action
Core strategy
Investing in our people
Investment driven growth
Continue to add value and differentiate
Operational efficiencies
Corporate social responsibility
Trifast in the community
Risk management
Key performance indicators
Business review
18
20
23
24
25
26
28
36
38
40
41
42
48
50
52
54
58
60
68
70
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Trifast – building a better tomorrow
(previously FY2023) due to the COVID-19
implementation deferral period).
The main benefits that form the basis of
this calculation have very deliberately
been restricted to only those elements
that we consider to be both achievable and
measurable, including:
•
Increased sales opportunities due to
reduced quoting times, more efficient
sourcing capabilities and improved
Group wide access to customer activity
data
• Greater integration and automation
at enquiry level to facilitate increased
in-house manufacturing levels, more
effective utilisation of available capacity
and a lower external spend
Specific investments into warehousing
technology to drive down picking errors
and manual checking procedures
Improved access to our Group wide
product, supplier and demand planning
data to help us further develop our
supplier networks and reduce input
costs
Project Atlas – a
transformational investment
to build an integrated global
business
Back in FY2018, we performed a
comprehensive review of our Enterprise
Resource Planning processes and systems
around the world. The end result of this
review was Project Atlas, a significant
multi-year investment into the integration
and development of the Group’s IT business
platform and its underlying processes,
policies and procedures.
•
•
Project Atlas – what will we become?
Project Atlas is a transformational
investment for Trifast. For the first time in
our history, we will become a fully integrated
global business, underpinned by best
in class global policies, processes and
procedures and a state of the art IT solution,
all of which have been designed to ensure
that we are able to operate as efficiently and
commercially effectively as possible.
As one of the very few truly global
businesses in a fragmented marketplace,
this will put us ahead of the majority of
our competition in our ability to reliably,
proactively and cost-effectively service our
global customers, as well as in our capacity
to maintain, manage and develop our
extensive supplier network around the world.
Project Atlas – what will we gain?
Project Atlas has been
specifically designed to
increase our future underlying
operating profits and margin
The direct benefits case
Project Atlas always came with a very
strong benefits case, including an ROI of
>25% at the point of full realisation. Albeit,
this is now expected to be in FY2024
In the current uncertain macro-economic
environment we expect the start of benefit
realisation to begin in FY2022 and we
remain fully confident that the final >25%
ROI continues to be both realistic and
achievable.
The wider picture
With greater efficiency, comes greater
capacity. The roll-out of Project Atlas will, in
the short term, create significant capacity
within our business which will enable
us to innovate, evolve, drive continuous
improvement and operational efficiencies
and keep ahead of the market.
Together we are stronger. . .
Increased integration will allow different
parts of our business to be better able to
support and collaborate with each other.
This includes our manufacturing supplying
our distribution business with engineering
know-how, innovation and, ultimately, trusted
reliable product. As well as distribution
operating as a truly global sales force for
our high quality manufacturing plants.
Even post-Atlas, Trifast is still all about our
people and we are very pleased to report
that Project Atlas, via the roll-out of our
first global talent management system,
will also help us to make the most of our
people. Ensuring that we don’t just drive
Despite COVID-19 the next
couple of years for Trifast
remain a very exciting time
for our business as we look
to implement and invest in
a number of significant and
positive changes in the way
that we are structured and we
operate”
We have been successfully investing
into our manufacturing and distribution
capabilities and capacity for a number of
years. These investments have created,
and continue to create, a lot of value for
the Group. They have helped to secure
the right foundation for eight years of
profitable growth up until FY2019 and even
in the current uncertain macro-economic
conditions, it is these investments that are
allowing us to better protect our existing
business and continue to outperform end
markets.
But what happens next. . .?
Trifast – the next stage
of the journey
There can be no doubt that we are currently
living in challenging times and as discussed
on pages 10 to 13, we have been working
very hard over the last few months to
ensure that we have all of the right plans in
place to face those challenges head on and
come out of the other side of this – stronger,
fitter and ready to grow.
For TR the next couple of years are also
going to be a very exciting time for our
business. Over the course of FY2021
and FY2022, we will see a number of
significant and positive changes both in
the way that we are structured and the
way that we operate. As well as a plan for
further investment into our fastest growing
locations as and when market conditions
allow.
All of these together will act to transform our
underlying business, ensuring that we are in
the best possible position to make the most
of the current uncertain times, but also,
more importantly, to move rapidly forward
when more stability returns to the macro-
environment.
18
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Trifast plc Annual Report 2020 ongoing loyalty but also ambition & personal
development across all our people around
the world.
Information is power. What
we know, who we know and
how together we 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 drive quicker
and better strategic decision making and a
more proactive approach to opportunities
and challenges.
It will allow us to better meet the ever
evolving needs of our multinational OEM and
Tier 1 customers, as well as to use our global
economies of scale to further develop our
third party vendor relationships.
Project Atlas supports our M&A
ambitions
Via Project Atlas, we will build an adaptable,
scalable, secure environment. One that
is flexible, rapidly deployable and widely
supported to form the backbone of our
growing global business.
This will not only support our organic
growth journey, but will also provide the
necessary foundation to allow us to widen
our acquisition size criteria, and further drive
this very key element of our strategic growth
plans.
Project Atlas – where are we now?
As at the end of FY2020, we
are pleased to report that
Project Atlas was on track and
on budget, although the impact
of COVID-19 will continue
to be closely monitored as
circumstances evolve
As planned, in FY2020 our key focus has
been on the finalisation of the analysis work.
Followed in the second half of the year by
the design and build phase of the project.
As a result of all that hard work, we are very
pleased to report that over the course of
the last 12 months we have successfully
built a global IT solution, that is now ready
and waiting to be rolled out as soon as the
current circumstances allow.
the balance sheet as at 31 March 2020
(intangible £4.1m, tangible £0.3m). These will
start to be amortised as the new IT system
is rolled-out across our global sites.
Given the extensive COVID-19 travel
restrictions and the importance of providing
adequate training to allow us to fully realise
expected benefits, we have inevitably been
forced to re-align the project timetable
a little, deferring roll-out until the second
half of FY2021. Our revised plan has been
specifically designed to make best use of
this deferral period, by focusing on upfront
site by site preparations and additional
development and training activities to
increase our internal expertise and self-
sufficiency.
Looking beyond that short deferral
period, the next two years will be all about
localisation and roll-out with priority being
given initially to our distribution businesses.
This will be an incredibly exciting time
for us as we start to see all our efforts
to date turn into something tangible and
transformational around the TR world.
With all of the benefits firmly in sight and a
strong and dedicated TR team behind us,
we remain completely confident that we will
be able to bring this project to a successful
conclusion.
Project Atlas – in numbers
As a consequence of the work undertaken
to date on this project, we have incurred
direct costs of £5.7m in FY2020 (to date
£10.0m), largely relating to project team and
consultancy costs. We have excluded £2.5m
of 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 investment.
In line with accounting standards, we have
also recognised the remaining amount of
£3.2m (to date £4.4m), as fixed assets on
Project Atlas – an investment
that will underpin our ongoing
organic and acquisitive growth
strategy and further integrate
our global business to create
the Trifast of tomorrow
Dara Horgan
Operations Manager
TR Mallow
TR Mallow is excited to be the
pilot site to go live for Project
Atlas”
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Trifast plc Annual Report 2020Strategic report Good news and the future
Succession planning
At Trifast we have a proud tradition of timely
and well-organised succession planning
and over the last five years we have seen a
series of key changes at both Main Board
level and below. Without exception all of
these have been successful, allowing for
seamless transition and the appropriate
retention of knowledge and networks within
our business.
As previously reported, in FY2021, we see
the continuation of that process, with a
number of changes taking place at senior
level. We are incredibly grateful to these
key individuals. They have built a fantastic
foundation for us, from which we can
go on to create future opportunities for
sustainable and profitable growth.
In November 2019 we announced Malcolm’s
intention to retire from his position as Non-
Executive Chair on 31 March 2020 and to be
replaced by Jonathan Shearman.
Malcolm Diamond MBE
Non-Executive Chair
(Retired 31 March 2020)
Jonathan Shearman
Non-Executive Chair
(Appointed 1 April 2020)
Having joined Trifast for the first time 45
years ago when the Group was in its infancy,
there can be no doubt that Malcolm will be
a tough act to follow. Malcolm has been
hugely instrumental in the development and
evolution of our business over the last five
decades, an experience that has enabled
him to go on to offer sound commercial and
strategic support and mentorship in his role
as Chair since his appointment in 2009.
Having overseen the
smooth CEO and CFO
succession plan at Trifast
as well as the adoption of
the transformational Project
Atlas, now halfway through
its four year implementation, I
feel comfortable in retiring as
Chair at the end of March 2020
knowing that the Trifast Board
and the business is in such
good shape, despite the current
uncertainties”
Malcolm Diamond
After a successful career in investment fund
management, stockbroking, investment
banking, and charitable foundations, Jonathan
has brought added skills to the Board in an
energetic, strategic and pragmatic manner,
proving his ability to provide direction in a TR
context. Jonathan already understands and fits
within the culture of Trifast at both Board and
operational level.
Jonathan has been a key part of the Trifast
Board since his appointment as Independent
Non-Executive Director in 2009, becoming
Remuneration Chair from 1 July 2009. Over that
time the Remuneration Policy has successfully
evolved, with policy and report voting outcomes
of c.95% achieved across the board over the
last five years.
I am delighted to have been
asked to take the Chair and
succeed Malcolm. Over the
years I have enjoyed the
challenge and work ethic at
Trifast and its culture which has
been a critical component to
the success of the business,
and it remains key to TR’s
future growth. I look forward to
continuing to work alongside
the Trifast team in driving the
next stage of this international
business’ transformation”
Jonathan Shearman
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Trifast plc Annual Report 2020 Claire Balmforth
Remuneration Chair
(Appointed 1 April 2020)
Neil Warner
Senior Independent Non-Executive Director,
Audit Chair (Retired 31 July 2020)
Clive Watson
Senior Independent Non-Executive Director,
Audit & Risk Chair (Appointed 30 July 2020)
We consider ourselves very fortunate that
Claire agreed to join TR from the 1 April 2020,
when she took over the role of Remuneration
Chair from Jonathan. Claire’s significant
experience in this area, as well as her wider
HR expertise will provide invaluable support
not only at the Main Board level, but also
beyond that as TR enters into such a pivotal
time in its history.
Neil Warner, Senior Independent Director,
who joined us in 2015, informed the Board of
his intention to retire from the Company on
31 July 2020. On behalf of all stakeholders
we would like to thank Neil for his invaluable
contribution over his five-year tenure and
wish him a long and happy retirement with
his family.
This is an exciting time to
join Trifast and support the
growth and development of the
business in the coming years”
Claire Balmforth
I have enjoyed my time as SID
and Audit Chair at Trifast.
During this period, the
Company has gone from
strength to strength in terms
of quality of people, processes
and systems. It has been a
pleasure working with my fellow
Board members and the Trifast
people”
Neil Warner
We welcome Clive Watson who joins Trifast
as a Non-Executive Director, Chair of the
Audit and Risk Committee and Senior
Independent Director on 30 July 2020.
Having qualified as a chartered accountant
with Arthur Andersen, Clive moved into
industry, where, over his career, he worked
for several international, companies in
the UK and overseas gaining extensive
experience in a variety of senior finance
roles.
I am excited to be joining the
Board of Trifast at this stage
in its development”
Clive Watson
Read more about our plc
team on pages 78 to 79
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Trifast plc Annual Report 2020Strategic report Good news and the future
I wish I was ten years younger
and able to continue to take
part in the next phase of
growth”
Glenda Roberts
Glenda has become something of an
institution within the TR culture over the
30 years since she joined in 1990. She also
spent ten years on the Main Board, retiring
on 31 March 2020. Over this period she
has driven the global sales & marketing
strategy on our journey from a Group more
heavily electronics dependent to one with a
more balanced portfolio and no one sector
representing more than approximately a
third of our global revenues. With the able
support of her team, Glenda has overseen
the Group’s successful penetration into the
automotive industry, which now represents
34% of our global revenues. Glenda has
built a highly successful global sales
team, focused on servicing not just our
multinational OEMs and Tier 1s, but also
on supporting our local and national sales
teams around the world.
In her role as Director on the newly formed
Operational Executive Board, Glenda will
be providing mentorship, guidance and
support to TR’s operational teams around
the business.
It is difficult to imagine TR
without Glenda, but it is also
difficult to imagine a better
successor than Dan Jack”
Glenda Roberts
USA Director
(appointed to the OEB 1 April 2020)
Dan Jack
Global Sales & Commercial Director
(Joined 8 June 2020)
We are very pleased to welcome Dan Jack
to TR from 8 June 2020. Ahead of joining
Trifast, Dan has built 25 years of history
within the industry, culminating in his most
recent previous position as President of
EMEA & APAC regions at one of our key
global competitors. Dan brings with him an
absolute wealth of knowledge, expertise,
experience and networks and will play a
key part on the TR Operational Executive
Board. Following a transition period,
Dan will take on the full Global Sales &
Commercial Director role.
Key areas of expertise
Over his 25-year career within the local
and global industry Dan has gained
extensive experience in commercial
supply chain management, engineering,
sales & marketing, and business
development. Having worked within the
UK, Europe and Asia in management
roles he has also developed his skills and
knowledge in strategic & financial planning,
M&A and project management.
TR’s renown for world-
class customer service is
enviable. Combining this
reputation with continued
investment in global
manufacturing, a history of
appropriate acquisitions
and a drive to continuously
improve made joining a
truly exciting proposition. I
am proud to be serving as
part of an experienced and
motivated team!”
Dan Jack
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Trifast plc Annual Report 2020 Introducing our new Operational Executive Board (OEB)
OEB Chair
Trifast CEO
Mark Belton
Trifast CFO
Clare Foster
Global HR Director
Helen Toole
Global IT Director
Colin Coddington
TR OPERATIONAL
EXECUTIVE BOARD
Global Sales &
Commercial
Director
Dan Jack
USA Director
Glenda Roberts
Asian MD
Charlie Foo
Asian COO
Endy Chin
European MD
Andrew Nuttall
Atlas Lead
Stevie Meiklem
UK & Ireland MD
Dave Fisk
A global business requires a global strategy
and a global strategy demands a global
Operational Executive Board (OEB). Since
April 2020, for the first time in TR’s history,
a fully cross-functional and regionally
representative OEB has been in operation.
The OEB is made up from some of our most
experienced and capable senior people
from around the world .
This team will devise the strategic direction
and goals for our global business and by
working together will take responsibility for
driving these to a successful conclusion for
the Trifast Group.
The OEB is global, cross-
functional and designed to
drive our integrated business
forward – a real engine for
sustainable growth”
Key terms of reference are as follows:
• Drive and deliver the Group’s profitable
growth strategy both organically and by
acquisitive means
• Motivate and develop the employee
workforce
•
Ensure the safety and wellbeing of the
workforce
• Commercially, minimise risk within the
business
•
•
Realise the Atlas benefits case, in
conjunction with the Project Atlas team
Enhance communication and
collaboration within the Group
In the current uncertain environment, wider
cost optimisation programmes are also
under development by the OEB with a focus
on measured and appropriate actions to
allow us to protect and sustain the business.
Data doesn’t make decisions, it
allows decisions to be made. It
is this team that will be making
use of the improved real-time
data environment post-Atlas
to drive effective and dynamic
strategic decision making and
action across the Group”
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Trifast plc Annual Report 2020Strategic report
Good news and the future
John Dick
Global Supply Chain Director
(Joined 8 June 2020)
Key areas of expertise
John’s career spans 26 years within
the international fastener industry.
Having worked in Asia, Europe and North
America at a senior level, John has gained
extensive knowledge and experience
in the development, sourcing, and
manufacturing of industrial fasteners.
He also has a broad understanding of
supply chain management and managing
these partnerships successfully on a
global basis.
I look forward to working
with my new colleagues,
and adding to the mix my
knowledge and experience in
fastener manufacturing and
global supply”
John Dick
Investment in
supplier relationship
management and
supply chain resilience
Over the last five years, we have been
investing in our sales teams, both at the
Group level and locally around the world.
However, there are always two sides to the
buy/sell margin we make and, whilst one is
most certainly the amount of income that
we can generate at the point of sale, the
other is the total price we need to incur in
order to service that sale.
At TR, we consider our established and
trusted supplier network to be second to
none. Many of these are tried and tested
vendors across the globe, who we have
worked alongside for a number of years.
However it is also true to say that the
way that we manage and develop those
networks is not something that we have
invested significantly in over the last five
years, despite the growing revenues we
have seen around the world. And it is this
coupled with the transformation that Project
Atlas will bring in terms of our access to
real-time, accurate, global data that has led
to some key investment decisions being
made on the supply side of our business.
As a result of the above, over the next
24 month period we will be investing in
an enhanced supply chain team. This
has already started with the successful
recruitment of a Global Supply Chain
Director, and will be followed by additional
global and regional recruitment to support
that new role.
Reporting directly into the new Global Sales
& Commercial Director, a key focus of this
team will be to work closely and develop
with our trusted supplier base, to ensure
that we are able to make the best use of
our global purchasing power and enhanced
forecasting capabilities to rationalise supply
and drive input cost efficiencies.
As discussed on page 11, looking ahead we
will also be using this additional resource
capacity to maintain and enhance the
geographical breadth and resilience
of our supplier base, to ensure we are
able to provide secure, reliable local and
global supply chains to best suit any of
our customers’ changing needs in a post
COVID-19 world.
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Trifast plc Annual Report 2020 Acquisitions
Acquisitions continue to
be a significant part of our
investment strategy and we
consider it likely that we will
see additional opportunities
as businesses look to adapt
to the challenges of a post
COVID-19 world”
In FY2018, we set up an internal acquisition
team and an enhanced structure to
continue to drive our ongoing proactive and
reactive M&A activities.
However, over the course of the last two
years, it has become more apparent that
in order to drive a greater frequency of
transactions, additional investment will
be needed. We began this process by
identifying external advisers to support us
in our two key M&A geographies – USA and
China/SE Asia. There is no doubt that this
has increased our activities in both of these
areas, including the number of opportunities
that we are now reviewing. However
on its own, external support is never a
good enough proxy for adequate internal
resource.
As a result of this, in August 2020, we will be
joined by an experienced M&A professional.
Paul Ranson has worked across all areas
of M&A and will work with us and our
external adviser networks to lead our global
acquisition activities. This will be further
supported by the additional PR investments
we are making specifically in the USA to
enhance our brand and profile in a market
where our current relative size against
the scale of opportunities can work as a
disadvantage.
Although consolidation is constant, our
market remains hugely fragmented, with
no one player owning more than 5%. This
means acquisitions will remain a key part
of our growth journey for the foreseeable
future. With significant debt financing in
place and the recent equity raise, as well
as additional internal resource we are
confident that the number of opportunities
and successful transactions we see will
begin to increase in the medium-term.
Paul Ranson
Head of Corporate Development
(Joining August 2020)
Paul is an experienced M&A professional.
His 26-year experience captured the
full transaction cycle together with
commercial and strategic projects on an
international basis. At his previous roles
with KPMG, a large privately owned multi-
national and more recently a boutique
Corporate Finance house, Paul has
completed cross-border transactions
both as an adviser and within a corporate
setting.
Key areas of expertise
Strategic M&A origination, project and
risk management; due diligence and deal
execution; supporting the creation of
financial deal models and transition and
integration plans.
I am delighted to be joining
Trifast at this exciting time
as the Board looks to fulfil its
growth strategy. The business
has a strong, positive culture
across the globe and I know
that I will be made equally
welcome wherever my role
takes me”
Paul Ranson
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Trifast plc Annual Report 2020Strategic report Good news and the future
Our fastest growing geographies
There are three territories in the world where
our growth has been and in the longer term
is expected to continue to be at worst very
strong and at best transformational. Over
the last five years, we have made it our
mission to identify these areas and ensure
that we organically invest to make the
best of the opportunities that exist. It is the
continuation of these investments that will
allow us to carry on taking profitable market
share despite the additional challenges that
the current uncertain environment is placing
on us.
FY2021 and FY2022 are all about ensuring that we are in the best
possible position to make the most of the current uncertain times,
but also more importantly, to move rapidly forward when more
stability returns to the macro-environment”
USA
The first of these is the USA. Over the last
five years the USA has grown with a CAGR
of 15.0% and is now two times the size it
was in FY2015. The source of this growth
is in both the automotive and electronics
sectors, with our existing multinational OEM
and Tier 1 relationships driving the majority
of the wins on the ground.
Once the COVID-19 environment has settled,
looking ahead, we expect double-digit
growth rates to remain for the foreseeable
future and to further support this we are
considering additional investments at the
right time into our warehouse and sales
teams.
Spain
This was our latest greenfield site, set up
in November 2016. In FY2020 turnover
grew over 50%, meaning that on a monthly
basis this site is now already successfully
servicing turnover levels in line with a
number of our much more established
smaller international locations.
Thailand
Our Thailand operations were set up largely
to service a number of multinational OEMs
in the electronics sector. Spotting a local
opportunity, over the last two years we
have been using our Group expertise and
multinational Tier 1 relationships to support
local penetration into the automotive sector.
Looking ahead turnover is forecast to
continue to grow at similar levels once
COVID-19 restrictions have been eased. At
which time we will be very happy to support
with additional warehouse and office staff to
manage the increasing demand.
The outcome of this is an increase in sales
in FY2020 of over 65%. Whilst we cannot
confirm that growth levels will remain this
high, we do expect to see strong sales
growth in FY2021.
To better support this we relocated our
Thailand business in January 2020, from
central Bangkok to a larger out of town
location, closer to the airport. This move will
improve staff retention and recruitment and
better support the ongoing sales growth.
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Trifast plc Annual Report 2020
CASE STUDY
TR FORMAC EXPANDS
PRESENCE IN THAILAND
AND JOINS ELECTRIC
VEHICLE ASSOCIATION
TR Formac, one of Trifast’s Asian
subsidiaries, has expanded its global
presence by moving into larger premises
in Prawet, Bangkok, in response to strong
growth across Asia and winning new
business from global OEMs. The new
facility provides around 3,000 sq. ft. of
space enabling the Company to trade
more efficiently and to help further
strengthen its position in the growing EV
market.
Operations in Thailand are headed up by
Country Manager David Ng, a knowledgeable
and well connected individual who has
witnessed the fast development of the
automotive sector across the country. Chris
Black, Global Director of Automotive Business
Development, will be supporting David and
the TR Formac team to increase their market
share of the automotive EV sector, sharing his
experience and knowledge with the Thailand
team.
David commented: “There are huge growth
opportunities in Thailand with key focuses on
technology and innovation of electric vehicles.
With this in mind, and to collaborate with other
companies, we decided to join the Electric
Vehicle Association of Thailand (EVAT)
which the Thai government was instrumental in
launching.
“There are three phases involving intensive R&D
to enable the production of 1.2 million units by
2036 and 690 EV smart charging stations. All
types of electrified vehicles are on the agenda;
battery, hybrid, plug-in and fuel cell. Moving
into bigger premises facilitates our continued
growth; it’s a key part of our strategic business
development initiative to move us forwards.”
The Electric Vehicle Association of Thailand
(EVAT) was set up in 2015 by individuals from
the private and public sectors to promote and
support industrial manufacturing, research and
development, and EV usage in Thailand. There has
been strong recognition within the country,
specifically at government level, to strengthen
knowledge and global competitiveness of
Thailand as an EV manufacturer. Supported
by the Ministry of Energy and the Energy
Regulatory Commission, the EVAT enables
members to exchange information and initiate
changes towards a low-carbon transport
community.
TR’s manufacturing capacity in Malaysia,
Singapore and Taiwan totals over 359,000
sq. ft. of factory space producing 525 million
components per month. Thailand is the 13th
largest automotive parts exporter and the sixth
largest commercial vehicle manufacturer in
the world with aims to become one of the top
performers in the global automotive market. 1
TR Formac is recognised throughout the
industry for world-class products and services,
manufacturing and distributing a huge
range of industrial fasteners and associated
components. PSEP (Power Steel & Electro-
Plating) in Malaysia was acquired in 2011 and
the Thailand office opened in 2013.
Source: 1 www.aseanbriefing.com/news/thailands-automotive-industry-opportunities-incentives/
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Trifast plc Annual Report 2020Strategic report Global marketplace
Overview
GLOBAL INDUSTRIAL
FASTENER MARKET
A highly fragmented market gives us an opportunity to develop our addressable scope.
Overview
The fastener market is very diverse and
fragmented. We have in the main focused
on the product that is consumed within
manufacturing assembly plants, and the
contractors that support them such as
sheet metal subcontractors and plastic
moulding companies. For example, there are
specialist fastener companies that focus
on construction, road and tunnel which is a
market that we would be less likely to enter
as it is very different to the fasteners that
we supply.
Macroeconomic conditions
Metal fastenings dominate the market with a
share of 90% of parts sold. However plastic
fastenings and other forms of adhesives
and bonding products are starting to
penetrate this percentage especially in
the automotive sector. The USA is still the
largest fastener user and in the near future
there will be a shift in the supply chain as
they onshore as much of their fastener
spend in line with the ‘one America’ policy.
There is encouraging news that the
automotive fastener market is expected to
grow post COVID-19 in the period between
2021 and 2026. One of the key drivers
will be the increased demand for electric
vehicles, and subsequently their battery
requirements which have a high fastener
content. Governments are now offering
scrappage schemes to stimulate the
market and encourage the changeover
from conventional combustion engines.
This could be a combination of fully electric
plug-in vehicles to hybrids. In turn this also
generates the need for charging units on the
highways and for domestic use and once
again these products have a high fastener
content. The increased use of plastics
in vehicles means that there will be an
increased need for fasteners.
Glenda Roberts
Group Sales and Marketing Director
We anticipate that companies
will now be looking more
closely at their supply chains
and onshoring where they can
since the Pandemic, so the
dynamics may change”
The electronics, 5G telecoms and domestic
appliances sectors are all high volume
fastener users predominantly requiring
smaller diameters compared to automotive.
Taiwan and China remain the most
competitive for products. We are seeing a
shift to Mexico which enables companies
in North America to have shortened lead
times and we can see that gaining more
traction.
The supply chain for Brexit has been under
much discussion within the UK. Our cross-
functional Brexit team have been putting in
place our contingency plans to mitigate the
risks attached to this.
Glenda Roberts
Group Sales and Marketing Director
c.£60bn
Market worth
<1%
Market share
TR customer sectors
9%
11%
11%
34%
15%
20%
Automotive
Domestic appliances
Electronics
General industrial
Distributors
Other
Link to strategy
Continue to add value
and differentiate
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Trifast plc Annual Report 2020 Market sectors
AUTOMOTIVE
Despite the negativity
surrounding automotive
we have outperformed the
underlying market
11%
11%
9%
34%
of annual
TR turnover
34%
15%
20%
Read more about How we
create value on page 38
Overview
Despite the confusion over diesel versus
petrol, or electric we have maintained our
revenue and percentage of Group sector
sales in automotive. We had already won
business on new model builds in Europe and
North America that came to market with
start of production dates during calendar
year 2019. This was helped by previous
years successes and having a strong
pipeline already in place.
Our focus on maintaining the strategy of
supply to the Tier 1s continues unabated.
Despite the current slowdown due to
COVID-19 we are succeeding in winning
business in new areas such as Thailand
and India and developing a strong supply
network with Tier1’s as platform models
go global. The reputation that we have
built up through working at Group level
with their corporate teams, and meeting
their stringent requirements at local
level, has ensured that we can follow
these companies globally. This is true in
North America which has seen the most
absolute growth during this period as our
knowledge of the part numbers, particularly
of European components has given us a
distinct advantage over USA manufacturers.
We don’t just focus on an individual part
but instead we aim to holistically supply the
complete component bill of material. In a car
seat that could be over 30 parts.
Link to strategy
Supply structure
Source: Insights Solutions Global
Estimated worldwide automobile production from 2000 to 2019
(in million vehicles) Source: Statista
This illustrates the structure and our strategy and focus
is predominantly on the Tier 1s as this is where there is
the highest fastener content.
OEMs
Tier 1
Systems or modules
manufacturers
Tier 2
Manufacturer of individual components
100
80
60
40
20
0
2000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
2012 2013 2014 2015 2016 2017 2018 2019
29
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Trifast plc Annual Report 2020Strategic report
Global marketplace
Market sectors
AUTOMOTIVE
ELECTRIC VEHICLE
Electric vehicles (EV)
EV’s are the fastest growing segment in
automotive today. This is driven by the
necessity to provide lower carbon emission
vehicles and sustainable clean energy to
support the Paris Climate Agreement. This
is a global framework to assist countries
in reducing global warming to 1.5 degrees
centigrade to avoid dangerous climate
changes taking place. We supply very few
parts for combustion engines or exhaust
systems so there is little negative impact.
The interior of the vehicles where we supply
the bulk of our parts will essentially remain
the same. As the technology develops
in the vehicle there will be more complex
components required as seating and the
IP console will have more functionality
and increased use of electronics. This has
opened new opportunities as we have been
able to secure business with the electric
charging units both positioned within garage
forecourts and with domestic plug-in units.
The electric charging units are essentially an
enclosure cabinet. We have heavily marketed
a complete range of sheet metal fasteners,
plastic hardware for cable management and
enclosure products such as hinges and locks
to support this exciting new development as
the roll-out plans gather pace.
Electric battery (EVB)
This is a totally new growth area for the Group
and we have created sales and marketing
campaigns to reach new companies entering
the marketplace alongside the companies
that we already work with.
The EVB demand for batteries for E-buses,
passenger cars, commercial vehicles, and
consumer electronics is set to dramatically
increase over the next ten years to satisfy
the need for a sustainable green energy
solution. We are working to support with
technical advice, as the fasteners used are
differing in many respects from the parts
we conventionally supply today. The EV
and EVB developments are fast paced and
have resulted in increased demand and an
opportunity to supply high quality fastenings
and finishes. Some examples are fastenings
with electrically isolating components and
30
Electric vehicle charging units
Number of charging outlets installed globally (thousand units)
Source: Bloomberg NEF Electric Vehicle Outlook
i
s
n
o
i
t
a
t
s
g
n
g
r
a
h
c
f
o
r
e
b
m
u
N
180000
160000
140000
120000
100000
80000
60000
40000
20000
0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Battery pack modules (EVB)
Global passenger vehicle sales by drivetrain
Source: Bloomberg NEF Electric Vehicle Outlook
100
80
60
40
20
0
2015
ICE
2020
PHEV
2025
BEV
2030
2035
2040
lightweight non-magnetic fastenings. EVBs
require special battery retention bolts and
extensive cable management product. There
is an increased demand for product such as
compression limiters going into the casings
all of which we can supply.
We are working with a number of companies,
and we have already secured one global
contract and have provided prototype parts
to Europe and North America for their new
facilities being built to house the production
of truck batteries. We have more detailed
information and key data available on our
website.
Link to strategy
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Trifast plc Annual Report 2020
CASE STUDY
MEDICAL
An increase in fastener demand to
support the medical equipment
manufacturing sector during the
COVID-19 pandemic
By Jeremy Scholefield,
Director of Strategic Business
For over 25 years, TR Fastenings has been
working with leading healthcare organisations
and their subcontractors as a total solution
provider of fasteners and Cat C products.
TR has geared up its capacity to support the
medical technology industry during this critical
time.
The current landscape
The outbreak of COVID-19, a major worldwide
public health emergency, created an
unprecedented demand for medical products,
a situation never before experienced on
this scale at any time in living memory. In
response to the outbreak, the world turned to
medical companies for vital help, which has
galvanised the industry into action and to work
in uncharted territories.
To meet the urgent global demand and to
alleviate shortages, many manufacturers from
outside of healthcare are now reconfiguring
their business to develop and produce
medical equipment and supplies.
It has been a high growth market for many
years and according to the Evaluate MedTech
Report produced in 2018, the global medical
technology industry is expected to grow
at 5.6% per year to reach worldwide sales
of US$595 billion by 20241 . COVID-19 will
most likely have significant influence on this
forecast in the coming months.
As the pandemic unfolded, the Governments
and Public Health Services of England,
Scotland, Wales and Northern Ireland
established several NHS COVID-19 critical
care field hospitals in various locations
across the UK. These temporary hospitals,
named NHS Nightingale after nursing pioneer
Florence Nightingale, were set up to cope
with the anticipated overflow from existing
hospitals. We have also seen similar actions
being replicated globally.
Medical devices are playing a crucial role in the
fight against COVID-19. The critical products
requiring fasteners and components are:
1.
Respiratory support and monitoring
equipment such as ventilators, which help to
treat hospitalised patients
2. Personal Protective Equipment (PPE) such as
face masks and protective visors
3. Diagnostic tests which identify those infected
and further limit the spread of the virus
The Group responded to the UK Government’s
urgent request to support the immediate needs
of established medical equipment manufacturers
and new companies diversifying into this sector.
With technical expertise, real time inventory
availability, a wide range of fasteners and an
intricate global supply chain already in place, TR
has been able to accelerate time to market.
The role fasteners play in medical devices
Although fasteners are typically the smallest
components in medical devices, they play an
important role in the assembly, functionality and
structural integrity of the device. Working directly
with a knowledgeable fastener manufacturer
early on in the design stage mitigates the
possibility of a costly redesign after the product
has been launched.
The challenges of working in a changing
world
Our fast-track approach to delivering a high
volume of products, often within hours, supported
the sudden acceleration of customers’ needs. We
worked through weekends and bank holidays to
respond quickly and engage with various medical
companies around the world.
The main products we supply are sheet metal
fasteners, high grade stainless steel fastenings,
plastic and rubber products plus specially
manufactured parts to be used in a range of
medical equipment. This includes ventilators,
medical beds & furniture, ultrasound machines,
medical imaging equipment, defibrillators,
incubators, medical computer stands, volumetric
pumps & infusion devices, vacuum extractors and
many other vital pieces of medical equipment.
New medical hardware products
introduced
TR has introduced two new products to its
range – the L-bow Handle and a Face Visor Kit:
•
•
The L-bow Handle can be retrofitted to an
existing compatible door handle and allows
the door to be opened ‘hands free’ with
your forearm, reducing the risk of direct
contact with viruses and bacteria on the
door handle. The door opener is made from
plastic with stainless steel components
and works on various door types with both
horizontal and vertical handles from 19mm
up to 22mm diameter
The face visor kit contains two
Polypropylene clips and a 330mm elastic
strap which is quick and easy to fit. A
secure, lockable and adjustable method of
attaching a strap to a face visor. The kit can
be manufactured in various colours with a
simple finger pressure closure and release
mechanism
Application engineering has proved to
be key
In addition to choosing a high quality fastener
manufacturer and distributor with a diverse
product range, it is also important to work with
a company that offers application engineering
expertise. Our engineers are fully engaged in
the design and make critical recommendations
for the interface between the fastener and the
medical device.
Due to COVID-19 lockdown restraints, our
engineers have fully utilised the modern
workplace by using various methods of online
virtual communication to ensure the customer
receives the highest level of service and
technical support.
The future
As the medical landscape changes, preparing
for the future has never been so important. The
Group is ready to meet the challenge.
1. Source: Market size extrapolated from EvaluateMedTech Report,World Preview 2018, Outlook to 2024 https://www.evaluate.com/thought-leadership/medtech/evaluatemedtech-
world-preview-2018-outlook-2024
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Trifast plc Annual Report 2020Strategic report Global marketplace
Market sectors
Major domestic appliance sales worldwide (2005 to 2019, US$bns)
Source: Statista
250
200
150
100
50
0
186
184
172
190
194
180
180
177
183
171
164
157
157
140
130
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
in a separate standalone unit. Once again this
has increased the use of the components
that we can supply into cordless vacuums,
cleaning machines right through to beauty
and hair care products incorporating battery
technology.
Our response
The Company’s strategy is to ensure that
we have a balanced sector base. Domestic
appliances are produced in high volumes
and as technology changes people want the
latest product. So, the future is assured.
Link to strategy
This extends the range of products that
we supply to the assembly plants, as the
additional features require more electronics
and the fasteners both in plastic and steel
that are needed to assemble the product.
The trend for designer coffee, and to be your
own barista, has seen the market demand
for coffee machines surge. We are supplying
a number of the major brands with not just
the conventional fastenings but many of the
bespoke integral parts in these machines.
Cordless products
Further change has seen the emergence of
battery powered products enabling them to
have more flexibility and mobility inside the
home, in the garden and in the garage without
the need for a power cord and the inevitable
extension cable. The batteries are charged
through the wall mounted charging station or
DOMESTIC APPLIANCES
Smart homes and appliances
controlled by a central system
is a reality today
9%
11%
11%
34%
20%
of annual
TR turnover
15%
20%
Trends shaping the market
From a European standpoint, the market
is characterised by multiple players and is
essentially fragmented in nature. Meanwhile,
the South East Asia and China market is
supported by growing urbanisation and
expanding middle classes. The North
American market is the most mature, with
high product penetration and capacity for
larger-scale appliances. The appliance scale
in the US is in contrast with other regions
where relatively smaller living spaces drive
consumer demand for smaller appliance
solutions.
The products that have been traditionally
supplied e.g. HOT cookers and high-end
ranges, WET washing machines and
dishwashers, and COLD fridges and freezers
have changed over the last few years
significantly. These everyday machines are
becoming smarter with IoT (Internet of Things)
and AI (Artificial Intelligence) previously seen
only in the technology sector. These smart
devices have inbuilt sensors, connectivity
and the ability to transact data and this frees
people up from tasks that were performed
manually before. Collaboration between
humans and machines in a domestic setting
is a relatively new experience, and it can even
extend to energy savings through adopting
these technologies.
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Trifast plc Annual Report 2020 Size of the 5G network infrastructure market worldwide in 2018 and 2022
(US$bns)
Source: Statista
s
r
a
l
l
o
d
.
.
S
U
n
o
i
l
l
i
b
n
i
i
e
z
s
t
e
k
r
a
M
30
25
20
15
10
5
0
0.53
2018
26
2022*
5G implementation
The implementation of 5G will take
communication and connectivity to a new
level as the speed will be greatly enhanced
along with the coverage and range.
The Group has been involved in 3G and 4G,
and we are now engaged in working with
companies involved in 5G.
The diagram above shows the infrastructure
and the opportunity to sell into the products
that are part of this extensive and extended
supply chain.
The equipment currently in place must
be replaced as it is old technology. These
end products are fastener rich so there
is a sizeable opportunity to be worked on
globally.
The technological
transformation in this digital
age and the innovations that
will emerge as a result will
ensure that there is an even
greater need for our products
to hold the world together”
Link to strategy
ELECTRONICS
Telecoms, information
technology, lighting, ATM &
retail hardware, consumer
electronics, medical, power
& energy products
9%
11%
11%
34%
15%
of annual
TR turnover
15%
20%
Trends shaping the market
This is a very diverse sector and
encompasses many different industries.
Essentially, it’s almost anything that has
a plug at the end of it, excluding domestic
appliances.
Our homes and offices are now full of the
latest gadgets, from security cameras,
to alarm systems and the latest virtual
intelligence assistant that you can
communicate with.
At home, garages in the future will have
charging points for electric vehicles, battery
operated power tools and garden machinery.
We have heightened expectations of
technology in our homes. Therefore, the
infrastructure must be in place to support
this.
We expect:
• Our Wi-Fi to reach the top of the house
and to the end of the garden
•
•
To be able to download data and stream
films and music at lightning speed
To work from home and still be able to
connect to the office server or on a train,
in a café and have total access to the
internet
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Trifast plc Annual Report 2020Strategic report
Global marketplace
New sectors
We have a constant eye on what the new
product trends are or new industries
that are being developed. The EV and
EVB development is leading us into new
customers and new products, and this
will become a separate sector during the
next year. PTS, the stainless distributor,
we acquired in April 2018, has given us the
product support and access to stocks of
stainless steel that have really helped in the
development of both EVB and medical.
We have been successful on 3G and 4G
technology platforms over the years. The
emergence of 5G and the new infrastructure
opens even more product demands and
requirements as the old systems are
replaced.
We have completed internal research
papers on the growing use of robotics
across many industry sectors and we are
poised to launch our plans for development.
There is a growing trend for more
environmentally focused products, the need
for clean air in all areas of our lives. Health
and wellbeing, fitness products including
bicycles are another key area of focus. There
is no shortage of sector diversity which will
generate new areas of revenue and improve
our lives at the same time.
be the new L-bow handle that we have
launched to eliminate the need for anyone’s
hands to touch a door handle.
Fasteners for plastic applications
Screws and inserts for plastics have
been a core product for a long time. As
new designer plastics were developed
for differing industries requirements the
product that we supply has evolved to
meet that need. We have an extensive
range on the TR website, sufficient stock
levels, with technical data and training
animations to support. A high percentage
of this product is manufactured in-house
within TR manufacturing sites. This product
is generally supplied to plastic moulding
companies who make everything from
medical equipment, car bumpers and IP
(instrument panel) consoles, to vacuum
cleaners and hair styling products. These
are not single use plastics, and instead
are recyclable and fit the needs of today’s
consumers desire for new products. We
are constantly working on assessing new
thread forms to meet the demands that we
see that are required for the future and to
meet the demands of the plastics industry
for lightweighting.
Brass inserts are still used today to
strengthen a plastic boss in a moulding to
allow a fastener to be used in assembly.
A good example would be the electric
junction box in your home or office that has
to have strength and durability as it is in
place often for over 15 years. We are seeing
an increased requirement for products
such as compression limiters and we have
developed and worked on special parts for a
number of automotive battery applications
which is a new and growing field for us.
Branded products
Sheet metal
Over time we have developed a range of
products initially designed for sheet metal
subcontractors. Today, we have an ‘end-
to-end’ solution of product for this market
sector. We have expanded from the original
Hank® rivet bush product, which we still
make in our UK manufacturing facility, into a
holistic range of products. This includes an
ever-increasing range of Hank® self-clinch
fasteners, blind rivet nuts, Binx® nut, blind
rivets, K-series nuts and more recently we
have successfully added the Enclosure
Hardware range of products. This provides
the customer with an effectively one-stop
shop for their needs.
If they are assembling to a higher level of
integration, they can access our range of
cable management products and PCB
(printed circuit board) fastenings. We
supply directly to our own customers, and
this is the core product range that our
distributors purchase from us. This product
is used extensively in enclosure cabinets
for industries in power supply, telecoms,
servers etc and for ducting and panel work.
We have seen the demand for this product
increase in the medical sector in recent
months through our own customer base
and increased purchases from Europe from
our 36 master distributors.
Enclosure products
This range of products includes hinges,
handles, locks and other product required
to complete the assemblies. The focus has
been on giving designers and specifiers
the capability to use our website to create
their own assemblies using our data and
drawings. Locks are complex products,
made up of multiple parts. The variances
that are required for them to be fit for the
function intended allows the engineer to
choose what he wants, assemble them
virtually online, and then print the drawing
from our system in the material and finish
of choice onto their own template. This has
been developed by our internal Team which
gives us a leading edge as our competitors
catalogues are not as intuitive as ours. We
have collaborated with several companies
who are only too willing to support some
of the new ideas that are generated or are
needed to support specific customer’s
needs. We have got parts tooled and to
market in short lead times through working
closely together. One such example would
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Trifast plc Annual Report 2020 TR global teams
We have a defined global account structure
which supports and assists in coordinating
customer activities across the TR sites.
Customers with multiple sites globally want to
have the same supply and service experience
regardless of which of our locations is
managing them. This is especially true when
we have new developing locations such as
Spain, Thailand and India. This involves sharing
of knowledge of the customer, the contracts
we have in place and their key drivers and
expectations. We can add value by supporting
on site, joint customer visits and through
working as virtual teams through coaching
and mentoring with ideas and technical skills
to achieve common goals until they grow to
the size where they are self-sufficient. The use
of Skype and more recently Microsoft Teams
has enabled us to have virtual meetings to
pool knowledge on products, aid with problem
solving and support on technical issues, give
sourcing and commercial advice which helps
to secure more business wins.
Marketing support
Additional support is provided with product
sample boxes, product data and customer
flyers, in-house training sessions at their
own location and even in-field support
at their customers to assist in winning
business. This is a growing sector of our
business and the knowledgeable team that
manage these accounts are dedicated to
giving a high level of service.
Summary
We have increased the range of TR branded
product over the last few years. We are
adding more sheet metal related products
so that we can service a greater share of
potential spend.
Link to strategy
Read more about our
Strategy on pages 40 to 53
Distributors
Distributors are a key focus for development
as the old advert says, “they can reach the
parts that we cannot“. In Europe for example,
we have 36 loyal master distributors. A high
percentage are in areas where we do not
have locations e.g. Israel, Slovakia, Slovenia,
Greece, Bulgaria and Latvia to name a few.
We supply bulk stock on a planned basis
and in turn they then sell on to a myriad of
local companies that we could never reach
or service. This supports the TR brand
growth and they are proud to have the TR
brand names on their literature and vans.
We also have over 100 distributors in the UK
distributing our product.
TR has a range of proprietary products that
are predominantly in demand for supply
to the sheet metal and plastic moulding
industries. There is a robust stocking policy
in place to enable us to service quick spikes
in demand to support both our own OEM
business and that of the distributors we
support. This product is a substantial part of
the records that we have on the TR website.
The customer has the ability to download
drawings and technical data, product
animations, and helps in illustrating the
features and benefits that can be used in a
production or sales environment to assist
with product selection and training.
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Trifast plc Annual Report 2020Strategic report Innovation
A COLLABORATIVE
APPROACH TO
WORKING WITH
OUR CUSTOMERS
TO IMPROVE THEIR
PRODUCT AND
PROCESSES
Ideation – imagination
and desirability alongside
collaborative application
engineering”
Read more about Electric
vehicles on page 30
Innovation for TR is responding to
customers’ needs, to changing market
advances, and marketing those advantages
so that we can add value and increase our
product offering.
Currently the emergence of new
technologies across the sectors is at
an all-time high. Rarely is this some new
and life changing product, but more
subtly providing application solutions to
meet new requirements, environmental
and often manufacturing processes or
production issues. It will not be a surprise
that automotive is top of the list of new
challenges and areas of opportunity
with EV development. However, we are
seeing the emergence of requirements in
diverse sectors within 5G and telecoms
infrastructure, industrial lighting, medical and
constantly emerging technology.
5G infrastructure
The global roll-out is underway with a
combination of structural installations as
well as the individual components, antenna’s,
power amplifiers, microwave filters and
diplexers. These products are fastener rich
and have differing requirements such as
tuning the microwave signals and being
capable of withstanding heat, vibration and
other environmental factors. They are often
installed in remote exposed locations and are
subject to harsh conditions in all weathers.
36
- Imagination and desirability
- Collaborative application
engineering
- Value creation and market
development
- Improvements
- Feedback into Ideation
- Harmonise requirements
- Analysis of features and
feasibility
Innovation
- Serial production and logistics
- Marketing
- Product and manufacturing
viability
- Testing of assumptions
- Piloting and line trials
- Market validation
Connected devices with the demand for fast
data both in residential and commercial has
driven the need for 5G. This has necessitated
changes as the enhanced requirements has
meant that the equipment used needed to
be upgraded. This includes the base stations
with the microwave technology, the street
enclosure cabinets, switchgear assemblies
and all the product needed on the antenna
masts, including fixing kits. We are working
with brass products often silver plated to
high-grade stainless steel to cope with the
adverse weather conditions. We have been
providing technical support to companies in
these industries.
Industrial lighting
We have supplied this sector for over
30 years. Much of this product was for
professional indoor and outdoor luminaires,
many of which have to withstand hostile
environments and we meet these
challenges. As this market developed, and
with the introduction of LED, the product
changed.
Over time the units became lighter and
became more aesthetically pleasing. We
have been heavily involved for many years
with some of the top brands, and as part of
our service offering, we have played a major
part in supporting the technical aspect
of supply. Meeting the quality criteria of
product that could be in situ for many years
was one area where we provided expertise
on materials, finishes and vibration proof
fasteners. Cost was another key driver
and we have developed some unique
products as a result of this close technical
collaboration which included technical
‘lunch and learns’ on site, workshops and line
walks.
We developed a unique fastening system
for suspended ceilings which met the safety
and strength criteria and gave the customer
a major cost saving in the process - see
image 1.
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Trifast plc Annual Report 2020 Medical
We have been supplying the medical
industry for more than 25 years, but the
COVID-19 pandemic suddenly catapulted
us into new areas where we had not been
previously involved. Initially we saw large
spikes in demand for our product in China
going into medical companies making
hospital equipment. We were able to
maintain supplies throughout the virus as it
spread in China. Our product was needed
to support the builds for medical machines,
including ventilators, to equip the new super
hospitals in Wuhan, Shanghai and Beijing.
However, as the virus spread to Japan,
Italy and then the whole of Europe, to the
UK and North America the needs became
more varied and included product for
hospital beds, ventilators, robots that enter
dangerous environments and components
for full face visors. We responded to
governments’ requests for companies that
could support these increased volume
needs, but also provide technical input
and guidance. During this time we were
proactive with our marketing, advertising the
products that we could supply speedily from
stock including rubber and plastic parts,
cable management and even castors.
Current and new customers that had never
made medical products before requested
our help, particularly needing our product
knowledge on stainless steel parts for
example to meet the stringent medical
requirements. We produced prototypes of
parts that would carry the varying tubes
and cables for ventilators, and latterly the
fixings for the full-face visor masks that the
industry was demanding.
Technology
We were asked to assist on a design
application that required a plastic printed
circuit board support. This range of PCB
supports runs into the thousands, but this
application was unusual as it required
three boards to be secured together, rather
than the usual two. This was a unique
design challenge. Additionally, there was an
added requirement for the material to be
conductive. The next task was to source a
conductive polymer composite nylon which
contained a conductive filler, turning the
material from an insulator to a conductor.
We evaluated the key elements of the
PCB’s, one of which was copper, to establish
spacing, hole sizes and panel thickness.
This required us to work with our supplier
and design a single cavity prototype tool
for sample and material evaluation. A final
design was tweaked, and a production tool
was manufactured together with an initial
batch in 30 days. We have an extensive
Fast Track Tooling Programme in place to
bring innovative products to the market
quickly. The final design was approved and
was tested in the electronic imaging device
offering the customer an assembly saving,
giving them commercial advantage, with a
bespoke solution in a matter of weeks.
Virtual training support
With over 60,000 parts on our TR website it
can be difficult for our customers to find the
right fastener for the right application. At the
end of 2019, our in-house team started to
create a library of video animations showing,
in detail, how different product types work.
So far, we have created over 130 animations
which are being used on the website, in
social media campaigns, on our YouTube
channel and by our distributors across the
world. As well as these product animations,
we have now completed five industry videos
which are used to target new customers in
these sectors – electric vehicles, servers &
enclosures, medical, robotics and 5G with
more to follow.
Read more about Continuing to
add value and differentiate on
pages 50 to 51.
1
2
3
4
1.
Plastic gripper – unique fastening system
for suspended ceilings
2. TR Face Visor Kit
3. Detection technology printed circuit board
support
4.
Reverse expansert installation animation
37
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Trifast plc Annual Report 2020Strategic report How we create value
Our Group business model
Providing Trusted Reliability at every turn
WE ARE A 24/7 ‘FULL
SERVICE PROVIDER’
OFFERING ‘END-TO-
END’ SUPPORT TO ALL
OUR CUSTOMERS
TR is a recognised and established global brand across a wide range of manufacturing
sectors. Our aim is to offer the highest levels of customer service and experience at every
point of contact. 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 success and ongoing growth is based on a unique blend of high quality in-house
manufacturing, our long-standing customer relationships, on and off-shore flexible supply
chains and adaptable, consistently reliable global logistics.
INPUTS
HOW WE OPERATE
Our people
We have c.1,300 employees based in our 33
locations across the globe, who deliver high-
quality service, technical expertise and product
quality to our customers.
Read more on page 4
Our global logistics network
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 a seamless and reliable supply to
over c.75 countries.
Read more on page 28
Manufacturing facilities
High quality, competitive manufacturing
across eight global locations forms the
foundation of our industry reputation which is
second to none.
Read more on pages 6 to 7
Partners and relationships
Trifast has a structured approach to engaging
with its strategic supply chain partners, to
establish long-term relationships which create
sustainable value for both Trifast and its
suppliers.
Read more on page 24
Financial strength
A strong balance sheet, flexible banking
facilities and a successful equity raise provide
the confidence to invest for growth.
Read more on page 8
Investment
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.
Read more on pages 48
38
DESIGN AND APPLICATION
Assemblies simply cannot function without fastening solutions. Our custom engineered
components influence and enhance the freedom and versatility of design necessary to
create assemblies that deliver at the peak of their potential. Our engineers are experts in
fastenings, but also in their application within assembly solutions, allowing them to provide
valuable input when engaged both early in the design phase and throughout the supply
cycle as part of a collaborative approach.
›
›
HIGH QUALITY
MANUFACTURING
SOURCING OF
COMPONENTS
Our eight manufacturing plants spread
across Asia, Europe and the UK provide
reliable, timely and high quality product
to our key multinational OEMs/Tier 1s
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.
Two-thirds of the Group’s revenue is sourced
from our established network of world class
external suppliers located across the globe.
This means we are not restricted by what
we can manufacture in-house or source
from one geography. Instead, by being a
truly ‘one-stop’ solution for all their fasteners
and related components we are able to
streamline and tailor the procurement
process to meet our customers’ needs.
›
›
FLEXIBLE GLOBAL LOGISTICS
We have established secure and proven logistic networks across the world, offering
seamless and reliable supply to c.75 countries. From complex and totally reliable 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
customers’ needs. Being where our customers need us to be is our ethos, delivering
whatever they need from a business perspective, with the same T rusted Reliability
wherever they are geographically.
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Trifast plc Annual Report 2020
POSITIONED FOR SUCCESS
OPPORTUNITIES FOR GROWTH
The strong relationships we have built with our key global customers 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 so as to grow our
market share with them across the world.
Our key focus is always on added value to the customer, with zero compromise on quality.
Established partner relationships
Key account development
Wider growth opportunities
Global network
›
Established partner
relationships
Our global presence
enables our teams to
collaborate together
and with our customers.
Through our world-
class supply chain, we
complement processes
and can deliver a cost-
effective solution and
efficient service
Key account
development
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
Wider growth
opportunities
As a wider business, we
are also constantly looking
beyond specific customer
relationships. 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
INVESTING FOR GROWTH
Ongoing capital expenditure in new manufacturing and inspection plants within our factories
has become almost routine in recent years, while sustained high growth in a number of
our distribution locations has been driving targeted investment into our people and our
warehousing. In the short term, we have chosen to defer some of these investments until
the macroeconomic environment settles. However, investing for growth will continue to be a
core element of our underlying business model for the foreseeable future.
VALUE GENERATED
FOR OUR
STAKEHOLDERS
Our people
We continue to invest in our training provision for
our employees to ensure that we have the best
skill sets that are relevant to each of our job roles.
Additionally, Trifast is committed to providing
a safe and fair environment, we enforce this
commitment through our Health and Safety, and
Environmental Management systems.
Read more on pages 42 to 47
Customers
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.
Read more on page 41
Suppliers
Our suppliers and our global manufacturing
sites provide us with the goods and services we
rely on to deliver to our customers. They range
from substantial multinational companies to
small-scale local businesses providing bespoke
services when they are needed.
Read more on page 49
Communities
It is our responsibility to respect and value
others and maintain high ethical standards in
everything we do. We are committed to the
care and stewardship of the communities and
environments our businesses are involved in
as a Group or across our 33 locations.
Read more on pages 54, 58 and 59
Investors
We operate a regular investor communications
programme where management are available
to all shareholders. Part of this programme
includes investor roadshows in association
with our key announcements, capital days and
operational visits.
Read more on pages 14 and 119
Environment
We have a responsibility to reduce the impact
that the Group has on the environment
through continuous improvement initiatives
that will create sustainable ways for us to save
energy, waste and also to deliver improved
efficiency and productivity.
Read more on pages 54 to 57
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Trifast plc Annual Report 2020Strategic report
Our Group strategy
CORE STRATEGY
INVESTING IN
OUR PEOPLE
INVESTMENT
DRIVEN GROWTH
Focus on multinational OEMs/Tier 1s
Our people are our greatest resource
Careful investment for tomorrow’s
growth continues to be a key element of
our strategy
Link to KPIs:
• Group total revenue
Link to KPIs:
• Group total revenue
Link to KPIs:
• Group total revenue
• Medical/General industrial sector
growth
•
•
Key multinational OEM/Tier 1 revenue
Underlying operating margin
•
•
•
Key multinational OEM/Tier 1 revenue
•
Return on capital employed (‘ROCE’)
Return on capital employed (‘ROCE’)
• Manufacturing to distribution ratio
Broaden skills of management
•
Underlying cash conversion as a % of
underlying EBITDA
Read more in Strategy in
action on page 41
Read more in Strategy in
action on pages 42 to 47
Read more in Strategy in
action on pages 48 to 49
CONTINUE TO
ADD VALUE AND
DIFFERENTIATE
ACQUISITIONS
OPERATIONAL
EFFICIENCIES
Quality and innovation underpins
everything that we do
In a fragmented market, acquisitions
provide a key growth opportunity
An efficient and effective cost structure
is the best way to future proof the
business and support our growth
strategy
Link to KPIs:
• Group total revenue
Link to KPIs:
• Group total revenue
Link to KPIs:
• Group total revenue
•
•
Key multinational OEM/Tier 1 revenue
Underlying operating margin
•
•
• Geography of supply
Underlying diluted earnings per share
(‘EPS’)
Return on capital employed (‘ROCE’)
•
Underlying operating margins
• Group underlying profit before tax
•
•
Underlying diluted earnings per share
(‘EPS’)
Underlying cash conversion as a % of
underlying EBITDA
Read more about innovation
on pages 50 to 51
• Manufacturing to distribution ratio
• Geography of supply
• Market sector growth
Read more in Good news on
page 25
Read more in Strategy in
action on pages 52 to 53
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Trifast plc Annual Report 2020
Strategy in action
CORE STRATEGY
Focus on multinational OEMs/Tier 1s
Even against a difficult
macroeconomic backdrop,
TR is in a good position to
continue to grow”
We are a global business serving a broad,
balanced and expanding range of sectors
and geographies. We have established and
trusted trading relationships with over 100
multinational OEMs/Tier 1s, with no one
customer forming more than 7% of our
global turnover.
We assign strategic account status to 25
of these to reflect where, as a business, we
see the greatest opportunities for growth.
At any point in time, these will always be
made up of a mixture of household names
and Tier 1 manufacturers spread across
the automotive, domestic appliances,
electronics and general industrials sectors.
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 Trusted
Reliability of supply (sometimes for hundreds
of parts at a time), via flexible global and
local logistics solutions as well as the
engineering ability to solve complex and
sometimes urgent manufacturing challenges
for our customers. Because of this, we are
able to avoid competing solely on price
and therefore can retain and build on our
business relationships for the longer term.
What does it mean to be a TR
customer. . .?
Our aim is to offer the highest levels of
customer service and experience at every
point of contact. We will never lose the
personal touch, as we believe the best way
to add value is to align our capabilities to our
customers’ needs as a result of listening and
understanding their business.
In short, at TR we care.
Our account teams are there to work
in partnership with our customers. This
approach enables us to fully understand
their challenges and to tailor our offering
accordingly, whether it be a combination
of manufacturing and sourcing a variety
of components to provide a single point of
contact or engineering a custom solution for
a specific application.
The breadth of our portfolio and in-house
expertise in terms of designing custom
solutions ensures our customers have
unfettered access to the highest quality
components. Coupled with our global and
local supply chains, those components
can be delivered with absolute consistency
wherever our customers are.
What does this mean for TR. . .?
It is these core skills that continue to allow
us to increase market share and extend
our sector spread across a wide customer
base and put us in a good position to keep
moving forward and delivering on our future
aspirations, even in a less certain world.
Notwithstanding the current high degree
of uncertainty across all of our markets
and geographies, we continue to see the
next few years as being a period of ongoing
market share growth. Using as a base
the strong foundations we have built, the
investments we have made over recent
years and the transformational benefits
that Project Atlas will provide (see pages 18
and 19). We will be working hard to ensure
that we are best able to seize the many
opportunities that will come out of this
current period of global uncertainty to grow
further into our key global customers, to
expand our market sectors and increase
our market share for the long-term.
Read more about our KPIs on
pages 68 to 69
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41
Trifast plc Annual Report 2020Strategic report Strategy in action
Global HR transformation strategy
Last year we reported that a new global
HR transformation strategy would be
presented to the Trifast Board. The strategy
was presented and is in the process of
being delivered – the main elements of the
strategy are detailed below.
New HR management system
As part of the wider business
transformation programme, we have
invested in a new global HR management
system - MIcrosoft Dynamics 365 Human
Resources. During the past year we have
undertaken all of the analysis work and have
built a modern, fit-for purpose system that
will be rolled out globally during calendar
year 2020. The analysis phase included
the implementation of global HR rules and
processes that have been agreed by all
Entity Directors and HR business partners
across all of our locations. All employees will
be fully trained in the use of the system and
our first location went live in July 2020.
The system comprises employee self-
service where employees can request
holiday and update their personal
information, a new modern performance
review system allowing all employees to
update journals as often as they would like
to. Requests can be made by managers
or employees at any time to have a
performance meeting, making the system
much more dynamic and flexible.
The self-service system will enable us to
have all of our employee information in one
place with a robust reporting facility giving
us the ability to proactively respond to
any emerging issues in a more timely and
appropriate manner.
We will also have a skills analysis capability
that will enable us to become a much more
agile organisation where we easily know
where specific skills are located within
the Group. This will allow us to quickly pull
together teams for particular projects and
allow training activity to be focused in the
right areas. Employees will be able to rate
their skills, with their managers using the
skills rating structure that is embedded
within the system.
One part of the HR strategy is to work
closely with colleagues across the world to
enable us to implement global best practice
policies and procedures, as well as being
able to talk with them about enhancements
to the software system.
In October 2019, two three-day conferences
were held – one with all UK, European and
USA HR business partners and one with
all of our Asian HR business partners. The
conferences were a method of being able to
inform all partners about the role that we are
looking for them to fulfil as well as to set out
the HR strategy to ensure that they can help
with the implementation.
Both conferences were very successful
and we now have a very strong network
representing all of our locations and virtual
meetings are held every fortnight with both
groups. The meetings are used to update
the Group on the progress of the roll-out of
the HR system as well as to inform them of
other HR related changes and hot topics.
It is also an opportunity for all partners to
raise any issues they may have in their
locations that we can assist with. They
allow the Group team to be able to react in a
timely, efficient and effective way.
Training and development
As part of the continued investment in the
Group HR function, a new learning and
development strategy will be produced
for the Group ensuring that we drive
organisational learning and development in
line with the overall business strategy. This
will include the management of all employee
development activity across all of our
locations, starting with onboarding a new
employee. Working with senior management
teams, we will be assisting managers and
our employees to advance their skills and
knowledge through the introduction of
learning strategies, performance measures
and e-learning courses.
The new performance review system will
provide a comprehensive overview of both
training provision and training needs.
A lot of the training activity over the last 12
months and upcoming year will be based
around the training needs for the roll-out of
the Atlas programme. Training remains a
priority for the Group and the introduction
of a new learning and development strategy
will help all of our employees to undertake
relevant learning.
Health, safety and environmental
management system
As reported in last year’s Annual Report, we
have invested in a new health, safety and
environmental management system. The
system has been rolled out to all of our UK
sites and the roll-out will continue through
Europe, USA and then to Asia.
INVESTING IN
OUR PEOPLE
Trifast is an organisation that
is lucky to have a mixture of
cultures spanning 33 locations
in 18 countries”
Global HR team
Helen Toole
Global HR Director
Rebecca Rutter
Global HR Data and
Process Manager
Luke Murphy
UK HR Manager
Julie Fry
UK Payroll & Benefits
Manager
Lydia Ball
HR Administrator
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Trifast plc Annual Report 2020 The system effectively and efficiently
replaces our existing risk assessment
tracker and audit non-conformance tracker
and facilitates the reporting of hazards,
incidents, positive incidents, audits and risk
assessments. It is an all-inclusive system
that all employees can use – reinforcing
the important message that good health,
safety and environmental practice is the
responsibility of all employees, wherever
they may work.
The system will assist us in our aim to
achieve accreditation against the ISO 45001
Standard (Health and Safety Management).
It allows us to have all of our management
documentation in one place and in the same
format, ensuring that there is a consistent
process of reporting. It will also give us
true, real time data about any accidents,
incidents or hazards and allow us to respond
quickly and appropriately. We will also be
able to show where our improvements
have been made and allow us to share best
practice more easily.
It also strengthens our existing ISO 14001
(Environmental Management) system
through the ease of completing
environmental risk assessments,
environmental incidents and the completion
of audits and management reviews.
Employee engagement
We continue to communicate regularly with
all of our employees. Many of the updates
are Project Atlas programme and COVID-19
related as these are the areas of most
change that will affect all of our employees.
Business readiness assessments and
surveys are carried out at various stages.
The results of these surveys allow us to
carry out relevant and timely interventions
to ensure that all of our employees are
prepared for the changes ahead.
We are currently researching new methods of
carrying out global employee surveys as well
as finalising research for a new global employee
assistance programme. Both of these initiatives
will be reported upon next year.
Read about our Designated
NED on pages 84 and 92
Wellbeing of employees
The wellbeing of employees is paramount.
This includes not only their physical health
but also their mental health. A number of
managers have been trained in mental
health awareness and we have introduced
our first mental health first aiders.
As part of the review of our benefit
provision we have sourced an Employee
Assistance Programme (EAP) providing
mental health support for those who
may be struggling with stress, anxiety or
depression.
We have been acutely aware that some
employees have struggled with being away
from the workplace during the COVID-19
pandemic. A SharePoint site has been set
up as part of our response and includes a
number of hints, tips and guidance to assist
employees in coping with these uncertain
times.
Over the coming months, we will be
reviewing our benefit provision globally to
ensure that we have the most appropriate
support for all of our employees.
Equality and diversity
Trifast is an organisation that is lucky to
have a mixture of cultures spanning 33
locations in 18 countries. It continues to
be important that we value those different
cultures and spend time understanding
each of them. The vision to bring the Group
closer together is working effectively. An
example of this has been the setting
up of the Global HR Business Partner
network and has also been realised in the
responses to COVID-19. Colleagues are
working very closely on a daily basis to
ensure that good and best practice are
shared allowing us to learn from each other
and mitigate as many risks as we can.
Equality and diversity are important parts
of our culture. We recognise the strengths
that a diverse workforce can bring. Our
aim is to continue to make equality part
of our every day work and ensure that we
remain focused on providing a workplace
where employees feel comfortable to be
themselves. As an organisation we make
every effort to eliminate discrimination,
create equal opportunities and develop
good working relationships between our
teams.
Throughout the employment relationship,
from recruitment to retirement, we do not
discriminate against any characteristic.
Our Corporate Code of Conduct makes
reference to the Trifast values and links to
the relevant Group-wide policies.
Composition of Group FY2020
Read more about our new FY2021 team on
pages 78 to 79
Trifast plc Board
29%
Trifast plc Executive Board
71%
33%
67%
Executive and Senior Managers
27%
All other employees
31%
Male
Female
73%
69%
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Trifast plc Annual Report 2020Strategic report
Strategy in action
INVESTING IN
OUR PEOPLE
Student opportunities
We remain committed to providing
opportunities for young people to
understand how a global organisation
operates. For the 12 months being reported
on we have had two university placement
students based in the UK. One has been
working in the Sales department and
one within the HR department. Both
departments have reaped the benefit of
having such enthusiastic students working
with them for 12 months. We hope to be able
to offer the same to other students in the
coming year.
Rosalind Manning
Student Placement –
HR Support
Dan Occomore
Student Placement –
Sales Support
We are increasing our activity within the
Enterprise Adviser network. Both Helen
Toole, Global HR Director, and Luke Murphy,
UK HR Manager, are Enterprise Advisers
providing a connection between schools
and the local business community.
The particular area of the school curriculum
of interest to us, based on our industry is
STEM (Science, Technology, Engineering and
Mathematics). Our in-house Head of Web
Development, Keith Gibb, has developed a
presentation about 3D imagery and printing
and computer generated output that is
hoped can be distributed to schools around
the country. The video will show students
the type of work that they can get involved
in and provide advice as to how to find a
career within that field.
Apprenticeships
We are proud that we continue to provide apprenticeships throughout our locations.
Apprenticeships are located in:
TR Kuhlmann, Germany
•
•
•
Yasin Akbulut
Warehouse
Tolunay Öztürk
Warehouse
Isabella Piergies
Administration
TR Fastenings, UK
• Brian McCord
Sales
• Ben Rees-Webbe
Sales
•
•
•
Lydia Ball
Human Resources
Emily Haigh
Warehouse
Lucas James
Warehouse
• Shani Coker
Administration
Keith Gibb
Head of Web Development
• Henry Hague-Jones
Sourcing
•
Patrick Deane
New Product Introduction
• McKenna Longstaff
Business
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Trifast plc Annual Report 2020 Apprentice Q&As
Emily Cowens
Former Business Administrator Apprentice
based in the North East
What did you do before you joined TR
Fastenings as an Apprentice?
Before I started working at TR Fastenings, I
worked at River Island as a Sales Assistant for
a year, before that I went to college to study for
my Level 2 beauty qualification.
What is your role at TR Fastenings?
I am a Business Administrator Apprentice.
How did you get your Apprenticeship?
I got my Apprenticeship through enrolling
at a college called ITEC who help you find a
suitable Apprenticeship. Once you’ve found the
right Apprenticeship you study your business
qualification with them.
What does your typical day involve?
My typical day involves confirming all of the
delivery notes, updating text in works orders,
communicating with our kitting companies, filing
and scanning, placing purchase orders and
assisting the sales team on a daily basis.
What takes up most of your time?
Updating the text in the works orders at the
moment, as I can get hundreds at a time and
going into each order and updating the text is very
time consuming.
What is the best aspect of your role?
Communicating with different people over the
phone on a daily basis as I enjoy speaking to
people. I love being constantly busy and always
having jobs/work to do every day.
And the most challenging?
Being given a job with a tight time frame to work
to when I already have a lot of other jobs that
need doing.
What is your greatest achievement at TR
Fastenings so far, i.e. what are you most
proud of?
I am the main point of contact for our kitting
companies, which I am really proud of, as I have
full control of checking what is going out to them
on a weekly basis and what we are receiving
back. Another achievement is that I have never
had a sickness day in the time that I have
worked here.
How do you wind down after a hard day?
After a hard day I usually go straight to the gym
and then come home and have a nice hot bath
then relax watching telly (Love Island).
What does the future hold?
Having now passed my Level 3 Business
Administration qualification. I am now working
as an Office Administrator at TR Fastenings (UK).
Shani Coker
Administration Apprentice
based in Uckfield
What did you do before you joined TR
Fastenings as an Apprentice?
I worked with horses for 6 years until I sustained
a knee injury which meant it was too dangerous
for me to carry on. With no experience of working
in an office I thought it would be best for me to
apply for an Apprenticeship so I could receive
the training I needed to gain skills to allow me to
progress within a successful company.
What is your role at TR Fastenings?
I am an Administration Apprentice.
How did you get your Apprenticeship?
I saw the position advertised online and after
researching TR I could see they would be a good
company to work for, so I applied for the job
and was accepted for an interview. It was very
informative and I was given a tour of the office
and warehouse where I would spend a lot of my
time. From this visit, I got a nice feel of the people
I would be working with and the environment I
would be working in and shortly after my interview
I was offered the Apprenticeship role and happily
accepted it.
What does your typical day involve?
My role is varied but typically I start off by making
sure meeting rooms are set up for the day and
turning the TV on in reception! I will then confirm
the delivery notes stock transfers and re-works. I
answer the phone, check my emails and deal with
any travel requirements that people need such as
booking flights, airport transfers and hotels and
order food for any meetings. I also sort the post
out in the mornings, ensuring the right post goes
to the right people/departments. I also sort the
post in the afternoon; putting labels on envelopes
ready for the postman to collect.
What takes up most of your time?
Confirming delivery notes and answering the
phone. (The phone rings a lot!)
What is the best aspect of your role?
The variety of work I get to do. Every day is
different! Apart from the day to day jobs I have
to do, every day brings something different.
And the most challenging?
Sitting still! After working with horses and being
on the move all day I definitely struggle sitting
still for most of the day. However, I do have to
walk out to the warehouse to collect the delivery
notes before I can confirm them so this helps
me be less restless.
What is your greatest achievement at TR
Fastenings so far, i.e. what are you most
proud of?
Remembering people’s names in the office!
There is a lot of people in the office to remember
and building a relationship with my customers.
How do you wind down after a hard day?
I have 2 dogs at home so I quite like to take them
for a walk after work which helps me to relax
after a hard day. The other thing I like to do is
a have a glass of wine and watch a comedy
programme or film.
What does the future hold?
I would like to use my Apprenticeship to
progress within the company and to develop my
skills further. I love learning new things and this
is a very exciting opportunity for me.
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Trifast plc Annual Report 2020Strategic report Strategy in action
Proportion of colleagues awarded a bonus in FY2019
Proportion of males who
received a bonus
Proportion of females who
received a bonus
2.2%
3.1%
97.8%
96.9%
Received a bonus
Did not receive a bonus
These charts illustrate that the numbers of men and women paid a bonus are in line. As a
Company we continue to reward all of our employees. The only reason the statistics do not
show 100% is due to eligibility criteria based on start and finish dates.
Quartiles
The following charts illustrate the construction of each quartile.
Lower quartile
14.4%
Lower Middle quartile
42.3%
85.6%
Upper Middle quartile
Upper quartile
29.9%
41.2%
58.8%
57.7%
70.1%
Male
Female
This is our third year of reporting and we are pleased to again provide positive news. All
of our decisions about recruitment, promotion, training and development are made within
our framework of equality. Going forward we will continue to ensure that all our employees
reflect our Company values, especially those of integrity and fairness.
The results demonstrate our continued commitment to equality, and we continue to
celebrate them.
INVESTING IN
OUR PEOPLE
Gender pay gap
The Equality Act 2010 (Gender Pay Gap
Information) Regulations 2017 brought into
effect a requirement for large UK employers,
such as our main UK trading subsidiary
TR Fastenings Ltd, 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.
Our gender pay reporting continues to
provide reassuring data that supports our
reward and recruitment strategies.
The full gender pay gap statement for the
reporting period is included below.
In brief
The table below shows our overall median
and mean gender pay and bonus gap based
on hourly rates of pay, and bonuses paid, as
at the snapshot date – 5 April 2019.
Pay and bonus
(Female compared to Male):
Hourly pay
Bonus pay
Median
+7.0%
0.0%
Mean
-4.7%
-7.9%
The table above shows that based on a
median average, our female employees are
paid 7.0% more than our male employees.
The mean average displays our male
employees as being 4.7% higher paid
than our female employees. This result
represents a change in the mean average
from 0.9% in FY2018 and a change in the
median average from 8.6% in FY2018.
These results compare very favourably
when compared with the pay gap average
of male employees being paid 9.6% more
than female employees.
The bonus difference mean figure highlights
a 7.9% difference in favour of male
employees – this represents a reduction on
the previous year (FY2018 -14.8% in favour of
male employees).
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Trifast plc Annual Report 2020 Code of business conduct
Last year we produced a Corporate Code of
Conduct (‘Code’) that was distributed in hard
copy to all our locations and is also available
on our website. All our employees have been
asked to read and fully understand the Code
which contains our vision, our mission and
our core values, together with our policies
for ensuring ethical business practice.
The Code not only helps our employees but
also helps our customers, our suppliers, our
distributors, contractors and other suppliers
of goods and services all around the globe
to understand our requirements to observe
all relevant laws and regulations.
The policies and documents that are
applicable to the Code of Business Conduct
are as follows:
•
•
Business Ethics and Responsible
Behaviour Policy
Anti-Bribery Statement and Policy
• Modern Slavery Statement
•
Environmental Policy
• Health and Safety Policy
•
•
•
Product Quality Procedures
Equal Opportunities Policy
Equal Pay Policy
• Dignity at Work Policy
• Whistleblowing Policy
All employees are aware of the global
Whistleblowing Hotline that is available
to them in their own language. The hotline
is hosted by a third-party company and
is available for employees to report any
activity or behaviour that they do not
feel is appropriate. No reports have been
submitted to the Hotline within the last 12
months.
Adherence to the policies within the Code
are audited as part of the Group HR Audit
process.
Read more about our KPIs on
pages 68 to 69
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Trifast plc Annual Report 2020Strategic report
Strategy in action
INVESTMENT
DRIVEN GROWTH
We pride ourselves on being
where our customers are.
Partnerships function better
in close proximity, and we
are committed to investing
strategically to ensure
our global footprint and
our supply chain is always
aligned with our individual
customers’ unique needs and
requirements”
By far the biggest investments that we have
been making over FY2020 are of course into
Project Atlas.
Looking ahead
We continue to see focused investment
as a core part of our ongoing strategy.
With additional investments in our digital
capabilities already underway. These are
focused on ensuring that we make best use
of the strong foundation that Project Atlas
will bring, in order to continue to evolve and
stay ahead of the competition.
Having completed a fairly significant round
of capital investment into our manufacturing
capabilities and capacities around the
world in recent years, and given the current
uncertain conditions, additional incremental
investments are expected to be lower in this
part of our business in the short-term.
However, targeted investments are still
under review in our high growth distribution
businesses to facilitate ongoing market
share gains in these key geographies, as
detailed on page 26.
Read more about our Project
Atlas on pages 18 to 19
For TR, FY2019 represented the ninth year of
sustained growth. And whilst we recognise
that the challenging macro-economic
conditions in FY2020 and into FY2021 will
temporarily knock us off that growth journey,
we remain completely confident in both the
previous investments that we have made
into the business and our plans to continue
to invest as required for our future growth.
Sustainable growth will always need
investment. However, in the current more
challenging conditions, we have taken the
opportunity to review, prioritise and defer
where appropriate. This will ensure we are
focusing resources and efforts to not only
best protect our short-term position, but
more importantly to protect and build our
competitive advantage, ready for when a
greater degree of stability returns to the
market.
FY2020 – a focused investment
journey
Capital expenditure in FY2020 has been
significantly lower than in recent years with
the main incremental investment being
made into our Taiwanese operations to
complete the 20% capacity expansion that
was started in FY2019.
On the distribution side, as planned we
have completed a 20% extension at our
Lancaster Fastener warehouse. This has
provided us with much needed additional
picking locations as well as bulk storage
facilities to support our future growth
plans and maximise the full potential of our
current site in Morecambe, UK.
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Trifast plc Annual Report 2020 CASE STUDY
TR AWARDS
Signify (formerly Philips Lighting) –
TR Holland received fifth and sixth
100% delivery award
TR Fastenings has once again received
recognition for its 100% delivery record from
Signify for the sixth year running.
A 0% failure rate over a 12-month period is
an impressive achievement as TR supplies
over 400 lines of C-class products to
Signify in Eindhoven, Holland, including
screws, nuts, clips and plastic components.
TR Holland has supplied into Philips since
2008, providing technical expertise for
bespoke parts and establishing a strong and
collaborative relationship over the years.
This year, due to the global COVID-19 crisis,
the judging and award certification took
place as a virtual event. Signify recognised
the high performance of Hans Nijhof,
Laurens Wekking and Jeanette ter Riet from
the TR site in Oldenzaal, who continue to
provide excellence in delivery services to
customers.
Our on going commitment to provide
exceptional services across our
entire business remains as strong
as ever. It has been a challenging
time with priority given to the health
and safety of our employees but we
have adapted and reacted quickly to
ensure delivery and service levels
to our customers remain high. We
are delighted that our hard work and
dedication have been recognised for
another year and I am very proud of
the team”
Ron Vlutters
Managing Director of TR Holland
Yanfeng Automotive Interiors – TR
USA recognised as Distinguished
Supplier for third year running
TR has previously been granted
Distinguished Supplier status by YFAI
(in 2019), following its award for Supplier
Excellence in 2018.
TR USA is supported by its manufacturing
colleagues in SFE Taiwan.
TR Fastenings has been recognised as
a ‘Distinguished Supplier’ by Yanfeng
Automotive Interiors for the third year
running.
Yanfeng Automotive Interiors (YFAI), the
world’s largest supplier of automotive
interiors, recognised 19 of its suppliers
during the ‘North America Supplier
Performance Awards Ceremony’ on 6
February, at its Michigan Tech Center.
Each year, this event is an
opportunity for us to recognise our
suppliers for their commitment to
excellence. Their dedication enables
our team to provide our customers
with the high-quality products
they’ve come to know from YFAI”
Jim Bos
Vice President, Global Procurement,
for Yanfeng Automotive Interiors
It is a huge honour to receive this
recognition for ‘Flawless Execution’.
These Awards celebrate suppliers’
outstanding track record in quality,
cost, logistics, development,
technology, and service and to
be acknowledged in this way is
testament to TR’s commitment
to providing our customers with
consistently high-quality products.
We are very proud of the strong
relationship we have with YFAI, which
is built on our teams’ exceptional
industry knowledge, manufacturing
excellence, and outstanding
customer service”
Jose Vera and Brad Allen
Business Development Managers
at TR USA
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Trifast plc Annual Report 2020Strategic report Strategy in action
CONTINUE TO
ADD VALUE AND
DIFFERENTIATE
TR – a global business that
offers Trusted Reliability at
every turn”
Read more about Innovation
on pages 36 to 37
Our engineering knowledge and experience,
supported by our high quality manufacturing
locations, means we are able to add real
value to our customers throughout the
purchasing cycle. From initial enquiry and
product development, through to ongoing
reliable supply management, we have the
skills across the world to problem solve, and
to drive efficiencies throughout the life of
the build.
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, or
to localise supply chains. This in turn helps
us to manage price discounting demands,
win customer loyalty and further enhance
our reputation.
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 often before they arise,
adapting quickly to supply chain challenges
and stepping in where competitors have
fallen short. All of this commitment is
supported by established on and off-shore
supplier networks and valuable licences
that mean we can reliably supply a full range
of quality product to meet our customers’
component requirements across a broad
range of sectors.
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.
Looking ahead
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.
We are also looking at how best to invest in
and develop our supply chain team to ensure
that we are able to continue to work closely
both with our existing trusted supplier base
as well as exploring additional sourcing
opportunities and thereby provide greater
supply chain flexibility to our end customers.
Further details are provided on page 24.
We believe that the global integration that
Project Atlas will bring to our business, will
also differentiate us from the competition in
the here and now and future proof us, so we
stay fit and ready for the challenges yet to
come. Further details are provided on pages
18 and 19.
Read more online at
www.trfastenings.com
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Trifast plc Annual Report 2020 CASE STUDY
TECHNICAL & INNOVATION
CENTRE – GREENVILLE,
SOUTH CAROLINA
In the last few years we have
successfully opened technical &
innovation centres in Gothenburg,
Sweden and Birmingham, UK. These
locations are in prime locations where
there are automotive clusters and
engineering headquarters for both OEMs
and Tier 1s focusing on new EV and EVB
developments.
Greenville in South Carolina, USA was
an obvious choice for a third technical
& innovation centre as it has a fast-
developing automotive sector with
Volvo, BMW and Mercedes. Clemson
CU-ICAR innovation clusters specialise
in automotive engineering research
and enables students to learn about
advanced manufacturing and materials
and connected and automated vehicles.
The university has incubator units for
companies to be on Campus and be part
of the new technologies, meet and share
information and have access to business
and network opportunities.
Our team visited and spent time being
shown the inner workings of the faculty
and, without hesitation, secured an
incubator unit. This has been ideal for
TR business managers and application
engineers to work from and to be part
of the new technology being developed.
It is early days for us but it is an amazing
launch pad for expansion into this region
and to be part of the new, fast paced
and changing face of automotive as
we embrace clean technology through
reducing carbon emissions.
Manufacturing and distribution sites
Houston, TR USA
Technical & innovation centre,
South Carolina
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Trifast plc Annual Report 2020Strategic report Strategy in action
OPERATIONAL
EFFICIENCIES
TR is committed to continuous
improvement. We understand
the importance of an efficient
and effective cost structure,
so as to best future proof the
business and our strategy for
growth”
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, so
as to best future proof the business and to
support our strategy for growth. This is even
more the case, in the current challenging
macroeconomic conditions.
The first half of FY2020 saw us make a
number of short-term cost savings and
deferrals to help manage the impact of
reduced trading levels on our underlying
operating margin.
COVID-19 has further accelerated our
activities in this area, with a number of cost
reduction and management actions taken
at the end of FY2020 and into FY2021. Full
details of this are provided in our separate
COVID-19 report on pages 10 to 13.
Operational efficiency and automation are
also two of the key wins that will come out of
Project Atlas which will be further supported
by the introduction of the OEB, which has
been specifically tasked with driving our
ongoing strategy in this area.
Read more about our OEB on
page 23
ACQUISITIONS
ACQUISITIONS
Read more about Good news on page 25
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Trifast plc Annual Report 2020
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53
Trifast plc Annual Report 2020Strategic report Corporate social responsibility
Communities
At Trifast we have a continuing commitment
to conduct our business operations in a fair
and ethical manner and to comply with all
relevant laws and regulations, within all our
operating locations.
We recognise that our business activities
can have an impact on the communities in
which we operate and we remain committed
to interacting responsibly with those
communities and all of our stakeholders.
As a global Company we bring together
people from a wide variety of backgrounds,
origins, experiences and cultures. It is our
responsibility to respect and value others
and maintain high ethical standards in
everything we do.
Health, Safety and Environment
ISO 14001
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. This is implemented
through a firm auditing process, and the
roll-out of our Health, Safety and
Environmental software solution – EHS
Engage.
The ISO 14001: 2015 Environmental
Management Systems standard is held
in our UK, European, USA and Asian
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.
Our Environmental Policy remains
committed to:
• Minimise energy consumption per full time
equivalent (FTE) and square metre as is
reasonably practicable
•
•
Prevent pollution as far as is reasonably
practicable
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
Jenni Davies
European Health, Safety and
Environmental Manager
Read more about our ESG
and more on pages 78 to 83
Our trusted reputation
gives our employees,
customers, stakeholders,
and the communities in
which we operate the
confidence to partner and
do business with us”
Stakeholder(s)
involved
Expectations
Top level aims
•
•
•
•
•
•
•
Employees &
their families
Customers
Suppliers
Investors
NGOs
Regulatory
organisations
Neighbours
& local
communities
Legal compliance
•
• Good standards of health,
•
•
•
•
•
•
•
•
•
•
•
•
safety & wellbeing
Data reporting
Auditing
Fair & ethical
Legal compliance
Impact awareness
Legal compliance
Retention of ISO 14001 accreditation
Control of emissions
Data reporting
Auditing
Compliance with local legal requirements
Sign up to our quality and sustainability
agreement
• Management of their sub-suppliers
•
Sign up to the modern slavery act
Comprehensive employee support
Employer of choice
•
•
• On time comprehensive auditing
•
•
Year-on-year reductions of accident rates
Effective implementation of software solutions
•
•
•
Professional & ethical standards
Respect for culture & values
Trusted reputation
Control of emissions
•
• Minimising environmental impact
• On time comprehensive auditing
•
•
Year-on-year reductions of incident rates
Effective implementation of software solutions
Strong business relationships with key suppliers
•
• On time comprehensive quality auditing
•
•
•
Regular planned visits
Business review meetings with key suppliers
Continued risk assessment
CSR
Pillar
Our people
Communities
Environment &
sustainability
Suppliers
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Trifast plc Annual Report 2020 ISO 45001
We are currently working towards
accreditation to ISO 45001 Occupational
Health and Safety Management Systems.
To aid us in the implementation of ISO
45001, we have invested in a Health and
Safety software solution. The software
roll-out is now underway, and will aid us in
effective management of incidents, risk
assessments, non-conformity management
and strengthening our auditing methods.
We have a firm responsibility 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.
Through our Health and Safety Policy, Trifast
remains committed 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 practicable, and reduce
occupational health and safety risks
• 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
Sustainability
Our commitment to be a sustainable
business underpins everything we do and
this culture is integrated into our day-to-day
operations around the globe. It is important
to us to demonstrate our approach to all
parties who have an interest in our business.
We regularly review and address the key
social, ethical and environmental issues that
could have a bearing on our operations.
Working as a team we:
•
•
•
Act in an ethical and responsible manner
Take care of all our employees
Are accountable for our impact on the
environment
• Deliver support to local communities
through volunteering and charitable
donations
•
Look to deliver best value to all
stakeholders
ISO 14001
Targets
In FY2018 we set two ambitious targets to
achieve within two years.
•
•
to reduce our waste to landfill
by 10%
By optimising on our current recycling
solutions and implementing new measures,
we had achieved the required 10% reduction
target by FY2019. We increased this target
by a further 5% and ended FY2020 having
achieved a 16.4% reduction in our waste to
landfill over the two-year period
to reduce our global carbon footprint
by 5%
Through implementing some simple cost
effective solutions, we had achieved a 2.58%
reduction in the first year. By FY2020 we had
achieved a 10.45% reduction since FY2018,
more than doubling our initial target
In adherence with our ISO14001 management
system, we will be looking to set new targets
during 2020/2021 – and will continue to
measure our existing KPI’s.
Suppliers
Our suppliers and our global manufacturing
sites provide us with the goods and services we
rely on to deliver to our customers. They range
from substantial multinational companies to
small-scale local businesses providing bespoke
services when they are needed.
Trifast has a structured approach to engaging
with its most strategic supply chain partners,
to establish long-term relationships which
create sustainable value for both Trifast and its
suppliers.
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Trifast plc Annual Report 2020Strategic report Corporate social responsibility
Carbon footprint FY2020
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:
•
•
FY2020
1,891
1,221
670
5,774
5,774
7,665
FY2019
1,872
1,278
595
6,252
6,252
8,125
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)
•
The FY2020 calculations have been made utilising the IEA “2018 CO2 emissions from fuel combustion” and “2018 emissions factors” data sets. The
FY2019 figures have been reworked to also utilise these figures for comparative purposes.
Trifast plc
7,665 tonnes
(FY2019: 8,125 tonnes)
5.91 per FTE
0.107 per SQM
Total manufacturing
6,131 tonnes
(FY2019: 6,748 tonnes)
10.63 per FTE
0.169 per SQM
15,240,111 KwH
Asia manufacturing
3,683 tonnes
(FY2019: 3,959 tonnes)
9.18 per FTE
0.151 per SQM
6,297,490 KwH
Europe manufacturing
2,422 tonnes
(FY2019: 2,703 tonnes)
18.63 per FTE
0.246 per SQM
430,936 KwH
UK manufacturing
26 tonnes
(FY2019: 86 tonnes)
0.57 per FTE
0.013 per SQM
358,270 KwH
Data Period for reporting
Trifast plc (KPI)
Total Distribution
Asia Distribution
USA Distribution
Europe Distribution
UK Distribution
Total Manufacturing
Asia Manufacturing
Europe Manufacturing
UK Manufacturing
56
Tonnes of Co2e per FTE
FY2020
actual
5.91
2.13
3.69
2.27
1.72
1.72
10.63
9.18
18.63
0.57
FY2019
actual
6.4
1.99
2.22
3.1
1.76
1.85
11.7
9.87
20.79
1.87
FY2018
actual
6.6
2.28
2.2
1.33
2.32
2.32
11.5
9.31
16.82
16.82
% Change
FY2018 to
FY2020
-10.45
-6.58
67.73
70.68
-25.86
-25.86
-7.57
-1.4
10.76
-96.61
Total distribution
1,535 tonnes
(FY2019: 1,377 tonnes)
2.13 per FTE
0.043 per SQM
3,730,103 KwH
UK distribution
708 tonnes
(FY2019: 759tonnes)
1.72 per FTE
0.151 per SQM
2,382,596 KwH
Asia distribution
532 tonnes
(FY2019: 319 tonnes)
3.69 per FTE
0.061 per SQM
786,392 KwH
Europe distribution
205 tonnes
(FY2019: 209 tonnes)
1.72 per FTE
0.024 per SQM
430,936 KwH
USA distribution
66 tonnes
(FY2019: 90 tonnes)
2.27 per FTE
0.034 per SQM
130,179 KwH
% Change
FY2019 to
FY2020
-7.66
7.04
66.22
-26.77
-2.27
-7.03
-9.15
-6.99
-10.39
-69.52
FY2020
Target
6.27
2.17
2.09
1.26
2.2
2.2
10.93
8.84
15.98
15.98
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Trifast plc Annual Report 2020 % reduction
of waste
to landfill
FY2018 to
FY2020
% recycled
FY2020
80.00
96.20
100.00
14.00
0.00
0.00
90.00
0.00
54.00
71.00
34.00
0.00
86.00
0.00
95.00
80.00
4.05
30.00
10.71
0.00
0.00
90.00
0.00
7.41
6.10
2.06
0.00
9.53
0.00
6.42
16.42
% recycled
FY2018
0.00
92.30
70.00
12.50
0.00
0.00
0.00
0.00
50.00
66.67
33.30
0.00
77.80
0.00
88.90
Waste to landfill reduction
Waste Stream
Batteries
Cardboard
Confidential
Substances
Electrical
End of Life
Foil
General
Light Bulbs
Metals
Oil
Organic
Plastic
Toners
Wood
Wood
Plastic
Oil
Light Bulbs
Foil
Electrical
Confidential
Batteries
0%
20%
40%
60%
80%
100%
% recycled FY2020
% recycled FY2018
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Trifast plc Annual Report 2020Strategic report Trifast in the community
TR Fastenings Inc encourages STEM careers
1.
TR’s North American location sponsors the Obra D. Tompkins High School's
Robotics Club (better known in the FIRST Robotics Competitions (FRC) as the
Steel Talons).
2. TR partnering with local college as Enterprise Advisers
Helen Toole, Global HR Director and Luke Murphy, UK HR Manager based at TR’s
head office in Uckfield, have partnered with the local college and will work with
them to provide support as Enterprise Advisers.
3. TR Kuhlmann take part in a MINT Chess event
In December 2019 staff from TR Kuhlmann held a chess event, that was
organised with local registered association Mint-Technikum (Mathematics,
Computer Studies, Natural Sciences, Technology)
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4. TR Fastenings Inc. putt their skills to the test in a tee-rific charity
golf match
TR was invited by Yanfeng Global Automotive Interiors to take part in the 21st
Annual Plymouth Community United Way Tee Off For A Friend Golf Classic and
Dinner.
5. TR Fastenings North East donates to local Food Bank at
Christmas
Staff at TR North East donated food and toiletries to supply to the St Clare's
Church Food Bank in Newton Aycliffe.
6. Continued support for Mick Kirby, Sussex based clay pigeon
shooting champion
TR is proud to support disabled sportsman Mick Kirby who took on his biggest
challenge to date in October 2019, ascending Mount Kilimanjaro to raise money
for charity.
7. TR Fastenings Uckfield raises over £130 for Movember 2019
Employees at TR’s head office in Uckfield, joined over 400,000 of their ‘Mo Bros’
and ‘Mo Sistas’ across the world during the month of November.
8. Employees at TR Scotland show continued support as they raise
money for Save The Children
In December 2019, the team took part in Christmas Jumper Day raising £270 for
Save The Children; a charity that was launched in 2012 and that now supports
over 100 countries.
9. TR Scotland shows continuous support with Christmas food and
toy drive 2019
The donations to these drives started early last year, as a result of discussions
held by the site’s ‘Continuous Improvement Team’ who meet every two months
to discuss ideas to improve culture, team work and the office environment.
10. TR Fastenings Inc. donate to Toys For Tots at Christmas
The TR team in the USA donated to the charity, established in 1947, that collects
new toys to be distributed to the less fortunate at Christmas. The charity
has distributed an impressive 566 million toys to date, supporting 258 million
children.
11. TR continues Jamie Bedwell sponsorship as he sets sights on
2024
TR is again sponsoring successful Sussex triathlete Jamie Bedwell, as he
continues on his quest to reach the Paris Olympics in 2024.
12. TR proud to encourage young talent by sponsoring Uckfield FM
Community Awards 2019
TR Fastenings were proud to again be supporting the Uckfield FM Community
Awards by sponsoring the Young Person of the Year Award.
13. Lancaster Fastener proud to support Sydney Terry
Lancaster Fastener is proud to support Sydney Terry who has been Slalom
Racing for over 18 months and has competed throughout the UK for Pendle
Race Squad, based in the North West of England.
14. Continued support for local team, Uckfield Grasshoppers JFC
TR is a proud sponsor of Uckfield Grasshoppers JFC. The club was set up in
1981 by a group of local parents, since then it has grown into a club with over
250 registered members and teams from Under 6s to the Under 16s – including
several girls in the younger “mini-soccer” age groups.
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Trifast plc Annual Report 2020 6
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15. TR Uckfield finds fundraising a piece of cake for Macmillan Coffee
Morning
Employees at TR Fastening’s head office in Uckfield, raised an impressive £272.78
for Macmillan Cancer Support in September 2019.
16. TR’s Hayley Neilly takes on the Three Peaks Challenge with just
days’ notice!
TR Transactional Sales Co-ordinator, Hayley Neilly, walked the Three Peaks in North
Yorkshire with just days’ notice to raise money for Raystead Centre for Animal
Welfare in East Sussex.
17. TR renews sponsorship of Buxted Football Club
TR is proud to renew its sponsorship of Buxted Football Club, who were
established over 100 years ago in 1918. Since the launch of the team they have
gone from strength to strength, and have in the past had four senior teams
running in various divisions across the Mid-
Sussex Football League.
18. TR Fastenings provide support to Hungarian racing team
TR Fastenings Hungary is providing technical and product support to Hungarian
racing team, Arrabona Racing. The team started in 2014, supporting and
encouraging students to produce, design and manufacture single seated race
cars and compete against each other in several events.
19. TR Fastenings continues to support Formula Student team in
Sweden
TR Fastenings has renewed its support of a Formula Student motorsport
team from Sweden for the third consecutive year. The team will be driving and
competing in electric cars they have designed and built themselves at the Italian
Riccardo Paletti circuit.
20. TR Fastenings, proud sponsor of the Newick Cricket Club
Piers Morgan and friends returned to Newick Cricket Club for a nail-biting summer
stand-off. A record-breaking turnout of an estimated 2,500 - 3,000 people returned
to the King George V playing field in Newick in July 2019.
21. TR Fastenings hosts annual Uckfield Kit Car Mini Grand Prix
TR hosted the 17th Uckfield Mini Grand Prix featuring over 250 local school children
in its car park in July 2019. This is the only race in the UK to feature kit cars being
driven side by side by children in a grand prix style competition.
22. Kevin races to the finish for charity in London to Brighton bike ride
In June 2019, TR’s Kevin Gladman, Data Controller, completed the London to
Brighton British Heart Foundation Bike Ride in an impressive 5 ½ hours, with the
average time being anything ranging from 6–10 hours, raising a grand total of £208.
23. Jenni returns for second Mighty Hike for Macmillan
TR’s Jenni Davies and Katie Boddy, who are both based at the Newton Aycliffe
site, took on the Northumberland coast for the Macmillan Mighty Hike in July
2019, raising money for the charity in memory of their friend and colleague Linda
Woodward.
24. Don Lamb rocked all the way to the finish line in musical Madrid
marathon
Don took part in the EDP Rock’n’Roll Madrid Marathon in April 2019 in support of
Newburn Sea Cadets, a charity providing opportunities for local children aged 10-
18 ranging from first aid skills to studying marine engineering courses.
25. TR Fastenings continues supporting the annual Little Horsted Fun
Run
TR sponsored the 10th annual Little Horsted Fun Run that took place in May 2019,
just minutes from TR’s Head office.
26. Comic Relief fundraising is a piece of cake for TR Fastenings team
in Uckfield
Employees at TR Fastening’s head office raised over £200 for Comic Relief. The
total was raised by selling cakes, red noses and taking part in ‘Guess Katherine
Ryan's favourite flavour cupcake.
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Trifast plc Annual Report 2020Strategic report Risk management
Viability statement
In line with provision 31 of the Code, the
Directors have assessed the prospects
of the Company taking into account 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 forecasts. Three years is
considered an appropriate period of time
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 including, the successful
c.£16m equity raise in June 2020, as well
as its financial projections in the context
of the Group’s cash and debt facilities and
associated covenants. These financial
projections are based on a bottom-up
budgeting exercise for FY2021 and FY2022
which has been approved by the Board and
a more top down view aligned to the Group’s
strategic objectives for FY2023. Due to the
current high degree of macroeconomic
uncertainty, three year projections have
been performed to reflect both a most
likely scenario outcome and an extreme
but plausible one, both of which are being
updated daily and reported to the board on
a weekly basis (for further details see our
specific COVID-19 discussions on pages
10 to 13). Under both of these scenarios the
Group’s projections indicate that cash and
debt facilities and projected headroom are
more than adequate to support the Group
over the next three years.
In conducting the assessment, the Directors
have considered the principal risks outlined
so as 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. COVID-19 has had and is expected
to have a significant impact on the
operations and trading performance
of the business in the short term and
longer term. A full discussion of how
60
the business is dealing with the risks
associated with COVID-19 is included on
pages 10 to 13.
2. A protracted global economic downturn
(such as may be the case following
COVID-19) would impact negatively on our
ability to continue to grow and invest as
a business. However, as for the majority
of customers we still only represent a
relatively small proportion of their global
fastening spend, even in a time of volume
reduction, we would continue to expect
to have the opportunity to secure growth
via customer specific market share
increases. As a business, we operate
in a very broad and balanced range of
sectors and geographies. In addition to
which, we have no one customer that
represents more than 7% of our Group
revenue, and no one end automotive
OEM that represents more than 5%. This
means that we are not overly dependent
on any one customer, market or sector
for our ongoing success, which greatly
increases our business sustainability
even in these uncertain times.
3. 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. To
date the impact has largely been in the
form of foreign exchange translation tail
winds, as the weakness of sterling has
increased our Group results at AER over
the last three years. In time there is a
risk that this could reverse if the relative
value of Sterling were to increase again.
Such a reversal would reduce absolute
consolidated profits in sterling, however
as it is unlikely to have a significant
impact on the underlying margins that
the overall business can secure, it would
not raise a significant viability risk. If we
do end up in a hard Brexit scenario, with
increased tariffs and administration
costs on the UK/EU border, this will have
a short-term impact most specifically
on a percentage of the UK’s distribution
business. However, 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 contract customer base
overseas if UK manufacturing moves in
the longer term.
4. 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 case of these circumstances, we
carry an annually renewable Product
Guarantee/Recall insurance policy which
is underwritten with first class security in
the London insurance market. Although,
the ongoing negative impact on the
business may still be significant whilst
the market builds back up its trust in the
Group.
5. 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 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 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 have been
negatively impacted as a result of a cyber
threat or data loss.
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Trifast plc Annual Report 2020 The scenarios are hypothetical and
purposefully severe for the purpose of
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.
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 in order
to maintain liquidity so as to continue in
operation such as accessing new external
funding early, more radical short-term cost
reduction actions and reducing capital
expenditure. As discussed on pages 10 to 13,
certain actions have already been taken in
reaction to the current COVID-19 situation.
However notwithstanding this, we retain a
comprehensive and evolving list of cash and
profit levers that we can draw on as required
to continue to safe guard the short and long-
term future of the business.
After considering the risks identified and on
the basis of 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.
Risk management
How the business manages risk to
achieve our strategic objectives
Trifast’s risk management process is
designed to improve the likelihood of
achieving our strategic objectives whilst
continuing to protect the interests of the
Group’s employees, shareholders and other
key stakeholders. The Group is committed
to conducting business in compliance with
all applicable laws and regulations and in
a manner consistent with its values and
Global Code of Ethics see page 88.
Risk appetite
Trifast recognises that the management
of risk requires a level of commerciality
to enable the business to meet its
joint strategic objectives of protecting
stakeholder interests whilst creating
stakeholder value. The Board therefore takes
responsibility for determining the nature
and extent of the principal risks it is willing
to take in achieving its strategic objectives.
The appetite the Board is willing to take is
Risk management framework
Ensures that risk is
managed across the
business
Main Board
Defines the Group’s
appetite for risk
Assesses the Group’s
principal risks and
opportunities
Operational Executive Board (OEB)
Audit & Risk Committee
Inputs into Main Board’s process for
setting risk appetite
Implements strategy in line with the
Group’s risk appetite
Leads operational management’s
approach to risk
Monitors and reviews the
effectiveness of the Group’s risk
management framework
Reviews, updates and submits
the Group’s principal risks and
uncertainties to the Main Board
Monitors and reviews the Group’s
ongoing compliance with relevant laws
and regulations
Operational Management
Employees
Creates an environment where risk
management is embraced and the
responsibility for risk management is
accepted by all employees
Implements and maintains risk
management processes, including the
maintenance and monitoring of the risk
register
discussed further in the Audit Committee
Report on pages 88 to 91.
Activities in the year
Annual risk review process
On an annual basis the Main Board,
Operational Executive Board and
Operational Management teams are
involved in a detailed risk assessment of
the Group’s strategic plans. This process
focuses primarily on those risks associated
with the execution of the Group’s strategy
and the results are reported to the Audit
Committee and the Main Board for
consideration and approval.
Compliance with Laws and Regulations
Each year the Group reviews its key policies
to ensure ongoing compliance with all
relevant laws and regulations, including anti-
bribery, whistleblowing and share dealing.
The results of this review are reported to the
Audit & Risk Committee for consideration
and approval and reported to the Main
Board where appropriate.
Active in the day-to-day
management of risk
Embedded within the new HR
management system - Microsoft
Dynamics 365 Human Resources
Internal audit
The Group operates an internal ‘health
check’ review process which operates on
a rotational basis across all business units.
These reviews cover both operational and
financial controls and are carried out by
senior Group finance personnel. Results
of these reviews are reported to the Audit
& Risk Committee for consideration and
reported to the Main Board and Operational
Executive Board where appropriate.
Cross functional reviews
A series of functional reviews are carried
out on a rotational basis across all business
units, including quality, supply, IT/cyber
security and HR. All such reviews are
conducted by senior Group functional
personnel and the outcome of these
reviews are reported to the Main and
Operational Executive Board and Audit
& Risk Committee for consideration as
appropriate.
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Trifast plc Annual Report 2020Strategic report Risk management
Risk
COVID-19 and the
macroeconomic
environment
Trend
Description and
potential impact
A significant decrease in global
manufacturing volumes will
lead to a reduction in trading
and profitability across our
businesses
Traditionally distribution/
manufacturing sectors bear the
effect of inventory reduction in
challenging economic periods
earlier than other industries
Risk
Personnel & resource
Trend
>
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
COVID-19 has brought
additional challenges to the way
that we manage and protect
our staff as working practices
change
Has the risk materialised?
As a result of COVID-19 the
global economy has been
in a period of significant
contraction since the
beginning of the calendar year
2020. How quickly regions and
sectors can come out of this
situation is currently unclear,
although general market
sentiment is moving more
towards a slower recovery
than the sharp V-shape that
was originally expected
This will undoubtedly make
conditions more challenging
for Trifast in the short to
medium term
Has the risk materialised?
The Group enjoys extremely
high retention levels with over
50% 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
The rapid and extensive
actions we have taken in
response to COVID-19 have
helped to mitigate the current
heightened risk level
Current mitigation
A comprehensive discussion of
how the business is dealing with
the specific risks associated with
COVID-19 is included on pages
10 to 13
In more normal times, by operating
globally and across a number of
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 <1% of the overall market
meaning trading growth via market
share can remain credible even in a
falling market
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. Our
planned investments in Project
Atlas (see pages 18 and 19) will
further enhance this. Rewards
are reviewed annually to ensure
they remain at levels that are
competitive within the marketplace
As discussed in detail on pages
10 to 13, we have worked hard in
the current uncertain COVID-19
situation to ensure that we
prioritise the health and wellbeing
of all of our people around the
world
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Trifast plc Annual Report 2020 Risk
Quality and
manufacturing
Trend
>
Risk
Foreign exchange
volatility
Trend
>
Risk
Loss of a key customer
and debtor exposure
Trend
Description and
potential impact
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
Description and
potential impact
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
Description and
potential impact
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 and
uncertain market conditions
can lead to higher debtor
balances, raising our exposure
to customer failure and bad
debt write downs
Has the risk materialised?
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
Has the risk materialised?
Foreign exchange volatility
has been significantly higher in
recent years 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 27
Has the risk materialised?
Despite the current uncertain
market conditions we have
only received a relatively
small number of credit term/
payment plan requests from
specific customers. None of
which have led to significant
recovery issues to date
The Group has not in recent
years experienced any
substantial credit issues
and attrition of our key
multinational OEMs remain
very low
Current mitigation
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
Current mitigation
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
Current mitigation
We maintain strong credit control
procedures from new customer
set up, through to regular
monitoring as trade develops.
As discussed on page 11, we
are working very closely with
customers across all of our
businesses in these uncertain
times to ensure we continue to
effectively manage working capital
levels including enhanced credit
control procedures
Our global multinational OEM focus
means we are able to 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
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Trifast plc Annual Report 2020Strategic report Risk management
Risk
Interruption of supply
Trend
Description and
potential impact
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
could be substantial
Risk
Inventories obsolescence
Trend
Description and
potential impact
The Group holds substantial
inventory balances across the
world. As the business grows or
as volumes fluctuate in a period
of uncertainty these levels
can increase in the short term.
Higher stock levels lead to an
increased exposure to obsolete
inventory
Has the risk materialised?
COVID-19 has brought with
it a number of significant
challenges to supply chain
management. Countries have
been in lockdown, supply
routes have been disrupted
and our internal and external
supplier bases have had
to deal with government
mandated reduced production
volumes
Despite this, our long
established and experienced
distribution business, with
its flexible supply base and
adaptable logistics has
continued to offer timely and
reliable supply to all of our
customers
Has the risk materialised?
Volatile ordering levels have
increased the amount of stock
held on hand at 31 March 2020
Our supply chain and
purchasing teams are already
working hard to reduce this
over the course of FY2021
Current mitigation
As discussed on page 11, we have
been working extremely closely
with our suppliers during these
unprecedented times to ensure
that we can successfully keep
all supply routes open for our
customers
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
Current mitigation
As discussed on pages 10 to 13,
we are working closely with all
our businesses, customers and
suppliers to continue to manage
working capital levels effectively,
including enhanced demand
forecasting and stock purchase
re-scheduling
Stock management processes are
a key part of the Group’s internal
controls. 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
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Trifast plc Annual Report 2020 Risk
Cyber security
Trend
>
Description and potential
impact
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
Risk
Impact of BREXIT:
Trend
>
Trend
>
Description and potential
impact
FX/Transaction risk/
pricing pressures
The prolonged weakness in
Sterling has brought inflationary
pressures to our imported
purchase costs into the UK
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
The specific tariffs attached to
our products are relatively low
at <5%. Meaning the main risk
to our business is a possible
disruption at the UK/EU border.
If not appropriately managed
this could potentially lead to lost
distributor sales or customer
line stops
Current mitigation
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. Comprehensive IT risk
reviews and PEN tests are routinely
carried out across all our sites
and we hold ISO/IEC 27001:2013
accreditation in our Group IT
function
Following the introduction of
GDPR in 2018, we appointed a
Group Chief Privacy Officer and
implemented a framework of
activities to ensure the Group’s
compliance with this legislation
Current mitigation
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
As a global Group with a number of
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 have had a cross-functional
Brexit team in place for the last
three years who have been carrying
out our contingency plans to help
mitigate the risks attached to a
potential no-deal Brexit scenario
The most important element of this
planning was a detailed line-by-line
review of our UK/EU supply routes.
As a result of this, we invested in
additional stock ahead of 31 March
2019 to ensure we could comfortably
manage the impact of any border
disruption arising as the result of a
no-deal Brexit
Has the risk materialised?
To date the Group has not
experienced any significant
cyber security threats or data
breaches
Has the risk materialised?
In FY2019 and FY2020, we
have seen the negative
impact of input price
increases on our UK margins.
This has reduced margins in
our UK business by c.2.0%
The situation at the moment
remains very unclear, but we
note that a hard Brexit may
lead to a default to WTO rules
We will continue to monitor the
situation closely and to review
our longer-term options, as
circumstances develop
In the short term, we will
continue to hold higher stock
levels on both sides of the
border to ensure we can
keep our supply chains open
whatever the final outcome
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Trifast plc Annual Report 2020Strategic report Risk management
Risk
Impact of BREXIT:
Trend
>
Description and potential
impact
UK Brexit specific macro-
economic environment
(non-COVID-19)
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
Current mitigation
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. Although the marked slowdown
in investment since the referendum
in 2016 may lead to future challenges
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
Has the risk materialised?
Our largest UK sector,
automotive, has seen
manufacturing volume
reductions over the last 24
months and we expect this
volatility to continue into FY2021
Outside of some well-publicised
automotive line stoppages
in April 2019 to manage the
fall-out of a potential no-deal
exit, we have continued to see
no evidence of a Brexit-led
contraction in UK manufacturing
to date
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
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Trifast plc Annual Report 2020 Cyber security
SECURITY
Every year, the scale of attack increases
and the impact intensifies across the globe.
With this in mind, we have been addressing
the key cyber-security challenges that
Trifast plc faces.
As we embrace our digital transformation
to the cloud, it has created new and
unanticipated risks. This translates into
a growing cyber-attack surface, which
requires modern measures to counteract
the threats faced in our new cloud-based
landscape.
Following a year of logical and physical
risk assessments, our focus has been
to resolve new vulnerabilities identified
across the Group. This has led to the
requirement of additional staff to create
our first Information Security Operations
Centre (ISOC). Security information and
event management data is now identified,
analysed and investigated to prevent attack
or intrusion.
Over the past year, the Group has seen
a significant increase in phishing attacks.
These attacks have now become more
sophisticated and persistent due to our
cloud exposure.
In response to the global digital
transformation, the ever-changing set of
security and privacy regulations provided by
governments has increased, compounding
the difficulty of managing cyber risks.
On 1 June 2017, China implemented the
Cybersecurity Law of the People’s Republic
of China, providing heightened regulatory
oversight across the internet and network
domains for mainland China. A proposed
update in December 2019 would have had a
dramatic effect on the right to remove data
from China. At present, the update is yet to
be enacted, but we will continue to review
security and privacy legislation in China and
other countries across the globe.
In order to keep our staff safe and
meet regulatory requirements, we
have implemented a new security
awareness training portal. Our new
innovative technology fuses psychology
and behavioural science with artificial
intelligence to transform cyber security and
data protection awareness. Our education
is now GCHQ and IISP accredited to improve
security behaviour and attitude within Trifast
plc.
The security challenges highlighted
above clearly point to the fact that our
digital transformation provides us with
great opportunities but also great risks.
To mitigate these risks, we must exercise
vigilance over the constantly changing
global cyber landscape. As an organisation
we must stay informed, be proactive in our
defence and threat intelligence, and above
all, be prepared for a cyber-attack.
TR Fastenings UK ( T R F) achieved the
renewal of its cyber security certification on
15 March 2020. The HM Government Cyber
Essentials scheme is designed to help UK
organisations improve their defences and
publicly demonstrate their commitment to
cyber security. The certification means that
T R F is now qualified to bid for government
and other highly sensitive contracts, due to
its exceptional standard of base controls
in cyber security. This certification is not
only evidence of our credibility in cyber
security, but also our dedication to quality
and integrity when it comes to customer
information.
Our continued efforts in information
security rewarded us with the achievement
of our third-year certification from the British
Standards Institution (BSI) for Information
Security Management System (ISO/IEC
27001:2013). Achieving the renewal shows
our commitment to information security. It
demonstrates that we continue to employ
a management framework of policies
and procedures that helps to keep our
information secure and provides confidence
to business customers and partners.
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Trifast plc Annual Report 2020Strategic report Key performance indicators
The Main and Operational Executive Boards 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.
The following represents a selection of these indicators:
Financial KPIs
Group total
revenue
Underlying
operating
margin*
Group underlying
profit before tax*
Underlying cash
conversion as a
% of underlying
EBITDA*
Underlying
return on capital
employed
(‘ROCE’)*
Underlying diluted
earnings per
share (‘EPS’)*
Strategic
multinational
OEM/Tier 1
revenue
Link to strategy Relevance and performance
Historic performance
Position on target?
Our clear strategy for long-term growth makes turnover an important barometer of the Group’s
success
Turnover has grown significantly from 2016, increasing by 24.1% to £200.2m (FY2016: £161.4m),
equating to 5.5% 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 been maintained at just
under 10% despite the uncertain macro-environment
Growing underlying profit before tax over the longer term is a key measure of the underlying
performance of the business
This has decreased significantly year on year in FY2020 due to the challenging market
conditions. However in the five years from FY2014 to FY2019 our UPBT CAGR was 20.8%
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 FY2020 with an adjusted conversion rate of
95.9% against a target of 70-80%
ROCE measures the return that we are able to provide our equity investors. Maintaining this
continues to be a key focus of the Group
Reflecting reduced profits, our ROCE has decreased in FY2020 by 680bps to 12.0% (FY2019:
18.8%). Excluding the impact of IFRS16 this decrease would be lower at 580bps, to 13.0%
EPS is a key target for the Group. Our clear strategy for growth is focused on increasing this
ratio year on year
This has decreased significantly year on year in FY2020 to 10.54p due to the challenging market
conditions
In the five years from FY2014 to FY2019 our UDEPS CAGR was 19.5%
Working to grow this revenue as well as building relationships with new multinational OEMs is
the backbone of our overall growth strategy
* 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 26 and the
glossary on pages 184 and 185. For reconciliations to equivalent GAAP measures, please see note 34 in the financial statements and the five-year history on page 186
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 not only reduce our reliance on purely distribution revenues, but we will also be able to
improve our profit margins as revenues increase faster than the underlying semi-fixed cost
bases we have in our manufacturing sites
Over the last five years, 34% of UK employees have
completed the management development programme
68%
68%
66%
32%
32%
34%
Non-financial KPIs
Broaden skills of
management
Manufacturing to
distribution ratio
68
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£200.2m
£209.0m
£197.6m
11.6%
11.5%
£23.5m
£22.2m
95.9%
18.8%
20.1%
14.53p
13.78p
9.0%
£17.1m
84.1%
78.2%
12.0%
10.54p
2020
-3.9%
+4.0%
+6.9%
2020
2019
2018
2020
2019
2018
2020
2019
2018
2020
2019
2018
2020
2019
2018
2020
2019
2018
2019
2018
2020
2019
2018
Trifast plc Annual Report 2020
Our strategic pillars
Core strategy
Investing in people
Investment driven growth
Continue to add value
and differentiate
Operational efficiencies
Acquisitions
Read more about our
strategy on pages 40 to 52
Group total
revenue
Underlying
operating
margin*
Group underlying
profit before tax*
Underlying cash
conversion as a
% of underlying
EBITDA*
Underlying
return on capital
employed
(‘ROCE’)*
Underlying diluted
earnings per
share (‘EPS’)*
Strategic
multinational
OEM/Tier 1
revenue
Broaden skills of
management
Manufacturing to
distribution ratio
Financial KPIs
Link to strategy Relevance and performance
Historic performance
Position on target?
Our clear strategy for long-term growth makes turnover an important barometer of the Group’s
success
equating to 5.5% p.a
investment plans
Turnover has grown significantly from 2016, increasing by 24.1% to £200.2m (FY2016: £161.4m),
Growth is about more than just the top line. Controlling our cost base is a key part of our
Reflecting our success in this area, underlying operating margin has been maintained at just
under 10% despite the uncertain macro-environment
Growing underlying profit before tax over the longer term is a key measure of the underlying
performance of the business
This has decreased significantly year on year in FY2020 due to the challenging market
conditions. However in the five years from FY2014 to FY2019 our UPBT CAGR was 20.8%
Our quality of earnings is reflected in our ability to consistently turn underlying EBITDA in to
underlying cash
95.9% against a target of 70-80%
The Group continued to be cash generative in FY2020 with an adjusted conversion rate of
ROCE measures the return that we are able to provide our equity investors. Maintaining this
continues to be a key focus of the Group
Reflecting reduced profits, our ROCE has decreased in FY2020 by 680bps to 12.0% (FY2019:
18.8%). Excluding the impact of IFRS16 this decrease would be lower at 580bps, to 13.0%
EPS is a key target for the Group. Our clear strategy for growth is focused on increasing this
This has decreased significantly year on year in FY2020 to 10.54p due to the challenging market
ratio year on year
conditions
2020
2019
2018
2020
2019
2018
2020
2019
2018
2020
2019
2018
2020
2019
2018
2020
2019
2018
9.0%
£17.1m
£200.2m
£209.0m
£197.6m
11.6%
11.5%
£23.5m
£22.2m
95.9%
12.0%
10.54p
84.1%
78.2%
18.8%
20.1%
14.53p
13.78p
In the five years from FY2014 to FY2019 our UDEPS CAGR was 19.5%
Working to grow this revenue as well as building relationships with new multinational OEMs is
2020
-3.9%
the backbone of our overall growth strategy
2019
2018
+4.0%
+6.9%
* 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 26 and the
glossary on pages 184 and 185. For reconciliations to equivalent GAAP measures, please see note 34 in the financial statements and the five-year history on page 186
Non-financial KPIs
Link to strategy Relevance and performance
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 not only reduce our reliance on purely distribution revenues, but we will also be able to
improve our profit margins as revenues increase faster than the underlying semi-fixed cost
bases we have in our manufacturing sites
Historic performance
Over the last five years, 34% of UK employees have
completed the management development programme
Position on target
2020
2019
2018
68%
68%
66%
32%
32%
34%
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Trifast plc Annual Report 2020Strategic report
Business review
Unless stated otherwise, amounts and comparisons with prior year are calculated at constant currency (Constant Exchange Rate ‘CER’) and, where we refer to ‘underlying’ this is
defined as being before separately disclosed items (see note 2).
The Group delivered a resilient performance
in FY2020, despite challenging market
conditions and the initial impact of COVID-19
in Q4. Revenues decreased by only 4.0%
at CER and 4.2% to £200.2m at Actual
Exchange Rate (‘AER’) for FY2020.
We are encouraged and supported by the
fact that we have sustained both business
and customers over this difficult period.
However as previously reported, we have
seen trading decreases across all our
key sectors, as production volumes have
reduced, and country lockdowns were put in
place across the world.
The largest source of market share growth
continues to come from our multinational
Tier 1s in the automotive sector, with market
share gains most specifically in the USA,
Thailand and Spain successfully offsetting
the impact of both volume reductions and
Q4 production line shutdowns.
Gross margins have decreased by 250bps
to 27.5% (FY2019: 30.0%) largely because
of product mix shift, reducing sales and,
particularly in Italy, foreign exchange
fluctuations. Whilst underlying operating
margins have decreased to 9.0% (FY2019:
11.6%) as the impact of revenue reductions
against a semi-fixed cost base has been
partially offset by overhead savings.
Reflecting the above, underlying PBT has
reduced to £17.1m at AER (FY2019: £23.5m)
leading to a reduced underlying diluted EPS
of 10.54p (FY2019: 14.53p).
Statutory profit before tax reduced to £3.0m
at AER (FY2019: £16.4m) due to the factors
above and separately disclosed items (see
note 2) including impairment charges in the
year of £7.8m. The impairments in VIC and
PSEP are due to the impact of COVID-19
on their respective discount rates and
short to medium-term cash flows (see
note 14). Despite the negative impact of the
macroeconomic factors which are outside
of our direct control, management believe
the outlook for VIC and PSEP continues to
be positive. Post-tax, this resulted in a diluted
loss per share in the year of (0.19)p (FY2019:
diluted EPS of 9.90p).
CER continues to be the best way of
understanding the progress of our
underlying business. To aid understanding,
the impact of this on our key metrics is
illustrated in the graph below.
Mark Belton
Chief Executive Officer
Clare Foster
Chief Financial Officer
The Group delivered a resilient
performance in FY2020.
We have sustained both
business and customers,
despite challenging market
conditions”
Cash generation has been
strong, with an increased
conversion rate of underlying
EBITDA to underlying cash of
95.9%”
Clare Foster
Chief Financial Officer
Mark Belton
Chief Executive Officer
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^
FY2020
CER
FY2020
AER
FY2019
£200.5m £200.2m £209.0m
£62.6m
30.0%
£55.1m
27.5%
£55.1m
27.5%
Movement
at CER
(4.0)%
(12.0)%
(250)bps
Movement
at AER
(4.2)%
(12.0)%
(250)bps
£18.0m
9.0%
£4.0m
2.0%
£23.5m
11.7%
£17.0m
£2.9m
10.52p
£18.1m
9.0%
£4.1m
2.0%
£23.5m
11.7%
£17.1m
£3.0m
10.54p
(0.19)p
12.0%
£24.2m
11.6%
£17.1m
8.2%
£26.4m
12.7%
£23.5m
16.4m
14.53p
9.90p
18.8%
(25.4)%
(260)bps
(76.7)%
(620)bps
(11.2)%
(100)bps
(27.7)%
(82.2)%
(27.6)%
(25.2)%
(260)bps
(76.1)%
(620)bps
(11.1)%
(100)bps
(27.5)%
(81.5)%
(27.5)%
(101.9)%
(680)bps
^ Presented after the adoption of IFSR16 Leases in FY2020. For ROCE the impact has been a reduction of 100bps
(before IFRS16 13.0%), less significant impacts on the remaining metrics which been explained in a separate table at
the end of the business review
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Trifast plc Annual Report 2020 FX effects
Revenue
m
3
0
£
.
.
m
2
0
0
2
£
m
.
1
0
£
.
m
0
9
0
2
£
0
2
0
2
9
1
0
2
AER
CER
Underlying PBT
Underlying diluted EPS
Net debt
m
.
1
0
£
.
m
5
3
2
£
m
.
1
0
£
.
m
0
7
1
£
p
2
0
0
.
p
3
5
4
1
.
p
2
0
0
.
p
2
5
0
1
.
m
3
0
£
.
.
m
3
0
3
£
m
6
0
£
.
.
m
2
4
1
£
0
2
0
2
9
1
0
2
0
2
0
2
9
1
0
2
0
2
0
2
9
1
0
2
Dividend progression
Dividend cover
4.50p
4.00p
3.50p
3.00p
2.50p
2.00p
1.50p
1.00p
0.50p
0.00p
5
1
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
.
0
6
1
£
0
2
0
2
2020
8.8×
2019
3.4×
2018
3.6×
Interim
Final
Dividend policy
The interim dividend of 1.20p per share was
paid on 9 April 2020 (FY2019: interim 1.20p;
final 3.05p).
To allow us to appropriately manage our
financial position and flexibility in such
an uncertain time, as we have already
announced in April 2020, we are not
proposing a final dividend for FY2020.
We plan to revisit this decision on a
regular basis depending on how the wider
macroeconomic environment develops.
As a Board, we are keen that dividends play
their part in our TSR as soon as is practical.
For the medium-term, we still believe that
an appropriate level of dividend cover is in
the range of 3x to 4x. However, as is always
the case, the actual dividend each year
will need to take in to account our ongoing
strategy for investment driven growth,
any acquisitions, and the working capital
requirements of the business.
2017
3.7×
2016
3.6×
2015
4.1×
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71
Trifast plc Annual Report 2020Strategic report Business review
Unless stated otherwise, amounts and comparisons with prior year are calculated at constant currency (Constant Exchange Rate ‘CER’) and, where we refer to ‘underlying’ this is
defined as being before separately disclosed items (see note 2).
Revenue by region (CER)*
FY2020
FY2019
£200.5m† -4.0%
£209.0m†
£53.7m
2020
£59.2m
£9.0m
£10.7m
20
1
9 £79.1m
£75.5m
£77.1m
£74.1m
UK
Europe
USA
Asia
* Regional revenues include intercompany
† Group revenue, after eliminating intercompany
Revenue
Due to the challenging market conditions
throughout FY2020, coupled with the
impact of COVID-19 in Q4, we have seen
revenue declines across nearly all our
regions, ranging from 3.9% to 9.4%. The one
exception to this being in the USA, where
we are very pleased to report that strong
double digit growth continued, up by 18.7% to
£10.7m (AER: 22.7% to £11.0m; FY2019: £9.0m)
largely due to market share wins in the
automotive sector.
Our European operations have seen a 3.9%
reduction in revenue to £74.1m (AER: 5.7%
to £72.7m; FY2019: £77.1m). Well-publicised
decreases in automotive volumes have
been felt most noticeably in Holland and
Sweden. Reduced volumes in domestic
appliances and regional lockdowns in
Q4 have decreased trading levels in
Italy. Production volume declines in the
electronics sector have reduced revenues
in our Hungarian operations and weakened
general industrial demand in Germany has
hampered trading levels here. Helping to
offset some of those challenges, even in
the current very uncertain environment, our
newest greenfield site in Spain has gone
from strength to strength, with a >50%
trading increase via market share wins in the
automotive sector.
In Asia, we have seen the steepest decline
in revenues of 9.4% to £53.7m (AER: 8.0%
to £54.5m; FY2019: £59.2m), in part as
the impacts of COVID-19 were felt more
strongly in Q4, most specifically in China,
where lockdowns were in place as early
as February 2020. It is reassuring to note
however, that we are now seeing recovery
coming through earlier at our Chinese
sites, with trading levels towards the end
of Q1 of FY2021 already returning to be in
line with the start of FY2020. The lockdown
in Malaysia at the end of Q4 has impacted
on both the electronics and domestic
appliances sector sales in the region,
especially at one of our largest domestic
appliance OEMs. As reported at the half-
year, our automotive business in Taiwan has
continued to be negatively impacted due
to volume reductions in its key European
market. However, these losses have been
offset to a large extent by >65% increases in
trading levels at our Thailand operations and
the beginnings of a return to strength at one
of our largest Malaysian automotive OEMs.
Overall, our UK business has declined by
4.5% to £75.5m (FY2019: £79.1m) with well-
publicised production volume decreases in
the automotive sector being exacerbated by
Q4 production line shutdowns and reduced
distributor sales, most noticeably to the
EU. We are pleased to report that our latest
acquisition, PTS, has continued to show
growth of >5% despite the current uncertain
macroeconomic conditions, helped by
increased medical sector and other
distributor demand in Q4 driving a strong
trading finish to the year.
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Trifast plc Annual Report 2020 Underlying operating margins
Underlying operating margins have reduced
by 260bps, to 9.0% (FY2019: 11.6%) to
generate an underlying operating profit of
£18.0m (FY2019: £24.2m).
In Europe we have seen a 300bps decrease
in underlying operating margin to 7.9%
(FY2019: 10.9%). Gross margins have
reduced as product mixes have shifted
and start of production delays, specifically
in the automotive and electronics sectors
have continued. Whilst as previously
reported, the remainder is largely related to
Italy, where movements in the average €:$
exchange rate have increased $ purchase
costs unfavourably against a largely €
denominated revenue base.
The reduction in sales over a semi-fixed cost
base has further reduced margins, although
we are pleased to report that we have been
able to mitigate the impact of this in part, via
careful overhead cost savings despite the
ongoing investments required into our fast
growing Spanish site (see page 26).
In Asia, underlying operating margins have
held up exceptionally well, with a reduction
of only 80bps to 15.1% (FY2019: 15.9%),
although reducing sales against a semi-
fixed cost base has had a negative impact.
We have been able to more than offset this
through short-term overhead cost savings.
Again, this is despite the investments we
continue to make in our successful Thailand
operations (see pages 26 and 27).
In the UK, underlying operating margins
have decreased by 190bps to 9.1% (FY2019:
11.0%). Gross margins have been lower in
the region, reflecting a change in product
mix due to a drop in distributor spend
and some temporary increases in stock
provisioning as the result of higher levels on
hand. However, it is reduced sales over a
semi-fixed cost base that have driven most
of the reduction.
In our small, nonetheless fastest growing
region, the USA, underlying operating
margins have remained low at 2.0% (FY2019:
4.9%). This reflects the very positive impact
of double-digit revenue growth but offset by
the ongoing investments for future growth
we are making within the business (see
pages 26 and 51).
Net financing costs (at AER)
Interest costs have increased to £1.0m
(FY2019: £0.7m). The main reason for this is
the inclusion of £0.4m of expense in relation
to right-of-use lease liabilities, following the
adoption of IFRS16.
Taxation (at AER)
The underlying effective tax rate (ET R ) is
broadly in line at 23.1% (FY2019: underlying
effective tax rate: 23.6%).
Subject to future tax changes and excluding
prior year adjustments, our normalised
underlying ET R is expected to remain in the
range of c.22–25% going forward.
The main reason for the difference between
our FY2020 ET R of 107.8% and the FY2019
ET R of 25.4% is due to the impairment
charges in the year and reduced deferred
tax on share options.
Underlying operating profit and
margin by region (CER)
FY2020
£18.0m†
9.0%
£8.1m
15.1%
£6.9m
9.1%
£0.2m
2..0%
£5.9m
7.9%
FY2019
£24.2m†
11.6%
£8.7m
11.0%
£9.4m
15.9%
£0.4m
4.9%
£8.4m
10.9%
UK
Europe
USA
Asia
† After deducting central costs
GAAP Measures: operating profit by region (AER)*
UK
Europe
Asia
USA
Central costs
Total
FY2020
FY2019
Profit/(loss)
(£m)
5.1
(2.8)
7.1
0.2
(5.5)
4.1
Margin
6.8%
(3.8)%
13.0%
1.8%
N/A
2.0%
Profit /(loss)
(£m)
7.1
7.0
9.1
0.4
(6.5)
17.1
Margin
9.0%
9.1%
15.4%
4.7%
N/A
8.2%
Operating margins have reduced from 8.2%
to 2.0% largely due to the factors above and
goodwill impairments in the year of £7.8m.
In the UK and USA reductions are largely due
to the factors above. In Europe and Asia this
is also true, however impairment losses of
£7.0m (VIC) and £0.8m (PSEP) have further
impacted margins in these two regions
respectively in FY2020.
*
After allocating separately disclosed items, including goodwill impairments
27166-Trifast-AR-2020 Strategic.indd 73
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Trifast plc Annual Report 2020Strategic report Business review
Unless stated otherwise, amounts and comparisons with prior year are calculated at constant currency (Constant Exchange Rate ‘CER’) and, where we refer to ‘underlying’ this is
defined as being before separately disclosed items (see note 2).
Adjusted net debt bridge (AER)
m
5
0
£
.
.
m
2
4
1
£
.
m
8
9
1
£
m
•
•
£
m
7
1
£
.
.
m
2
5
1
£
m
7
4
£
.
m
5
1
£
.
m
9
3
£
.
m
4
1
£
.
m
4
1
£
.
m
7
5
£
.
£20.0m
£15.0m
£10.0m
£5.0m
0.0
£5.0m
£10.0m
t
b
e
d
t
e
N
h
s
a
c
t
e
N
Adjusted
net debt
FY2019
Deferred
consideration
paid
Operating
cash inflow
Working
capital
movements
Capital
expenditure
Atlas
Interest &
foreign
exchange
Tax paid
Dividend less
proceeds from
share issue
Treasury
shares
purchased
Adjusted
net debt
FY2020^
^ Adjusted net debt is stated excluding the impact of IFRS16 Leases, including right-of-use liabilities, net debt increases by £15.1m to £30.3m and operating cash inflow before
changes in working capital increases by £3.5m
Net debt (AER)
Our net debt position at the end of FY2020
has increased by £16.1m to £30.3m (FY2019:
£14.2m). Some £15.1m of this increase is due
to the adoption of IFRS16 Leases. Excluding
the impact of this, our pre-IFRS16 adjusted net
debt is significantly lower at £15.2m (excluding
the impact of prepaid arrangement fees
relating to the refinance in April 2019, adjusted
net debt would be higher at £15.8m).
Cash generation has been strong, with an
increased conversion rate of underlying
EBITDA to underlying cash of 95.9% (FY2019:
64.9%) as stock levels have stabilised and
trade debtors have reduced due to slower
trading at the end of the year. Year-end stock
levels have remained higher than our historic
average, largely due to the high degree
of volatility in current demand. However,
our operational teams have been working
extremely hard to help us secure a £4.1m stock
reduction to £59.2m in HY2 (HY2020: £63.3m;
FY2019: £57.6m).
Project Atlas has driven additional investment
of £5.7m in the year, of which £3.1m has been
capitalised as an intangible asset (see page
155). As planned, excluding Project Atlas
capital expenditure has been lower at only
£1.4m in the period, including the finalisation of
a factory extension at one of our Taiwanese
sites and a much needed warehouse
extension at our Lancaster distribution site
(see page 48).
In addition, in February 2020, £1.7m was also
used to acquire 1 million 5p ordinary shares on
74
the open market via the Trifast EBT to honour
future equity award commitments.
Banking facilities
The Group successfully renegotiated its
banking facilities in April 2019 and has access
to an £80m revolving credit facility over a
four-year term, with an option to extend for up
to one year, and an additional £40m accordion
facility to support acquisitions.
The Group’s banking facilities include
covenants to maintain an adjusted leverage
ratio of below 3.0x and an interest cover ratio
above 4.0x on a rolling 12-month basis. At 31
March 2020, the Group’s covenants are well
within these limits with an adjusted leverage
ratio of 0.80x and interest cover of 30x.
To reflect the current uncertain conditions
the Board has set a reduced maximum net
debt to underlying EBITDA ratio target of 1.5x
(FY2019: 2.0x). This would only be breached via
investment, where a short-term reversal can
be reliably forecast.
Return on Capital Employed (at AER)
As at 31 March 2020, the Group’s shareholders’
equity had decreased to £115.7m (FY2019:
£121.1m). This £5.4m movement is made up
of a retained loss of £7.4m (including goodwill
impairments of £7.8m), share movements
totalling £1.6m (including the acquisition and
utilisation of own shares held of £1.1m) and a
foreign exchange reserve gain of £0.4m which
arose due to a relative weakening of Sterling
in FY2020.
Over this decreased asset base, our
underlying ROCE has reduced to 12.0%
(FY2019: 18.8%).
Following an annual impairment review, the
goodwill balances that the Group holds in
both TR VIC in Italy and PSEP, in Malaysia
have been impaired by £7.0m to £3.0m and
£0.8m to £nil, respectively. These impairments
have been recognised in response to the
short and medium-term impacts of COVID-19
and do not reflect a long-term change in the
Group’s strategic direction or support of these
underlying businesses.
Full details of the work performed in relation to
the above are included in note 14.
Post-balance sheet event
Equity Placing
In June 2020, the Company undertook a non-
pre-emptive equity placing which raised £16m
gross proceeds. This ensures that the Group
can continue to support its long-term strategic
investments (see page 14) as well as being
able to maximise its growth in the short-term
as markets recover.
As a result of this equity Placing, the Group
is in an adjusted net cash position (excluding
IFRS16 right-of use lease liabilities) as at 30
June 2020.
The combination of the new banking facilities
and the equity Placing is an extremely exciting
development for the Group. Providing the
flexibility and confidence to allow us to
continue to follow our strategic aims, coupled
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Trifast plc Annual Report 2020
Adjusted net debt bridge (AER)
with an increase in both security and tenure of
funding to support us in a less certain macro-
economic environment.
Outlook
The next couple of years for
Trifast remain a very exciting time
for our business as we look to
implement and invest in a number
of significant and positive changes
in the way that we are structured
and operate”
In FY2020 the Group has delivered a resilient
performance despite challenging market
conditions and the initial impact of COVID-19
in Q4.
We have taken swift and significant action in
response to COVID-19 to ensure that we look
after both the welfare of our staff, and that we
continue to work closely with our suppliers and
customers so supply chains are protected,
production lines continue to operate, and we
cement Trifast’s reputation as a trusted and
reliable counterparty.
The Group’s focus on flexibility and an
integrated global approach has provided
resilience and, combined with the decisive
actions taken by the Board, minimised the
impact of COVID-19 and preserved capability
(for further details, see pages 10 to 13).
There can be no doubt that COVID-19 had a
significant impact on trading in the latter part
of FY2020 and into the first quarter of FY2021.
However, we are immensely proud to report
that all our TR sites are back open for business
and ready and able to return to full capacity as
soon as demand returns to the market.
Very encouragingly, volumes have begun to
recover in all key end markets over the course
of Q1 of FY2021, allowing the Group to return
to underlying profitability in the month of June
2020.
We are especially excited by the encouraging
activity levels and pipeline of opportunities
that we are seeing, with additional prospects
for growth already secured, and enquiries
well underway across a number of sectors
including electric vehicle, 5G, medical and the
general industrial sector.
Looking further ahead, we strongly believe
that the combination of our reputation for
Trusted Reliability, our flexible and established
global supplier networks, and our balance
sheet strength will put us in a great position
to make the most of both the organic and
M&A opportunities that are likely to arise as
the competitor landscape shifts and demand
returns to the market.
It is, of course likely, that there will be
some long-term changes in the way that
our customers, our suppliers, and the
macroeconomic environment operates.
We consider that the real fundamentals of
our business model and strategy remain
unchanged, although we are constantly
reviewing what this ‘new normal’ will look like
and how we can best address the challenges
and opportunities it will bring.
Trifast is a global business serving
a broad and balanced range of
sectors and geographies and with
no one customer representing
greater than 7% of revenue. We
are a full-service provider to
our multinational customers,
delivering reliable product
engineering, quality, and supply via
flexible global logistics solutions.
Even in uncertain times, this
gives us a very good base from
which to keep moving forward
and delivering on our future
aspirations”
Underlying measures
CER
GP%
Underlying EBITDA
Underlying EBITDA%
Underlying operating profit (UOP)
UOP%
Underlying profit before tax
AER
Underlying diluted EPS
Return on capital employed (ROCE)
Net debt
Net debt to underlying EBITDA ratio
Underlying cash conversion as a
percentage of underlying EBITDA
Net financing costs
GAAP Measures (AER)
Operating profit
Operating profit %
Profit before tax
Diluted EPS
FY2020
(post
IFRS16)
27.5%
£23.5m
11.7%
£18.0m
9.0%
£17.0m
10.54p
12.0%
£30.3m
1.29x
95.9%
£1.0m
£4.1m
2.0%
£3.0m
(0.19)p
IFRS16
impact
10bps
£3.5m
170bps
£0.4m
20bps
-
-
(100)bps
£15.1m
0.54x
40bps
£0.4m
£0.4m
20bps
-
-
FY2020
(pre
IFRS16)
FY2019
(pre
IFRS16)
27.4%
£20.0m
10.0%
£17.6m
8.8%
£17.0m
10.54p
13.0%
£15.2m
0.75x
95.5%
£0.6m
£3.7m
1.8%
£3.0m
(0.19)p
30.0%
£26.4m
12.7%
£24.2m
11.6%
£23.5m
14.53p
18.8%
£14.2m
0.54x
64.9%
£0.7m
£17.1m
8.2%
£16.4m
9.90p
The Strategic report was approved by the Board of Directors on 27 July 2020 and signed on
its behalf by:
Jonathan Shearman
Non-Executive Chair
Trifast House, Bellbrook Park,
Uckfield, East Sussex
TN22 1QW
Company registered number: 01919797
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Trifast plc Annual Report 2020Strategic report
ENABLING
INNOVATION
WITHIN
ELECTRONICS
& TECHNOLOGY
Advances in electronics and technology continue
to evolve bringing more functionality, increased
mobility and added complexity to meet the
demands of the consumer.
Read more about Innovation
on pages 36 to 37
TR is strategically positioned and fully engaged with many of the
largest multinational OEMs and EMS companies involved in this
industry sector. Strong relationships are built in all areas of the
business including R&D, purchasing and production to ensure TR
is the first choice for their fastenings and hardware requirements.
The sector covers a vast array of different product types
including lighting. Not only is the light fixture an important
element but actual fully serviced lighting solutions are becoming
a commonplace, mainly due to the rapid advancement of LED
technology and smart connected lighting. Products find their way
into all areas of life including residential, commercial, industrial,
medical, agriculture and architecture bringing real enhancements
to well-being or production efficiency. Developments in Data over
Light (LiFi) is an exciting new concept and allows more expansive
mobility solutions.
e
c
n
a
n
r
e
v
o
g
r
u
O
02
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Our governance
Contents
Introducing the plc team
Corporate governance report
Nomination Committee report
Audit Committee report
Directors’ remuneration report
Directors’ remuneration policy
Directors’ report
Statement of directors’ responsibilities
78
80
86
88
92
108
119
121
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Introducing the plc team
Thank you to those retiring
Welcome to our new members
We take this opportunity to thank
each one for their service and
wish them and their families a
long and happy retirement”
The combination of skills and experience of the Executive
and Non-Executive team gives us a solid foundation to
deliver the next stage of our journey”
Malcolm Diamond MBE
Non-Executive Chair
C
IN
Jonathan Shearman
Independent Non-Executive
Chair C IN
Mark Belton
Chief Executive Officer
IN
Malcolm retired from the business on 31 March 2020
after a long and successful 45-year career with TR.
We wish him and his family well for the future
Length of service
11 years; appointed to the plc Board in 2009
and as Chair on 1 April 2020
Length of service
21 years; appointed to the plc Board in 2010
and CEO on 1 October 2015
Formerly Non-Executive Director and Chair of the
Remuneration Committee
From 1 April 2020, Mark will also Chair the newly
formed Operational Executive Board (OEB)
Key areas of expertise
Experienced professional in M&A, strategic
planning and forecasting. After a successful
career in investment fund management,
stockbroking, investment banking, and charitable
foundations, Jonathan has brought as a NED
added skills to the Board in an energetic, strategic
and pragmatic manner, proving his ability to
provide direction in a TR context. He understands
and fits within the culture of Trifast at Board and
operational level, and within the global business
teams. Jonathan also acknowledges the absolute
need for continuity being an essential aspect of
taking on the role of Chair during this pivotal time
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
Glenda Roberts
Group Sales and Marketing
Director IN
Read more
about the
OEB on
page 23
Glenda also retired from the plc Board on
31 March 2020 after 30 years of service at TR.
During the next 12-month period she will sit on
the newly formed OEB providing mentorship,
guidance and support to TR’s operational teams
Length of service
5 years; appointed to the plc Board on 1 October 2015
Clare, in her CFO role, will also be working with the OEB team formed
on 1 April 2020
Key areas of expertise
Clare was first introduced to Trifast in 1999 (as part of KPMG) and over
the last 20 years has developed an in-depth understanding of the
business, its values and the key drivers for success
Financial and treasury management strategy, accounting governance,
tax compliance and statutory reporting expertise. Large-scale project
management, strategic thinking and consultancy skills support Project
Atlas and the wider business in terms of strategic planning, organic
investment decisions and the Group’s acquisition activities
Neil Warner
Senior Independent Non-
Executive Director
C
Clare Foster
Chief Financial Officer
IN
Neil, who joined us in 2015, will retire on 31 July 2020.
Trifast would like to thank Neil for his invaluable
contribution over his five-year tenure
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Trifast plc Annual Report 2020
Composition membership
Nomination Committee
Remuneration Committee
IN Invitation only
Audit & Risk Committee
C Chair of Committee
Sec Secretary to the Committees
Clive Watson
Senior Independent Non-
Executive Director
C
Scott Mac Meekin
Independent Non-Executive
Director
Claire Balmforth
Independent Non-Executive
Director
C
Length of service
appointed to the plc Board 30 July 2020
Length of service
7 years; appointed to the plc Board in 2013
Length of service
appointed to the plc Board 1 April 2020
Key areas of expertise
Chartered accountant with extensive financial
experience gained over his career in the industry
both in the UK and internationally. Retired in 2019
as Group Finance Director at Spectris plc, a
position held since 2006, and from his NED role
at Spirax-Sarco which he held for 10 years
Other directorships
Non-Executive Director at Breedon Group plc,
discoverIE Group plc (Audit and Risk Chair) and
Kier Group plc (Audit and Risk Chair)
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
CEO at Circular Computing
Member of Harvard Alumni Association &
National University Singapore Alumni Association
Key areas of expertise
Extensive operational experience and also
significant knowledge of leadership, customer-
focused cultures and human resources including
employee engagement, having worked in
FTSE250 companies within the retail, B2B and
financial services sectors
Other directorships
Safestore Holdings plc (RemCo Chair), British
Heart Foundation (member of the RemCo and
Retail Committees)
Length of service
20 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
Lyndsey Case
Company Secretary
Sec IN
Compliance
The Board recognises the importance of
its composition and remains committed
to good corporate governance whilst
supporting diversity in its broadest sense.
We believe that a wide range of knowledge,
skills and experience are among the
essential drivers of Board effectiveness
Trifast has entered the new financial year,
with a newly structured Board which
brings balance, wise counsel and deep
understanding of the business at both Board
and operational levels
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Trifast plc Annual Report 2020Our governance
Corporate governance report
Framework of corporate governance
The plc Board is accountable to the shareholders for standards of governance across the Group’s businesses. Certain strategic decisions and
authorities are reserved as matters for the Board.
The key areas reserved for the Trifast Board are:
•
•
•
•
Establishing and appraising the overall
strategic direction and management
responsibility
•
Assessment and approval of the
principal risks for the business and how
they are being managed
Approval of the Group’s reports &
financial statements
•
Approval of the viability statement
• Maintaining sound internal control and
Recommending or declaring dividends
risk management systems
Approval of new bank facilities, or
significant changes to existing facilities
•
Approval of major corporate
transactions and commitments
•
•
•
Succession planning and appointments
at senior level
Review of the Group’s overall corporate
governance and evaluating the
performance of the Board and its
Committees annually
Approval of the delegation of authority
between Executives and the terms
of reference of all Committees of the
Board
Details of terms of reference are available to view on the investor website at http://www.trifast.com/investors/governance
The Board has delegated specific responsibilities to the Audit & Risk, Nomination and Remuneration Committees. Further explanation of how the
principles and supporting principles have been applied is set out below (including in the Audit & Risk Committee, Nomination Committee and Directors’
remuneration reports on pages 86 to 118 and in the Viability statement on page 60). Details of substantial shareholdings of the Company can be found on
page 119.
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 62 to 66. Significant detail of how the Group has managed the
impact of COVID-19 are included on pages 10 to 13.
How the Board is structured and works
The collective members of the Board plan and make decisions for Trifast, setting the strategic direction, making sure that all risks are
managed effectively. To focus on decision making areas that require an independent opinion separate Board Committees also exist
made up of Non-Executive Chair and Non-Executive Directors
The Board
›
›
›
›
Operational Executive
Board (OEB)
Functioning with Executive
representation from
Trifast’s CEO and CFO,
the OEB brings together a
strong senior leadership
team at an operational level
below the plc Board
Read more about the
OEB on page 23
›
Indicates Board support
›
Indicates Board delegation
Audit & Risk
Committee
Members
Clive Watson (Chair)
Scott Mac Meekin
Claire Balmforth
Role
Provides effective
governance around Trifast’s
financial reporting and
ensures the integrity of
its financial statements.
Reviews accounting
policies, monitors internal
financial controls, looks at
financial risk management
and monitors the
performance of the external
auditor
Nomination
Committee
Members
Jonathan Shearman (Chair)
Scott Mac Meekin
Claire Balmforth
Clive Watson
Role
Regularly evaluates the
composition of the Board
and the committees so that
each is made up of the right
people with the right skills,
knowledge, experience
and independence. The
Committee looks closely
at succession planning
for executive and non-
executive directors and
senior management
Remuneration
Committee
Members
Claire Balmforth (Chair)
Scott Mac Meekin
Clive Watson
Role
The non-executive
members of the
Remuneration Committee
ensure that a policy exists
for the remuneration of the
executive directors that is
fair, attracts key executives
and rewards progress
against Trifast’s business
strategy
The table shows the structure of the Committees for FY2021. However Neil Warner served on the Board and Committees (including as Audit
Chair) until his retirement on 31 July 2020.
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Trifast plc Annual Report 2020
S172 statement
The Board recognises the significance of considering the Company’s responsibilities and duties for the long-term, with the aim of always
protecting reputation and upholding the highest standards of conduct. The Group can only continue to grow and prosper over the long term if
we all respect and understand the views and needs of our internal and external stakeholders.
Read more about how the Board considers key stakeholders:
• COVID-19 and the business on pages 10 to 13
• How we create value on pages 38 to 39
• Corporate social responsibility on pages 54 to 57
• Equity Placing on page 14
• Our Group strategy on page 40
• Governance on page 84
Our people
Investors
Customers
The Board recognise that the Group’s
greatest asset are its employees. The
Directors communicate regularly with
TR teams throughout the business via
a variety of media
Read more about:
• Our culture on Page 4
• Investing in our people on pages 42 to 47
• Designated NED and Employee
engagement on pages 84 and 92
• Employees - policy on page 120
The Board consider that an ongoing
dialogue with all shareholders is
important. We operate a structured
programme throughout the year
Read more about:
• Shareholder relations on page 84
• The plc team on pages 78 and 79
• Results and proposed dividends on
page 119
• Trifast at www.trifast.com
Trifast prides itself on its long-standing
partnerships with all its customers
Read more about:
• Good news and the future on page 22
• Customer support on page 35
• Innovation on page 36
• Core strategy on page 41
Suppliers
Environment
Communities
A combination of in-house
manufacturing and established world-
class suppliers enables us to be a truly
‘one-stop’ solution
Read more about:
• Working with our suppliers on page 11
• Supplier relationship on page 24
• Sourcing of components on page 38
• Suppliers on pages 54 to 55
We work on a continuous improvement
programme of objectives and
targets, monitoring our impact on the
environment
Read more on pages 54 to 57 about:
• Health, Safety and Environment
• CSR Pillars
• Sustainability and Targets
• Carbon footprint
We recognise that our business
activities can have an impact on the
communities in which we operate, and
we remain committed to interacting
responsibly with those communities
Read more about:
• Communities on page 39
• Student opportunities on pages 44 to 45
• Communities on page 54
• Trifast in the community on pages 58 to 59
Corporate governance
With exceptions as highlighted below, the
Company complied with the provisions of the
UK Corporate Governance Code issued by
the Financial Reporting Council in July 2018.
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, Nomination Committee
and the Directors’ remuneration reports
on pages 86 to 118 and in the Viability
statement on page 60. Details of substantial
shareholdings of the Company can be found
on page 119.
The structure of the Board and its standing
committees is shown on page 80.
The Board
During FY2020, the Board consisted of three
Executive Directors, three Independent Non-
Executive Directors and a Non-Executive
Chair. 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.
As part of the Company’s ongoing
succession planning, on 19 November
2019 Trifast announced changes to its
Board composition. In conjunction with the
directorate retirements on 31 March 2020
and as announced, the Company also
appointed two Independent Non-Executive
Directors; who would take office with
effect from 1 April and 30 July respectively.
These appointments complement an
already strong and experienced Board and
contribute positively to TR as it enters a
pivotal time in its history.
The Board recognised that Malcolm
Diamond’s position as a Non-Independent
Non-Executive Chair (Executive Chair
until 1 April 2017) did not comply with the
requirements of provision 9 of the UK
Corporate Governance Code. However, the
Board believed that given Mr Diamond sits
as Chair and is a Non-Executive in other
companies, his experience from these
appointments and his previous knowledge
of Trifast was invaluable and was best
delivered through the position of Chair.
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Trifast plc Annual Report 2020Our governance Corporate governance report
On 19 November 2019 Malcolm Diamond
announced his retirement which became
effective at the end of the period being
reported upon.
Glenda Roberts also chose to retire from the
plc Board, with effect from 31 March 2020;
however as previously stated in this Report
will be providing mentorship, guidance
and support to TR’s operational teams as
Director on the newly formed Operational
Executive Board (OEB).
Neil Warner, Senior Independent Director,
who joined in 2015 has informed the Board
of his intention to retire from the Company
on 31 July 2020. As the Senior Independent
Non-Executive Director, Neil Warner, was
chosen due to his executive and non-
executive board experience with other
companies.
Following an appropriate process Jonathan
Shearman was appointed to the role
of Non-Executive Chair on 1 April 2020.
In line with the code, the Nomination
Committee carried out a vigorous review
of his proposed 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. Since joining TR
eleven years ago as Non-Executive Director
and Remuneration Committee Chair, he
has provided wise counsel and gained
a valuable deep understanding of the
business at both Board and operational
level.
Since the financial period end, Claire
Balmforth joined Trifast as a Non-Executive
Director and Chair of the Remuneration
Committee. Claire brings extensive
operational experience and significant
knowledge of leadership, customer-focused
cultures, and human resources, including
employee engagement.
With effect from 30 July 2020, Clive Watson
joined Trifast as Non-Executive Director,
Chair of the Audit and Risk Committee
and Senior Independent Director. Clive
is a qualified chartered accountant with
extensive financial experience gained during
his career in both UK and International
senior roles.
82
Board meeting attendance FY2020
MM Diamond (Chair)
MR Belton
CL Foster
GC Roberts
NW Warner
JPD Shearman
SW Mac Meekin
0%
20%
40%
60%
80%
100%
Apr-19
Dec-19
May-19
Jan-20
Jul-19
Feb-20
Sep-19
Mar-20
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.
All Independent Non-Executive Directors
have the authority to meet with
shareholders without first seeking approval
from the Chief Executive or the Chair.
On request the members of the Audit
& Risk, Remuneration and Nomination
Committees are always available to speak
to shareholders too.
Upon appointment the Directors are
required to seek election at the first AGM
following appointment.
In accordance with the Code, all Directors
are subject to annual re-election and, being
eligible, Mark Belton, Clare Foster, Scott
Mac Meekin and Jonathan Shearman (as
Chair) offer themselves for re-election.
Claire Balmforth and Clive Watson (as
Non-Executive Directors) will also offer
themselves for election at the forthcoming
Annual General Meeting.
The Chair (Jonathan Shearman) and Senior
Independent Non-Executive Director (Neil
Warner) confirm that, following formal
performance evaluation, the individuals
seeking re-election continue to be effective
and demonstrate commitment to the role.
The Company has separate posts for
Chair and Chief Executive. The Chair
leads the Board and the Chief Executive
is responsible for the management of
the Company, implementing policies and
strategies determined by the Board.
Trifast considers that the composition of
its Main Board and Committees are fully
compliant with the Code.
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 at least five times a year
formally, plus for other regular meetings
to cover budgets, risk etc. and is supplied
as early as practical with an agenda and
appropriate papers. Directors are appointed
by the Board on recommendation from the
Nomination 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.
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Trifast plc Annual Report 2020 Board evaluation process
The process of the evaluation was as follows:
Surveys
Review
Outcome
The appropriate surveys are
distributed electronically to the Board
•
•
•
•
Individual
Director
Chair
External audit
Audit
Committee
•
•
•
Remuneration
Committee
Nomination
Committee
Board
Initial review of the responses
is carried out by the Company
Secretary to prepare for the Chair
a consolidated report for each
discipline and any other points raised
›
›
The Chair and the Board discuss
the responses and what actions, if
required, need to be taken
Board effectiveness
The annual evaluations for FY2020 indicated that the Board operated effectively, and the overall feedback can be seen below:
Individual Directors
Chairman
External audit
Audit Committee
Remuneration
Committee
Nomination
Committee
Board
0%
20%
40%
60%
80%
100%
FY2020
FY2019
Board evaluations
The Board undertakes annual evaluations of
its own performance, that of its Committees,
the Chair, individual Directors and external
audit and continues to train and evaluate
senior managers below plc Board level to
maintain its continuous succession planning
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.
Internal audit
As detailed in the Audit Committee report
on pages 88 to 91, 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
known as a ‘health check’, that has been
in operation for some years, recently
underwent a significant evaluation as part
of the initial stages of Project Atlas.
Through business process reviews carried
out at the entities, a scoping and frequency
schedule with different cycle times for each
entity based on size and risk profile, was
introduced to replace the previous rotational
timetable. Whilst the Board recognises
that this process does not constitute a
fully independent internal audit, it believes
that due to the size of the Group, and the
improvements that have been and continue
to be implemented this provides appropriate
comfort as to the operational and financial
controls in place.
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83
Trifast plc Annual Report 2020Our governance Corporate governance report
Shareholder relations
The Group has an investor website,
www.trifast.com. This is regularly
updated to ensure that shareholders
and other providers of capital and
interested third-parties 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 and media relations
Shareholders can contact them at any
time by writing to Trifast plc, Trifast House,
Bellbrook Park, Uckfield, East Sussex
TN22 1QW or via email to corporate.
enquiries@trifast.com .
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, the Viability
statement on page 60 and our responses to
COVID-19 on pages 10 to 13 . For this reason,
they continue to adopt the going concern
basis in preparing the financial statements.
Board activities
Stakeholder relations
The Board consider that an ongoing
dialogue with all shareholders is important.
We operate a structured programme
throughout the year which is, in the main,
arranged with the CEO and CFO, with some
location visits involving other senior staff in
a support role.
The AGM, (last held in July 2019), offers all
shareholders the opportunity to meet the
Board and listen to a presentation about the
Group’s progress, as well as dealing with the
legal matters of the Meeting.
Unfortunately, with the Coronavirus
continuing and in line with Public Health
England and the FCA together with the
UK Government restrictions on social
gathering, shareholders must not attend the
AGM in person. In light of these extremely
challenging circumstances, we encourage
you to vote remotely on the resolutions
by completing the form of proxy which
accompanied your Notice of Meeting either
in paper form or electronically.
84
Programme of events
Over the last financial year, we held various presentations with conference dial in facilities
(covering equity research analysts, investors (both existing and potential) and media). The
outline of events were:
Programme of events
June 2019
July 2019
Full year results roadshow and investor engagement
Investor site visit (Uckfield)
AGM and open site visit
August 2019
Investor engagement post results
September 2019
New site visit & Board meeting, Houston USA
November 2019
December 2019
Half-year results roadshow and investor engagement
Technical & innovation centre visit & Board meeting,
Birmingham UK
January 2020
Executive team Asia visit
March 2020
April 2020
Plans for FY2021
Investor engagement
Investor engagement (pre-close period)
To be determined, in relevant compliance with COVID-19
guidelines
Read more about our COVID-19 Taskforce on page 10
Employee engagement
The Board recognise that the Group’s
greatest asset are its employees. The
Directors communicate regularly with
TR teams throughout the business via
a variety of media including the intranet
portal, conferencing and virtual platforms.
In line with provision 5 of the Code’s
requirement for Board engagement at all
levels, Jonathan Shearman, (appointed
as Trifast Non-Executive Chair on 1 April
2020), has become the designated Non-
Executive Director for engagement with
the workforce. Claire Balmforth, appointed
as Non-Executive Director on 1 April 2020,
will work alongside the Global HR Director
Helen Toole in supporting Jonathan in his
employee engagement role.
By order of the Board
Lyndsey Case
Company Secretary
27 July 2020
Board meetings
The Board meetings are held at least
five times a year. In addition to being at
Head Office in Uckfield, East Sussex, the
Board aim to visit at least two sites each
year which, in addition to giving the Board
the opportunity to see facilities and give
ongoing support to the business, gives local
management the opportunity to brief the
Board on local progress and needs.
During FY2020 meetings have been held
in Houston, USA as part of a new premises
location visit, and Birmingham, UK to visit
the newly completed technical & innovation
centre.
Operational visits
The Board place great importance on
the interaction with operational locations,
with site visits arranged during the year.
This initiative ensures that the Board is
available to talk and understand the needs
of each business unit and its staff at all
levels as they are key to the TR network’s
development and future.
The time is taken to discuss plans at a
corporate and local level as well as the
prospects and the impact these have
on individual business units and their
customers. It also provides a platform to
gain knowledge and understanding of what
is new in the market and where TR may have
new opportunities and challenges.
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Trifast plc Annual Report 2020 SITE VISITS
HOUSTON, USA
BIRMINGHAM, UK
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85
Trifast plc Annual Report 2020Our governance Nomination Committee report
Role
To ensure their continued effectiveness the
Committee regularly reviews and evaluates
the composition of the Main Board and its
Committees in order that they retain and
reflect the appropriate balance of skills,
knowledge, experience and independence.
The Board acknowledges and understands
the importance in terms of composition
and keeps these matters under review. As
part of our review process we also evaluate
succession plans for the Non-Executive
Directors, the Executive Directors and the
Group’s senior management.
The Nomination Committee’s terms of
reference are available on the website or on
request to the Company Secretary.
Committee structure, membership
and attendance
During FY2020, the Committee was
considered not to comply with the corporate
governance code given the majority of
its members were not deemed to be
independent. The Board has considered the
membership of all of the Committees during
the year to ensure they are appropriate for
the size and complexity of the TR business,
as well as complying with the corporate
governance code in terms of composition.
More detail is given on this below.
To complement and support the Committee,
other Board members are invited to the
Nomination Committee meetings as and
when required.
Boardroom diversity
Appointing the most talented and
experienced people to the Board and senior
management (including the newly formed
OEB) is critical to the ongoing success of
the Company. The Board is proud of the
diversity across the Group and regularly
monitors and reviews our position in this
area.
Malcolm Diamond MBE
Chair of the Nomination Committee
The increasing need for
professional corporate
governance across all plc
Committees has proved
invaluable to the team in our
senior appointments process.
The single most important
factor is to identify, recruit and
develop people based on skills,
leadership and merit”
Malcolm Diamond MBE
Chair of the Nomination Committee
Nomination committee meeting attendance FY2020
MM Diamond (Chair)
MR Belton
NW Warner
JPD Shearman
0%
20%
40%
60%
80%
100%
May-19
Sep-19
Mar-20
86
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 is mindful but not bound by
targets for Board appointments. The Trifast
Board during FY2020 comprised a gender
balance with 29% female/71% male.
Succession planning
Given a series of retirements, the
Nomination Committee has focused
much time and energy in preparation for
the coming financial year with several
appointments having been undertaken. We
have ensured that a robust appointment
process is in place, and adhered to, as is
outlined in this report.
The Committee is pleased to confirm that all
positions have been fulfilled with extremely
high quality and experienced candidates.
Trifast has continually prospered by
sustaining a highly inclusive culture with an
exemplary record of promoting equality at
all levels, and the forthcoming changes fully
reflect this alongside a need for continuity.
Having commissioned external consultancy
firm, Hoggett Bowers, to assist with our
senior succession planning programme,
we consider that following these
successful appointments, the Board and its
Committees are all fully compliant with the
Code.
Board appointment process
Appointments to the Board are subject to a
formal, rigorous and transparent process.
Both appointments and succession plans
are based on merit and objective criteria
and, where possible, promote diversity
of gender, social and ethnic background,
cognitive and personal strengths.
The Nomination Committee evaluates the
skills, experience and knowledge on the
Board, and the future challenges affecting
the business, to prepare a description of
the role and capabilities required for an
appointment. It then agrees the process to
be undertaken to identify, sift and interview
suitable candidates.
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Trifast plc Annual Report 2020 Step one
Necessary discussions with key stakeholders to fully
understand the best course of action
›
Step two
The Committee assess what additional skills are necessary to support the
implementation of the strategy over both the short and long term. With the rapidly
changing nature of the business, it is important that, whenever possible, Trifast
considers a wide pool of talent in order to identify people with the skills needed for
them to meet the challenges they face both now and over the longer term. A skills
matrix is used to identify needs as well as any immediate skills gaps
›
Step three
To identify suitable candidates as a Board member of Trifast and demonstrate strong
governance by reference to the relevant principles and provisions of the UK Code, a
“Qualitative” assessment of the relevant skills of the selected candidate is agreed and
undertaken through a formal interview process. The following sets out the generic
basis for this
•
•
•
Succession planning process
•
Interview process
Production of job description
• Diversity considered
Sifting of candidates
• Decision process
Board composition
In line with its ongoing succession planning
and in accordance with the agreed process,
Trifast announced in March 2020 the
following Directorate changes:
Trifast plc Board
Appointment of new Chair
Following a long & successful career with
TR, Malcolm Diamond MBE retired on 31
March 2020. On behalf of all stakeholders
and colleagues from around the world,
the Directors would like to acknowledge
his relentless support, commitment and
mentorship over his 45-year career in
industry. We wish him and his family well
for the future.
Jonathan Shearman, Non-Executive
Director has assumed the role of Chair with
effect from 1 April 2020. The Directors look
forward to continuing to work with Jonathan
in his new role. Since he joined TR, he has
provided wise counsel and has gained a
valuable deep understanding of the business
at both Board and operational level.
Director retirements
After 30 years of service at TR, Glenda
Roberts chose to retire from the plc Board,
which she joined in 2010, with effect from
31 March 2020. Over a long and successful
career, she has established a thriving
team who together have driven TR’s global
sales and marketing strategy. During the
next 12-month period she will be providing
mentorship, guidance and support to TR’s
operational teams around the business as
a Director on the newly formed Operational
Executive Board (see below for further
details). Thereafter, Glenda plans to spend
more time with her family but will remain
available to undertake project work for TR.
Neil Warner, Senior Independent Director,
who joined us in 2015, informed the Board
of his intention to retire from the Company
on 31 July 2020. On behalf of the Board we
would like to thank Neil for his invaluable
contribution over his five-year tenure and
wish him a long and happy retirement with
his family.
New NED plc Board appointments
Claire Balmforth joined Trifast as a
Non-Executive Director and Chair of the
Remuneration Committee on 1 April 2020.
With effect from 30 July 2020, Clive
Watson joined Trifast as a Non-Executive
Director, Chair of the Audit and Risk
Committee and Senior Independent
Director.
Read more about the plc team
on pages 78 to 79
Formation of an Operational
Executive Board (OEB)
As of 1 April 2020, and part of the strategy
to drive the business forward and bring
together a strong senior leadership team
at an operational level below the plc Board,
Trifast now has an Operational Executive
Board (OEB) which functions with Executive
representation from the plc Board and is
Chaired by the CEO.
Read more about our OEB
on page 23
Financial year ending 31 March 2021
In line with corporate governance
recommendations, and following these
changes, for FY2021, gender balance for the
Main Board is 67% male/33% female.
From 1 April 2020 the Nomination
Committee will be:
•
•
Jonathan Shearman, Chair
(Chair of Committee)
Scott MacMeekin, NED
• Claire Balmforth, NED
• Neil Warner, NED^
^
following Neil’s retirement on 31 July 2020, Clive
Watson (NED) will take his place on this Committee
Jonathan
Shearman
Jonathan Shearman
Chair of the Nomination Committee
Appointed 1 April 2020
27 July 2020
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Trifast plc Annual Report 2020Our governance
Audit Committee report
Role and responsibilities
The Committee operates within its terms
of reference, which are reviewed on an
annual basis. These 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 responsibilities by
reviewing and monitoring:
•
•
The integrity and compliance of
the financial information provided
to shareholders including, the
strategic report, financial results,
announcements, viability statement
(page 60) and financial statements
The appropriateness of accounting
policies and the supporting key
judgements and estimates
• Whether 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
Company’s position and performance,
business model and strategy
•
•
•
•
The Group’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 61
to 66 for Risk Management)
The effectiveness of the external
audit process and external auditors,
making recommendations to the
Board about the appointment,
reappointment or removal, and
approving the remuneration, the
terms of engagement, performance,
expertise, independence and
objectivity, along with the
effectiveness of its scope
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 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
Read more about Audit Committee
members on pages 78 to 79 and 80
Key matters considered and activities
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 yearly results. Due
to the rules on the mandatory rotation of
auditors, the Committee also carried out a
formal audit tender process, and appointed
BDO LLP to act as auditor with effect from
25 November 2019, replacing KPMG LLP.
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 plc Board on
how it has discharged its responsibilities on
a regular basis.
The Committee’s prime areas of focus has
been:
•
•
The integrity, completeness and
consistency of financial reporting and
disclosures
The areas where significant judgements
and estimates are required in the
financial statements (during the year-
end, at and post the balance sheet date)
•
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
•
•
•
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
Neil Warner
Chair of the Audit Committee
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, including
COVID-19 going concern
assessments and the quality
and effectiveness of audit
processes to complement
the other risk management
activities.
Following a tender process
BDO LLP was selected to act
as our new auditor. We thank
KPMG for their significant
contribution and service to
Trifast in a partnership that
extended over 24 years”
Neil Warner
Chair of the Audit Committee
(retired 31 July 2020)
88
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Trifast plc Annual Report 2020 •
•
•
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 the controls and testing
that are in place mitigate the Group’s
exposure to this risk
To review and amend the reporting
timetable in order to take into
appropriate account the practical
considerations arising as a result of
the COVID-19 situation. The resultant
deferral to sign off on 27 July 2020,
remains within the FCA’s normal four
month reporting timetable
Principal risks, going concern and
viability statement
Our viability statement set out on page
60, details how we have assessed the
prospects of the Group over a three-year
time period and why we consider that
period is appropriate. After considering
the risks identified and on the basis of
the assessments completed, the Board
and the Committee 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. Further going concern
statements are made within our Corporate
governance statement on pages 80 to 84,
and in note 1 of the financial statements.
The Committee concluded that there
were three principal risks arising from the
financial statements which would require
consideration during the year:
Recoverability of customer-specific
inventory
The Group has bespoke customer-specific
products for which there is a risk over
recoverability if any contractual obligations
to acquire outstanding stock are waived
for commercial reasons or the customer
experiences financial distress. Given the
size of the customer-specific inventory
balance, and the complexity involved in
estimating customers changes in future
demand there is a risk that the valuation
of the inventory provision is inappropriate.
The Committee is satisfied that sufficient
focus is given to this whole area and that
provisions made for customer specific
inventory are adequate.
Goodwill impairment
Goodwill in the Group balance sheet
is significant and subject to an annual
impairment review. The recoverability of
goodwill is dependent on estimating both
cash flows and appropriate discount
rates to apply in a value in use calculation.
Given the size of the goodwill balance, and
the complexity of estimating both cash
flows (particularly owing to the impact
of COVID-19) and discount rates, the
Committee considers goodwill impairment
to be an area of material estimation.
Hence there is a risk that the valuation of
goodwill is inappropriate. The Committee
has reviewed the projected cash flows and
discount rates used in the valuation model
and the disclosures provided in note 14 of
the financial statements. The Committee is
satisfied that, following the impairment of
£7.8m recognised in the year as a result of
COVID-19, the year-end goodwill balance is
appropriately valued.
COVID-19 – Going concern
The assessment of going concern involves
a number of subjective estimates including
forecast revenues, changes in working
capital, future levels of bad debts, the rate
of inflation, which have all been impacted
by the current COVID-19 pandemic. The
Committee has been actively involved in
the regular review and approval of these
forecasts and on the basis of that work, is
satisfied that the going concern basis of
preparation remains appropriate for the
Group and the Company.
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89
Trifast plc Annual Report 2020Our governance Audit Committee report
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 (currently being prepared
weekly due to COVID-19) are reported
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
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, BDO
present their audit strategy identifying
their assessment of the key risks for the
purposes of the audit and the scope of
their work. For FY2020 these risks were:
the recoverability of customer-specific
inventory, goodwill impairments and
COVID-19 going concern. More detail is set
out in BDO’s report on pages 124 to 129.
BDO reported to the Committee at the
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 Committee reviews
the external auditor’s performance and
ongoing independence and concluded
that the external audit process is operating
effectively. BDO have proved effective in
their first year of audit, and are expected to
continue to prove effective in their role as
external auditor going forward. From FY2021,
BDO will also report its findings to the
Committee at the half year.
For HY2020, KPMG remained in post and
performed the required external auditor
review work on the Group’s 30 September
2019 financial report.
Non-audit services provided by BDO
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.
Internal audit
A formalised internal review process where
all business units are the subject of a ‘health
check’ on a rotational basis, has been in
operation for some years. This process
recently underwent a significant evaluation
as part of the initial stages of Project Atlas.
Through business process reviews carried
out at the entities, a scoping and frequency
schedule with different cycle times for each
entity based on size and risk profile was
introduced to replace the previous rotational
timetable. Looking ahead this process will
continue to be developed, and will also take
into account the impending implementation,
roll-out and post implementation stage of
the Atlas project.
The reviews, covering both operational and
financial controls, are carried out by senior
Group finance and IT 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, it believes
that due to the size of the Group, and the
improvements that have been and continue
to be implemented this provides appropriate
comfort as to the operational and financial
controls in place.
Risk management and 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,
along with the FRCs Guidance on risk
management, internal control and financial
and business reporting, requires that
the Board monitors the Company’s risk
management and internal control systems
and, at least annually, carries out a review
of their effectiveness which should cover
all material controls including financial,
operational and compliance controls.
Having done so, the Committee is of the
view that there is an appropriate ongoing
process for identifying, evaluating and
managing significant risks.
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Trifast plc Annual Report 2020 Audit committee meeting attendance FY2020
Neil Warner (Chair)
Jonathan Shearman
Scott Mac Meekin
0%
20%
40%
60%
80%
100%
Jun-19
Nov-19
Jan-20
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 governance requirements
regarding the Annual Report. We consider
that, taken as a whole, the FY2020 Annual
Report is fair, balanced and understandable
with appropriate references being made
throughout the various sections, which we
hope you will find helpful in understanding
the information and disclosures contained
within them.
The Board is satisfied that the members of
the Audit Committee have both recent and
relevant breadth of knowledge, experience
and financial dynamics to effectively fulfil
their responsibilities as well as competence
relevant to the sector in which the Group
operates. The Directors’ summary
biographies can be found on pages 78 and
79 of this report.
Finally, it is time for me to look to retirement
and start to reduce my work commitments
to focus on myself and family. I have
therefore decided that after five enjoyable
years working with Trifast I will step down
and retire on 31 July 2020. My thanks go
to my colleagues at plc Board level and all
those I have had the pleasure of interacting
with around the business during my
tenure for their support, wise counsel, and
camaraderie.
On behalf of the Audit Committee
Neil Warner
Chair of the Audit Committee
27 July 2020
Clive
Watson
Clive Watson
Chair of the Audit & Risk Committee
Appointed 30 July 2020
See Clive Watson’s biography on
page 79
Appointment of external auditor
Following a formal tender process, the
Committee was pleased to appoint BDO
LLP to act as the Group’s new external
auditor. KPMG resigned as auditor of the
Company following completion of the review
of the half-yearly financial report for the six
months ended 30 September 2019. They
did not participate in the tender process due
to the rules on the mandatory rotation of
auditors.
The appointment of BDO to carry out the
audit of the Company’s financial statements
for the financial year ending 31 March
2020 took effect immediately following
KPMG’s resignation. The appointment for
subsequent years will be subject to approval
by shareholders at the next Annual General
Meeting of the Company, to be held on 22
September 2020.
Following the completion of the audit, the
Committee has reviewed the effectiveness
and performance of BDO 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 and the
Board have concluded that BDO provides
an effective audit and have recommended
their re-appointment at the 2020 AGM.
Committee membership and
attendance
The Audit Committee consists of the three
independent Non-Executive Directors. The
external auditor, the Non-Executive Chair,
the Chief Executive, the Chief Financial
Officer and the Company Secretary are also
invited to attend meetings. The Committee
met three times during FY2020 and on
two of these occasions, the Committee
members also had discussions with the
external auditor without the Executive
Directors present.
All Committee meetings are held to coincide
with key dates within the financial reporting
and audit cycle. As Chair of the Audit
Committee, 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
auditors for the open discussions that
have taken place at our meetings and the
importance they all attach to its work.
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Trifast plc Annual Report 2020Our governance Directors’ remuneration report
Introduction
As part of Trifast’s ongoing succession
planning, the Board was delighted, as from 1
April 2020, to welcome Claire Balmforth, as
a Non-Executive Director and Chair of the
Remuneration Committee (the ‘Committee’,
‘RemCo’). Claire and I are therefore writing
the FY2020 Director’s Remuneration Report
in our capacity as outgoing and incoming
Chair of the Committee. As Chairman of the
Board, I will continue to have oversight of
company-wide remuneration policies and
practices and will keep my role as the NED
designated to lead engagement with the
workforce, including discussions on pay.
The report has been prepared by the
Committee in accordance with the relevant
legal and accounting regulations, then
approved by the Board. Given the significant
changes to the remuneration reporting
requirements under the updated regulations
and the UK Corporate Governance Code
we have made several improvements which
include:
•
•
An improved section setting out more
information in relation to the wider
workforce and pay fairness which
includes the CEO pay ratio and other
pay relativity reference points such as
external benchmarking (page 100)
Setting out how the proposed
remuneration policy aligns with
Company strategy (page 98)
• Describing how the Committee
has addressed the factors of
clarity, simplicity, risk, predictability,
proportionality and alignment to culture
when determining the proposed
remuneration policy (page 99)
• Disclosure of maximum remuneration
receivable assuming a 50% share price
appreciation in the application of the
proposed remuneration policy charts
(page 112)
Role and activities of the Committee
The role of the Committee is unchanged
– provide our Executive Directors with
remuneration that motivates, aligns
them with delivery of our strategy and
creates shareholder value in a sustainable
manner. In addition, it is our duty to ensure
that the remuneration received by the
Executive Directors is proportionate to the
performance achieved and the returns
received by shareholders.
Since our last report, the main activities of
the Committee were as follows:
• Construction of a new Policy to present
to shareholders at the forthcoming AGM
− this was reviewed in light of
the relevant aspects of the UK
Corporate Governance Code
and the latest guidelines from
shareholders and proxy agencies
• Determination of the final remuneration
outcomes for the year to 31 March 2020
• Determining the Company’s response
to COVID-19 and the impact on its
remuneration arrangements
• Consideration of
− the appropriate incentive targets for
the year to 31 March 2021
− our gender pay reporting summary
• Oversight of the remuneration aspects
of the newly created Operational
Executive Board (OEB) and gaining a
clear understanding of wider workforce
pay and policies
•
Review and amendment of its terms of
reference such that they are aligned with
the remuneration related provisions of
the New Code
• Confirmation of treatment of Malcolm
Diamond and Glenda Roberts’
remuneration arrangements in line with
Policy
Jonathan Shearman
Chair of the Remuneration Committee
Claire Balmforth
Chair of the Remuneration Committee
Appointed 1 April 2020
We take the views of the
shareholders seriously and
these were considered when
shaping the proposed new
remuneration Policy.
The Committee engaged with
its key shareholders and the
investor representative bodies
and is grateful for their input
into the process”
Jonathan Shearman
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Trifast plc Annual Report 2020 Company performance
There is no doubt that the year under review
was a difficult one for many industrial
companies, Trifast included. A headwind of
necessary investment was compounded,
firstly by continued structural difficulties in
the automotive sector and then latterly by
the initial impact of COVID-19. This led to a
fall in underlying diluted earnings per share
to 10.54 pence for FY2020 (14.53 pence:
FY2019).
Despite this, there were undoubtedly a
number of highlights yielding immediate and
longer-term benefits:
•
The wider Group drawing on PTS’
expertise and position in the market
• Ongoing Project Atlas progress as set
out in detail on pages 18 to 19
• Continued focus on people including the
formation of the OEB
FY2020 remuneration outcomes
Annual bonus
Given that the threshold hurdle of 5%
organic EPS growth was not met during
the year, the Committee was unable to
consider payment of any bonus from either
the financial performance targets or the
strategic and operational measures.
Overall, therefore, no FY2020 annual bonus
is payable for the Executive Directors. This
is the second consecutive year that the
Committee has been unable to award any
annual bonus and the Executive Directors
have requested that there be no bonus
payments in the current financial year.
This is untenable in the longer term and
unlikely to allow the Committee to fulfil its
duties in full – the proposed Policy has been
constructed with that in mind.
Long-Term Incentive Plan (LTIP)
The three-year performance period of LTIP
awards granted to the Executive Directors
during FY2018 ended on 31 March 2020.
The Committee assessed performance
against the EPS and relative TSR targets
and determined that on both elements this
was below the threshold level resulting in nil
vesting. Full details of Trifast’s performance
against the LTIP targets are provided on
page 104.
Overall
Despite there being no incentive payout
for FY2020, the Committee acknowledged
that the management team performed
well during the year but determined that it
should not exercise its discretion to adjust
the formulaic outturn as it was aligned with
wider company performance. Therefore,
the Executive Directors’ remuneration for
FY2020 consisted of base salary, pension
and benefits only.
Wider workforce considerations
The performance of the Company over
several years could not have been possible
without developing our people. This includes
significant training and ensuring they are
incentivised to contribute to the best of their
ability. We recognise that it is also critical for
our employees to feel valued as well as to
be paid fairly.
Our current focus in relation to engagement
has centred around communicating
regularly with all our employees as well as
staff surveys.
Read more about Investing in our
people on pages 42 to 47 and
Employee engagement on page 84
We also published our third gender pay gap
report in April 2020. We were encouraged to
see that our median gender pay gap of +7%
(i.e. our female employees are paid 7% more
than our male employees ) and the median
bonus gap of zero demonstrates that Trifast
is an equal opportunities organisation. Our
gender pay gap report can be found on our
corporate website at www.trfastenings.
com and extracts have been provided on
page 46. We are proud that we have bonus
schemes covering all employees.
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. To facilitate
this, we operate a popular Save As You Earn
(“SAYE”) share plan which is open to all UK
employees. We are delighted that so many
of our UK employees are currently enrolled.
Wider share ownership also aligns with our
remuneration principles by rewarding our
employees for the successful execution
of strategy. Therefore, we have expanded
our equity scheme for Senior Managers in
FY2020 which now has c.100 participants and
I am pleased to report that the first awards
under the scheme vested in full during late
2019 based on performance to FY2019.
Directorate Changes
As set out in the Strategic section of the
report Malcolm Diamond and Glenda
Roberts stepped down as Main Board
Directors as at 31 March 2020. The
Committee can confirm that the treatment
of their remuneration arrangements is in line
with our existing Policy with details set out
on page 105 of this report. Claire Balmforth
and Clive Watson joined the Board as Non-
Executive Directors and their fees will be in
line with the proposed Policy.
New Policy
Clearly, this would not be an ideal time to
structure a new Remuneration Policy, more
so given our need to manage the tensions
of the current macro environment alongside
motivating the Executive Directors. We want
to assure you that the Committee reviewed
the Policy proposal in light of the potential
impact of the COVID-19 outbreak, and to
align with the Board’s broader planning, and
we can confirm:
•
•
•
The priority is to look after our people
and thereafter customers, suppliers and
other communities
To meet the current and future
challenges, it is more important than
ever to retain an exceptional and proven
management team, focusing them on
the delivery of strong organic and total
performance over the coming years,
including maximising the ROI from
Project Atlas
The Policy proposals remain appropriate
for the next three years noting that
external events, such as COVID-19,
will impact how it is implemented by
the Committee each year and that
the Committee will be sensitive to the
external environment in making such
decisions
However, as a Group we continue to be cash
generative, with a strong balance sheet. This,
coupled with a continued pipeline of new
wins, means the Board remains optimistic
about the medium to long-term future of the
Group and there is a need to focus a highly
talented management team on this.
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Trifast plc Annual Report 2020Our governance
The Committee feels that it is important to
continue granting LTIP Awards to retain and
motivate the management team and will
ensure that the targets will be challenging
but with an appropriate probability of payout.
Once the EPS targets have been calibrated,
they will be disclosed to shareholders by
the Committee through an additional RNS
announcement. The relative TSR targets for
the FY2021 awards are set on page 111.
In determining final vesting outcomes, the
Remuneration Committee will take into
account the overall corporate performance
of the business, the shareholder experience
and the external operating environment.
Looking ahead
Although these are extraordinary times
requiring a more flexible approach to many
aspects of business, including remuneration
– in many senses, little has changed for
Trifast. Our strategy remains to grow
organically and by acquisition. Alongside
this, the current Executive Directors and
OEB, have the right people in place.
The Committee believes that the proposed
remuneration Policy will allow the Company
to incentivise and retain those team
members who are critical to executing our
business strategy and driving the long-term
creation of value for shareholders. We look
forward to your support at the forthcoming
AGM.
Jonathan Shearman
Claire Balmforth
27 July 2020
Directors’ remuneration report
Reinforce pay fairness throughout
the Company: Targeting median base
salary and fee levels for the Board
is consistent with the positioning of
the wider workforce. The Committee
acknowledges that current base pay
is lagging behind the desired policy
positioning and that is something that it
will consider addressing when the time
is right. This is particularly relevant given
the additional responsibilities taking
on by the CEO and CFO following the
retirement of two Executive Directors in
the past two years
The Committee engaged with its key
shareholders and the investor representative
bodies and is grateful for their input into the
process.
Fuller details are contained in a summary
table setting out the key changes to the
Policy on page 108 and in the remuneration
Policy section beginning on page 109.
Implementation of Policy for FY2021
The Committee will be sensitive to the
challenges faced by our stakeholders at
present through the implementation of
Policy, such that there will be no salary/fee
increases or bonus opportunity for FY2021
with the entire Board taking a 20% salary/fee
reduction for Q1. As set out above, the new
Policy will provide the Committee with the
ability to increase base pay to the median
of the FTSE Small Cap index within the
next three years recognising the increased
scope of the CEO and CFO roles (as the
Executive Board has shrunk from four to
two incumbents over the current policy
period). Clearly, it would not be appropriate
to make any such change in FY2021, but
the Committee will consider such a move
when it is comfortable that Project Atlas
implementation has progressed and key
milestones have been achieved.
At the present time, the Committee does
not feel able to robustly set three-year EPS
targets given the significant uncertainty
in the wider economic environment.
Therefore, in line with guidance issued by the
Investment Association, the Committee’s
intention is to set the EPS targets within
six months of the FY2021 LTIP award being
granted (noting that the grant will take place
as soon as possible after the AGM subject
to Policy approval).
Taking all of this into account, the Committee
determined the following principles and we
set out how they translated into the new
Policy below:
•
Support the long-term business strategy
and reward its successful execution
by the leadership team. Overall, the
Policy has been constructed such
that management are well rewarded
if significant value is delivered for
shareholders, but pay-outs are limited
if Company performance is below
expectations: Short and long-term
incentives are heavily weighted to
growing sustainable earnings through
organic and acquisitive means,
balanced by targets measuring balance
sheet strength, strategic milestone
execution and the shareholder
experience through TSR
Ensure that key components of
remuneration are competitive against
the market reflecting the transformation
of the business (with the associated
benefits of Project Atlas) and the
complexities of running an international
business. This will be achieved through
a staged move of all elements of
total remuneration to the median of
those of the FTSE Small Cap taking
into account corporate and individual
performance and the external operating
environment in a post COVID-19 world.
At present, to achieve a near median
total remuneration opportunity driven
off below lower quartile fixed pay the
Committee has increased the maximum
incentive opportunity by 50% of salary
paid entirely in shares. The Committee
will reduce incentive levels to rebalance
the package to median for all elements
when certain conditions are met to
move base salaries to the median
Align with latest corporate governance
best practice principles, including
consideration of the elements
of Provision 40 of the Corporate
Governance Code: This has been
achieved throughout the Policy, for
example we are proposing a two-year
post vesting holding period for the
LTIP combined with a two-year post
cessation shareholding requirement in
line with best practice
•
•
•
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Trifast plc Annual Report 2020
Annual Report on
Remuneration
This section of the Remuneration Report
contains details as to how the Company’s
remuneration Policy was implemented
during the year FY2020. In the first part of
this report we have also set out information
with regards to our wider workforce and pay
fairness.
Pay at Trifast
To attract and retain high calibre individuals,
we aspire to become an employer of choice
within our sector, maintaining a competitive
reward package that balances fairness to
the colleague as well as responsible use of
shareholders’ funds. Our pay principles are
as follows:
•
•
•
•
Support the recruitment and retention of
high-quality colleagues
Enable us to recognise and reward
colleagues appropriately for their
contribution
Help to ensure that decisions on pay are
managed in a fair, just and transparent
way
Create a direct alignment between
our Company culture and our reward
strategy
In FY2020, the Company has successfully
attracted a number of industry specialists
with global experience at senior level which
bodes well for our future plans.
Read more about Good news and the
future on pages 20 to 27
How the committee is informed on
wider workforce pay
To build the Remuneration Committee’s
understanding of reward arrangements
applicable to the wider workforce, the
Committee is provided with data on the
remuneration structure for management
level tiers below the Executive Directors
and pay outcomes for these roles. The
Committee is also developing a process
whereby it will be provided with feedback
from the Company’s various engagements
tools, such that it has access to further
context in making decisions on future
pay outcomes. This information will be
combined with the insights gained by
Jonathan Shearman who has taken on the
designated Non-Executive role for liaising
with the wider workforce. The Committee
uses this information to ensure consistency
and fairness of approach throughout the
Company in relation to remuneration.
Alignment with Directors’
remuneration policy
Understanding the remuneration practices
of the wider workforce has helped inform
the new policy. Taking the above into
account the Committee determined that the
new policy should be designed in line with
the factors set out in the Committee Chair’s
statement.
The Committee is of the opinion that the
new policy principles are appropriate for
the next three years noting that external
events, such as COVID-19, will impact how it
is implemented by the Committee each year
and that the Committee will be sensitive to
the external environment in making such
decisions.
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Trifast plc Annual Report 2020Our governance Directors’ remuneration report
Summary of the Directors’ remuneration policy
We have summarised below the key changes from our current to our proposed remuneration policy and how we intend to implement it in
FY2021.
Element
Base salary
Pension and benefits
Annual bonus
Rationale
Median salary target aligns with
wider workforce salary positioning
Provides flexibility for Committee
to increase salaries up to FTSE
Small Cap median when it is
appropriate to do so, noting that
it will always target a median total
remuneration package
Implementation for FY2021
No increase to base salaries
in FY2021 with 20% reduction
over Q1
Salaries are as follows:
• Mark Belton (CEO):
£310,000
•
Clare Foster (CFO):
£237,500
As per policy
The Committee approved a
market aligned increased to
the car allowance to £1,500
per month. However, the
Executive Directors have
requested not to receive the
increase in FY2021
For FY2021 the Executive
Directors have requested that
there be no bonus opportunity
The Committee determined it
appropriate to align with the
Operational Executive Board
pension level rather than the
general workforce given the
current conservative positioning of
the executive’s fixed pay. However,
the Committee will keep this
provision under review to reflect
developing practice and investor
sentiment
The increase in award level allows
the Committee to target total
remuneration at Small Cap median
based off current conservative
salary. The increase will only apply
from FY2022 – the executives have
requested that there be no bonus
opportunity for FY2021
Profitability, balance sheet strength
through cash conversion and
strategic milestones provide
a holistic measure of annual
performance
Discretion and on-target pay-out
level in line with best practice
Policy Changes
Targeting FTSE Small Cap
median salaries for Executive
Directors
Added an extra circumstance
where the Committee may
determine to award a salary
increase above that provided
to the Trifast UK employee
population; namely the progress
of Project Atlas recognising the
Company would move into its
next phase of development
Existing Executive Directors
will remain on the current
contribution level (20% of salary)
until 31 March 2023 when it will
fall to 10% of salary
New joiners will receive 10% of
salary
No changes proposed to
benefit policy
Maximum opportunity
increased by 25% of salary to
150% of salary. Any bonus in
excess of 100% of salary will be
paid in deferred shares
Performance measures and
their weightings have been
changed:
•
•
•
•
(70%) Underlying organic
operating profit target
(20%) Cash conversion rate
targets
(10%) Basket of up to two
Strategic/Operational
targets
No pay-out unless threshold
underlying organic profit
performance met
Pay-out for on-target
performance reduced to 50% of
maximum
Clarity provided that the
Committee has overriding
discretion to change formulaic
outcome (both downwards and
upwards) if it is out of line with
underlying performance of the
Company
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Trifast plc Annual Report 2020 Element
Long-Term Incentive Plan
(“LTIP”)
Policy Changes
Opportunity increased by 25%
of salary to 175% of salary
Adopted three-year vesting
period plus two-year holding
period
Enhanced malus and clawback
provisions
Overriding discretion in line with
annual bonus
No change to performance
measures and weighting i.e.
70% EPS and 30% relative
TSR. 25% vests for threshold
performance increasing on
a straight line to 100% for
maximum performance. Targets
will be calibrated each year and
disclosed prospectively
Increased shareholding
requirement to 250% of salary
over five years from policy
adoption and introduction of
post-employment shareholding
requirement for two years
Shares beneficially owned at
the date of adoption of the
policy and any inflight LTIP
awards will be exempt from this
post-employment requirement,
but all future share based
awards granted under the policy
will be captured
Targeting FTSE Small Cap
median fees
Minimum shareholding
requirement
Non-Executive Director
fees
Rationale
The increase in award level
allows the Committee to target
FTSE Small Cap median total
remuneration. The Committee will
determine the impact of any share
price falls on the number shares
granted at that time in line with
investor guidance
Five years from grant to release,
enhanced malus/ clawback
provisions and discretion in line
with best practice
The EPS and relative TSR
measures have been selected
to reward senior executives for
the generation of strong and
sustainable long-term earnings
and the delivery of long-term
sustainable value for the benefit of
shareholders
Increased requirement aligned to
incentive opportunity increase and
post-employment requirement in
line with best practice
Implementation for FY2021
The FY2021 LTIP award to
each Executive Director will be
equal to 175% of base salary
The relative TSR targets will be
25% vesting for performance
equal to the FTSE Small Cap
index excluding Investment
Trusts increasing on a straight-
line basis to 100% vesting for
8% p.a. above the index.
At the present time, the
Committee does not feel
able to robustly set three-
year EPS targets given the
significant uncertainty in the
wider economic environment.
Therefore, the Committee’s
intention is to set the EPS
targets within six months of
the FY2021 LTIP award being
granted. Once the EPS targets
have been calibrated, they will
be disclosed in an additional
RNS announcement
The shareholding requirement
in FY2021 will be 250%
of salary, post cessation
shareholding requirement of
250% of salary will also apply
Median fees target aligns with
wider workforce and Executive
Director salary positioning
No increase to fees in FY2021
with 20% reduction for Q1
Fees are as follows:
Chair fee: £125k
•
•
•
•
•
SID fee: £5k
NED base fee: £42k
Committee chair fee: £8k
Committee membership
fee: £5k
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97
Trifast plc Annual Report 2020Our governance Directors’ remuneration report
Linking our new Policy with our business strategy
Our remuneration policy has been designed to align with the Group strategy. Below we have set out how each performance measure within
our incentive structure links back to our core strategic pillars.
Our strategic pillars
Investment
driven growth
Continue to
add value and
differentiate
Acquisitions
Operational
efficiencies
Investing in
our people
›
Our key performance indicators
Group total revenue
Underlying operating margin
Group underlying profit before tax
Cash conversion
Return on capital employed
Underlying diluted earnings per share
Strategic multinational OEM Tier 1 penetration
Broaden skills of management
Manufacturing to distribution ratio
Geography of supply
›
Annual bonus
LTIP
Link to strategy
•
Focus on organic growth
Link to KPIs
Measure
EPS growth
Link to strategy
•
Key measure of growth
Link to KPIs
•
Focus on sustainable
investment
•
Relative TSR •
Focus on acquisitions
Linked to shareholder
value
Shareholding
guidelines
•
•
Focus on outperformance
Linked to shareholder
value
Measure
Operating
profit
Cash
conversion
•
•
•
Focus on sustainable
investment
Focus on operational
efficiencies
Focus on cashflow
management
Strategic/
Operational
• Delivery of superior
customer service
•
Focus on operational
efficiencies
• Manage the business
responsibly
•
Focus on people/talent
98
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Trifast plc Annual Report 2020
Our governance
How the Company addressed factors in provision 40 of the 2018 UK Corporate Governance Code
Read more in Letters to shareholders on pages 2 to 3
The Code requires the Committee to determine the Policy and practices for Executive Directors in line with several factors set out in
Provision 40. The following table sets out how the Remuneration Committee’s proposed new Policy aligns with Provision 40 of the Code,
the objective of which is to ensure the remuneration operated by the Company is aligned to all stakeholder interests including those of
shareholders.
How the committee has addressed this in the proposed remuneration policy
The Company’s performance-based remuneration is based on supporting the implementation of the
Company’s strategy as measured through its core KPIs. There is transparency over the performance
metrics in place for both annual bonus and the LTIP and there is a clear link between long-term value
creation and the provision of reward to Executive Directors and senior management
The market standard annual bonus and LTIP structures are well understood by shareholders and
participants alike
Identified risks have been mitigated as follows:
•
•
•
•
•
Deferring bonus in shares and a two-year holding period on the proposed LTIP helps ensure that the
performance earning awards was sustainable and thereby discouraging short-term behaviours
Aligning any reward to the agreed strategy of the Company
Variable pay will only be earned for sustainable growth in earnings and therefore aligned with risk
Reducing the awards or cancelling them if the behaviours giving rise to the awards are inappropriate
through malus and clawback
Reducing annual bonus or future LTIP awards or cancelling them, if it appears that the criteria on
which the award was based do not reflect the underlying performance of the Company
The Remuneration Committee has good line of sight and control over the potential performance
outcomes, and the actual and perceived value of the incentives
The Policy sets out the potential remuneration available in several performance scenarios
One of the key strengths of the proposed approach of the Company to remuneration is the direct link
between the returns strategy and the value received by Executives
The schematic above sets out in detail the link between Company strategy and a broadened range of
performance measures in the incentive arrangements
The LTIP rewards long-term sustainable performance. This focus on long-term sustainable value is a key
tenet of the Company’s strategy
Remuneration factors
Clarity – remuneration
arrangements should be
transparent and promote
effective engagement
with shareholders and the
workforce
Simplicity – remuneration
structures should avoid
complexity and their
rationale and operation
should be easy to
understand
Risk – remuneration
arrangements should
ensure reputational
and other risks from
excessive rewards, and
behavioural risks that
can arise from target-
based incentive plans, are
identified and mitigated
Predictability – the range
of possible values of
rewards to individual
directors and any other
limits or discretions
should be identified and
explained at the time of
approving the policy
Proportionality – the
link between individual
awards, the delivery of
strategy and the long-
term performance of the
company should be clear.
Outcomes should not
reward poor performance
Alignment to culture
– incentive schemes
should drive behaviours
consistent with company
purpose, values and
strategy
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99
Trifast plc Annual Report 2020 Directors’ remuneration report
Alignment between wider workforce pay and Directors’ remuneration policy
Trifast aims to provide a remuneration package for all employees which is market
competitive and operates a similar structure as for Executive Directors.
The Company’s LTIP extends to selected Senior Management within the Company, with the
number of employees eligible to participate being c.100 from across 14 countries.
The Company’s remuneration philosophy for all management from the Executive Directors
downwards is that all employees should have a meaningful element of performance-
based pay. For Executive Directors, part of the annual bonus is provided in deferred shares
to ensure a focus on long-term sustainable value creation and to align their experience
with those of shareholders. For all employees, Trifast operates a performance-based
discretionary bonus scheme. The Company also has a Save As You Earn scheme (SAYE) for
all UK employees in order to increase levels of share-ownership throughout the Company
and allow employees to share in its success.
The table below illustrates the cascade of our reward structure from Executive Directors to
the wider employee population. As shown below, senior management and key employees
participate in the LTIP and annual bonus schemes.
Fixed
Remuneration
Annual
bonus
Executive Committee
Senior management
Wider workforce
Y
Y
Y
Y
Y
Y
UK employee
share scheme
(SAYE)
Y
Y
Y
LTIP
Y
Y
N
The Committee is satisfied that the approach to remuneration across the Company is
consistent with the Company’s principles of remuneration. In the Committee’s opinion the
approach to executive remuneration aligns with wider Company pay policy and there are no
anomalies specific to the Executive Directors.
CEO pay ratio
The table below sets out the ratios of the CEO single total figure of remuneration to the
equivalent pay for the lower quartile, median and upper quartile of UK employees.
Year
FY2020
Method
Option A
25th
percentile
18:1
Pay ratio
50th
percentile
14:1
75th
percentile
10:1
The CEO remuneration figure is as shown in the Single total figure for Executive Directors’
Remuneration table on page 103. The remuneration figures for the employee at each quartile
were determined as at 31 March 2020. Each employee’s pay and benefits were calculated
using each element of employee remuneration, consistent with the CEO, on a full-time
equivalent basis. No adjustments (other than to achieve full-time equivalent rates through
simple pro-ration) were made and no components of pay, except SAYE awards, have been
omitted. The salary and total pay and benefits for employee at each of the percentile are as
shown in the table below:
Pay data
CEO
Employee at 25th percentile
Employee at 50th percentile
Employee at 75th percentile
Base salary
(£000)
Total pay and
benefits1 (£000)
310
19
24
34
383
21
27
39
1. Although SAYE granted during FY2020 is included in the CEO figure for total pay and benefits, this has not been
included for the UK employee’s calculation, partially on the basis that a significant number of employees have
withdrawn from the scheme.
We have chosen methodology option A
for the calculation, to identify the three UK
employees at each of the quartile. In line
with the regulations, all employees across
our four UK subsidiaries were used in the
calculation. This method was chosen given
its robustness in determining these three UK
employees. The Committee is comfortable
that the median ratio is consistent with the
Company’s pay and progression policies.
These ratios will be used as part of the
Committee remuneration decision-making
process with regards to broader employee
pay policies as well as remuneration policies
for the Executive Directors. In addition, the
Committee will consider the CEO pay ratio
based on average pay in the upper, lower
and middle quartiles to gain a more rounded
understanding of pay at Trifast. For FY2020,
the total pay and benefits and CEO pay ratio
for these individuals was as follows:
Total pay
and benefits
(£000)
19
27
72
CEO
pay ratio
20:1
14.1
5:1
25th percentile
50th percentile
75th percentile
The ratios reflect the difference
in remuneration arrangements as
responsibility increases for more senior
roles within the Company. There may
therefore be significant volatility in this ratio,
caused by the following:
•
•
Our CEO pay is made up of a higher
proportion of incentive pay than that
of our employees, in line with the
expectations of our shareholders, which
introduces a higher degree of variability
in his pay each year versus that of our
employees
A significant proportion of our CEO’s
pay is provided in shares, and their value
reflects the movement in share price
over the three years prior to vesting. This
can add significant volatility to the CEO’s
pay and this is reflected in the ratio
The ratio is driven by the different structure
of the pay of our CEO versus that of our
employees, as well as the make-up of
our workforce. This ratio will therefore
vary between businesses even in the
same sector. What is important from our
perspective is that this ratio is influenced
only by the differences in structure within
our business, and not by divergence in fixed
pay between the CEO and wider workforce.
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Trifast plc Annual Report 2020 Remuneration justification
The Committee is comfortable that the internal and external pay relativity reference points
set out above provide justification that the proposed Policy is entirely appropriate, whilst
noting the potential volatility of the CEO pay ratio in future years.
How executive remuneration is communicated with stakeholders – employees
and shareholders
It is the Committee’s experience that stakeholders find the remuneration information they
believe to be relevant to them via the Annual Report (available in hardcopy and on the
website). In addition to this, executive remuneration will be one of the topics that is flagged
for employee conversations with the designated Non-Executive Director. Shareholders can
liaise with the Committee Chair throughout the year, including at the time of the AGM. The
Committee engaged with its key shareholders and the investor representative bodies and is
grateful for their input into the process.
CEO and all employee pay
Total shareholder return
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 ten-year period from 31 March 2010. The Remuneration Committee believes it is
appropriate to monitor the Company’s performance against these indices as the Company
is a constituent of both.
0
1
0
2
h
c
r
a
M
1
3
n
o
0
0
1
a
o
t
d
e
s
a
b
e
r
R
S
T
1,400
1,200
1,000
800
600
400
200
0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Trifast
FTSE All Share Industrial Engineering Index
FTSE Small Cap Index
Gender pay gap reporting
Trifast is committed to the principle of
equal opportunities and equal treatment
for all colleagues, regardless of sex, race,
religion or belief, age, marriage or civil
partnership, pregnancy/maternity, sexual
orientation, gender reassignment or
disability. However, whilst these factors are
important when considering possible new
employees, the Company has concluded
that the single most important factor is to
identify, recruit and develop people based
on skills and merit. We have a clear policy of
paying employees equally for the same or
equivalent work, regardless of their sex (or
any other characteristic set out above).
Trifast is therefore confident that our gender
pay gap does not stem from paying men
and women differently for the same or
equivalent work. Rather, our gender pay gap
is the result of the roles in which men and
women work within the organisation and the
salaries that these roles attract.
We are pleased that our median gender pay
gap, calculated for our TR Fastenings (UK)
subsidiary, shows female employees are
paid 7.0% more than our male employees
and remains significantly lower than the UK
average (male +9.6%.)
See the Gender pay gap report on
page 46
External benchmarking
The chart below shows the relative
positioning of Trifast’s CEO and CFO in
relation to the percentiles of the FTSE Small
Cap Index.
100%
75%
50%
25%
0%
Base
salary
Total target
remuneration
Base
salary
Total target
remuneration
Mark Belton
(CEO)
Clare Foster
(CFO)
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101
Trifast plc Annual Report 2020Our governance
Directors’ remuneration report
Performance and pay
The table below shows the single figure remuneration and levels of bonus and equity pay-outs for the Group CEO during the past ten years:
Year
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
Total remuneration
£000
Annual cash bonus
pay-out against
maximum
Equity award
pay-out against
maximum
383
367
629
811
641†
766
643
1,263
327
265
0%
0%
69.8%
100%
50%
100%
80%
30%
35%
45%
0%
n/a***
n/a***
100%**
100%**
100%**
100%**
100%*
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 a previous policy
*** Additional details on LTIP awards are set out above on page 97
†
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
Percentage change in CEO remuneration
The table below compares the percentage increase in the CEO’s pay with that of the total UK region 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 employees1
Salary
Taxable benefits
Annual bonus – cash
Annual bonus – deferred
Salary
Taxable benefits
Annual bonus
2020
£000
310
15
–
–
15,147
837
701
2019
£000
300
14
–
–
14,036
660
739
Change
3%
7.1%
0%
0%
7.9%
26.8%
(5.1)%
1.
2019 UK employee figures have been restated to include Precision Technology Supplies Limited which was acquired 4 April 2018 and also to include all Trifast Executive
Directors.
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)
Year to
31 March
2020
£1.46m
£31.33m
£7.79m
Year to
31 March
2019
£5.13m
£29.96m
£8.01m
Change
(71.7)%
4.6%
(2.7)%
Included in our trading update on 23 April 2020 we stated that “In order to allow us to appropriately manage our financial position and flexibility in such an uncertain time, we do not
currently intend to propose a final dividend for FY2020 at our forthcoming AGM.”
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Trifast plc Annual Report 2020 Executive Director remuneration for the year ended 31 March 2020
Executive Director single figure of remuneration
Annual bonus3
Salary
£000
310
300
238
230
215
210
763
740
Taxable
benefits1
£000
15
14
16
15
24
23
55
52
Pensions2
£000
55
53
42
41
38
38
135
132
Total
fixed
380
367
296
286
277
271
953
924
Cash
£000
–
–
–
–
–
–
–
–
MR Belton
Prior year
CL Foster
Prior year
GC Roberts
Prior year
Totals
Prior year totals
Deferred
equity (face
value)
£000
LTIP4
–
–
–
–
–
–
–
–
Other5
3
–
4
–
–
–
7
–
Total
variable
–
–
–
–
–
–
–
–
Total
£000
383
367
300
286
277
271
960
924
1.
Taxable benefits consisted of the cost of providing a company car (or car allowance), private medical insurance and critical illness cover
2. Mark Belton, Clare Foster and Glenda Roberts were members of the Company’s non-contributory pension plan in FY2020 and FY2019. 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. All Executive Directors choose to take a proportion of their pension as a cash
allowance
3.
4.
See additional details in relation to the annual bonus element of remuneration below
The performance period of the LTIP award granted on 30 September 2017 ended on 31 March 2020 and therefore its value (nil) is included in the LTIP column. See additional
details on the performance outcomes of the 2017 LTIP and the LTIP award granted in the year below on page 104
5.
SAYE has been valued, based on discount applied to option price as at the date of grant
Additional details for variable pay element of remuneration
(i) Annual bonus for year ended 31 March 2020
For FY2020, the Executive Directors had a maximum annual bonus opportunity of 125% of base salary. For each Executive Director, the
FY2020 annual bonus determination was based 75% on performance against organic underlying diluted Group EPS growth targets and
25% based on a basket of strategic and operational measures. In line with policy, the strategic and operational measures will only pay-
out if threshold EPS performance has been achieved to ensure alignment between the annual bonus outturn and underlying corporate
performance. The table below provides information on the targets for each measure, actual performance and the resulting bonus payment
for each Executive Director:
Measure
Organic
underlying
EPS growth*
Strategic
and
operational
measures
Performance required
Actual performance
% of
maximum
payable
Weighting
Threshold
On-target
Maximum Actual
75%
4.0%
6.0%
8.0%
(27.5%)
0%
25%
Objectives based on strategic and
operational targets
See
below
0%
Total bonus
achieved in
FY2020
Achievement
as % salary
MR
Belton
CL
Foster
GC
Roberts
0%
0%
0%
–
–
–
–
–
–
–
–
–
*
the impact of current and previous year acquisitions and share buybacks are excluded from the calculation.
FY2020 organic underlying diluted EPS growth was (27.5)% which is below the threshold performance of 4% growth required for any pay-out
under the financial element of the annual bonus.
On the basis that the threshold EPS performance level was not achieved, the pay-out from the strategic and operational measures is
automatically set to nil such that the Remuneration Committee was not required to test their achievement for FY2020. However, in line with
our commitment to provide transparency on the strategic and operational measures we set out below a summary of these measures and
their achievement for FY2020.
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Trifast plc Annual Report 2020Our governance Directors’ remuneration report
Objective
ROCE:
Minimum of 15%
Link to strategy
ROCE is a financial key
performance indicator
Financial & operational
excellence:
‘Atlas’
Project Atlas is a major plank
in integrating the business to
create the Trifast of tomorrow
Achievements
ROCE of 12.0%
Outcome
Not met
Successful pilot before the end of
FY2020
Unable to roll-out due to
COVID-19
Growth strategy:
This measure was deemed, and is considered to remain commercially sensitive
Overall, there is no FY2020 annual bonus payable for the Executive Directors (FY2019: 0% of salary). Despite there being nil annual bonus
for FY2020, the Committee acknowledged that the management team’s performance during the year merited note, and would create
longer-term value, but determined that it should not exercise its discretion to adjust the formulaic bonus outturn as it was aligned with wider
Company performance.
(ii) LTIP performance period ending in the year ended 31 March 2020
The 2017 LTIP awards equivalent to 150% of salary were granted to the Executive Directors on 30 September 2017. The awards vest on 30
September 2020; however, the performance period for these awards ended on 31 March 2020. These awards were granted subject to
the achievement of certain EPS growth (70% weighting) and relative TSR targets (30% weighting) and we set out the outcomes in the table
below:
EPS growth
(70% weighting)
Trifast EPS
growth
(6.3)% p.a.
EPS growth
required for
25% vesting
5% p.a.
EPS growth
required for
100% vesting
15% p.a.
Vesting
0%
Trifast TSR
growth
(22.0)%
TSR growth1 vs FTSE Small Cap Index
(30% weighting)
Index
Growth + 8%
p.a. (100%
vesting)
27.7%
Index growth
(25% vesting)
3.7%
Vesting
0%
Overall
vesting
0%
1.
TSR growth for Trifast and the FTSE Small Cap Index (excluding investment trusts) was measured using a three-month average prior to the start and the end of the three-year
performance period
The following table presents the number of 2017 LTIP awards that will vest on 30 September 2020 based on the assessment of the
performance conditions and the resulting value of awards using the average Q4 FY2020 share price for each Executive Director:
Role
MR Belton
CL Foster
GC Roberts
Number of 2017 LTIP
awards granted
Number of 2017 LTIP
awards vesting on
30 September 2020
Value of
vested
awards
216,346
165,865
151,442
nil
nil
nil
nil
nil
nil
Despite there being nil vesting for the LTIP awards granted in 2017, the Committee acknowledged that, particularly within this current
environment, this outcome did not reflect fairly on the management team, who had indeed, during this period, driven strategically essential
issues. However, it determined that it should not exercise its discretion to adjust the formulaic vesting outturn as it was aligned with wider
Company performance.
The Committee is comfortable that the current Policy operated as intended and that the overall FY2020 remuneration paid to Executive
Directors’ set out above was not excessive.
(iii) LTIP awards granted in the year ended 31 March 2020
The table below sets out the details of the LTIP awards granted on 23 July 2019 where vesting will be determined according to the
achievement of certain performance measures.
Role
MR Belton
CL Foster
GC Roberts
Type of
award
Nil-cost
Option
Award as
% of base
salary
150%
Face value1
of award
£464,999
£356,250
£322,500
Face value
of award at
threshold
vesting No. of shares
£116,250
£89,063
£80,625
223,557
171,274
155,048
Vesting
period
3 years
from grant
1. Calculated using a share price of £2.08 being the closing share price on 22 July 2019 (the last business day prior to the grant date of 23 July 2019).
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Trifast plc Annual Report 2020 The awards will vest subject to achieving the following targets:
Measure
Underlying diluted EPS growth (70% weighting)
Performance period
3 financial years from 1 April 2019
Relative TSR2 vs FTSE Small Cap index (excluding
Investment Trusts)
(30% weighting)
3 financial years from 1 April 2019
Notes
1.
Vesting between the threshold and maximum based on a sliding scale
Performance target
Less than 5% p.a.
Vesting (% of
award)1
nil
5% p.a.
15% p.a.
Below index return
Equal to index return
8% p.a. in excess of index return
25%
100%
nil
25%
100%
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
Payments to past Directors and for loss of office
There were no payments to past directors made in the year to 31 March 2020, As disclosed in the 2018 Annual Report on remuneration,
Geoff Budd’s FY2016 Deferred Equity award vested in the year to 31 March 2020. Geoff’s 2017 Deferred Equity award vests in July 2020 and
his 2017 LTIP awards, due to vest on 30 September 2020 (measured over the three years ending 31 March 2020), are nil as set out above.
Malcolm Diamond
As announced on 31 March 2020 and set out in the Company’s Section 430(2b) Companies Act 2006 disclosure, Malcolm Diamond MBE
retired from the main Board on 31 March 2020.
We set out below the implications for Malcolm’s future remuneration, which highlights awards made to him whilst he was Executive Chair,
before becoming Non-Executive Chair on 1 April 2017.
Malcolm will not receive any other payments in relation to loss of office.
The table below sets out Malcolm’s in-flight award, its vesting date and the numbers of awards outstanding:
Type of award
Deferred Equity
Glenda Roberts
Year of award
2017
Vesting date
July 2020
Number of
awards
95,219
As announced on 31 March 2020, and set out in the Company’s Section 430(2b) Companies Act 2006 disclosure, Glenda Roberts retired
from the Main Board on 31 March 2020, although she will remain as an employee of the Company as Global Projects and Marketing Director
as well as sitting as Director on the Boards of the Operational Executive Board, TR Fastenings (UK), TR Fastenings Inc. (USA) and TR España.
Read more about Glenda Roberts and OEB on pages 22 to 23
We set out below the implications for Glenda’s future remuneration:
• Glenda was eligible to receive a bonus in respect of FY2020 to reflect her Directorship throughout the financial year ending 31 March
2020 (nil as set out above)
•
On the basis that Glenda will remain an employee of the Company, and in line with the Company’s Directors’ Remuneration Policy, all
inflight awards made to her under the Deferred Equity Bonus Scheme (2017 award only) and the Long-Term Incentive Plan (2018, 2019
and 2020 awards) will continue to vest, without pro-ration, on their normal dates. In addition, the LTIP awards will only vest subject
to the achievement of the performance conditions (set out in this report and previous remuneration reports) over their respective
performance period. The number of in-flight awards that will vest in future years is set out in the table below
• Glenda’s 2017 LTIP awards will lapse in full on 30 September 2020 as the performance targets (measured over the three years ending
31 March 2020) were not met to any extent in line with the disclosures above
Glenda will not receive any other payments in relation to loss of office
Glenda will not participate in the Executive Director annual bonus and LTIP schemes for FY2021 and future years
•
•
The table below sets out Glenda’s in-flight awards, their vesting dates and the numbers of awards outstanding:
Type of award
Deferred Equity
LTIP
LTIP
LTIP
Year of
award
2017
2018
2019
2020
Vesting date
July 2020
September 2020
July 2021
July 2022
Number of
awards
95,219
151,442
140,000
155,048
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Trifast plc Annual Report 2020Our governance
Directors’ remuneration report
Non-Executive Director single figure for remuneration
Malcolm Diamond
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
8
8
8
–
–
16
16
Committee
membership
£000
–
–
5
5
5
5
8
8
18
18
Senior
Independent
Director
£000
–
–
5
5
–
–
–
–
5
5
Core fee
£000
125
125
42
42
42
42
42
42
251
251
Total
£000
125
125
60
60
55
55
50
50
290
290
Statement of Director’s shareholdings
Shareholding
requirement1
Current
beneficial
holding2
652,632
500,000
452,632
366,822
18,588
237,571
N/A
N/A
N/A
N/A
820,782
22,750
N/A
N/A
Executive Directors
Mark Belton
Clare Foster
Glenda Roberts
Non-Executive Directors
Malcolm Diamond
Neil Warner
Jonathan Shearman
Scott Mac Meekin
Deferred
shares
without
performance
measures
Current
shares which
count toward
shareholding
requirements3
LTIP awards
subject to
performance
conditions4
Total of all
interests at
31 March
2020
Shareholding
requirement
met?1
SAYE
options
502,769
95,219
95,219
457,685
N/A
N/A
N/A
633,290
69,054
289,941
639,903
490,472
446,490
10,112
13,482
–
1,519,606
617,761
779,280
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
–
N/A
N/A
N/A
1,278,467
22,750
N/A
N/A
No
No
No
N/A
N/A
N/A
N/A
1.
2.
3.
4.
Under the existing Policy, a 200% of salary shareholding requirement for all Executive Directors. This is to be built up over five years from 27 July 2017, the date the current
remuneration policy was approved by shareholders. For the last quarter of FY2020 the share price fell to £0.95 as at 31 March 2020 due to the effect of COVID-19. In previous
years, Mark Belton and Glenda Roberts have both met the shareholding requirement
Including options exercised in the year
Total of current beneficial holding and deferred equity awards subject to continued employment only on a net of tax basis
The LTIP awards subject to performance conditions column includes the FY2018 LTIP which will lapse on 30 September 2020 on the basis of not achieving the attaching
performance conditions
Following her exercise of her 2016 Deferred Equity shares on 31 March 2020, Clare Foster on 1 April 2020 purchased 20,631 ordinary shares
through her ISA and also transferred 20,631 ordinary shares to her spouse’s ISA, taking her current shareholding to 59,850.
Mark Belton acquired 10,000 shares through a Company Placing of Ordinary Shares and the Admission of Placing Shares, as announced on
Friday 19 June 2020. Following this transaction, Mr. Belton’s beneficial interest increased to 376,822.
106
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Trifast plc Annual Report 2020 The fees paid by the Company to PwC for services to the Committee during the financial
year was £51,900 (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. PwC does not have any
other connections with the Company or its Directors.
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.
Remuneration committee meeting attendance FY2020
Jonathan Shearman
(Chair)
Malcolm Diamond
Neil Warner
Scott Mac Meekin
0%
20%
40%
60%
80%
100%
Jun-19
Sep-19
Feb-20
Neil Warner did not attend the February 2020 Remuneration Committee meeting due to illness
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 2019 remuneration report at the AGM held
on 24 July 2019 and the voting on the remuneration policy at the AGM held on 27 July 2017:
Votes for
77,334,887
%
99.5
Votes
against
401,360
78,087,128
94.8
4,246,406
%
0.5
5.2
Votes
Withheld
9,507
400
2019 remuneration
report
2017 remuneration
policy
This Report was approved by the Board of Directors and signed on its behalf by:
Jonathan Shearman
Claire Balmforth
27 July 2020
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 the inside back cover of this
publication.
Alongside numerous conference calls and
meetings with advisors, the Committee
had 3 formal meetings during the year. All
members of the Committee attended each
of these meetings, with the exception of Neil
Warner who was absent from the meeting in
February 2020, due to illness.
On most occasions, the CEO and CFO were
invited to attend to ensure the Committee
was in possession of all the relevant facts.
The key activities the Committee undertook
during the year were; determining the final
remuneration outcomes for the year to
31 March 2020, reviewing the current
Directors’ remuneration policy and designing
the new Policy, the consideration of the
appropriate incentive targets for the year to
31 March 2021, a review of the Company’s
Gender Pay reporting and updating the
remuneration report in line with the 2018
corporate governance code and new
remuneration reporting regulations.
During the year the Committee received
independent advice from PwC in relation
to the remuneration Policy review and
general matters. PwC was appointed by the
Committee.
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107
Trifast plc Annual Report 2020Our governance Directors’ remuneration policy
This section of the remuneration report contains details of the Policy which is being proposed at the AGM on 22 September 2020 and, if
approved, will be effective from that date.
The Committee reviewed Trifast’s remuneration policy in detail working with its external advisers, PwC, and determined that the new policy
should:
•
•
•
•
Support the long-term business strategy and reward its successful execution by the leadership team (see pages 40 and 98 for details).
Overall, the Policy has been constructed such that management are well rewarded if significant value is delivered for shareholders, but
pay-outs are limited if Company performance is below expectations
Ensure that key components of remuneration are competitive against the market reflecting the transformation of the business (with the
associated benefits of Project Atlas) and the complexities of running an international business. This will be achieved through a staged
move of all elements of total remuneration to the median of those of the FTSE Small Cap taking into account corporate and individual
performance and the external operating environment in a post COVID-19 world
Align with latest corporate governance best practice principles
Reinforce pay fairness throughout the Company e.g. consistent base salary positioning
The Committee is of the opinion that the new policy principles are appropriate for the next three years noting that external events, such
as COVID-19, will impact how it is implemented by the Committee each year and that the Committee will be sensitive to the external
environment in making such decisions.
The Committee determined to make the following changes to the Policy.
Summary of changes to policy versus 2017 policy
Element
Change to 2017 Policy
Executive Directors
Base salary
Benefits
Pension
All employee share plan
(“SAYE”)
Annual bonus
Long-Term Incentive Plan
(“LTIP”)
Targeting FTSE Small Cap median salaries for Executive Directors
Added an extra circumstance where the Committee may determine to award a salary increase above
that provided to the Trifast UK employee population; namely the progression of Project Atlas recognising
the Company would move into its next phase of development
No change as policy is still considered appropriate
Existing Executive Directors will remain on the current contribution level (20% of salary) until 31 March
2023 when it will fall to 10% of salary
New joiners will receive 10% of salary
No change as policy is still considered appropriate
Maximum opportunity increased by 25% of salary to 150% of salary. Any bonus in excess of 100% of
salary will be paid in deferred shares
Performance measures and their weightings have been changed:
•
(70%) Underlying organic operating profit targets
•
•
(20%) Cash conversion rate targets
(10%) Basket of up to two Strategic/Operational targets
• No pay-out unless threshold underlying organic profit performance met
Pay-out for on-target performance reduced to 50% of maximum
Clarity provided that the Committee has overriding discretion to change formulaic outcome (both
downwards and upwards) if it is out of line with underlying performance of the Company
Opportunity increased by 25% of salary to 175% of salary
Adopted three-year vesting period plus two-year holding period
Enhanced malus and clawback provisions
Overriding discretion in line with annual bonus
No change to performance measures
Minimum shareholding
requirement
Increased shareholding requirement to 250% of salary and introduction of post-employment
shareholding requirement for two years
Non-Executive Directors
Fees
Targeting FTSE Small Cap median fees
108
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Trifast plc Annual Report 2020 1) Policy tables — Executives
Base salary
Purpose
To provide competitive salary levels recognising the market value of the
role and individual’s skills, experience and performance as well as their
contributions and enable the recruitment and retention of high calibre
Executives
Operation
Base salary is set annually on 1 April. 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 will target median salaries within
FTSE Small Cap index companies
The Committee also considers the impact of any base salary increase on
the total remuneration package. Increases awarded each year will be set
out in the statement of implementation of Policy
Benefits
Purpose
To provide market-competitive benefits
Operation
The Company provides the following ongoing benefits:
• Company car (or car allowance)
•
•
Private medical insurance
Permanent health insurance
• Critical illness cover and life cover
•
Income protection insurance
In addition, the Company pays additional benefits when specific business
circumstances require it. For example, for a non-UK Executive the
Company may consider providing specific benefits appropriate for the
local market. The Company reimburses all necessary and reasonable
business expenses
Pension
Purpose
To offer market-competitive levels of pension provision
Operation
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
Maximum opportunity
The maximum annual salary increase
will not normally exceed the average
increase which applies across the
wider Trifast UK employee population.
Larger increases may be awarded
subject to performance in the following
circumstances:
i. A material change in the role and
responsibilities of the Executive
Director (for example, in the
situation where the Executive Board
is reduced in size); or
ii. Project Atlas implementation has
progressed and key milestones
have been achieved, however an
Executive Director’s salary remains
below the median of the FTSE Small
Cap Index; or
iii. An Executive Director has been
appointed either internally or
externally at below the market level
to reflect experience
Maximum opportunity
Capped at the cost of providing the
benefits
Maximum opportunity
For existing Executive Directors, the
maximum employer contribution is
20% of base salary until 31 March
2023. From 1 April 2023 this will be
reduced to 10% of base salary in line
with the Operational Executive Board
(OEB) contribution level. However, the
Committee will keep this under review
to reflect market practice
For new joiners, the maximum employer
contribution is 10% of base salary in line
with the OEB contribution level
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Trifast plc Annual Report 2020Our governance Directors’ remuneration policy
SAYE
Purpose
Facilitate equity involvement for Executives and UK based employees
Operation
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%)
Maximum opportunity
Annual savings limit in line with HMRC
limit
Annual bonus
Purpose
To encourage and reward delivery of short-term profitability and cash
conversion alongside the execution of the Company’s annual strategic
priorities in line with shareholder interests
Maximum opportunity and timing of
payments
The annual bonus will be in the form of
cash with a deferred share component
The maximum annual award level is
150% of base salary
The maximum amount that can be paid
as cash is 100% of base salary and any
remainder would be paid as deferred
shares
A deferral period of three years will
apply to any portion of the annual
bonus over 100% of base salary that is
deferred into shares
The percentage of bonus earned for
differing levels of performance is:
i.
Threshold: 25% of maximum
opportunity
ii. Target: 50% of maximum
opportunity
iii. Stretch: 100% of maximum
opportunity
Operation and performance measures
Each year Executive Directors are eligible to participate in the annual
bonus. The Committee selects performance measures which it considers
appropriate to support the Company’s strategic priorities and the delivery
of value to shareholders. The individual targets for each element of the
bonus will be set annually by the Committee
The annual bonus will be assessed against three performance measures
over the financial year as set out below:
•
•
•
70% of maximum bonus opportunity will be measured against
underlying organic operating profit* targets
20% of maximum bonus opportunity will be measured against cash
conversion rate** targets
10% of maximum bonus opportunity will be measured against a
basket of one or two Strategic and/or Operational targets. This basket
will include measures relating to the following themes: operational
excellence, growth strategy, customer satisfaction, people and
risk mitigation. The Committee will determine the one or two most
appropriate targets each year in line with the business plan
The performance measures that have been selected, in the Committee’s
view, most appropriately reflect the Company’s strategy to:
•
•
•
Focus on generating strong and sustainable organic profits for the
benefit of shareholders
Focus on maintaining a strong balance sheet through cash
conversion of profit
Focus on delivering challenging specific Strategic and Operational
targets which aid in long-term value creation
A financial underpin will apply such that for a payment to be made under
the Strategic and Operational element the Company will need to achieve
at least threshold performance against the underlying organic operating
profit measure
Strategic and Operational targets will be disclosed prospectively, unless
they are deemed commercially sensitive by the Board in which case the
targets and their achievement will be reported on retrospectively
The Committee will have overriding discretion to change formulaic
outcome (both downwards and upwards) if it is out of line with underlying
performance of the Company. In addition, the Committee has the
discretion to adjust targets or performance conditions for any exceptional
events that may occur during the year
Malus will apply during the bonus year and the share deferral vesting
period and clawback will apply for a period of two years post bonus
payment and deferred share vesting
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Trifast plc Annual Report 2020 Long-Term
Incentive
Plan
Purpose
To incentivise delivery of the Group’s long-term business strategy and
sustainable value for shareholders
Operation and performance measures
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”)
LTIP awards will have a vesting period of three years followed by a holding
period of two years. During the holding period any vested and exercised
awards cannot be sold except for tax purposes on exercise
The Committee selects performance measures considering the
Company’s long-term business strategy. The individual targets and the
weightings will be set at grant by the Committee
Performance will be measured against total Earnings Per Share (“EPS”)
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; and
30% of the LTIP award will be based on relative TSR versus the FTSE
Small Cap Index (excluding investment trusts)
The EPS targets and relative TSR measures for the following years LTIP
award will be disclosed prospectively in the implementation of Policy
section of the annual report on remuneration
The EPS and relative TSR measures have been selected to reward
senior Executives for the generation of strong and sustainable long-term
earnings and the delivery of long-term sustainable value for the benefit of
shareholders
Malus will apply during the vesting period and clawback will apply during
the holding period
The Committee will have overriding discretion to change formulaic
outcomes of future LTIP awards (both downwards and upwards) if it is out
of line with underlying performance of the Company
Shareholding
requirement
Operation
A 250% of salary shareholding requirement for all Executive Directors.
This is to be built up over five years and shall be effective at the start of
the new Policy
Shares beneficially owned, the post-tax value of any vested but
unexercised LTIP awards and the post-tax value of any bonus deferral
shares will count towards the requirement
Maximum opportunity
The proposed annual award level for
existing Executive Directors is to grant
awards of 175% of base salary
On recruitment this limit may be
increased to 250% of salary but only in
exceptional circumstances
25% of the LTIP award will vest for
threshold performance increasing on a
straight line basis to 100% for maximum
performance
Post-employment requirement
Post-employment, an Executive
Director shall continue to hold shares
equivalent to the minimum of their
actual shareholding on cessation of
employment and their in- employment
shareholding requirement for a period
of two years following termination of
employment
For the avoidance of doubt, shares
beneficially owned at the date of
adoption of the policy and any in-
flight LTIP awards will be exempt from
this post-employment requirement
but all future share-based awards
granted under the policy approved by
shareholders at the 2020 AGM would
be captured
The Committee will annually review the
progress against achievement of these
guidelines
* Underlying organic operating profit is defined as organic operating profit before separately disclosed items ^
** Cash conversion rate is defined as underlying cash conversion as a percentage of underlying EBITDA. Underlying cash conversion is defined as cash conversion before the cash
impact of separately disclosed items. Underlying EBITDA is defined as operating profit before depreciation. amortisation and separately disclosed items^
^ Separately disclosed items are detailed in note 2
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Trifast plc Annual Report 2020Our governance Directors’ remuneration policy
Any differences between the policy for
Directors and employees is set out on page
100 of the 2020 Directors’ remuneration
report in the alignment between wider
workforce pay and Directors’ remuneration
policy section.
Legacy incentive awards
Executive Directors are eligible to receive
payment under any award made prior to
the approval and implementation of the
Remuneration Policy set out above under
existing incentive arrangements. For the
avoidance of doubt, it is noted that the
Company will honour any commitments
entered that have been disclosed previously
to Shareholders.
2) Illustration of Remuneration Policy
The following chart provides an estimate of
the potential future reward opportunities for
the Executive Directors, and the potential
split between the different elements of pay
under four different performance scenarios:
“minimum”, “on-target”, “maximum” and
“maximum with LTIP share price growth
of 50% over three years”. Potential reward
opportunities are based on the proposed
Remuneration Policy, applied to salaries as
at 1 April 2020.
The assumptions used in determining the
level of pay-outs are set out in the table
below the chart:
Mark Belton
Clare Foster
0
5
7
,
1
6
6
,
1
£
%
9
4
%
8
2
%
3
2
0
0
5
,
0
9
3
,
1
£
%
9
3
%
3
3
%
8
2
3
6
5
,
4
5
9
£
%
6
3
%
4
2
%
0
4
0
0
0
,
3
8
3
£
%
0
0
1
8
8
1
,
9
7
2
,
1
£
%
9
4
%
8
2
%
3
2
5
7
3
,
1
7
0
,
1
£
%
9
3
%
3
3
%
8
2
1
9
3
,
7
3
7
£
%
5
3
%
4
2
%
1
4
0
0
5
,
9
9
2
£
%
0
0
1
Minimum
On-Target Maximum
Maximum with
50% share price
increase
Minimum
On-Target Maximum Maximum with
50% share price
increase
Fixed*
Annual variable
Multiple reporting periods
Scenario
Minimum
On target
Maximum
Maximum with LTIP
share price growth of
50% over three years
Fixed
Base salary at 1
April 2020
Pension, benefits
and SAYE in line
with year ended 31
March 2020
Annual variable
(annual bonus)
Nil
50% of maximum
100% of maximum
100% of maximum
Multiple reporting
periods (LTIP)
Nil
62.5% vesting
100% vesting
100% vesting with
50% share price
growth
Notes
•
For LTIP, the on-target pay-out is 62.5% of maximum (the mid-point between threshold vesting (25%) and maximum
vesting (100%)
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Trifast plc Annual Report 2020 3) Policy on recruitment arrangements
The Committee’s approach to Executive Director recruitment remuneration is to pay no more than is necessary to attract candidates of
the appropriate calibre and experience needed for the role. The remuneration package for any new recruit would be assessed following the
same principles as for the current Executive Directors, as set out in the remuneration Policy table.
Remuneration
element
Base salary, pension
and other benefits
Treatment under Policy
The salary level will be set considering a number of factors including market practice, the individual’s
experience and responsibilities, other pay structures within Trifast and will be consistent with the salary
Policy for existing Executive Directors
The Executive Director shall be eligible to receive pension and benefits in line with Trifast’s remuneration
policy
Annual bonus and LTIP
The Executive Director will be eligible to participate in the Annual Bonus and LTIP as set out in the
remuneration Policy table above. The maximum level of variable remuneration that may be offered is 325% of
base salary consistent with that of existing Executive Directors
The exceptional award limit in the LTIP allows this to be increased to 400% of base salary in the year of
recruitment (where the increased award of 250% of salary is above the normal LTIP maximum of 175% of
salary)
Share buy-outs and
replacement awards
The Committee’s Policy is not to provide replacement awards as a matter of course. However, should the
Committee determine that the individual circumstances of recruitment justify the provision of a replacement
award, the value of any incentives that will be forfeited on cessation of a director’s previous employment will
be calculated taking into account the following:
•
•
•
The proportion of the performance period completed on the date of the director’s cessation of
employment
The performance conditions attached to the vesting of these incentives and the likelihood of them being
satisfied
Any other terms and conditions having a material effect on their value (‘lapsed value’)
The Committee may then grant a replacement award up to the equivalent value as the lapsed value where
possible under the Company’s incentives plans. Where the circumstances are such that this is not possible
a bespoke arrangement may be used including in accordance with Rule 9.4.2(R) of the Listing Rules
In instances where the new Executive Director is required to relocate or spend significant time away from
his/her normal residence, the Company may provide one-off compensation to reflect the cost of relocation
for the Executive Director. The level of the relocation package will be assessed on a case by case basis but
will take into consideration any cost of living differences/housing allowance, disturbance allowances and
schooling
Relocation policies
Internal promotions
In the case of an internal appointment, any variable pay element awarded in respect of the prior role would
be allowed to pay out according to the terms on which it was originally granted. These would be disclosed to
shareholders in the remuneration report for the relevant financial year
Changes from
previous Policy
approved at the
2017 AGM
Changes in the recruitment Policy reflect changes to the remuneration Policy
The Company’s Policy when setting fees for the appointment of new Non-Executive Directors is to apply the policy which applies to current
Non-Executive Directors, which is set out on page 106.
4) Policy on payment for loss of office – cessation of employment and Change of Control
When determining any loss of office payment for a departing Director the Committee will always seek to minimise the cost to the Company
whilst complying with the contractual terms and seeking to reflect the circumstances in place at the time. The Committee reserves the
right to make additional payments where such payments are made in good faith in discharge of an existing legal obligation (or by way of
damages for breach of such an obligation), or by way of settlement or compromise of any claim arising in connection with the termination of
an Executive Director’s office or employment.
The following tables shows how the Committee would expect to treat Executive Directors on cessation of employment or upon a Change of
Control.
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Trifast plc Annual Report 2020Our governance Directors’ remuneration policy
Cessation of employment
Notice periods
The notice periods for all Executive Directors is 12 months
Circumstances
of departure of
Executive
Directors
A ‘good leaver’ is a person whose cessation of employment is for one of the following reasons:
•
•
•
•
•
•
•
•
Death
Ill-health
Injury or disability
Redundancy
Retirement
Employing company ceasing to be a Group company
Transfer of employment to a company which is not a Group company
Where the person is designated a good leaver at the discretion of the Committee
A participant who is not a ‘good leaver’ is a ‘bad leaver’
Base salary, pension
and other benefits
Base salary, pension and all taxable benefits (company car (or car allowance), private medical insurance,
permanent health insurance, critical illness cover & life cover and income protection insurance) are paid in
lieu of notice. Neither notice nor a payment in lieu of notice will be given in the event of gross misconduct
Annual bonus
Unless the Remuneration Committee determines otherwise, if a participant is a ‘good leaver’, then any cash
bonus payable in the year of cessation will be pro-rated for time, performance will be tested at the normal
date and will be paid at the usual bonus payment date with the exception of death when bonus will be
calculated at date of death
Where a participant is a ‘good leaver’ and there is a deferred bonus payable in the year of cessation, then the
portion of the bonus that is required to be deferred will remain subject to deferral and will vest on the original
vesting date with the exception of death when awards vest on date of death. The Remuneration Committee
may exercise discretion to pay any deferred element to a ‘good leaver’ in cash at the usual bonus payment
date. Any unvested deferred shares would vest on the usual vesting date unless the Committee exercises
discretion to allow for vesting at the date of cessation
The Remuneration Committee also has the discretion to allow the determination and payment of bonus as
at the date of cessation. The Remuneration Committee will make this determination depending on the type
of good leaver reason resulting in the cessation
Participants that are ‘bad leavers’ will forfeit any cash bonus in the year of cessation and any unvested
deferred shares
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Trifast plc Annual Report 2020 Notice periods
The notice periods for all Executive Directors is 12 months
LTIP
The treatment under the LTIP is as follows:
•
•
•
•
For good leavers, any outstanding awards will normally vest on the normal vesting date subject to
performance, and be prorated for time except for death when awards vest on date of death
Anyone who is not a good leaver will be a bad leaver. Bad leavers will forfeit all unvested awards
All leavers will remain subject to the sale restrictions under the holding period irrespective of their
employment status
Where a participant ceases employment during the two-year holding period, they will have six months
from the date they cease employment to exercise their vested awards
The Remuneration Committee has the following elements of discretion
•
•
•
•
•
•
•
•
•
•
To measure performance over the original performance period or at the date of cessation. The
Remuneration Committee will make this determination depending on the type of good leaver reason
resulting in the cessation
To vest the LTIP award at the end of the original performance period or at the date of cessation. The
Remuneration Committee will make this determination depending on the type of good leaver reason
resulting in the cessation
To determine whether to pro-rate the maximum number of shares to the time from the date of grant to
the date of cessation. The Remuneration Committee’s normal policy is that it will pro-rate awards for
time. It is the Remuneration Committee’s intention to use discretion to not pro-rate in circumstances
where there is an appropriate business case which will be explained in full to shareholders
Cash bonus for the year in which a change of control event occurs will be pro-rated for time and
performance
At the Remuneration Committee’s discretion, it may consider whether to dis-apply pro-rating for time
Unvested deferred share awards will vest on change of control
In the event of an internal corporate reorganisation, the Remuneration Committee may decide to replace
unvested deferred share awards with equivalent new awards over shares in the acquiring company
Unvested awards will vest early subject to (i) the extent that any applicable performance targets have
been satisfied at that time and (ii) pro-rating to reflect the reduced period of time between grant and
early vesting as a proportion of the vesting period that has then elapsed
At the Remuneration Committee’s discretion, it may consider whether to dis-apply pro-rating for time
In the event of an internal corporate reorganisation, the Remuneration Committee may decide to replace
unvested awards with equivalent new awards over shares in the acquiring company
Change of control
Annual bonus
LTIP
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Trifast plc Annual Report 2020Our governance Directors’ remuneration policy
5) Malus and clawback policies
Annual bonus – cash
• Malus will apply up to the time of payment and clawback will apply for a period of 2-years post payment
Annual bonus – shares
• Malus will apply during the vesting period and clawback will apply for a period of 2-years post-vesting
LTIP
• Malus will apply during the vesting period and clawback will apply for the 2-year post-vesting holding
The circumstances in which malus and clawback could apply are as follows:
period
• Discovery of a material misstatement resulting in an adjustment in the audited accounts of the Group or any Group company
•
•
•
•
•
•
The assessment of any performance condition or condition in respect of an annual bonus or LTIP award that was based on error, or
inaccurate or misleading information
The discovery that any information used to determine a cash bonus or the number of shares subject to a bonus share deferral or LTIP
award was based on error, or inaccurate or misleading information
Action or conduct of a participant which, in the reasonable opinion of the Committee, amounts to fraud or gross misconduct
A material failure of risk management of the Company, a Group company or a business unit of the Group
The Company or any Group company or business of the Group becomes insolvent or otherwise suffers a corporate failure so that the
value of shares is materially reduced provided that the Board determines following an appropriate review of accountability that the
participant should be held responsible (in whole or in part) for that insolvency or corporate failure; and/or
Events or the behaviour of a participant have led to the censure of a Group company by a regulatory authority or have had a significant
detrimental impact on the reputation of any Group company provided that the Board is satisfied that the relevant participant was
responsible for the censure or reputational damage and that the censure or reputational damage is attributable to him
6) Discretions retained by the Remuneration Committee
The Committee retains discretion, consistent with market practice, in a number of regards to the operation and administration of the annual
bonus and LTIP (the LTIP being operated in general terms according to the rules to be approved by shareholders).
The areas where discretion is retained includes, but is not limited to, the following:
•
•
•
•
•
•
•
The participants
The timing of an award
The size of an award
The determination of vesting and/or pay-out
Discretion required when dealing with a change of control or restructuring of the Group
Determination of the treatment of leavers based on the rules of the plan and the appropriate treatment chosen
Adjustments required in certain circumstances (e.g. rights issues, corporate restructuring events and special dividends)
These discretions, which in certain circumstances can be operated in both an upward and downward manner, are consistent with market
practice and are necessary for the proper and fair operation of the plans so that they achieve their original purpose.
The Committee has discretion in several areas of policy as set out in this report. In particular, the Committee will have overriding discretion
to change formulaic outcomes (both downwards and upwards) if they are out of line with underlying performance of the Company. In
addition, the Committee has the discretion to amend the Policy with regard to minor or administrative matters where it would be, in the
opinion of the Committee, disproportionate to seek or await shareholder approval.
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Trifast plc Annual Report 2020 7) External Directorships
The Board allows Executive Directors to accept one appropriate outside commercial non-Executive Director appointments provided the
aggregate commitment is compatible with their duties as Executive Directors. The Executive Director concerned may retain fees paid
for these services, which will be subject to approval by the Board before accepting. The Executive Directors currently hold no external
directorships.
8) Policy table – Non-Executive Directors
Non-Executive Director remuneration is not performance related and is not pensionable. The only other payments made to Non-Executive
Directors are mileage allowances at HMRC rates and expenses for items incurred during the fulfilment of their roles. An explanation of the
Policy with regards to Non- Executive Directors is set out in the table below:
Non-Executive
Directors
Objective
To attract and retain individuals with the requisite
skills and experience to perform the role
Operation
Set annually on 1 April
The Company will target median fees within FTSE
Small Cap index companies
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
The Chair fee will be determined by the Committee,
whilst the other non-executive fees will be
determined by the Chair and Executive Directors
Maximum opportunity
It is anticipated that increases to Chair and NED fee
levels will typically be in line with market levels of
fee inflation and the increase awarded to the wider
workforce. Larger increases above this may be
awarded in the following circumstances:
i. A material change in the time commitment or
responsibilities of the Non-Executive Director; or
ii. Project Atlas implementation has progressed
and key milestones have been achieved,
however, Non-Executive Director’s fees remain
below the median of the FTSE Small Cap Index
9) Service contracts for Executive Directors
The service agreements of the Executive Directors are not fixed term and are terminable by either the Company or the Director on the
following bases:
Executive Director
MR Belton
CL Foster
GC Roberts
Notice period
12
12
12
Date of signing
26 July 2012
1 October 2015
26 July 2012
When setting notice periods, the Committee has regard for market practice and corporate governance best practice. For new
appointments the notice period for Executive Directors will be set at 12 months. The Director contracts are kept at the Company’s
Registered office.
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Trifast plc Annual Report 2020Our governance
Directors’ remuneration policy
10) Non-Executive Directors letters of appointment
The Company’s policy is to appoint Non-Executive Directors to the Board with a breadth of skills and experience that is relevant to its
business. Appointments are made by the Board upon the recommendations and advice from the Nomination Committee. The Non-
Executive Directors do not have service contracts but are appointed under letters of appointment. Claire Balmforth and Clive Watson have
been appointed for an initial three-year term and both are subject to election at the 2020 AGM and annual re-election thereafter at the
Company’s AGM.
Read more about the Nomination Committee on pages 86 to 87
The remaining Non-Executive Directors were appointed for an initial three-year term and their appointment continues subject to annual
re-election at the Company’s AGM. The table below sets out the date that each Non-Executive Director was first appointed and the notice
period by which their appointment may be terminated early by either party. For new appointments the notice period is three months and in
line with existing Non-Executives arrangements, set out in the 2014 Director’s remuneration policy, this will be extended to 12 months on a
change of control. The Director contracts are kept at the Company’s Registered office.
Executive Director
MM Diamond*
NW Warner **
JPD Shearman
SW Mac Meekin
C Balmforth^
C Watson^
Notice period
3 months
3 months
3 months
3 months
3 months
3 months
Date of signing
1 April 2017
16 June 2015
26 July 2012
25 April 2013
26 March 2020
20 April 2020
* retired 31 March 2020 and, as such, will not be seeking re-election at the AGM
** retired 31 July 2020 and, as such, will not be seeking re-election at the AGM
^although signing contracts prior to the appointment, Claire Balmforth was appointed as Non-Executive Director on 1 April 2020 and Clive Watson on 30 July 2020
11) Consideration of conditions elsewhere in the Group
The remuneration Policy throughout the Company is based on ensuring that we can attract and retain the most suitable people. This
principle is consistent with that applied to the development of our remuneration Policy for Executive Directors. Employee views were not
specifically sought in determining this Policy and no comparison metrics were used.
As part of our commitment to fairness across the business, and in line with requirements under the Corporate Governance Code, we
have set out in this report information on the pay conditions of the wider workforce and comparisons with Executives. We are committed
to transparency internally and externally in relation to developments on these important issues and will continue to consider how our
disclosures can be enhanced going forward.
Pay structures across the Group
In making decisions on executive pay, the Committee considers wider workforce remuneration and conditions. We recognise the central
importance of all our teams in delivering success and aim to provide a remuneration package for our employees which is aligned to our
values and remuneration principles across the Group. Our remuneration for employees is market competitive and operates the same
core structure as for Executive Directors including employee share and variable pay plans, with pension provision for all Directors and
employees.
Prior to reviewing the remuneration outcomes, the Committee will consider a report covering key information such as base pay levels,
pension and share scheme participation.
Employee engagement
We already regularly communicate with our employees. During FY2021, Jonathan Shearman (as designated NED) together with Claire
Balmforth and the Global HR Director, Helen Toole, will develop this further to include, amongst other things, executive pay and culture.
Further details on how we engaged with employees during the year and the outcomes will be set out in this report next year. The Committee
will use the voice of employees as valuable insight when making wider remuneration decisions.
12) Statement of shareholder views
We take the views of the shareholders seriously and these were considered when shaping the proposed new remuneration Policy. The
Committee engaged with its key shareholders and the investor representative bodies and is grateful for their input into the process.
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Trifast plc Annual Report 2020 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 2020.
Results and proposed dividends
Total Group revenue from continuing
operations was £200.2m (FY2019: £209.0m)
and the profit for the year before taxation
was £3.0m (FY2019: £16.4m). Underlying
profit before tax for the Group was £17.1m
(FY2019: £23.5m); see note 2 for breakdown.
The interim dividend of 1.20p per share was
paid on 9 April 2020 (FY2019: interim 1.20p;
final 3.05p).
To allow us to appropriately manage our
financial position and flexibility in such
an uncertain time, as we have already
announced in April 2020, we are not
proposing a final dividend for FY2020.
We plan to revisit this decision on a
regular basis depending on how the wider
macroeconomic environment develops.
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 Tuesday 22 September 2020 at
Trifast House, Bellbrook Park, Uckfield, East
Sussex TN22 1QW.
Shareholders must not attend the
AGM in person
As the situation with COVID-19 continues
to evolve and develop, we are closely
monitoring Public Health England advice in
line with the UK Government restrictions on
social gathering.
We encourage shareholders to vote
remotely on the resolutions by completing
the form of proxy which is attached to the
Notice of Meeting either in paper form or
electronically.
Should shareholders wish to put questions
to the plc Board, these can be submitted
via the investor website or via email to
corporate.enquiries@trifast.com, in advance
of the AGM. Any questions raised will be
published on the website after the AGM
together with the results of voting.
Directors and Directors’ interests
The Directors who held office during the year
were as follows:
Chair
MM Diamond MBE
*Non-Executive Director
*Chair of Nominations Committee
Executive Directors
MR Belton
Chief Executive Officer
CL Foster
Chief Financial Officer
*GC Roberts
Group Sales Director
Independent Directors (Non-Executive)
NW Warner
Senior Independent
Chair of Audit Committee
JPD Shearman
*Chair of Remuneration Committee
SW Mac Meekin
*retired from position 31 March 2020
The Directors’ remuneration and their interests
in share capital are shown in the Remuneration
report on pages 92 to 107. All Directors are
subject to annual re-election, details can be
found in the Corporate governance report on
pages 80 to 84. Biographical details can be
found on pages 78 and 79.
Substantial shareholdings
Details of the share structure of the Company are disclosed in note 25.
The Company was aware of the following material interests, representing 3% or more of the issued share capital of the Company.
As at 31 March 2020
Castlefield Investments (Sanford DeLand Asset Mgt)
Liontrust Asset Management
AXA Framlington Investment Managers
Schroder Investment Management Ltd
Mr Michael Timms
Hargreave Hale Ltd
Threadneedle Asset Management Ltd
As at 1 July 2020 (following the Placing in June)
Castlefield Investments (Sanford DeLand Asset Mgt)
AXA Framlington Investment Managers
Schroder Investment Management Ltd
Liontrust Asset Management
Hargreave Hale Ltd
Mr Michael Timms
Threadneedle Asset Management Ltd
Franklin Templeton Investments
No. of
shares held
% of
shareholding
16,535,000
12,766,165
11,816,640
11,278,826
7,000,000
6,588,113
3,914,632
13.48
10.41
9.64
9.20
5.71
5.37
3.19
No. of
shares held
% of
shareholding
19,100,000
13,410,375
12,491,510
8,397,204
7,729,192
7,000,000
4,906,547
4,598,800
14.05
9.87
9.19
6.18
5.69
5.15
3.61
3.38
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Trifast plc Annual Report 2020Our governance Directors’ report
The Company is party to several 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.
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,
virtual 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.
Read more about Employee
engagement and our Designated
NED on pages 84 and 92
Read more about Strategy in action
- Investing in our people on pages
42 to 47
Read more about our Health, Safety
and Environment - ISO 14001 and our
Carbon footprint in Corporate social
responsibility on pages 54 to 57
Equity Placing (post balance sheet
event)
On 19 June 2020, we provided an update to
the Company’s response to the COVID-19
outbreak and the intention to raise capital
through a Placing. This has ensured that the
Group could continue to invest in long-term
growth as well as short-term working capital
needs as markets recover.
Read more about our Equity Placing
on page 14
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
During the year, as announced on
12 November 2019, following an audit tender
process, the Board appointed BDO LLP as
auditor of the Company on 25 November
2019. Please see pages 90 to 91 for further
details.
The appointment for subsequent years
will be subject to approval by shareholders
at the next Annual General Meeting of the
Company.
By order of the Board
Lyndsey Case
Company Secretary
27 July 2020
Trifast House
Bellbrook Park
Uckfield
East Sussex
TN22 1QW
Company registration number:
01919797
Employee Benefit Trust (“EBT”)
The number of Trifast 5p ordinary shares
held by the Trifast EBT (as funded by the
Group) at the 31 March 2020 was 1,028,191
(FY2019: 1,317,378) which represented 0.8%
of the fully paid up share capital of the
Company as at 31 March 2020 (FY2019:
1.08%). During the year, 1,289,187 shares were
issued to meet employee share obligations
(FY2019: 182,622) and 1,000,000 shares were
acquired (FY2019: nil). These shares are
shown in the own shares held reserve within
equity on the balance sheet.
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, along with the capital structure of the
Group are given in note 27 to the financial
statements.
Corporate Governance
The Corporate governance statement on
pages 80 to 84 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 because 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 84. The
Company’s Articles of Association may only
be amended by a special resolution at a
General Meeting of shareholders.
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Trifast plc Annual Report 2020
Statement of directors’ responsibilities
in respect of the annual report and the financial statements
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 is 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 complies 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.
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
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
Clare Foster
Chief Financial Officer
27 July 2020
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 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 to cease operations or
have no realistic alternative but to do so
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Trifast plc Annual Report 2020Our governance
ENABLING
INNOVATION
WITHIN
HEALTHCARE &
ENVIRONMENT
The outbreak of COVID-19, a major worldwide public
health emergency, created an unprecedented
demand for medical products, a situation never
before experienced on this scale at any time in living
memory. In response to the outbreak, the world
turned to medical companies for vital help, which has
galvanised the industry into action and to work in
uncharted territories.
Read more about Medical and
Innovation on pages 31 and 37
The critical products requiring fasteners and components are:
1.
2.
Respiratory support and monitoring equipment such as
ventilators, which help to treat hospitalised patients
Personal Protective Equipment (PPE) such as face masks and
protective visors
3. Diagnostic tests which identify those infected and further limit the
spread of the virus
Application engineering has proved to be key. In addition to choosing
a high quality fastener manufacturer and distributor with a diverse
product range, it is also important to work with a company that offers
application engineering expertise. TR engineers are fully engaged
in the design and make critical recommendations for the interface
between the fastener and the medical device.
Due to COVID-19 lockdown restraints, TR engineers have fully utilised
the Modern Workplace by using various methods of online virtual
communication to ensure the customer receives the highest level of
service and technical support.
For over 25 years, TR Fastenings has been working with leading
healthcare organisations and their subcontractors as a total solution
provider of fasteners and cat c products. TR has geared up its capacity
to support the medical technology industry during this critical time.
s
t
n
e
m
e
t
a
t
s
l
i
a
c
n
a
n
F
i
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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
124
130
131
132
133
134
135
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Financial statements •
the directors’ explanation set out on
page 60 in the annual report as to how
they have assessed the prospects
of the Group, over what period they
have done so and why they consider
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.
Key audit matters
Key audit matters are those matters that,
in our professional judgment, were of most
significance in our audit of the financial
statements of the current period and
include the most significant assessed risks
of material misstatement (whether or not
due to fraud) that we identified, 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. These
matters were addressed in the context of
our audit of the financial statements as a
whole, and in forming our opinion thereon,
and we do not provide a separate opinion
on these matters.
Independent auditor’s report
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities
under those standards are further described
in the Auditor’s responsibilities for the audit
of the financial statements section of our
report. We are independent of the Group
and the Parent Company in accordance with
the ethical requirements that are relevant
to our audit of the financial statements in
the UK, including the FRC’s Ethical Standard
as applied to listed public interest entities,
and we have fulfilled our other ethical
responsibilities in accordance with these
requirements. We believe that the audit
evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Conclusions relating to principal risks,
going concern and viability statement
We have nothing to report in respect of the
following information in the annual report,
in relation to which the ISAs (UK) require us
to report to you whether we have anything
material to add or draw attention to:
•
•
the directors’ confirmation set out on
page 60 in the annual report that they
have carried out a robust assessment
of the Group’s emerging and principal
risks and the disclosures in the annual
report that describe the principal risks
and the procedures in place to identify
emerging risks and explain how they are
being managed or mitigated;
the directors’ statement set out on page
84 in the financial statements about
whether the directors considered it
appropriate to adopt the going concern
basis of accounting in preparing
the financial statements and the
directors’ identification of any material
uncertainties to the Group and the
Parent Company’s ability to continue to
do so over a period of at least twelve
months from the date of approval of the
financial statements;
• whether the directors’ statement
relating to going concern required
under the Listing Rules in accordance
with Listing Rule 9.8.6R(3) is materially
inconsistent with our knowledge
obtained in the audit; or
Independent auditor’s
report to the members
of Trifast plc
Opinion
We have audited the financial statements
of Trifast plc (the ‘Parent Company’) and
its subsidiaries (the ‘Group’) for the year
ended 31 March 2020 which comprise
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
notes to the financial statements, including
a summary of significant accounting
policies. The financial reporting framework
that has been applied in their preparation
is applicable law and International Financial
Reporting Standards (IFRSs) as adopted
by the European Union and, as regards the
Parent Company financial statements, as
applied in accordance with the provisions of
the Companies Act 2006.
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 2020 and of the Group’s loss
for the year then ended;
the Group financial statements have
been properly prepared in accordance
with IFRSs as adopted by the European
Union;
the Parent Company financial
statements have been properly
prepared in accordance with IFRSs
as adopted by the European Union
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.
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Trifast plc Annual Report 2020 Key audit matter
Recoverability of customer-specific inventory
The group has bespoke customer-specific products for which there
is a risk over recoverability if any contractual obligations to acquire
outstanding stock are waived for commercial reasons or the
customer experiences financial distress.
How We Addressed the Key audit matter in the Audit
We have
•
Tested the application of the group provision accounting
policy through sample testing the disaggregation of customer
specific inventory, their aging and the arithmetical accuracy
of application of the provision;
Inventory is held at the lower of cost and net realisable value with
provision being made for obsolete and slow moving items.
Given the size of the customer-specific inventory balance, and the
complexity involved in estimating customers changes in future
demand there is a risk that the valuation of the inventory provision
is inappropriate.
Refer to the Accounting Policies of the Group on pages
136 to 143 for further detail on the policies impacting
inventory provision valuation together with Note 31 detailing
the estimation uncertainty over provisions for customer
specific inventory and Note 19 for the financial disclosure of
inventory.
Goodwill impairment
Goodwill in the Group balance sheet is significant and subject to
an annual impairment review.
The recoverability of goodwill is dependent on estimating both
cashflows and appropriate discount rates to apply in a value in use
calculation.
Given the size of the goodwill balance, and the complexity of
estimating both cashflows (particularly owing to the impact of
COVID-19) and discount rates we consider goodwill impairment
to be an area of material estimation. Hence there is a risk that the
valuation of goodwill is inappropriate.
Refer to the Accounting Policies of the Group on pages 136
to 143 for further detail on the policies impacting goodwill
valuation together with Note 31 detailing the estimation
uncertainty over goodwill impairment and Note 14 for the
financial disclosure of goodwill.
• Challenged management’s customer specific inventory
provision estimate by evaluating its historic accuracy in
comparison to the prior period provision, scrappage and its
subsequent utilisation;
• On a sample basis, obtained agreements to confirm
contractual terms of customer underwriting agreements; and
• On a sample basis, tested the recoverability of accounts
receivable balances including those related to the sale
of customer-specific inventory for indicators of financial
distress.
Key observations:
We did not identify any indicators to suggest that the customer
specific inventory provision was materially misstated.
We have;
•
Assessed management’s model for compliance with IAS
36 (impairment of assets) together with its interaction
with the new application of IFRS 16 (leases) and tested its
computational accuracy;
• Considered the historical accuracy of management’s
forecasting in light of the detailed exercise completed this
year as a starting point for sensitising management’s model;
• Checked the coherence of the forecast COVID-19 adjusted
cashflows with those modelled as part of the group going
concern exercise;
•
•
•
Tested the discount rate assumptions using our valuation
specialists to assess their reasonableness through
corroboration to external sources;
Performed sensitivity analysis over the key assumptions and
ensuring the group considered the same reasonably possible
adverse effects that could arise as a result of a decrease in
sales due to the impact of COVID-19 as with those applied in
their going concern exercise; and
Assessed whether the disclosures sufficiently detail the key
judgements within the impairment model and sources of
estimation uncertainty.
Key observations:
We did not identify any indicators to suggest that the estimates
made by the directors in the calculation of the goodwill
impairment were inappropriate.
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125
Trifast plc Annual Report 2020Financial statements Independent auditor’s report
Key audit matter
COVID-19 – Going Concern
The directors’ assessment of going concern involves a number
of subjective estimates including forecast revenues, changes
in working capital, future levels of bad debts, the rate of inflation,
which have all been impacted by the current COVID-19 pandemic.
We have therefore spent significant audit effort in assessing the
appropriateness of the assumptions involved and to ensure the
adequacy of the disclosure in the accounting policy in relation to
the steps undertaken by the board to gain assurance that there
is not a material uncertainty around the adoption of the going
concern basis of preparing the financial statements. Therefore
this area was identified as a Key Audit Matter.
Refer to Accounting Policies of the Group on pages 136 to
143 for further detail on the Group’s basis of preparation and
within the Director’s statement on page 84.
How We Addressed the Key audit matter in the Audit
We have:
• Checked that forecasts included considerations for the
impact of COVID-19;
•
Tested the computational accuracy of management’s
model and re-created their three scenario results using their
respective input variables;
• Challenged the likelihood and adequacy of management’s
cost savings based on our understanding of the business and
benchmarking against historic actuals;
•
Assessed the availability of financing facilities, including the
nature of facilities, their covenants and repayment terms;
• Considered management’s financial covenant compliance
calculations through to September 2021 and concluded on
the consistency of such calculations with the ratios stated in
the relevant lender agreements;
•
Sensitised the model with multivariate impacts to reflect
a second peak in the Autumn mirroring the year-on-year
revenue profile seen in April, flattening the overall revenue
recovery together with a separate slower and contracted
automotive sector. Further hypothetical mitigating cost
savings were modelled by management bringing overhead
costs in line with recent historic proportions;
• Considered the adequacy of the disclosures in the financial
statements against the requirements of the accounting
standards and consistency of the disclosure against the
forecasts and stress test scenario.
Key observations:
Our key observations are set out in the conclusions relating to
principal risks, going concern and viability statement section of
our audit report.
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Trifast plc Annual Report 2020 Our application of materiality
We apply the concept of materiality both in
planning and performing our audit, and in
evaluating the effect of misstatements. We
consider materiality to be the magnitude by
which misstatements, including omissions,
could influence the economic decisions
of reasonable users that are taken on the
basis of the financial statements. In order
to reduce to an appropriately low level the
probability that any misstatements exceed
materiality, we use a lower materiality level,
performance materiality, to determine
the extent of testing needed. Importantly,
misstatements below these levels will not
necessarily be evaluated as immaterial
as we also take account of the nature of
identified misstatements, and the particular
circumstances of their occurrence, when
evaluating their effect on the financial
statements as a whole.
The materiality for the group financial
statements as a whole was set at £0.7m
being 5% of profit before tax adjusted to
exclude expensed Project Atlas, business
acquisition costs and goodwill impairment
totalling £11.7m. We consider this adjusted
group profit before tax to be the most
appropriate benchmark as it provides a
more stable measure year-on-year than
group profit before tax.
Performance materiality was set at 60%
of the above materiality level taking into
account various factors including this is a
first year audit, the expected total value of
known and likely misstatements, brought
forward misstatements, management’s
attitude towards adjustments, the number of
material estimates, and how homogeneous
processes are within the group.
Where financial information from significant
components were audited separately,
significant component materiality levels
were set for this purpose at lower levels up
to a maximum of 95% of Group materiality
ranging between £80k–£365k.
We agreed with the audit committee that
we would all individual audit differences
identified during the course of our audit in
excess of £14k with those below £50k being
reported in aggregate, in addition to other
identified misstatements which, in our view,
warranted reporting on qualitative grounds.
The materiality for the parent company
financial statements, was restricted to the
group audit allocated materiality of £0.2m.
Performance materiality was set at 60%
of materiality taking into account various
factors including the expected total value
of known and likely misstatements, brought
forward misstatements, management’s
attitude towards adjustments, and the
number of material estimates.
An overview of the scope of our audit
Our group audit was scoped by obtaining
an understanding of the group and its
control environment and assessing the risk
of material misstatement at a group level.
Audit work was planned and undertaken to
address the risks of material misstatement.
Of the group’s 23 reporting components,
five were identified as significant and
material with full scope audit procedures
being performed for group purposes and
15 were identified as not-significant but
material where specific balances and
risks were identified as being in scope for
audit purposes. We conducted reviews of
financial information (including enquiry) at
a further three not-significant or material
components.
Total
Revenue
Total
Assets
0%
50%
100%
Full Audit
Specific procedures
Group level procedures
Members of the group audit team
completed all audits except for three of the
full scope and three specific scope audits
that were audited by local overseas BDO
network members, and inventory counts
where a combination of local BDO network
members and a non-BDO audit team
attended and reported to the group audit
team. We performed audit procedures on
the group consolidation process.
The group audit team controlled and
directed the work of the component audit
teams. This included providing detailed
audit instructions and setting of group
materiality. The group audit team also took
part in local audit meetings at the planning
and completion stage of the component
audits, had full access to the component
team’s audit files, and the group audit team
visited two overseas component teams and
met with all Asian management teams. As a
result of travel restrictions due to COVID-19,
a further planned visit to Italy was not able
to be completed in person but completed on
a remote basis instead.
Extent to which the audit is capable of
detecting irregularities, including fraud
We gained an understanding of the legal
and regulatory framework applicable to the
Group and the industry in which it operates,
and considered the risk of non-compliance
or fraud by the Group. We designed
audit procedures at both the Group and
significant component levels to detect
material misstatements due to fraud and
error. We note that it can be harder to detect
those arising due to fraud as they may
involve deliberate concealment or collusion.
We focused on laws and regulations that
could give rise to a material misstatement
in the Group and Parent Company financial
statements, including, but not limited
to, IFRS, Companies Act 2006, the UK
Listing Rules and certain requirements
from the UK and overseas tax legislation.
Our tests included, but were not limited
to, agreement of the financial statement
disclosures to underlying supporting
documentation, review of correspondence
with regulators and legal advisors, enquiries
of management, review of board minutes,
review of significant component auditors’
working papers and review of internal audit
reports. We also addressed the risk of
management override of internal controls,
including testing journals and evaluating
whether there was evidence of bias by the
directors that represented a risk of material
misstatement due to fraud.
There are inherent limitations in the audit
procedures described above and the
more removed from the audited financial
transactions, the less likely we would
become aware of it.
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127
Trifast plc Annual Report 2020Financial statements Independent auditor’s report
Other information
The directors are responsible for the
other information. The other information
comprises the information included in
the Annual report, other than the financial
statements and our auditor’s report thereon.
Our opinion on the financial statements
does not cover the other information and,
except to the extent otherwise explicitly
stated in our report, we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial
statements, our responsibility is to read the
other information and, in doing so, consider
whether the other information is materially
inconsistent with the financial statements
or our knowledge obtained in the audit
or otherwise appears to be materially
misstated. If we identify such material
inconsistencies or apparent material
misstatements, we are required to determine
whether there is a material misstatement
in the financial statements or a material
misstatement of the other information. If,
based on the work we have performed,
we conclude that there is a material
misstatement of the other information, we
are required to report that fact.
We have nothing to report in this regard.
In this context, we also have nothing to
report in regard to our responsibility to
specifically address the following items
in the other information and to report as
uncorrected material misstatements of the
other information where we conclude that
those items meet the following conditions:
•
Fair, balanced and understandable
set out on page 121 – the statement
given by the directors that they
consider 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, performance, business model
and strategy, is materially inconsistent
with our knowledge obtained in the
audit; or
• Audit committee reporting set
out on pages 88 to 91 – the section
describing the work of the audit
committee does not appropriately
address matters communicated by us
to the audit committee; or
• Directors’ statement of
compliance with the UK Corporate
Governance Code set out on
page 81 – the parts of the directors’
statement required under the Listing
Rules relating to the Company’s
compliance with the UK Corporate
Governance Code containing provisions
specified for review by the auditor in
accordance with Listing Rule 9.8.10R(2)
do not properly disclose a departure
from a relevant provision of the UK
Corporate Governance Code.
Opinions on other matters prescribed
by the Companies Act 2006
In our opinion, the part of the directors’
remuneration report to be audited has been
properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work
undertaken in the course of the audit:
•
•
the information given in the strategic
report and the directors’ report for the
financial year for which the financial
statements are prepared is consistent
with the financial statements; and
the strategic report and the directors’
report have been prepared in
accordance with applicable legal
requirements.
Matters on which we are required
to report by exception
In the light of the knowledge and
understanding of the Group and Parent
Company and its environment obtained
in the course of the audit, we have not
identified material misstatements in the
strategic report or the directors’ report.
We have nothing to report in respect of the
following matters in relation to which the
Companies Act 2006 requires us 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.
Responsibilities of directors
As explained more fully in the directors’
responsibilities statement set out on page
121, the directors are responsible for the
preparation of the financial statements and
for being satisfied that they give a true and
fair view, and for such internal control as the
directors determine is necessary to enable
the preparation of financial statements
that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the
directors are responsible for assessing the
Group’s and the 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 the directors either
intend to liquidate the Group or the Parent
Company or to cease operations, or have
no realistic alternative but to do so.
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Trifast plc Annual Report 2020 Use of our report
This report is made solely to the Parent
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 Parent 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 Parent Company and
the Parent Company’s members as a body,
for our audit work, for this report, or for the
opinions we have formed.
Anna Draper
(Senior Statutory Auditor)
For and on behalf of BDO LLP,
Statutory Auditor
Gatwick
27 July 2020
BDO LLP is a limited liability partnership
registered in England and Wales (with
registered number OC305127).
Auditor’s responsibilities for the audit
of the financial statements
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 error, and to issue an auditor’s
report that includes our opinion. Reasonable
assurance is a high level of assurance, but is
not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect
a material misstatement when it exists.
Misstatements can arise from fraud or error
and are considered material if, individually
or in the aggregate, they could reasonably
be expected to influence the economic
decisions of users taken on the basis of
these financial statements.
A further description of our responsibilities
for the audit of the financial statements
is located on the Financial Reporting
Council’s website at: www.frc.org.uk/
auditorsresponsibilities. This description
forms part of our auditor’s report.
Other matters which we are required
to address
Following the recommendation of the audit
committee, we were appointed by the board
on 25 November 2019 to audit the financial
statements for the year ending 31 March
2020 and subsequent financial periods.
The period of total uninterrupted
engagement is 1 year, covering the year
ending 31 March 2020.
The non-audit services prohibited by the
FRC’s Ethical Standard were not provided to
the Group or the Parent Company and we
remain independent of the Group and the
Parent Company in conducting our audit.
Our audit opinion is consistent with the
additional report to the audit committee.
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129
Trifast plc Annual Report 2020Financial statements Consolidated income statement
for the year ended 31 March 2020
Continuing operations
Revenue
Cost of sales
Gross profit
Other operating income
Distribution expenses
Administrative expenses before separately disclosed items
IFRS2 share based payment charge
Acquired intangible amortisation
Net acquisition costs
Project Atlas
Impairments in goodwill
Costs on exercise of executive share options
Total administrative expenses
Operating profit
Financial income
Financial expenses
Net financing costs
Profit before taxation
Taxation
(Loss)/profit for the year
(attributable to equity shareholders of the parent Company)
(Loss)/earnings per share
Basic
Diluted
The notes on pages 136 to 181 form part of these financial statements
Note
3, 37
4
2, 23
2, 14
2, 32
2
2, 14
2
5, 6, 7
8
8
3
9
26
26
2020
£000
200,221
(145,114)
55,107
424
(4,627)
(32,815)
(2,030)
(1,409)
—
(2,505)
(7,761)
(307)
(46,827)
4,077
82
(1,117)
(1,035)
3,042
(3,280)
2019
£000
208,952
(146,317)
62,635
464
(4,268)
(34,635)
(2,454)
(1,419)
(3)
(3,117)
—
(107)
(41,735)
17,096
80
(755)
(675)
16,421
(4,177)
(238)
12,244
(0.19)p
(0.19)p
10.14p
9.90p
130
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Trifast plc Annual Report 2020 Consolidated statement of comprehensive income
for the year ended 31 March 2020
(Loss)/profit for the year
Other comprehensive income for the year:
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
(Loss)/profit on a hedge of a net investment taken to equity
Other comprehensive income recognised directly in equity
Total comprehensive income recognised for the year
(attributable to the equity shareholders of the parent Company)
2020
£000
(238)
1,342
(924)
418
2019
£000
12,244
148
466
614
180
12,858
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131
Trifast plc Annual Report 2020Financial statements Consolidated statement of changes in equity
for the year ended 31 March 2020
Balance at 31 March 2019
Effect of change in accounting policy
(see note 1)
Balance at 31 March 2019 (restated)
Total comprehensive income for the year:
Loss for the year
Other comprehensive income for the year
Total comprehensive income recognised
for the year
Issue of share capital (note 25)
Share based payment transactions (net of tax)
Movement in own shares held (note 25)
Dividends (note 25)
Total transactions with owners
Balance at 31 March 2020
Share
capital
£000
6,095
—
6,095
—
—
—
37
—
—
—
37
6,132
Share
premium
£000
21,914
Own
shares held
£000
(3,019)
Translation
reserve
£000
13,988
Retained
earnings
£000
82,115
Total
equity
£000
121,093
—
21,914
—
(3,019)
—
13,988
(1,069)
81,046
(1,069)
120,024
—
—
—
426
—
—
—
426
22,340
—
—
—
—
—
1,085
—
1,085
(1,934)
—
418
418
—
—
—
—
—
14,406
(238)
—
(238)
(16)
1,836
(2,778)
(5,134)
(6,092)
74,716
(238)
418
180
447
1,836
(1,693)
(5,134)
(4,544)
115,660
Consolidated statement of changes in equity
for the year ended 31 March 2019
Balance at 31 March 2018
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 25)
Share based payment transactions (net of tax)
Movement in own shares held (note 25)
Dividends (note 25)
Total transactions with owners
Balance at 31 March 2019
Share
capital
£000
6,068
Share
premium
£000
21,579
Own
shares held
£000
(3,437)
Translation
reserve
£000
13,374
Retained
earnings
£000
72,705
—
—
—
27
—
—
—
27
6,095
—
—
—
335
—
—
—
335
21,914
—
—
—
—
—
418
—
418
(3,019)
—
614
614
—
—
—
—
—
13,988
12,244
—
12,244
(9)
2,213
(418)
(4,620)
(2,834)
82,115
Total
equity
£000
110,289
12,244
614
12,858
353
2,213
—
(4,620)
(2,054)
121,093
132
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Trifast plc Annual Report 2020 Company statement of changes in equity
for the year ended 31 March 2020
Balance at 31 March 2019 and restated for
effect in change in accounting policy (see
note 1)
Total comprehensive income for the year:
Profit for the year
Total comprehensive income recognised
for the year
Issue of share capital (note 25)
Share based payment transactions (net of tax)
Movement in own shares held (note 25)
Dividends (note 25)
Total transactions with owners
Balance at 31 March 2020
Share
capital
£000
Share
premium
£000
Own
shares held
£000
Merger
reserve
£000
Retained
earnings
£000
Total
equity
£000
6,095
21,914
(3,019)
1,521
23,680
50,191
—
—
37
—
—
—
37
6,132
—
—
—
4,166
4,166
—
426
—
—
—
426
22,340
—
—
—
1,085
—
1,085
(1,934)
—
—
—
—
—
—
1,521
4,166
(16)
1,848
(2,778)
(5,134)
(6,080)
21,766
4,166
447
1,848
(1,693)
(5,134)
(4,532)
49,825
Company statement of changes in equity
for the year ended 31 March 2019
Balance at 31 March 2018
Total comprehensive income for the year:
Profit for the year
Total comprehensive income recognised
for the year
Issue of share capital (note 25)
Share based payment transactions (net of tax)
Movement in own shares held (note 25)
Dividends (note 25)
Total transactions with owners
Balance at 31 March 2019
Share
capital
£000
6,068
Share
premium
£000
21,579
Own
shares held
£000
(3,437)
Merger
reserve
£000
1,521
Retained
earnings
£000
21,853
Total
equity
£000
47,584
—
—
27
—
—
—
27
6,095
—
—
335
—
—
—
335
21,914
—
—
—
—
418
—
418
(3,019)
—
—
—
—
—
—
—
1,521
4,577
4,577
4,577
(9)
2,297
(418)
(4,620)
(2,750)
23,680
4,577
353
2,297
—
(4,620)
(1,970)
50,191
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133
Trifast plc Annual Report 2020Financial statements Statements of financial position
at 31 March 2020
Non-current assets
Property, plant and equipment
Right-of-use asset
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
Right-of-use liabilities
Tax payable
Total current liabilities
Non-current liabilities
Non-current trade and other payables
Other interest-bearing loans and borrowings
Right-of-use liabilities
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
20
27
3
21, 27
22
12, 13, 21
21, 27
12, 13, 21
24
17, 18
3
Group
Company
2020
£000
20,427
13,788
39,155
—
1,926
75,296
59,187
52,928
28,727
140,842
216,138
266
34,914
3,113
1,817
40,110
—
43,622
11,996
959
3,791
60,368
100,478
115,660
6,132
22,340
(1,934)
14,406
74,716
115,660
2019
£000
21,081
—
44,818
—
2,129
68,028
57,558
53,782
25,199
136,539
204,567
32,617
37,207
—
1,982
71,806
138
6,739
—
959
3,832
11,668
83,474
121,093
6,095
21,914
(3,019)
13,988
82,115
121,093
2020
£000
2,384
24
4,088
42,006
381
48,883
—
48,911
265
49,176
98,059
—
4,587
11
—
4,598
—
43,622
14
—
—
43,636
48,234
49,825
6,132
22,340
(1,934)
1,521
21,766
49,825
2019
£000
2,469
—
943
41,440
683
45,535
—
44,517
899
45,416
90,951
29,123
5,102
—
—
34,225
—
6,407
—
—
128
6,535
40,760
50,191
6,095
21,914
(3,019)
1,521
23,680
50,191
The profit after tax for the Company is £4.2m (FY2019: £4.6m).
The notes on pages 136 to 181 form part of these financial statements.
These financial statements were approved by the Board of Directors on 27 July 2020 and were signed on its behalf by:
Mark Belton
Director
Clare Foster
Director
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Trifast plc Annual Report 2020 Statements of cash flows
for the year ended 31 March 2020
Cash flows from operating activities
(Loss)/profit for the year
Adjustments for:
Depreciation, amortisation and impairment
Right-of-use asset depreciation
Unrealised foreign currency loss
Financial income
Financial expense (excluding right-of-use liabilities’ financial expense)
Right-of-use liabilities’ financial expense
(Gain)/loss 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
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
(Payment)/proceeds from finance leases
Repayment of right-of-use liabilities
Dividends paid
Interest paid
Net cash (used in)/from 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
Group
Company
Note
2020
£000
2019
£000
2020
£000
2019
£000
(238)
12,244
4,166
4,577
10, 11, 14
12, 13
8
8
12, 13
9
32
10, 11, 14, 15
25
25
12, 13
25
11,541
3,118
89
(82)
752
365
(3)
—
1,981
3,280
20,803
2,060
(1,217)
(2,242)
—
19,404
(3,889)
15,515
7
82
(503)
(4,594)
—
(5,008)
447
(1,693)
45,026
(41,620)
(74)
(3,487)
(5,134)
(752)
(7,287)
3,220
25,199
308
28,727
3,672
—
38
(80)
755
—
12
—
2,414
4,177
23,232
(755)
(6,036)
(2,645)
(12)
13,784
(3,877)
9,907
31
84
(8,150)
(4,180)
—
(12,215)
353
—
12,136
(5,953)
(2)
—
(4,620)
(758)
1,156
(1,152)
26,222
129
25,199
85
19
82
(115)
742
—
—
(10,072)
441
41
(4,611)
(2,310)
—
(538)
—
(7,459)
—
(7,459)
—
108
—
(3,145)
10,072
7,035
447
(1,693)
44,225
(37,318)
—
(18)
(5,134)
(719)
(210)
(634)
899
—
265
80
—
—
(38)
614
—
—
(10,837)
1,131
—
(4,473)
(10,475)
—
2,673
—
(12,275)
—
(12,275)
—
37
—
(999)
10,837
9,875
353
—
12,136
(4,433)
—
—
(4,620)
(614)
2,822
422
477
—
899
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Trifast plc Annual Report 2020Financial statements Notes to the financial statements
for the year ended 31 March 2020
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 187.
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 £4.2m (FY2019: £4.6m).
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.
In these financial statements the Group has changed its accounting policies for IFRS16 Leases. The effect of the changes in accounting
policies by this standard has been disclosed in note 1w. The accounting policies (notes 1f and 1o) and relevant notes to the financial
statements (notes 12 and 13) have been updated to reflect the new requirements.
A number of amendments to existing standards are also effective from 1 April 2019 but they do not have a material effect on the Group
financial statements.
There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in
future accounting periods that the group has decided not to adopt early. The following amendments are effective for the period beginning 1
January 2020:
•
•
•
IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (Amendment –
Definition of Material)
IFRS 3 Business Combinations (Amendment – Definition of Business)
Revised Conceptual Framework for Financial Reporting
The Group is currently assessing the impact of these amendments and do not expect them to have a significant impact on the 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 (including the impact of COVID-19) 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 70 to 75. Detailed information regarding the Group’s current facility levels, liquidity, credit, interest and foreign
exchange risk are provided in note 27.
Current trading and forecasts show that the Group will continue to be profitable and generate cash. The banking facilities and covenants
that are in place provide appropriate headroom against forecasts.
Considering the current forecasts, the Directors have a reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual
financial statements.
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Trifast plc Annual Report 2020 1 Accounting policies continued
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.
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 functional currencies 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
Short leasehold properties
Motor vehicles
Plant and machinery
Fixtures, fittings and office equipment
— 2% per annum on a straight-line basis or the period of the lease
— period of the lease
— 20–25% per annum on a straight-line basis
— 10–20% per annum on a straight-line basis
— 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 (prior year only)
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).
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Trifast plc Annual Report 2020Financial statements Notes to the financial statements
for the year ended 31 March 2020
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
Expenditure on Project Atlas is capitalised (currently as an asset under the course of construction) as the system is technically and
commercially feasible, and the Group intends to and has the technical ability and sufficient resources to complete development, future
economic benefits are probable and the Group can measure reliably the expenditure attributable to the asset during its development. The
expenditure capitalised is directly attributable to the design and build of the new system and includes the cost of materials and external
consultants as well as an appropriate allocation of overheads. Other development expenditure is recognised in the income statement as an
expense as incurred. Capitalised development expenditure is stated at cost less accumulated amortisation and less accumulated impairment
losses. Currently no amortisation charges are recognised in the financial statements as the asset is not ready for its intended use.
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 the income statement 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 in administrative expenses 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
Technology
Order backlog
Marketing – related
Other
— 6.7% to 12.5%
— 6.7% to 10%
— 100%
— 8.3%
— 20% to 33%
h) Non-derivative financial instruments
i) Investments in subsidiaries
Investments in subsidiaries are held in the Company balance sheet at historic cost net of any impairment (see accounting policy (j)).
ii) Trade and other receivables
Trade and other receivables are recognised initially at the transaction price when they originated, and subsequently at amortised cost less
impairment losses (see accounting policy (j)). Interest income, foreign exchange gains and losses and impairment are recognised in profit or
loss. Any gain or loss on derecognition is recognised in profit or loss.
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Trifast plc Annual Report 2020 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.
iv) Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at amortised cost. Subsequent to initial recognition, interest-bearing borrowings are
stated at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised
in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.
v) Trade and other payables
Trade and other payables are recognised initially at fair value plus transaction costs that are directly attributable to their acquisition or issue.
Subsequently they are measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and
losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.
i) Inventories
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.
j) Impairment
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.
Financial assets measured at amortised cost and contract assets (as defined in IFRS15) are considered to be credit-impaired if objective
evidence indicates that one or more events has had a negative effect on the estimated future cash flows of that asset.
When determining whether objective evidence indicates there is a negative effect on estimated future cash flows, the company considers
reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and
qualitative information and analysis, based on the company’s historical experience and informed credit assessment and including
forward-looking information.
Loss allowances for expected credit losses (ECLs) are recognised when they are expected to arise as the present value of all cash
shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the company
expects to receive). ECLs are discounted at the effective interest rate of the financial asset where appropriate.
The company measures loss allowances at an amount equal to lifetime ECL, except for other debt securities and bank balances for which
credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial
recognition, which are measured as 12-month ECL.
Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument. 12-month ECLs are
the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the
expected life of the instrument is less than 12 months).
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of
recovery.
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.
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Trifast plc Annual Report 2020Financial statements Notes to the financial statements
for the year ended 31 March 2020
1 Accounting policies continued
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.
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 performance obligation
is satisfied and the customer obtains control. In accordance with normal practice, there is a single performance obligation which is on
dispatch of goods or at the point of customer acceptance where appropriate. The transaction price is determined by the invoice amount
with adjustments made for variable consideration (ie rebates) where applicable.
o) Expenses
i) Operating lease payments (prior year) and short-term/low value lease payments (current year)
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 (prior year finance leases, current year IFRS16 Leases)
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.
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Trifast plc Annual Report 2020 1 Accounting policies continued
iii) Net financing costs
Net financing costs comprise interest payable on borrowings and right-of-use liabilities 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.
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.
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and
the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:
− The same taxable group company, or
− Different group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle
the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be
settled or recovered.
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.
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141
Trifast plc Annual Report 2020Financial statements Notes to the financial statements
for the year ended 31 March 2020
1 Accounting policies continued
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.
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.
w) Adoption of IFRS16
This note explains the impact of the adoption of IFRS16 Leases on the Group’s financial statements and discloses the new accounting
policies that have been applied from 1 April 2019 (date of initial application).
The group adopted IFRS16 from 1 April 2019 under the modified retrospective approach and therefore has not restated comparatives for the
2019 reporting period. The reclassifications and the adjustments arising from the new leasing rules are therefore recognised in the opening
balance sheet on 1 April 2019.
Policy applied from 1 April 2019 – The Group as lessee
The Group’s leases primarily comprise of right-of-use assets regarding land & buildings, motor vehicles and equipment. Short-term leases
(<12 months) and leases for which the underlying asset is of a low value (<£4k) are excluded.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured
at cost, and subsequently at cost less any accumulated depreciation and impairment losses. The right-of-use asset is subsequently
depreciated using the straight-line method from the lease commencement date to the end of the lease term. In addition, the right-of-use
asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments (excluding non-lease components) that are not paid at
the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the lessee’s
incremental borrowing rate. Generally, the Group uses its incremental borrowing rate.
The lease liabilities are subsequently increased by the interest cost on the lease liability and decreased by lease payments made. The
liability will be remeasured if there is a change in the future lease payments or if there are changes in the estimated length of the lease.
The lease period is established as the non-cancellable period together with the opportunity to extend the lease if the lessee is reasonably
certain to utilise that option, and periods covered by an opportunity to terminate the lease if the lessee is reasonably certain not to utilise
that option.
Practical expedients applied
In applying IFRS16 for the first time, the group has used the following practical expedients permitted by the standard:
•
•
•
•
The use of a single discount rate to a portfolio of leases with reasonably similar characteristics
The accounting for operating leases with a remaining lease term of less than 12 months as at 1 April 2019 as short-term leases
The exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application
The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease
The Group has also elected not to reassess whether a contract is or contains a lease at the date of initial application. Instead, for contracts
entered into before the transition date the Group relied on its assessment made applying IAS17 and IFRIC4 Determining whether an
Arrangement contains a Lease.
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Trifast plc Annual Report 2020 1 Accounting policies continued
Adjustments recognised on adoption of IFRS16 – Group
On adoption of IFRS16, the Group recognised lease liabilities in relation to leases which had previously been classified as operating leases
under the principles of IAS17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted
using the lessee’s incremental borrowing rate as of 1 April 2019. The Group also recognised right-of-use assets for properties, vehicles &
equipment which were measured on a retrospective basis as if the new rules had always been applied, discounted at the rate on the date of
initial application. This has been summarised below.
Right-of-use assets
Deferred tax asset
Right-of-use liabilities (current)
Right-of-use liabilities (non-current)
Prepayments
Accruals
Retained Earnings
1 April 2019
£’000
12,909
251
2,727
11,566
(117)
(180)
(1,069)
When measuring lease liabilities for leases that were classified as operating leases, the Group discounted lease payments using the
lessee’s incremental borrowing rate at 1 April 2019. The weighted average rate applied is 2.4%.
The right-of-use liabilities recognised at 1 April 2019 reconciles to the operating lease commitment as at 31 March 2019 as disclosed in the
Group’s consolidated financial statements as follows:
Operating lease commitment as at 31 March 2019 as disclosed in the Group’s consolidated financial statements
Recognition exemption for leases of low-value assets
Recognition exemption for leases with less than 12 months lease term at transition
Operating leases in scope of IFRS16
Discounted using the incremental borrowing rate as 1 April 2019
Inception date before transition date but lease commenced after
Difference between minimum lease payments & end of lease
Extension options reasonably certain to be exercised
Right-of-use liabilities recognised at 1 April 2019
The recognised right-of-use assets relate to the following types of assets:
Land & buildings
Motor vehicles
Equipment
Total right-of-use asset
1 April 2019
£’000
14,283
(160)
(250)
13,873
(1,676)
(203)
2,105
194
14,293
1 April 2019
£’000
11,925
951
33
12,909
Adjustments recognised on adoption of IFRS16 – Company
On adoption of IFRS16, the Company recognised lease liabilities of £20,000 and right of use assets of £20,000 in relation to leases which
had previously been classified as operating leases under the principles of IAS17 Leases. The leases were measured using the same
principles above for the Group.
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143
Trifast plc Annual Report 2020Financial statements Notes to the financial statements
for the year ended 31 March 2020
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
Impairment of goodwill
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
Impairment of goodwill
Costs on exercise of executive share options
EBITDA
Acquired intangible amortisation
Depreciation and non-acquired amortisation
Operating profit
Note
23
14
32
Note
23
32
2020
£000
17,054
(2,030)
(1,409)
—
(2,505)
(7,761)
(307)
3,042
2020
£000
23,525
(2,030)
—
(2,505)
(7,761)
(307)
10,922
(1,409)
(5,436)
4,077
2019
£000
23,521
(2,454)
(1,419)
(3)
(3,117)
—
(107)
16,421
2019
£000
26,449
(2,454)
(3)
(3,117)
—
(107)
20,768
(1,419)
(2,253)
17,096
There were £nil separately disclosed items in FY2020 (FY2019: £nil) other than the amounts detailed above. FY2020 accounts for leases
under IFRS16 Leases, FY2019 accounts for leases under IAS 17 Leases. The transition to IFRS16 resulted in EBITDA being c.£3.5m higher.
Recurring items
During the period the IFRS2 charge decreased, due to the non-market performance conditions not being achieved for the Board FY2018
LTIP and hence the cumulative charge was reversed. £0.3m (FY2019: £0.5m) relates to the Board deferred equity bonus scheme. £0.1m
(FY2019: £0.6m) relates to the new LTIP structure for the Directors. £1.5m (FY2019: £1.2m) represents the charge for the Deferred Bonus
Award scheme for senior managers. The remaining £0.2m (FY2019: £0.2m) relates to the SAYE scheme.
IFRS2 share based payment charges have continued to be specifically presented as separately disclosed items within administrative
expenses. We understand that these costs are more conventionally included within underlying results and we confirm management’s
intention to present these as such at the appropriate time. However, currently the underlying equity award schemes that form the basis of
these charges are under a period of significant development.
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Trifast plc Annual Report 2020
2 Underlying profit before tax and separately disclosed items continued
This includes:
•
•
•
•
The cessation of the Board deferred equity schemes that were in operation from FY2014 to FY2017
The one-off introduction of a three-year Senior Manager deferred equity bonus award in FY2016
The introduction of the current annual, rolling three year Board LTIP share awards in FY2018
The subsequent introduction of a new annual, rolling three year Senior Manager LTIP share award scheme in FY2020
As a result of the above, the annual IFRS2 charge is expected to be subject to a significant degree of volatility until we reach a more stable
ongoing position. We consider that this ongoing volatility, if presented within our underlying results in the short to medium term, will only
detract readers from being able to gain a clear understanding of the Group’s underlying trading position.
Management will continue to periodically assess this decision to determine when IFRS2 share based payment charges will become part of
the underlying results.
Acquired intangible amortisation has remained in line with prior year. Intangible amortisation relating to acquisitions have been separately
disclosed since they do not relate to the trading performance of the respective entities with a charge.
During the year, part of the FY2017 Board deferred equity bonus shares and the FY2017 Senior Manager Equity Awards were exercised
and the Group incurred £0.3m of employer’s National Insurance in relation to these exercises. Last year, the FY2016 Deferred Equity Bonus
awards were exercised resulting in the Company incurring £0.1m of employer’s National Insurance.
Event driven/one-off items
Net acquisition costs of £nil (FY2019: £0.1m) were incurred in the year. The FY2019 acquisition costs were in relation to the acquisition of PTS
on 4 April 2018. The costs in FY2019 were offset by a £(0.1)m movement in the contingent consideration for PTS.
Project Atlas is a multi-year investment into our IT infrastructure and underlying business processes, budgeted to cost £15.0m. As a
consequence of the work undertaken to date on this project, we have incurred direct costs of £2.5m in FY2020 (FY2019: £3.1m), largely
relating to the project team. 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 investment will be recorded as a combination of capital expenditure and separately
disclosed items, dependent on accounting convention.
Impairments in goodwill of £7.8m (FY2019: £nil) were incurred in the year relating to VIC (£7.0m) and PSEP (£0.8m), see note 14 for further details.
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.
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.
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145
Trifast plc Annual Report 2020Financial statements Notes to the financial statements
for the year ended 31 March 2020
3 Operating segmental analysis continued
Geographical operating segments
The Group is comprised of the following main geographical operating segments:
— UK
— Europe
— USA
— Asia
includes Norway, Sweden, Hungary, Ireland, Holland, Italy, Germany, Spain and Poland
includes USA and Mexico
includes Malaysia, China, Singapore, Taiwan, Thailand, India and Philippines
In presenting information on the basis of geographical operating segments, segment revenue and segment assets are based on the
geographical location of our entities across the world, and are consolidated into the four distinct geographical regions, which the Board
use to monitor and assess the Group. Interest is reported on a net basis rather than gross as this is how it is presented to the Chief
Operating Decision Maker. All material non-current assets are located in the country the relevant Group entity is incorporated in.
March 2020
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
Impairments in goodwill
Assets and liabilities
Non-current asset additions
Segment assets
Segment liabilities
UK
£000
Europe
£000
71,979
3,521
75,500
6,819
(161)
6,658
1,841
3,021
65,679
(24,127)
71,217
1,521
72,738
5,722
(102)
5,620
2,717
6,966
777
69,836
(16,150)
Within separately disclosed items of £14.0m are £7.8m of goodwill impairments.
UK
£000
76,030
3,040
79,070
8,666
(99)
8,567
Europe
£000
75,395
1,742
77,137
8,423
(42)
8,381
March 2019
Revenue
Revenue from external customers
Inter segment revenue
Total revenue
Underlying operating result
Net financing (costs)/income
Underlying segment result
Separately disclosed items (see note 2)
Profit before tax
Specific disclosure items
Depreciation and amortisation
Assets and liabilities
Non-current asset additions
Segment assets
Segment liabilities
USA
£000
10,864
177
11,041
281
(114)
167
235
136
8,897
(1,855)
USA
£000
8,822
178
9,000
446
(19)
427
Asia
£000
46,161
8,363
54,524
8,262
(33)
8,229
1,949
795
1,463
64,534
(13,582)
Asia
£000
48,705
10,539
59,244
9,445
63
9,508
Common
costs
£000
—
—
—
(2,995)
(625)
(3,620)
103
Total
£000
200,221
13,582
213,803
18,089
(1,035)
17,054
(14,012)
3,042
6,845
7,761
3,167
7,192
(44,764)
8,564
216,138
(100,478)
Common
costs
£000
—
—
—
(2,784)
(578)
(3,362)
Total
£000
208,952
15,499
224,451
24,196
(675)
23,521
(7,100)
16,421
705
1,891
45
951
80
3,672
700
57,763
(20,027)
754
75,407
(14,416)
1,312
6,505
(492)
218
59,458
(10,759)
998
5,434
(37,780)
3,982
204,567
(83,474)
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 (FY2019: £16.9m) was sold into the European market. Of the Asian external revenue,
£4.5m (FY2019: £5.1m) was sold into the American market and £4.1m (FY2019: £8.6m) sold into the European market.
Revenue is derived solely from the manufacture and logistical supply of industrial fasteners and Category ‘C’ components.
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Trifast plc Annual Report 2020 4 Other operating income
Rental income received from freehold properties
Other income
5 Expenses and auditor’s remuneration
Included in profit for the year are the following:
Depreciation and non-acquired amortisation
Right-of-use assets depreciation
Amortisation of acquired intangibles
Impairments in goodwill
Operating lease expense
Net foreign exchange gain
Project Atlas (IT and business processes)
(Gain)/loss on disposal of fixed assets
2020
£000
12
412
424
2020
£000
2,318
3,118
1,409
7,761
1,058
(567)
2,505
(3)
2019
£000
12
452
464
2019
£000
2,253
—
1,419
—
4,051
(92)
3,117
12
Note
10, 14
12
14
The employee benefit expense recognised in the year is disclosed in note 23. Operating lease expense in FY2020 are low value and short-
term leases, in FY2019 it was operating leases under IAS17.
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
Total
2020
£000
146
250
—
—
—
396
2019
£000
87
252
21
30
—
390
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147
Trifast plc Annual Report 2020Financial statements Notes to the financial statements
for the year ended 31 March 2020
6 Staff numbers and costs
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 accrued bonus)
Share based payments
Social security costs
Contributions to defined contribution plans (see note 23)
7 Directors’ emoluments
Directors’ emoluments
Company contributions to money purchase pension plans
Pension cash payments
Group
Number of employees
2019
113
337
193
633
1,276
2020
113
338
194
634
1,279
Company
Number of employees
2019
19
—
—
—
19
2020
20
—
—
—
20
Group
Company
2020
£000
33,622
2,030
3,497
2,004
41,153
2019
£000
32,697
2,454
3,280
1,994
40,425
2020
£000
1,851
441
303
178
2,773
2020
£000
1,108
30
105
1,243
2019
£000
1,780
1,131
274
192
3,377
2019
£000
1,082
30
102
1,214
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 92 to 107.
The aggregate of emoluments of the highest paid Director was £0.32m (FY2019: £0.31m), which included no vested LTIP or deferred equity
award (FY2019: £nil), Company pension contributions of £0.01m (FY2019: £0.01m) made to a money purchase scheme on his behalf and
pension cash payments of £0.04m (FY2019: £0.04m). During the year, 16,822 SAYE share options were exercised (no deferred equity shares
were exercised) by the highest paid director (FY2019: no SAYE share options exercised, no deferred equity shares exercised).
The annual IFRS2 charge relating to Board deferred equity bonuses was £0.28m (FY2019: £0.52m). The annual IFRS2 charge relating to
Board LTIP shares was £0.11m (FY2019: £0.58m). The highest paid Director’s element of this charge was £0.08m (FY2019: £0.33m).
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 92 to 107 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, IFRS 16 right-of-use liabilities and hire purchase liabilities
Number of Directors
2019
2020
3
3
3
1
2020
£000
82
1,117
2019
£000
80
755
The FY2020 includes £0.4m of additional interest on the right-of-use liabilities in compliance with IFRS 16, see note 12 (FY2019 : £nil)
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Trifast plc Annual Report 2020 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 17):
Origination and reversal of temporary differences
Change in tax rates
Adjustments for prior years
Deferred tax expense/(income)
Tax in income statement
Current tax recognised directly in equity — IFRS2 share based tax credit
Deferred tax recognised directly in equity — IFRS2 share based tax charge
Total tax recognised in equity
Reconciliation of effective tax rate (‘ETR’) and tax expense
(Loss)/profit for the period
Tax from continuing operations
Profit before tax
Tax using the UK corporation tax rate of 19% (FY2019: 19%)
Tax suffered on dividends
Non-deductible expenses
Tax incentives
Non-taxable receipts
IFRS2 share option charge
Deferred tax assets not recognised
Impairment losses
Different tax rates on overseas earnings
Adjustments in respect of prior years
Tax rate change
Total tax in income statement
2020
£000
(238)
3,280
3,042
578
416
286
—
(44)
501
76
1,475
131
(132)
(7)
3,280
ETR
%
19
14
9
—
(1)
16
2
49
4
(4)
—
108
2020
£000
59
(50)
9
3,181
(91)
3,090
3,099
179
(7)
9
181
3,280
2020
£000
(58)
203
145
2019
£000
12,244
4,177
16,421
3,120
474
189
(146)
—
105
58
—
348
2
27
4,177
2019
£000
496
103
599
3,941
(10)
3,931
4,530
(289)
27
(91)
(353)
4,177
2019
£000
(121)
322
201
ETR
%
19
3
1
(1)
—
1
—
—
2
—
—
25
149
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Trifast plc Annual Report 2020Financial statements Notes to the financial statements
for the year ended 31 March 2020
10 Property, plant and equipment – Group
Land and
buildings
£000
Leasehold
improvements
£000
Plant and
equipment
£000
Fixtures &
fittings
£000
Motor
vehicles
£000
Cost
Balance at 1 April 2018
Additions
Acquisitions
Disposals
Effect of movements in foreign exchange
Balance at 31 March 2019
Balance at 1 April 2019
Additions
Disposals
Effect of movements in foreign exchange
Balance at 31 March 2020
Depreciation and impairment
Balance at 1 April 2018
Depreciation charge for the year
Acquisitions
Disposals
Effect of movements in foreign exchange
Balance at 31 March 2019
Balance at 1 April 2019
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange
Balance at 31 March 2020
Net book value
At 31 March 2018
At 31 March 2019
At 31 March 2020
17,091
182
—
—
42
17,315
17,315
24
—
206
17,545
5,376
271
—
—
(12)
5,635
5,635
283
—
85
6,003
11,715
11,680
11,542
968
136
4
(36)
19
1,091
1,091
10
—
(1)
1,100
698
103
1
(20)
14
796
796
100
—
(2)
894
270
295
206
30,876
1,656
115
(67)
140
32,720
32,720
688
(46)
470
33,832
24,650
1,331
71
(41)
121
26,132
26,132
1,473
(49)
357
27,913
6,226
6,588
5,919
6,077
982
399
(18)
10
7,450
7,450
655
(156)
40
7,989
4,407
451
201
(17)
11
5,053
5,053
436
(150)
21
5,360
1,670
2,397
2,629
683
32
19
—
(1)
733
733
50
(16)
14
781
551
50
11
—
—
612
612
41
(15)
12
650
132
121
131
Total
£000
55,695
2,988
537
(121)
210
59,309
59,309
1,427
(218)
729
61,247
35,682
2,206
284
(78)
134
38,228
38,228
2,333
(214)
473
40,820
20,013
21,081
20,427
Included in the net book value of land and buildings is £9.7m (FY2019: £9.7m) of freehold land and buildings, and £1.9m (FY2019: £2.0m) of long
leasehold land and buildings.
Project Atlas costs in the consolidated income statement includes £53k (FY2019: £3k) of depreciation.
150
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Trifast plc Annual Report 2020 11 Property, plant and equipment – Company
Cost
Balance at 1 April 2018
Additions
Balance at 31 March 2019, 1 April 2019 and 31 March 2020
Depreciation and impairment
Balance at 1 April 2018
Depreciation charge for the year
Balance at 31 March 2019
Balance at 1 April 2019
Depreciation charge for the year
Balance at 31 March 2020
Net book value
At 1 April 2018
At 31 March 2019
At 31 March 2020
Land and
buildings
£000
Fixtures &
fittings
£000
3,857
48
3,905
1,375
76
1,451
1,451
82
1,533
2,482
2,454
2,372
571
8
579
560
4
564
564
3
567
11
15
12
Total
£000
4,428
56
4,484
1,935
80
2,015
2,015
85
2,100
2,493
2,469
2,384
Included in the net book value of land and buildings is £2.4m (FY2019: £2.5m) of freehold land and buildings.
12 IFRS16 – Group
All leases are accounted for by recognising a right-of-use asset and a lease liability except for:
•
•
Leases of low value assets
Leases with a duration of 12 months or less
IFRS 16 was adopted on 1 April 2019 without restatement of comparative figures. For an explanation of the transitional requirements that
were applied as at 1 April 2019, see note 1w. The following policies apply subsequent to the date of initial application, 1 April 2019.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount
rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which
case the lessee’s incremental borrowing rate on commencement of the lease is used. Variable lease payments are only included in the
measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes
the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which
they relate.
On initial recognition, the carrying value of the lease liability also includes
•
•
•
Amounts expected to be payable under any residual value guarantee
The exercise price of any purchase option granted in favour of the group if it is reasonably certain to assess that option
Any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination option being
exercised
Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:
•
•
•
Lease payments made at or before commencement of the lease
Initial direct costs incurred
The amount of any provision recognised where the group is contractually required to dismantle, remove or restore the leased asset
Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding
and are reduced for lease payments made. Right-of-use assets are depreciated on a straight-line basis over the remaining term of the lease.
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151
Trifast plc Annual Report 2020Financial statements Notes to the financial statements
for the year ended 31 March 2020
12 IFRS16 – Group continued
When the Group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension or
termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised
term, which are discounted using a revised discount rate. The carrying value of lease liabilities is similarly revised when the variable element
of future lease payments dependent on a rate or index is revised, which are discounted at the same discount rate that applied on lease
commencement. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying
amount being amortised over the remaining (revised) lease term.
When the Group renegotiates the contractual terms of a lease with the lessor, the accounting depends on the nature of the modification:
•
•
•
If the renegotiation results in one or more additional assets being leased for an amount commensurate with the standalone price for the
additional rights-of-use obtained, the modification is accounted for as a separate lease in accordance with the above policy
In all other cases where the renegotiation increases the scope of the lease (whether that is an extension to the lease term, or one or
more additional assets being leased), the lease liability is remeasured using the discount rate applicable on the modification date, with
the right-of use asset being adjusted by the same amount
If the renegotiation results in a decrease in the scope of the lease, both the carrying amount of the lease liability and right-of-use asset
are reduced by the same proportion to reflect the partial or full termination of the lease with any difference recognised in profit or loss.
The lease liability is then further adjusted to ensure its carrying amount reflects the amount of the renegotiated payments over the
renegotiated term, with the modified lease payments discounted at the rate applicable on the modification date. The right-of-use asset
is adjusted by the same amount
The Group sometimes negotiates break clauses in its property leases. On a case-by-case basis, the Group will consider whether the
absence of a break clause would expose the group to excessive risk.
Typically, factors considered in deciding to negotiate a break clause include:
•
•
The length of the lease term
The economic stability of the environment in which the property is located
• Whether the location represents a new area of operations for the Group
At 31 March 2020 the carrying amounts of lease liabilities are not reduced by the amount of payments that would be avoided from
exercising break clauses because it was considered reasonably certain that the Group would not exercise its right to exercise any right to
break the lease.
Nature of leasing activities (in the capacity as lessee)
The Group leases several properties in the jurisdictions from which it operates. In some jurisdictions it is customary for lease contracts to
provide for payments to increase each year by inflation and in others to be reset periodically to market rental rates. In some jurisdiction’s
property leases the periodic rent is fixed over the lease term.
The Group also leases certain items of plant and equipment and vehicles which comprise only fixed payments over the lease terms.
The percentages in the table below reflect the current proportions of total lease payments that are either fixed or variable. The sensitivity
reflects the impact on the carrying amount of lease liabilities and right-of-use total assets if there was an uplift of 1% on the balance sheet
date to lease payments that are variable.
Property leases with periodic uplifts to market rentals or inflation
Property leases with fixed payments
Leases of equipment & vehicles
At 31 March 2020
Lease
contracts
(number)
7
35
129
171
Fixed
payments
%
—
72
7
79
Variable
payments
%
21
—
—
21
Sensitivity
£000
31
—
—
31
152
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Trifast plc Annual Report 2020 12 IFRS16 – Group continued
Right-of-use assets (Group)
At 1 April 2019
Additions
Lease extensions
New leases
Rent review
Depreciation
Disposals
Foreign exchange movements
At 31 March 2020
Right-of-use liabilities (Group)
At 1 April 2019
Additions
Lease extensions
New leases
Rent review
Lease payments
Interest
Disposals
Foreign exchange movements
At 31 March 2020
Short-term lease expense
Low value lease expense
Aggregate undiscounted future commitments for short-term and low value leases
There have been no sale and leaseback transactions in the current or prior year.
Land and
buildings
£000
11,925
Motor
vehicles
£000
951
Equipment
£000
33
2,336
920
31
(2,590)
–
44
12,666
22
586
–
(504)
(21)
4
1,038
–
75
–
(24)
–
–
84
Land and
buildings
£000
13,288
Motor
vehicles
£000
966
Equipment
£000
39
2,279
920
31
(2,937)
342
–
43
13,966
22
586
–
(523)
22
(21)
3
1,055
–
75
–
(27)
1
–
–
88
Total
£000
12,909
2,358
1,581
31
(3,118)
(21)
48
13,788
Total
£000
14,293
2,301
1,581
31
(3,487)
365
(21)
46
15,109
Total
£000
973
85
301
At 31 March 2020
Lease liabilities
Under
1 year
£000
Between
1 and 2
years
£000
Between
2 and 5
years
£000
Over
5 years
£000
Total
£000
3,113
2,380
4,477
5,139
15,109
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153
Trifast plc Annual Report 2020Financial statements Notes to the financial statements
for the year ended 31 March 2020
13 IFRS16 – Company
Right-of-use assets (Company)
At 1 April 2019
Additions
New leases
Depreciation
At 31 March 2020
Right-of-use liabilities (Company)
At 1 April 2019
Additions
New leases
Lease payments
Interest
At 31 March 2020
Motor
vehicles
£000
20
23
(19)
24
Motor
vehicles
£000
20
23
(18)
–
25
Short-term lease expense
Low value lease expense
Aggregate undiscounted future commitments for short-term and low value leases
There have been no sale and leaseback transactions in the current or prior year.
Under
1 year
£000
Between
1 and 2
years
£000
Between
2 and 5
years
£000
Over
5 years
£000
Total
£000
20
23
(19)
24
Total
£000
20
23
(18)
–
25
Total
£000
7
–
–
Total
£000
At 31 March 2020
Lease liabilities
11
6
8
–
25
154
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Trifast plc Annual Report 2020 14 Intangible assets – Group
Cost
Balance at 1 April 2018
Acquisitions
Additions
Effect of movements in foreign exchange
Balance at 31 March 2019
Balance at 1 April 2019
Additions
Effect of movements in foreign exchange
Balance at 31 March 2020
Amortisation and impairment
Balance at 1 April 2018
Amortisation for the year
Effect of movements in foreign exchange
Balance at 31 March 2019
Balance at 1 April 2019
Amortisation for the year
Impairment for the year
Effect of movements in foreign exchange
Balance at 31 March 2020
Net book value
At 1 April 2018
At 31 March 2019
At 31 March 2020
Assets
under
course of
construction
£000
Goodwill
£000
—
—
943
—
943
943
3,145
—
4,088
—
—
—
—
—
—
—
—
—
—
943
4,088
43,358
2,043
—
359
45,760
45,760
—
165
45,925
14,231
—
164
14,395
14,395
—
7,761
(12)
22,144
29,127
31,365
23,781
Other
£000
15,456
4,816
51
(258)
20,065
20,065
22
346
20,433
6,182
1,469
(96)
7,555
7,555
1,447
—
145
9,147
9,274
12,510
11,286
Total
£000
58,814
6,859
994
101
66,768
66,768
3,167
511
70,446
20,413
1,469
68
21,950
21,950
1,447
7,761
133
31,291
38,401
44,818
39,155
The addition in assets under the course of construction in the year relates to Project Atlas.
Included within other intangibles are customer relationship intangible assets of £9.0m (FY2019: £9.9m), know-how of £1.1m (FY2019: £1.3m)
and marketing related intangibles of £0.9m (FY2019: £1.0m).
The amortisation charge is recognised in administrative expenses in the income statement. Of the £1,447,000 charge in the year, £1,409,000
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 3.8 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 7.8 years
• Customer relationships acquired as part of the acquisition of Kuhlmann. The average remaining amortisation period on these assets
is 5.5 years
• Customer relationships and marketing related intangibles acquired as part of the acquisition of PTS, the average remaining amortisation
period on these assets is 12.3 years
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155
Trifast plc Annual Report 2020Financial statements Notes to the financial statements
for the year ended 31 March 2020
14 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 VIC SPA (VIC) (Italy)
TR Kuhlmann GmbH (Germany)
Precision Technology Supplies Ltd (UK)
Other
2020
£000
10,691
1,063
1,245
4,083
—
3,001
1,551
2,043
104
23,781
2019
£000
10,722
1,063
1,245
4,083
793
9,802
1,510
2,043
104
31,365
The changes in goodwill for SFE and Kuhlmann relate to foreign exchange gains or losses as these investments are held in, Singaporean
Dollars and Euros respectively. The reductions in goodwill for VIC and PSEP predominantly relate to goodwill impairments of £7.0m and
£0.8m respectively, the remaining movements relate to foreign exchange gains or losses as the investments are held in Euros and
Malaysian Ringgits respectively.
Annual impairment testing
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 VIC SPA (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
2020
2.0%
7.6%
9.5%
16.2%
2019
2.0%
9.9%
12.4%
16.8%
2020
1.6%
10.8%
14.9%
13.5%
2019
2.0%
11.2%
15.4%
17.2%
2020
2.0%
7.3%
9.0%
8.1%
2019
2.0%
8.4%
10.4%
9.1%
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
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.
156
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Trifast plc Annual Report 2020 14 Intangible assets – Group continued
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 an equity market risk premium that takes into consideration
studies by independent economists, the average equity market risk premium over the past five 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.
Impairments in the year
The impairments of £7.0m in VIC’s goodwill and £0.8m in PSEP’s goodwill respectively have arisen due to the impact of COVID-19 both on
short to medium-term cash flows as well as higher than usual discount rates. These have been separately disclosed in the consolidated
income statement.
For VIC, the discount rate used is 10.8% post-tax (14.9% pre-tax). This is at similar levels to FY2019 (11.2% post-tax; 15.4% pre-tax) due to the
economic struggles in Italy, but higher than the average post-tax rate in previous years of c.9.3%. The unit’s recoverable amount calculated
by management is £27.4m.
For PSEP, the discount rate used is 10.6% post-tax (13.9% pre-tax). This is broadly in line with FY2019 (11.6% post-tax; 15.3% pre-tax), but higher
than the average post-tax rate in previous years of c.10.0%. The unit’s recoverable amount calculated by management is £10.4m.
Sensitivity to changes in assumptions
The continued economic struggles in Italy, combined with the impact of COVID-19, has caused the discount rate for VIC to remain high
(the years before FY2019 it was c.9.3%), thus reducing headroom. If these uncertainties continue and the discount rate increases then it
is possible that there might be an additional impairment of VIC’s goodwill. Given the impairment in the year, VIC’s recoverable amount is
equal to its carrying amount. An increase in the discount rate of 50bps will cause the units recoverable amount to be £1.3m lower than its
carrying amount. Despite the negative impact of the macroeconomic factors (including COVID-19) which are outside of our direct control,
management believe the outlook for VIC continues to be positive.
Excluding VIC, 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.
15 Intangible assets – Company
Assets
under
course of
construction
£000
Other
£000
Total
£000
Cost
Balance at 1 April 2018
Additions
Balance at 31 March 2019
Balance at 1 April 2019
Additions
Balance at 31 March 2020
Amortisation and impairment
Balance at 1 April 2018, 31 March 2019, 1 April 2019 and 31 March 2020
Net book value
At 1 April 2018
At 31 March 2019
At 31 March 2020
The addition in assets under the course of construction in the year relates to Project Atlas.
—
943
943
943
3,145
4,088
—
—
943
4,088
62
—
62
62
—
62
62
—
—
—
62
943
1,005
1,005
3,145
4,150
62
—
943
4,088
157
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Trifast plc Annual Report 2020Financial statements Notes to the financial statements
for the year ended 31 March 2020
16 Equity investments – Company
Investments in subsidiaries
Cost
Balance at 1 April 2018, 31 March 2019, 1 April 2019
Additions
Balance at 31 March 2020
Provision
Balance at 1 April 2018, 31 March 2019, 1 April 2019 and 31 March 2020
Net book value
Balance at 1 April 2018, 31 March 2019
Balance at 31 March 2020
Total
£000
42,585
566
43,151
1,145
41,440
42,006
The additions in the year relate to IFRS2 charges that will not be recharged to subsidiaries.
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.
Following the acquisition of Serco Ryan Ltd in September 2005, the trade and assets of Serco Ryan were transferred to fellow subsidiary
TR Fastenings Ltd at book value. This resulted in an apparent overvaluation of the Serco Ryan Ltd investment as held in the Company’s
books, although there was no overall loss to the Group. Schedule 1 of SI 2008/410 of the Companies Act 2006 requires that, where such
overvaluation is expected to be permanent, the investment should be written down accordingly. The directors consider that as the
substance of the transaction was merely to reorganise the Group’s operations, such a treatment would fail to give a true and fair view.
Therefore the diminution in value of the investment in Serco Ryan Ltd has instead been re-allocated to the Company’s investment in Trifast
Overseas Holdings Ltd, being the immediate parent company of TR Fastenings Limited and directly owned by the Company.
17 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
IFRS16 Leases
Intangible assets
Provision on inventories
Provisions/accruals
IFRS2 Share based payments
Tax losses
Tax (assets)/liabilities
Tax set-off
Net tax (assets)/liabilities
Assets
Liabilities
Net
2020
£000
(1)
(253)
(118)
(715)
(480)
(405)
(489)
(2,461)
535
(1,926)
2019
£000
(44)
—
(116)
(805)
(460)
(1,068)
(213)
(2,706)
577
(2,129)
2020
£000
1,815
—
2,166
—
345
—
—
4,326
(535)
3,791
2019
£000
1,751
—
2,292
—
366
—
—
4,409
(577)
3,832
2020
£000
1,814
(253)
2,048
(715)
(135)
(405)
(489)
1,865
—
1,865
2019
£000
1,707
—
2,176
(805)
(94)
(1,068)
(213)
1,703
—
1,703
A potential £2.3m (FY2019: £2.0m) 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 majority of the increase (£0.2m) reflects the UK tax rate change from 17% to 19%.
A potential £1.4m of (FY2019: £1.6m) deferred tax liability relating to the temporary differences associated with undistributed profits in
subsidiaries has not been recognised. This is on the grounds that we are able to control the timing of these reversals and it is not
considered probable that these amounts will reverse in the foreseeable future.
158
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Trifast plc Annual Report 2020 17 Deferred tax assets and liabilities – Group continued
Movement in deferred tax during the year
Property, plant and equipment*
IFRS16 leases*
Intangible assets
Provision on inventories
Provisions/accruals
IFRS2 Share based payments
Tax losses
1 April
2019
£000
1,707
(251)
2,176
(805)
(94)
(1,068)
(213)
1,452
Recognised
in income
£000
95
(3)
(163)
87
(22)
460
(273)
181
Recognised
in equity^
£000
12
1
35
3
(19)
203
(3)
232
* The 1 April 2019 position has been restated to include a deferred tax asset of £251k recognised on the adoption of IFRS16 Leases
Movement in deferred tax during the prior year
Property, plant and equipment
Intangible assets
Provision on inventories
Provisions/accruals
IFRS2 Share based payments
Tax losses
1 April
2018
£000
1,625
1,634
(694)
(223)
(1,142)
(270)
930
Recognised
in income
£000
36
(248)
(103)
139
(248)
71
(353)
Recognised
on
Acquisitions
£000
42
819
—
—
—
—
861
Recognised
in equity^
£000
4
(29)
(8)
(10)
322
(14)
265
31 March
2020
£000
1,814
(253)
2,048
(715)
(135)
(405)
(489)
1,865
31 March
2019
£000
1,707
2,176
(805)
(94)
(1,068)
(213)
1,703
^
Amounts recognised in equity include the deferred tax on IFRS2 share based payments and the equity element of foreign exchange differences taken to reserves
18 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 losses
Tax (assets)/liabilities
Tax set-off
Net tax (assets)/liabilities
Assets
Liabilities
Net
2020
£000
—
(1)
(309)
(204)
(514)
133
(381)
2019
£000
—
(1)
(682)
—
(683)
—
(683)
2020
£000
133
—
—
—
133
(133)
—
2019
£000
128
—
—
—
128
—
128
2020
£000
133
(1)
(309)
(204)
(381)
—
(381)
2019
£000
128
(1)
(682)
—
(555)
—
(555)
A potential £2.2m (FY2019: £2.0m) 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 increase of £0.2m reflects the UK tax rate change from 17% to 19%.
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159
Trifast plc Annual Report 2020Financial statements Notes to the financial statements
for the year ended 31 March 2020
18 Deferred tax assets and liabilities – Company continued
Movement in deferred tax during the year
Property, plant and equipment
Provisions/accruals
IFRS2 Share based payments
Tax losses
Movement in deferred tax during the prior year
Property, plant and equipment
Provisions/accruals
IFRS2 Share based payments
19 Inventories – Group
Raw materials and consumables
Work in progress
Finished goods and goods for resale
1 April
2019
£000
Recognised
in income
£000
Recognised
in equity
£000
31 March
2020
£000
128
(1)
(682)
—
(555)
1 April
2018
£000
132
(1)
(766)
(635)
5
—
195
(204)
(4)
—
—
178
—
178
Recognised
in income
£000
(4)
—
(107)
(111)
Recognised
in equity
£000
—
—
191
191
2020
£000
4,982
2,026
52,179
59,187
133
(1)
(309)
(204)
(381)
31 March
2019
£000
128
(1)
(682)
(555)
2019
£000
5,568
2,233
49,757
57,558
In FY2020, inventories of £129.2m (FY2019: £132.4m) were recognised as an expense during the year and included in cost of sales.
Inventories have been written down by £1.6m in the year (FY2019: £1.1m) in line with the Group’s stock provisioning policy. Such write-downs
were recognised as an expense during FY2020. 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 £1.4m (FY2019: £1.2m).
20 Trade and other receivables
Trade receivables
Non trade receivables and prepayments
Amounts owed by subsidiary undertakings
Group
Company
2020
£000
48,484
4,444
—
52,928
2019
£000
49,149
4,633
—
53,782
2020
£000
—
21
48,890
48,911
2019
£000
—
313
44,204
44,517
An explanation of credit risk and details of the security held over receivables is provided in note 27.
The trade receivables position for the Group at 1 April 2018 was £48.0m.
Expected credit losses for the Group were calculated by first grouping trade receivables by entity and looking at historic credit loss rates
over 5 years. This was then overlaid with considerations for overdue debt, forward looking information (including COVID-19) and any
customer specific risks.
Expected credit losses for the Company were assessed at year end and there had not been a significant increase in credit risk therefore
they are provided at 12-month ECL. No material provision was required in FY2020 or FY2019.
160
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Trifast plc Annual Report 2020 21 Other interest-bearing loans and borrowings
This note provides information about the Group and Company’s existing interest-bearing loans and borrowings as at 31 March 2020. 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 27.
Current
Non-current
Initial loan value
Group
Asset based lending
VIC unsecured loan
Right of use liabilities
Finance lease liabilities
Group and Company
Revolving Credit Facility
Prepaid arrangement fees
Right of use liabilities
Facility A VIC acquisition loan
Facility B Revolving Credit Facility
Property Loan
Total Group
Total Company
Rate
Maturity
Base + 1.49%
EURIBOR + 1.95%
Various
Various
2019
2020
2020-2050
2019-2020
LIBOR/ EURIBOR + 1.10%
2023
Various
EURIBOR + 1.50%
LIBOR/ EURIBOR + 1.50%
LIBOR + 1.25%
2020-2023
2021
2019-2021
2021
2020
£000
—
266
3,102
—
—
—
11
—
—
—
3,379
11
2019
£000
2,977
517
—
—
—
—
—
4,307
24,816
—
32,617
29,123
2020
£000
—
—
11,982
—
44,262
(640)
14
—
—
—
55,618
43,636
2019
£000
—
258
—
74
—
—
—
4,307
—
2,100
6,739
6,407
On 16th April 2019, the Group re-financed its banking facilities, see note 27 for further information.
22 Trade and other payables
Trade payables
Amounts payable to subsidiary undertakings
Deferred consideration
Non-trade payables and accrued expenses
Other taxes and social security
Group
Company
2020
£000
20,054
—
—
12,665
2,195
34,914
2019
£000
21,496
—
511
12,961
2,239
37,207
2020
£000
—
3,547
—
855
185
4,587
2019
£000
—
4,162
—
839
101
5,102
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161
Trifast plc Annual Report 2020Financial statements Notes to the financial statements
for the year ended 31 March 2020
23 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 £2.0m (FY2019: £2.0m) 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 (FY2019: £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 or five 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
2020
2019
Weighted
average
exercise
price
1.43
1.78
1.81
1.04
1.65
1.17
Options
1,239,534
373,753
(235,663)
(427,971)
949,653
42,421
Weighted
average
exercise
price
1.22
1.93
1.77
1.00
1.43
1.05
Options
1,341,115
298,670
(54,890)
(345,361)
1,239,534
22,797
The options outstanding at 31 March 2020 had a weighted average remaining contractual life of 1.9 years (FY2019: 1.6 years) and exercise
prices ranging from £1.00 to £1.93 (FY2019: £0.35 to £1.93).
The weighted average share price at the date of exercise for share options exercised in 2020 was £1.86 (FY2019: £1.99).
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.
Board deferred equity bonus shares
The Board deferred equity bonus shares have been discussed in more detail in the Remuneration report (pages 92 to 107). The number
of deferred equity bonus shares are as follows:
Outstanding at beginning of year
2015 deferred equity bonus shares exercised
Outstanding at the end of the year
Exercisable at the end of the year
Deferred
equity
bonus
shares
1,682,860
(400,046)
1,282,814
746,211
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 FY2020 was £1.79 (FY2019: £2.21).
The options outstanding at 31 March 2020 had a weighted average remaining contractual life of nil years (FY2019: 0.4 years).
162
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Trifast plc Annual Report 2020 23 Employee benefits continued
Senior manager deferred bonus shares
The number of deferred bonus shares is as follows:
Outstanding at beginning of year
Granted during the year
Exercised during the year
Outstanding at end of year
Deferred
bonus
shares
1,843,179
788,500
(1,306,440)
1,325,239
The shares granted in previous years were subject to a base award and a multiplier award. The base award required a service period of
three years from date of grant and was also subject to personal performance conditions being met during the performance period. The
multiplier award was determined by a non-market performance condition which was achieved at 31 March 2019 meaning the maximum
multiplier was applied to the shares that vested. The awards granted on 30 December 2016, 24 November 2017, 1 April 2018, 4 April 2018 and
14 November 2018 vested in December 2019. The method of settlement for these shares is 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 was remeasured to the date the awards vested. The weighted average share price at the date of exercise for share
options exercised in FY2020 was £1.75 (FY2019: £nil).
The awards granted in the current year are subject to a non-market performance condition of underlying EPS growth for a 3 year period
starting on 1 April 2019 and a service condition of 3 years from the grant date. The non-market performance condition requires underlying
EPS to growth by 5% per annum for a 25% payout, 15% per annum for a 100% payout with straight line vesting for growth in between 5% and
15% per annum. If growth is less than 5% per annum the payout is nil. The method of settlement for these shares is 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 are part of the remuneration policy approved at the 2017 AGM and have been discussed in more detail in the
Remuneration report (pages 92 to 107). 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
1,178,428
549,879
1,728,307
The above includes 151,442 shares for G Budd relating to when he was a main plc Board Director. He stepped down from the main plc Board
on 31 March 2018. The above includes 446,490 shares for G Roberts relating to when she was a main plc Board Director. She stepped down
from the main plc Board on 31 March 2020.
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163
Trifast plc Annual Report 2020Financial statements Notes to the financial statements
for the year ended 31 March 2020
23 Employee benefits continued
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 2020 had a weighted average remaining contractual life of 1.3 years (FY2019: 1.8 years).
Share
price on
date of
grant
(£)
Exercise
price
(£)
Expected
volatility
%
Vesting
period
(yrs)
Expected
life
(yrs)
Risk- free
rate
%
Expected
annual
dividend
%
Fair value
(£)
1.00
1.05
1.07
1.07
1.77
1.77
1.93
1.93
1.78
1.78
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
35.76
34.60
33.83
32.80
26.64
31.18
24.59
30.01
27.58
28.46
n/a
n/a
n/a
n/a
n/a
n/a
5.00
5.00
3.00
5.00
3.00
5.00
3.00
5.00
3.00
5.00
2.56
2.71
2.68
3.00
2.10
3.00
5.00
5.00
3.00
5.00
3.00
5.00
3.00
5.00
3.00
5.00
2.56
2.71
2.68
3.00
2.10
3.00
1.73
1.17
0.36
0.66
0.57
0.82
0.84
1.03
0.45
0.43
n/a
n/a
n/a
n/a
n/a
0.53
1.33
1.84
1.63
1.63
1.56
1.56
2.01
2.01
2.66
2.66
1.81
2.07
1.61
1.46
1.47
1.68
0.33
0.33
0.68
0.71
0.59
0.72
0.28
0.42
0.19
0.24
1.11
1.28
2.08
1.96
2.37
1.98
25.7
3.00
3.00
0.53
1.68
0.80
n/a
n/a
1.74
3.00
1.75
3.00
n/a
0.77
1.42
1.62
2.48
2.27
Valuation
Type of
instrument
model
SAYE 5 Year Black–Scholes
SAYE 5 Year Black–Scholes
SAYE 3 Year Black–Scholes
SAYE 5 Year Black–Scholes
SAYE 3 Year Black–Scholes
SAYE 5 Year Black–Scholes
SAYE 3 Year Black–Scholes
SAYE 5 Year Black-Scholes
SAYE 3 Year Black-Scholes
SAYE 5 Year Black–Scholes
Number
out-
standing
on
31 March
2020
1,515
111,991
34,986
57,018
169,183
76,766
132,022
27,504
245,713
92,955
949,653
384,466
DDM
DDM
361,745
DDM
536,603
DDM
488,183
DDM
39,370
DDM
479,567
1.05
1.14
1.72
1.72
2.24
2.24
1.92
1.92
1.60
1.60
1.16
1.35
2.17
2.05
2.45
2.08
Monte-Carlo
simulation
205,528
2.08
DDM
9,186
DDM
345,333
2.54
2.38
15/07/2016
Date of
grant
01/10/2014
01/10/2015
01/10/2016
01/10/2016
01/10/2017
01/10/2017
01/10/2018
01/10/2018
01/10/2019
01/10/2019
Total SAYE Share Options
Board
30/09/2015
deferred equity
Board
deferred equity
Board
deferred equity
SM deferred
bonus equity
SM deferred
bonus equity
Board LTIP
shares – EPS
growth
Board LTIP
shares – TSR
element
SM deferred
bonus equity
Board LTIP
shares – EPS
growth
Board LTIP
shares – TSR
element
04/04/2018
30/09/2017
30/09/2017
23/07/2018
23/07/2018
30/12/2016
26/07/2017
24/11/2017
23/07/2019
23/07/2019
23/07/2019
23/07/2019
Board LTIP
shares – EPS
growth
Board LTIP
shares – TSR
element
SM deferred
bonus equity
SM deferred
bonus cash
Monte-Carlo
simulation
148,000
2.38
n/a
24.30
3.00
3.00
0.77
1.62
0.94
DDM
384,915
2.07
n/a
n/a
3.00
3.00
0.42
2.05
1.95
Monte-Carlo
simulation
164,964
2.07
n/a
25.96
3.00
3.00
0.42
2.05
1.15
DDM
744,000
DDM
44,500
2.07
2.07
n/a
n/a
n/a
n/a
3.00
3.00
3.00
2.31
n/a
n/a
2.05
4.47
1.95
0.86
Total Share options
5,286,013
164
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Trifast plc Annual Report 2020 23 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 £2.0m and £2.5m in relation to share based payment transactions in FY2020 and FY2019
respectively. Of this, £49k (FY2019: £40k) relates to cash settled awards to which a liability is recognised on the statement of financial
position in trade and other payables. The remaining amount relates to equity settled awards.
As at 31 March 2020, outstanding options to subscribe for ordinary shares of 5p were as follows:
Grant date/employees entitled
01/10/14/SAYE
01/10/15/SAYE
01/10/16/SAYE
01/10/17 SAYE
01/10/18 SAYE
01/10/19 SAYE
Total outstanding options
Board deferred equity bonus shares
Senior manager deferred bonus shares
Board LTIP shares
Total
Number of
instruments
1,515
111,991
92,004
245,949
159,526
338,668
949,653
1,282,814
1,325,239
1,728,307
5,286,013
Contractual life
of options
Oct 2019
Oct 2020
Oct 2019, Oct 2021
Oct 2020, Oct 2022
Oct 2021, Oct 2023
Oct 2022, Oct 2024
Sep 2018, Jul 2019, 2020
Dec 2019, Jul 2022
Sep 2020, Jul 2021, Jul 2022
All options require continued employment from grant date to the later of vesting date or exercise date.
24 Provisions
Group
Balance at 31 March 2019 and 31 March 2020
Dilapidations
£000
959
Total
£000
959
Dilapidations relate to a portfolio of properties within the UK, 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. These will be
utilised on vacation.
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 (FY2019: £nil).
2020
Total
£000
959
—
959
2019
Total
£000
959
—
959
165
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Trifast plc Annual Report 2020Financial statements Notes to the financial statements
for the year ended 31 March 2020
25 Capital and reserves
Capital and reserves – Group and Company
See Statements of changes in equity on pages 132 to 133.
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 purchased 1,000,000 shares (FY2019: nil) on the open market via the Trifast EBT for £1.68 per share , total £1.7m
(FY2019 : nil shares). Whilst 1,289,187 shares (FY2019: 182,622) were transferred out of the Own Shares Held reserve at a weighted average
cost of £2.16, total cost £2.8m (FY2019: weighted average cost of £2.29, total cost £0.4m) to fulfil part of the exercise of awards under the
deferred equity bonus shares scheme. The number of ordinary shares held at the 31 March 2020 was 1,028,191 (FY2019: 1,317,378). These
shares are in the Own Shares Held reserve and are to help meet future employee share plan obligations.
Share capital
In issue at 1 April
Shares issued
In issue at 31 March — fully paid
Number of ordinary shares
2019
121,364,667
525,344
121,890,011
2020
121,890,011
742,901
122,632,912
The total number of shares issued during the year was 742,901 for a consideration of £0.4m (FY2019: 525,344 shares for £0.4m). In FY2019
6,973 shares were issued in relation to the Senior Manager deferred bonus share scheme. The number was greater than the total exercised
(3,937 shares) as a result of a proportion of the award being settled in a tax efficient manner (3,195 as nil-cost awards and 3,778 as CSOP
options with an exercise price of £1.98).
In FY2020, all shares were issued for cash, excluding 314,930 shares (FY2019: 173,010) as part of the Board deferred equity bonus scheme
and nil (FY2019: 3,195) as part of the senior manager deferred bonus shares.
Allotted, called up and fully paid
Ordinary shares of 5p each
2020
£000
6,132
2019
£000
6,095
The holders of ordinary shares (excluding own shares held) 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 2019 — 3.05p (FY2018: 2.75p) per qualifying ordinary share
Interim paid 2019 — 1.20p (FY2018: 1.10p) per qualifying ordinary share
2020
£000
3,687
1,447
5,134
2019
£000
3,301
1,319
4,620
After the balance sheet date a final dividend of nilp per qualifying ordinary share (FY2019: 3.05p) was proposed by the Directors and an
interim dividend of 1.20p (FY2019: 1.20p) was paid in April 2020.
Final proposed 2020 — nilp (FY2019: 3.05p) per qualifying ordinary share
Interim paid 2020 1.20p (FY2019: 1.20p) per qualifying ordinary share
2020
£000
—
1,457
1,457
2019
£000
3,687
1,447
5,134
Subject to Shareholder approval at the Annual General Meeting which is to be held on 22 September 2020, the Board are not proposing a
final dividend at this time. See the Business Review for further details.
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Trifast plc Annual Report 2020
26 Earnings per share
Basic earnings per share
The calculation of basic loss per share at 31 March 2020 was based on the loss attributable to ordinary shareholders of £(0.2)m (FY2019:
profit of £12.2m) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2020 (excluding own
shares held) of 122,171,272 (FY2019: 120,723,637), calculated as follows:
Weighted average number of ordinary shares
Issued ordinary shares at 1 April
Net effect of shares issued/(held)
Weighted average number of ordinary shares at 31 March
2020
121,890,011
281,261
122,171,272
2019
121,364,667
(641,030)
120,723,637
Diluted earnings per share
The calculation of diluted loss per share at 31 March 2020 was based on loss attributable to ordinary shareholders of £(0.2)m (FY2019: profit
of £12.2m) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2020 (excluding own shares
held) of 122,171,272 (FY2019: 123,734,170), 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
2020
122,171,272
—
122,171,272
2019
120,723,637
3,010,533
123,734,170
For diluted EPS there are potentially 2,273,827 dilutive share options, however they are not included in the weighted average calculation
for FY2020 because they are anti-dilutive since there is a loss after tax. These dilutive share options are considered in the calculation for
underlying diluted EPS below.
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
2020 EPS
2019 EPS
EPS (total)
(Loss)/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
Impairments in goodwill
Project Atlas
Tax charge on adjusted items above
Underlying profit after tax
Earnings
£000
(238)
Basic
(0.19)p
Diluted
(0.19)p
Earnings
£000
12,244
2,030
1,409
—
307
7,761
2,505
(653)
13,121
1.66p
1.15p
—
0.25p
6.35p
2.05p
(0.53)p
10.74p
1.63p
1.13p
—
0.24p
6.24p
2.01p
(0.52)p
10.54p
2,454
1,419
3
107
—
3,117
(1,370)
17,974
Basic
10.14p
2.03p
1.18p
—
0.09p
—
2.58p
(1.13p)
14.89p
Diluted
9.90p
1.98p
1.14p
—
0.09p
—
2.52p
(1.10p)
14.53p
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).
27 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, liquidity, 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.
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167
Trifast plc Annual Report 2020Financial statements Notes to the financial statements
for the year ended 31 March 2020
27 Financial instruments continued
(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. All overdue debts are monitored regularly
and customers are put on credit hold if payments are not received on time as appropriate. The carrying amount of trade receivables
represents the maximum credit exposure for the Group. These procedures have been enhanced as a result of COVID-19 uncertainties.
Therefore, the maximum exposure to credit risk at the balance sheet date was £48.5m (FY2019: £49.1m), 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 (FY2019: £nil), even taking into account COVID-19.
At the balance sheet date there were no significant geographic or sector specific concentrations of credit risk. Although we continue to
monitor the automotive sector closely due to the ongoing challenges in this specific end market.
Impairment losses
The movement in the allowance for impairment in respect of trade receivables and contract assets during the year was as follows.
Balance at 1 April
Impairment loss movement
Balance at 31 March
2020
£000
(986)
(163)
(1,149)
2019
£000
(897)
(89)
(986)
There are no significant losses/bad debts provided for specific customers. The allowance account for trade receivables is used to record
impairment losses where a credit risk has been identified, unless 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.
(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 facilities 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 banking
facilities as applicable.
At 31 March 2020, the Group banking facilities with a group of three lenders comprised a revolving multi-currency credit facility (‘RCF’) of up
to £80.0m (balance at 31 March 2020: £44.3m).
On 16 April 2019, all of the Group’s centrally held facilities and the ABL facility in TR Fastenings Ltd were redeemed via this new four year
Revolving Credit Facility of up to £80m maturing April 2023. The facility includes an accordion of. up to £40m and the option to extend
maturity up to April 2024. The facility is guaranteed by 16 Group companies which exceed thresholds in various financial metrics as
specified by lenders. Interest on this new facility is charged at the aggregate rate of LIBOR/EURIBOR plus a margin of 1.10%, in accordance
with a formula incorporating the ratio of consolidated net debt against the consolidated underlying EBITDA of the Group.
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 FY2021.
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Trifast plc Annual Report 2020 27 Financial instruments continued
Covenant headroom – at 31 March 2020
The RCF facility in place as at 31 March 2020 are subject to quarterly covenant testing as follows:
Interest cover:
Adjusted leverage:
Underlying EBITDA to net interest to exceed a ratio of four.
Total net debt to underlying EBITDA not to exceed a ratio of three.
These covenants currently provide significant headroom and forecasts (taking into account COVID-19 scenario planning and the equity
raise (see note 30)) indicate no breach is anticipated.
Liquidity tables
The following are the contractual maturities of the existing financial liabilities, excluding bank overdrafts and lease liabilities
Non-derivative financial liabilities
Company
Revolving credit facility
Total Company
Group
VIC unsecured loan
Total Group
2020
Carrying
amount/
contractual
cash flows^
£000
Less than
1 year
£000
1 to 2
years
£000
2 to 5
years
£000
44,262
44,262
266
44,528
—
—
266
266
—
—
—
—
44,262
44,262
—
44,262
^
In addition to the above, there are interest charges of £328k for the year relating to Revolving Credit Facilty.
IFRS 16 Right-of-use liabilities details are provided in note 12.
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
2019
Carrying
amount/
contractual
cash flows
£000
Less than
1 year
£000
8,614
24,816
2,100
35,530
2,977
775
39,282
4,307
24,816
—
29,123
2,977
517
32,617
1 to 2
years
£000
4,307
—
2,100
6,407
—
258
6,665
2 to 5
years
£000
—
—
—
—
—
—
—
Liquidity headroom
Trading forecasts show that the facilities in place at 31 March 2020 provided 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. The re-finance on 16 April 2019 provides additional liquidity headroom to support the Group’s strategic
investment aims.
On 19 June, the Group successfully completed a placing of new ordinary shares, raising net £15.5m of proceeds. As of 30 June 2020 the
Group has been in a net cash position, promoting further significant liquidity headroom (see note 30).
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169
Trifast plc Annual Report 2020Financial statements Notes to the financial statements
for the year ended 31 March 2020
27 Financial instruments continued
Facilities that were available at 31 March 2020 (excluding bank overdrafts and lease liabilities):
Company
Revolving Credit Facility
Facility A — VIC acquisition loan
Facility B — Revolving credit facility
Property loan
Total Company
Group
Asset based lending
VIC unsecured loan
Total Group
Available
facilities
£000
2020
Utilised
facilities
£000
Unutilised
facilities
£000
Available
facilities
£000
80,000
—
—
—
80,000
—
266
80,266
44,262
—
—
—
44,262
—
266
44,528
35,738
—
—
—
35,738
—
—
35,738
—
8,614
31,000
2,100
41,714
15,000
775
57,489
2019
Utilised
facilities
£000
—
8,614
24,816
2,100
35,530
2,977
775
39,282
Unutilised
facilities
£000
—
—
6,184
—
6,184
12,023
—
18,207
In addition there is an accordion facility of £40m as part of the RCF facility agreement, which provides potential additional finance under
current agreed terms subject to credit approval.
Interest risk
The Group monitors closely all loans outstanding which currently incur interest at floating rates. When appropriate the Group makes use
of derivative financial instruments, including interest rate swaps and caps. 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 21.
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 lease liabilities)
Variable rate instruments
Financial assets
Financial liabilities*
Net debt
*
Including prepaid arrangement fee of £0.6m
Group
Company
2020
£000
28,727
(58,997)
(30,270)
2019
£000
25,199
(39,356)
(14,157)
2020
£000
265
(43,647)
(43,382)
2019
£000
899
(35,530)
(34,631)
Sensitivity analysis
A change of one percentage point in interest rates at the balance sheet date would change equity and profit and loss by £0.4m (FY2019:
£0.4m). 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.
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Trifast plc Annual Report 2020 27 Financial instruments continued
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 Euro denominated RCF utilised facility of €46.4m (£41.1m) is net investment hedged against the net asset value of TR VIC, TR Kuhlmann
and TR Espana. Therefore all foreign exchange movements that are being hedged are taken to the translation reserve. The US Dollar
denominated RCF utilised facility of $4.0m (£3.2m) is naturally hedged by an equivalent asset in the Company.
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 2020
Cash and cash equivalents exposure
31 March 2019
Cash and cash equivalents exposure
Sterling
£000
695
Sterling
£000
1,297
Euro
£000
2,497
US Dollar
£000
7,730
Euro
£000
2,719
US Dollar
£000
5,094
Singapore
Dollar
£000
213
Singapore
Dollar
£000
281
Total
£000
11,135
Total
£000
9,391
Sensitivity analysis
Group
A 1% change in significant foreign currency balances against local functional currency at 31 March 2020 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
EURO
US Dollar
US Dollar
EURO
Local currency
Sterling
Singapore Dollar
Taiwanese Dollar
Hungarian forint
Equity & profit or loss
2020
£000
(9)
(51)
(20)
(11)
2019
£000
(11)
(26)
(14)
(9)
(c) Capital management and allocation
The Group’s objectives when managing capital are to ensure that all entities within the Group will be able to continue as going concerns,
whilst 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.
Capital allocation priorities
The Board’s key capital allocation priorities are as follows:
• Continue to invest in the business to drive organic growth
•
•
Realise acquisitions in-line with our acquisition strategy
Return to a progressive dividend policy as soon as is practical, maintaining a target dividend cover range of between 35 to 45
Due to ongoing investment opportunities and the current levels of uncertainty due to COVID-19, we have no medium-term plans to return
excess cash to shareholders.
Cash conversion
The Group has been and continues to expect to be, outside of the short term COVID-19 environment, consistently cash generative. In the
longer term the Board continues to target normalised cash conversion of 70% to 80%, as we invest in the balance sheet to support our
ongoing organic growth.
Net debt to underlying EBITDA
Calculated in line with the banking agreement
Maximum adjusted leverage covenant - 3.0x
2017
0.285
2018
0.305
2019
0.545
2020
0.80x
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Trifast plc Annual Report 2020Financial statements Notes to the financial statements
for the year ended 31 March 2020
27 Financial instruments continued
In the current uncertain environment the Board has set a maximum net debt to underlying EBITDA ratio of 1.55 (FY2019 : 2.05). This would
only be breached via investment, where a short-term reversal can be reliably forecast.
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.
Due to the uncertainties of the COVID-19 pandemic our total funding requirement is reviewed via detailed scenario forecasts, updated daily and
reported weekly. Further information on our response to COVID-19 is included on pages 10 to 13.
The capital structure of the Group is provided below:
Cash and cash equivalents
Borrowings (note 21)
Net debt
Equity
Capital
2020
£000
28,727
(58,997)
(30,270)
(115,660)
(145,930)
2019
£000
25,199
(39,356)
(14,157)
(121,093)
(135,250)
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 (FY2019: £0.1m).
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 92 to 107.
Transactions with Directors and Directors’ close family relatives.
During 2020 a relative of the Chair provided IT/Marketing consultancy services totalling £12,000 (FY2019: £12,000) on an arm’s length basis
and with terms similar to other third party suppliers. The outstanding balance at 31 March 2020 was £2,000 (FY2019: £1,000).
There were no other related party transactions with Directors, or Directors’ close family members in the year (FY2019: £nil).
Related party transactions
Details of principal subsidiary undertakings, country of registration and principal activities are included in note 33.
Company related party transactions with subsidiaries – income/expenditure FY2020
Income
management
fees
£000
332
30
Loan
interest
receivable
£000
—
—
Rent income
£000
290
—
Total
income
£000
622
30
Expenditure
management
fees
£000
647
—
Loan
interest
payable
£000
23
—
Total
expense
£000
670
—
—
—
—
—
—
—
—
—
—
—
—
290
30
24
24
73
88
103
104
76
64
82
752
1,782
—
—
—
—
—
—
—
—
25
90
—
115
30
24
24
73
88
103
104
76
89
172
752
2,187
—
—
—
—
—
—
—
—
—
—
—
647
—
—
—
—
—
4
—
—
—
—
—
27
—
—
—
—
—
4
—
—
—
—
—
674
TR Fastenings Ltd
Lancaster Fastener Co Ltd
Precision Technology Supplies
Ltd
TR Southern Fasteners Ltd
TR Norge AS
TR Fastenings AB
TR Miller BV
TR Hungary Kft
TR VIC SPA
TR Kuhlmann GmbH
TR Fastenings España
TR Fastenings Inc
TR Asia Investments Pte Ltd
Total
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Trifast plc Annual Report 2020 29 Related parties continued
Company related party transactions with subsidiaries – income/expenditure FY2019
Income
management
fees
£000
435
39
Loan
interest
receivable
£000
—
—
Rent income
£000
290
—
Total
income
£000
725
39
Expenditure
management
fees
£000
539
—
Loan
interest
payable
£000
—
—
Total
expense
£000
539
—
TR Fastenings Ltd
Lancaster Fastener Co Ltd
Precision Technology Supplies
Ltd
TR Southern Fasteners Ltd
TR Norge AS
TR Fastenings AB
TR Miller BV
TR Hungary Kft
TR VIC SPA
TR Kuhlmann GmbH
TR Fastenings España
TR Fastenings Inc
TR Asia Investments Pte Ltd
—
—
—
—
—
—
—
—
—
—
—
290
—
25
29
77
92
97
104
82
66
87
716
1,849
—
—
—
—
—
—
—
—
16
22
—
38
—
25
29
77
92
97
104
82
82
109
716
2,177
—
—
—
—
—
—
—
—
—
—
—
539
—
—
—
—
—
7
—
—
—
—
—
7
TR Fastenings Ltd
Lancaster Fastener Company Ltd
Precision Technology Supplies
TR Southern Fasteners Ltd
TR Norge AS
TR Fastenings AB
TR Miller Holding B.V.
TR Hungary Kft
TR VIC SPA
TR Kuhlmann GmbH
TR Fastenings España
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 Poland Sp Zoo
Non-trading dormant subsidiaries
Trifast Overseas Holdings Ltd
Trifast Holdings B.V.
All related party transactions are on an arm’s length basis.
2020
2019
Balances
receivables
£000
2,812
104
116
49
86
246
234
53
215
15
2,758
3,330
491
411
8
3
149
13
43
—
37,754
—
48,890
Balances
payables
£000
3,225
—
—
—
—
—
—
2
—
—
—
—
—
—
—
—
—
—
—
267
—
53
3,547
Balances
receivables
£000
2,026
93
56
23
55
164
183
29
136
143
1,687
2,018
491
234
75
67
96
167
39
—
36,422
—
44,204
—
—
—
—
—
7
—
—
—
—
—
546
Balances
payables
£000
3,462
—
—
—
—
—
—
343
—
—
—
—
—
—
—
—
—
—
—
267
—
90
4,162
173
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Trifast plc Annual Report 2020Financial statements
Notes to the financial statements
for the year ended 31 March 2020
30 Subsequent events
There are no material adjusting events subsequent to the balance sheet date.
On the 19 June 2020 the Company’s broker, Peel Hunt, successfully completed the placing of 12,448,132 new ordinary shares of five pence
each in the share capital of the Company at a price of 120.5 pence per Placing Share, raising gross proceeds of approximately £15m. The
Placing Price represented a discount of 9.7% to the closing price of 133.5 pence per share on 18 June 2020. The Placing Shares being issued
represented approximately 10.1% of the issued share capital of the Company prior to the Placing.
On 23 June, the broker option was exercised in full, placing a total of 830,000 new ordinary shares of five pence each in the share capital of
the Company, raising gross proceeds of approximately £1m. The transaction costs incurred relating to the placings of these shares were
£0.5m.
As part of the transactions for the placing of the ordinary shares, Trifast plc acquired Project Lavender Limited, a company incorporated in
Jersey, on 5 June 2020, and after the placing of the shares the company was liquidated on 24 June 2020.
The placing was undertaken to ensure that the Group can continue to support its long-term strategic investments as well as being able to
maximise its growth in the short term as markets recover from COVID-19. For further details, see the Business Review.
There are no other material non-adjusting events subsequent to the balance sheet date.
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, the key judgement made by management relates to
Project Atlas costs meeting the capitalisation criteria under IAS 38 Intangible Assets, allowing directly attributable costs to be capitalised.
The judgement includes identifying and quantifying the costs that should be capitalised, which principally relate to the design and build of
the IT infrastructure, from the overall Project Atlas spend. In the year, £3.1m (FY2019: £0.9m) (see notes 14 and 15) has been capitalised. The
costs expensed in the income statement are disclosed in note 2. Other than Project Atlas, no 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 sources 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 are inventory valuation and recoverability of goodwill.
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 19.
The carrying amount of inventory at year end was £59.2m of which £31.4m related to customer specific stock (FY2019: carrying value
£57.6m, customer specific stock £30.3m).
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.
The carrying amount of goodwill at year end was £59.9m (FY2019: £31.4m) of which £3.0m (FY2019: £9.8m) relates to VIC. As part of the
impairment review testing, management have recognised an impairment of £7.0m in the year for VIC, but also that the recoverability of the
remaining goodwill is sensitive to changes in discount rate. The uncertainty in the Italian economy, particularly due to COVID-19, could cause
an increase in discount rate which could lead to an additional impairment. For more information, please see note 14.
There are also longer-term risks involved with the recoverability of goodwill 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.
174
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Trifast plc Annual Report 2020 32 Acquisition of Precision Technology Supplies Limited (‘PTS’)
Please note all figures below are as disclosed in the 31 March 2019 Annual Report.
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
profit after tax (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 >75 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.
In the twelve months since acquiring PTS to 31 March 2019, the subsidiary contributed £1.2m to the consolidated profit before tax for the
period and £7.1m to Group revenue.
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
12% of Group revenue).
Property, plant and equipment
Intangible assets
Inventories
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Provisions
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
Provisional
fair values
disclosed^
Adjustments
to provisional
fair values
£000
—
—
(164)
—
—
187
(50)
—
(27)
Recognised
fair value
£000
253
4,816
2,253
1,324
632
(1,031)
(50)
(861)
7,336
—
—
—
27
8,781
598
9,379
2,043
^
These figures were disclosed in the Annual Report for the year ended 31 March 2019
* Original contingent consideration fair value at acquisition date
The fair value of trade and other receivables is £1.3m. The gross contractual flows to be collected are £1.1m. The best estimate at acquisition
date of the contractual flows not to be collected is £nil.
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 £nil up to 31 March 2020 (FY2019: £0.1m) in relation to the PTS acquisition. In FY2019 the £0.1m of costs were
included in administrative expenses in the Group’s consolidated statement of comprehensive income and formed part of separately
disclosed items, see note 2. This was offset by a movement of £0.1m in acquisition related contingent consideration.
27166-Trifast-AR-2020 Financials.indd 175
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175
Trifast plc Annual Report 2020Financial statements Notes to the financial statements
for the year ended 31 March 2020
33 Trifast plc subsidiaries
Country of
incorporation or
registration
Issued and fully
paid share capital Principal activity
Percentage
of ordinary
shares held
Group
Company Office Address
United Kingdom
Netherlands
United Kingdom
Republic of Ireland
Norway
Netherlands
United Kingdom
Sweden
Hungary
Poland
Italy
Poland
Germany
United Kingdom
Europe
Trifast Overseas Holdings Ltd
Trifast Holdings B.V.
TR Fastenings Ltd
TR Southern Fasteners Limited
TR Norge AS
TR Miller Holding B.V.
Lancaster Fastener Company Ltd
TR Fastenings AB
TR Hungary Kft
TR Fastenings Poland Sp. Z o.o
TR VIC SPA
VIC Sp. Z o.o.
TR Kuhlmann GmbH
Precision Technology Supplies Ltd
TR Fastenings España – Ingenieria Industrial, S.L. Spain
Asia
TR Asia Investment Holdings Pte Ltd
TR Formac Pte Ltd
TR Formac (Malaysia) SDN Bhd
TR Formac (Shanghai) Pte Ltd
Special Fasteners Engineering Co Ltd
TR Formac Fastenings Private Ltd
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
Trifast Qualifying Employee Share
Ownership Trustee Ltd
Trifix Ltd
Serco Ryan Ltd
TR Europe Ltd
USA
Singapore
Singapore
Malaysia
China
Taiwan
India
Malaysia
Thailand
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Holding Company
Holding Company
Manufacture and distribution of fastenings
Distribution of fastenings
Distribution of fastenings
Distribution of fastenings
Distribution of fastenings
Distribution of fastenings
Distribution of fastenings
Distribution of fastenings
Manufacture and distribution of fastenings
Distribution of fastenings
Distribution of fastenings
Distribution of fastenings
Distribution of fastenings
Holding Company
Manufacture and distribution of fastenings
Manufacture and distribution of fastenings
Distribution of fastenings
Manufacture and distribution of fastenings
Distribution of fastenings
Manufacture and distribution of fastenings
Distribution of fastenings
Distribution of fastenings
11255 Windfern Road, Houston, TX. 77064
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%
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
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
The Birches Industrial Estate, Imberhorne Lane, East Grinstead, West Sussex RH19 1XZ, UK
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
International House, Stanley Boulevard, Hamilton Intnl Technology Park, Blantyre, Glasgow, Scotland, G72 0BN
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
All of the above subsidiaries have been included in the Group’s financial statements.
176
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Trifast plc Annual Report 2020 Precision Technology Supplies Ltd
United Kingdom
TR Fastenings España – Ingenieria Industrial, S.L. Spain
33 Trifast plc subsidiaries
Europe
Trifast Overseas Holdings Ltd
Trifast Holdings B.V.
TR Fastenings Ltd
TR Southern Fasteners Limited
TR Norge AS
TR Miller Holding B.V.
Lancaster Fastener Company Ltd
TR Fastenings Poland Sp. Z o.o
TR Fastenings AB
TR Hungary Kft
TR VIC SPA
VIC Sp. Z o.o.
TR Kuhlmann GmbH
Asia
TR Asia Investment Holdings Pte Ltd
TR Formac Pte Ltd
TR Formac (Malaysia) SDN Bhd
TR Formac (Shanghai) Pte Ltd
Special Fasteners Engineering Co Ltd
TR Formac Fastenings Private Ltd
Power Steel & Electro-Plating Works SDN Bhd
TR Formac Co. Ltd
Americas
TR Fastenings Inc
Dormants
Trifast Systems Ltd
Ivor Green (Exports) Ltd
Fastech (Scotland) Ltd
Micro Screws & Tools Ltd
Trifast International Ltd
Rollthread International Ltd
TR Group Ltd
Fastener Techniques Ltd
Charles Stringer’s Sons & Co.Limited
Trifast Qualifying Employee Share
Ownership Trustee Ltd
Trifix Ltd
Serco Ryan Ltd
TR Europe Ltd
United Kingdom
Netherlands
United Kingdom
Republic of Ireland
Norway
Netherlands
United Kingdom
Sweden
Hungary
Poland
Italy
Poland
Germany
Singapore
Singapore
Malaysia
China
Taiwan
India
Malaysia
Thailand
USA
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
All of the above subsidiaries have been included in the Group’s financial statements.
Manufacture and distribution of fastenings
Holding 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
Distribution of fastenings
Manufacture and distribution of fastenings
Holding Company
Manufacture and distribution of fastenings
Manufacture and distribution of fastenings
Distribution of fastenings
Manufacture and distribution of fastenings
Distribution of fastenings
Manufacture and distribution of fastenings
Distribution of fastenings
Distribution of fastenings
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Country of
incorporation or
Issued and fully
registration
paid share capital Principal activity
Percentage
of ordinary
shares held
Group
Company Office Address
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%
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
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
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
The Birches Industrial Estate, Imberhorne Lane, East Grinstead, West Sussex RH19 1XZ, UK
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
11255 Windfern Road, Houston, TX. 77064
Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
International House, Stanley Boulevard, Hamilton Intnl Technology Park, Blantyre, Glasgow, Scotland, G72 0BN
Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, UK
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177
Trifast plc Annual Report 2020Financial statements Notes to the financial statements
for the year ended 31 March 2020
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 68 to 69 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 2020 income statement results (of subsidiaries whose
presentational currency is not sterling) using FY2019 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 operating margin
Underlying operating margin is used in the business review to give the reader a better understanding of the performance of the Group and
regions. It is calculated by dividing underlying operating profit by revenue in the year.
• 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 26.
• 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 pages 184 to 185. 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
Impairments of goodwill
Costs on exercise of executive share options
Operating profit
Note
23
32
2020
£000
18,089
(2,030)
(1,409)
—
(2,505)
(7,761)
(307)
4,077
2019
£000
24,196
(2,454)
(1,419)
(3)
(3,117)
—
(107)
17,096
178
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Trifast plc Annual Report 2020
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
Acquisition expenses
Costs on exercise of executive share options
Deferred consideration
Project Atlas
Cash generated from operations
2020
£000
22,579
—
(289)
(503)
(2,383)
19,404
2019
£000
17,154
(101)
(107)
—
(3,162)
13,784
• Underlying effective tax rate
This is used in the underlying diluted EPS calculation. It removes the tax impact of separately disclosed items in the year to arrive at a tax
rate based on the underlying profit before tax.
Profit before tax
Separately disclosed items
Underlying profit before tax
Profit
impact
£000
3,042
14,011
17,053
2020
Tax impact
£000
(3,280)
(653)
(3,933)
ETR
%
107.8%
4.7%
23.1%
Profit
impact
£000
16,421
7,100
23,521
2019
Tax impact
£000
(4,177)
(1,370)
(5,547)
ETR
%
25.4%
19.3%
23.6%
• Adjusted net debt and adjusted net debt to Underlying EBITDA (adjusted leverage) ratio
This removes the impact of IFRS 16 from both net debt and Underlying EBITDA from FY2020. There is no impact to FY2019 as IFRS16 was
applied under the modified retrospective approach, see note 1. Underlying EBITDA is reconciled to operating profit in note 2.
Net debt
Right-of-use lease liabilities
Adjusted net debt
Underlying EBITDA
Operating lease payments
Adjusted EBITDA
•
Interest cover
2020
£000
(30,270)
15,109
(15,161)
2020
£000
23,525
(3,505)
20,020
This is Adjusted EBITDA to adjusted net interest, removing the impact of IFRS 16 from both in FY2020. There is no impact to FY2019 as IFRS16
was applied under the modified retrospective approach, see note 1. Underlying EBITDA has IFRS 16 removed above and is reconciled to
operating profit in note 2.
Net debt
Right-of-use liability interest
Adjusted net interest
2020
£000
(1,035)
365
(670)
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Trifast plc Annual Report 2020Financial statements Notes to the financial statements
for the year ended 31 March 2020
35 Reconciliation of net cash flow to movement in net debt
Net change in cash and cash equivalents
Proceeds from new loan
Repayment of borrowings
Net increase in right-of-use liabilities
Payment of finance lease liabilities
Net proceeds from borrowings
Increase in net debt before exchange rate differences
Exchange rate differences
Increase in net debt
Opening net debt
Opening right-of-use liabiltiies at 1 April 2019
Closing net debt
2020
£000
3,220
(45,026)
41,620
(816)
74
(4,148)
(928)
(892)
(1,820)
(14,157)
(14,293)
(30,270)
2019
£000
(1,152)
(12,136)
5,953
—
2
(6,181)
(7,333)
607
(6,726)
(7,431)
—
(14,157)
Net debt consists of cash and cash equivalents, right-of-use liabilities and other interest-bearing loans and borrowings (both current and
non-current) on the statement of financial position.
36 Changes in financial liabilities including both cash flows and non-cash changes
Balance at 1 April
Opening right-of-use liabilities as 1 April 2019
Balance at 1 April (restated)
Cash flow changes
Foreign exchange on loans
Foreign exchange on translation of subsidiaries
Right-of-use liabilities additions
Right-of-use liabilities disposals
Right-of-use liabilities interest
Balance at 31 March
2020
£000
39,356
14,293
53,649
(155)
1,185
61
3,913
(21)
365
58,997
2019
£000
33,653
—
33,653
6,181
(461)
(17)
—
—
—
39,356
Liabilities arising from financing activities include other interest-bearing loans and borrowings and right-of-use liabilities.
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Trifast plc Annual Report 2020 37 Revenue from contracts with customers
In line with IFRS15 Revenue from Contracts with Customers we have included the disaggregation of external revenue by sector, breaking this
down by our geographical operating segments.
March 2020
Electronics
Automotive
Domestic appliances
Distributors
General industrial
Other
Revenue from external customers (AER)
March 2019
Electronics
Automotive
Domestic appliances
Distributors
General industrial
Other
Revenue from external customers (AER)
UK
£000
4%
9%
2%
9%
7%
5%
36%
UK
£000
3%
10%
1%
10%
7%
5%
36%
Europe
£000
4%
13%
12%
—
3%
4%
36%
Europe
£000
5%
13%
12%
—
3%
3%
36%
USA
£000
1%
4%
—
—
—
—
5%
USA
£000
2%
2%
—
—
—
—
4%
Asia
£000
5%
8%
6%
2%
1%
1%
23%
Asia
£000
5%
8%
7%
2%
1%
1%
24%
Total
£000
14%
34%
20%
11%
11%
10%
100%
Total
£000
15%
33%
20%
12%
11%
9%
100%
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Trifast plc Annual Report 2020Financial statements ENABLING
INNOVATION
WITHIN
ROBOTICS &
AUTOMATION
Once being the topic of science fiction, robotic
automation and drone service integration is
augmenting and replacing human activities in
today’s ever changing economic and social
landscape.
Read more about innovation
on pages 36 to 37
Pursuing increased productivity, accuracy and efficiency whilst
reducing human exposure to dangerous or extreme environments
are more available than ever with new enabling technologies in
systems, drives, batteries and materials. Advances in artificial
intelligence empowers auto-adaptability in autonomous
robots and drones alongside collaborative and conventionally
programmable robots. Cost effective, modular, more flexible and
more capable equipment are accelerating the growth of drones
and personal robots, fully automated production facilities as well
as improved logistics and warehousing.
Our purpose is to enable business agility for our customers
in this modern and rapidly evolving industry through our
engineering resources, product expertise and local support
and supply to stay ahead of the development curve in intelligent
automation trends. Be it, autonomic farming or attended robotic
manufacture, warehouse automation or drone service integration,
entertainment, health or security services, TR Fastenings is
facilitating the continuation of automation innovations.
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Contents
Glossary of terms
Five year history
Company and advisers
Financial calendar
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186
187
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Shareholder information Glossary of terms
AER
Actual Exchange Rate.
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.
Earnings before
There are several ‘Earnings before….’ ratios.
The key ones being:
•
•
•
•
PBT
Profit/earnings before taxes
EBIT
Earnings before interest and taxes
EBITDA
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.
Goodwill
Any surplus money paid to acquire a
company that exceeds its net assets fair
value.
Dividend cover
Underlying diluted earnings per share over
proposed dividend per share in the year.
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.
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)
Book build
Book building is the process by which an
underwriter attempts to determine the price
at which an initial public offering (IPO) or
Placing of equity will be offered.
Broker option
The Broker Option has been issued to
facilitate the participation by existing
shareholders of the Company, being
shareholders of the Company who hold
shares in the Company.
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.
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Trifast plc Annual Report 2020
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 distributors of
MiFID ‘products’
•
Introduction of a harmonised
commodity position limits regime
for more visit 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.
Non-pre-emptive rights
This term refers to an issue or sale of any
equity securities by a Company to which
pre-emptive rights do not apply.
PDMR
This term stands for Persons Discharging
Managerial Responsibility. These relate to
people who are Board directors or senior
management, who have access to price-
sensitive information on a regular basis.
As a result, if they buy or sell shares at any
time this must be declared in a PDMR notice
which is released by the Company via the
London Stock Exchange New service (RNS).
PDMRs may not deal in the Company’s
shares in a close period.
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.
Placing
A placing (called a placement in the US)
is the issue of new securities, which are
sold directly to holders, usually institutional
investors. Unlike a Rights issue a placing
of shares is not an offer to existing
shareholders; simply to any suitable buyers
who can be found. The advantage of a
placing is that it is a cheaper and simpler
method of raising funds for the business.
PPE
PPE stands for Personal Protective
Equipment and includes items such as
masks, helmets, gloves, eye protection and
high-visibility clothing and is designed to
keep people safe.
Pre-emptive rights
Pre-emptive rights are a clause in an option,
security or merger agreement that gives
the investor the right to maintain his or her
percentage ownership of a company by
buying a proportionate number of shares of
any future issue of the security.
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
Rights issue
A rights issue is the term for when a
Company offers more of its ordinary shares
to current shareholders, usually to raise
extra capital for the business.
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 T R I
Third party logistics (3PL)
3PL in logistics and supply chain
management is an organisation’s use
of third-party businesses to outsource
elements of its distribution, warehousing,
and fulfilment services.
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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Trifast plc Annual Report 2020Shareholder information Five year history
Revenue
GP margin
Underlying operating profit*
Underlying operating profit margin
Operating profit
Operating profit margin
Underlying EBITDA*
Underlying PBT*
PBT
ROCE %
Total dividend per share
Dividend increase %
Dividend cover
Underlying diluted EPS*
Diluted EPS
Adjusted net debt/(cash)^
Cash conversion % of underlying EBITDA*
Share price at 31 March
* Before separately disclosed items, see note 2
2016
£161.4m
29.7%
£16.8m
10.4%
£13.9m
8.6%
£18.2m
£16.0m
£13.1m
18.5%
2.80p
33.3%
3.6 ×
9.99p
8.50p
£16.0m
88.9%
127p
2017
£186.5m
31.1%
£21.0m
11.3%
£17.9m
9.6%
£22.9m
£20.5m
£17.3m
19.9%
3.50p
25.0%
3.7 ×
12.82p
10.40p
£6.4m
97.3%
211p
2018
£197.6m
30.5%
£22.7m
11.5%
£19.0m
9.6%
£24.7m
£22.2m
£18.5m
20.1%
3.85p
10.0%
3.6 ×
13.78p
12.20p
£7.4m
68.1%
255p
2019
£209.0m
30.0%
£24.2m
11.6%
£17.1m
8.2%
£26.4m
£23.5m
£16.4m
18.8%
4.25p
10.4%
3.4 ×
14.53p
9.90p
£14.2m
64.9%
193p
2020
£200.2m
27.5%
£18.1m
9.0%
£4.1m
2.0%
£23.5m
£17.1m
£3.0m
12.0%
1.20p
(71.8)%
8.8 ×
10.54p
(0.19)p
£15.2m
95.9%
95p
^ Presented after adoption of IFRS16 Leases in FY2020. For underlying EBITDA and underlying EBITDA%, the impact has been an increase of £3.5m and 170bps at CER (before
IFRS16: £20.0m and 10.0%) and £3.5m and 170bps at AER (before IFRS16: £20.0m and 10.0%). For ROCE the impact has been a reduction of 100bps (before IFRS16: 13.0%)
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Trifast plc Annual Report 2020 Company and advisers
Trifast plc
Incorporated in the United Kingdom
Registered number: 01919797
LSE Premium Listing:
Ticker: T R I
LEI REFERENCE: 213800WFIVE6RWK3CR22
Head office and registered office
Trifast House,
Bellbrook Park, Uckfield,
East Sussex TN22 1QW
Telephone: +44 (0)1825 747366
Committee memberships
as at 1 April 2020
Advisers
Registered auditor
BDO LLP
2 City Place, Beehive Ring Road
Gatwick
West Sussex RH6 0PA
Corporate stockbroker
Peel Hunt LLP
Moor House, 120 London Wall
London EC2Y 5ET
Solicitor
Charles Russell Speechlys, LLP
Compass House, Lypiatt Road
Cheltenham GL50 2QJ
Registrar
Computershare Investor Services plc
The Pavilions, Bridgwater Road
Bristol BS13 8AE
Financial PR
TooleyStreet Communications Limited
62 Caroline Street
Birmingham B3 1UF
Audit Committee
Neil Warner (Chair)1
Clive Watson (Chair)2
Scott Mac Meekin
Claire Balmforth
Remuneration Committee
Claire Balmforth (Chair)
Neil Warner1
Scott Mac Meekin
Clive Watson2
Nominations Committee
Jonathan Shearman (Chair)
Neil Warner1
Scott Mac Meekin
Claire Balmforth
Clive Watson2
Company Secretary
Lyndsey Case
1. retired 31 July 2020
2. appointed 30 July 2020
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187
Trifast plc Annual Report 2020Shareholder information
Financial calendar
AGM
Half-yearly results
Trading update
Financial year end
Pre-close trading update
Preliminary results
12 noon, Tuesday 22 September 2020
November 2020
February 2021
31 March 2021
April 2021
June 2021
Details of the Company’s up to date Financial reporting calendar can be found on our
website at www.trifast.com/investors/financial-calendar/
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Trifast House,
Bellbrook Park,
Uckfield,
East Sussex
TN22 1QW
Tel: +44 (0)1825 747366
Fax: +44 (0)1825 747368
www.trifast.com
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