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    TRI   GB0008883927

TRIFAST PLC

(TRI)
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Trifast : 2022 Half-year report

11/23/2021 | 01:59am EDT

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

Tuesday, 23 November 2021

Leading international specialist in the design, engineering, manufacture, and distribution

of high-quality industrial fastenings and Category 'C' components principally to major global assembly industries

"Our fastenings enable innovation today, to build a better tomorrow"

TRIFAST PLC

HALF-YEARLY FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021

Key financials

CER4

CER4

AER4

AER4

HY20211

HY20201

Underlying measures

HY2022

change

HY2022

change

Revenue

£106.4m

31.4%

£103.8m

28.1%

£81.0m

£103.1m

Gross profit %

26.2%

(80)bps

26.3%

(70)bps

27.0%

28.8%

Underlying operating profit (UOP)3

£7.7m

73.7%

£7.4m

67.0%

£4.5m

£10.4m

Underlying operating profit %3

7.3%

180bps

7.2%

170bps

5.5%

10.1%

Underlying profit before tax3

£7.3m

84.2%

£7.0m

76.8%

£4.0m

£9.9m

Underlying diluted earnings per share3

4.59p

102.2%

4.42p

94.7%

2.27p

6.07p

Bank facility headroom

£50.8m

£10.2m

£40.6m

£39.9m

Adjusted net (debt)/cash5

£(5.1)m

(£8.5)m

£3.4m

£(15.7)m

Return on capital employed (ROCE)2,3

8.8%

330bps

5.5%

11.3%

Interim dividend

0.70p

N/A

-

1.20p

GAAP measures

Operating profit

£5.7m

81.3%

£3.2m

£8.4m

Operating profit %

5.5%

160bps

3.9%

8.2%

Profit before tax

£5.3m

98.7%

£2.7m

£7.9m

Diluted earnings per share

3.22p

117.6%

1.48p

4.82p

  1. Presented after the reclassification of IFRS2 Share-based Payments, including related social security costs on exercise, into underlying results. For EPS, the impact has been a reduction of 0.04p from 2.31p. For ROCE, a reduction of 120bps from 7.8%
  2. The calculation for ROCE was changed in FY2021, and therefore restated above for HY2021, to reflect an add back of gross, rather than net debt. The impact of this change is a 110bps reduction from 6.6%. HY2020 has also been restated to add back gross rather than net debt. In addition IFRS16 Leases only became effective from 1 April 2019, therefore HY2020 ROCE has been calculated from a six month average, with underlying EBIT pro-rated for a full year
  3. Before separately disclosed items (see notes 2, 6 and 9)

4. "CER" being Constant Exchange Rate, calculated by translating the HY2022 figures by the average HY2021 exchange rate & "AER" being Average Exchange Rate

5. Adjusted net (debt)/cash is presented excluding the impact of IFRS16 Leases as this is how the calculation is performed for the purposes of the Group's banking facilities.

Including right-of-use liabilities, net debt would increase by £(13.4)m to £(18.5)m (HY2021: net cash would decrease by £(13.9)m to net debt of £(10.5)m)

Operational highlights

  • Strong rebound in Q1 and solid Q2 growth drives year-on-year revenue increase of 31.4% and an increase of 3.2% over the pre-Covid HY2020 period
  • Operational gearing underpins underlying operating margin increase of 180bps to 7.3%
  • Gross margins at 26.2% are down against HY2021, but have held steady against HY2 FY2021 (26.1%), as transactional price rises offset increased inflationary pressures
  • Global price increase programme on contract customers is on course to secure normalised gross margins by Q4
  • Light vehicle sector sales outperform the market growing 34.3% (8.5% - source: LMC Automotive Ltd), through continued market share gains
  • Focused inventory investments support sales growth and protects supply in a challenging market
  • Project Atlas - costs and timetable on track, benefits starting to come through
  • Falcon acquired - a first step on our ambitious North America acquisition journey

1

"Demand across all sectors is strong and our order pipeline has never been higher. Increasing opportunities for expansion into key emerging technologies continue to fuel growth, supplemented by new contract wins across a range of existing and new multinational OEMs/Tier 1 customers. Our global price increase programme will pass-through cost inflation and we expect revenues to increase and gross margins to normalise in Q4 as a result. "

Mark Belton, Chief Executive Officer

"There really has never been a more exciting time for the Group. We believe that the combination of our reputation for 'Trusted Reliability', our loyal and established customer base and our balance sheet strength put us in a great position to make the most of both the organic and acquisition opportunities that surround us."

Jonathan Shearman, Non-ExecutiveChair

Enquiries please contact:

Trifast plc

Jonathan Shearman, Non-Executive Chair

Mark Belton, Chief Executive Officer

Clare Foster, Chief Financial Officer

Office: +44 (0) 1825 747630

Email: corporate.enquiries@trifast.com

Peel Hunt LLP (Stockbroker & financial adviser)

Mike Bell

Tel: +44 (0)20 7418 8900

TooleyStreet Communications (IR & media relations)

Fiona Tooley

Tel : +44 (0)7785 703523

Email: fiona@tooleystreet.com

Editors' note

LSE Premium Listing: Ticker: TRI

LEI number: 213800WFIVE6RUK3CR22

About Trifast plc (TR) is a leading international specialist in the design, engineering, manufacture, and distribution of high-quality industrial fastenings and Category 'C' components principally to major global assembly industries.

TR supplies to c.5,000 customers in c.75 countries across a wide range of industries, including light vehicle, heavy vehicle, health & home, energy, tech and infrastructure, general industrial and distributors. As a full-serviceprovider to multinational OEMs and Tier 1 companies spanning several sectors, TR delivers comprehensive support to its customers from concept design through to technical engineering consultancy, manufacturing, supply management and global logistics.

TR employs c.1,300 people across 34 business locations within the UK, Asia, Europe, and the USA including seven high-volume,high-quality and cost-effective manufacturing sites and three technical & innovation centres across the world.

For more information, visit

Investor website: www.trifast.com

Commercial website: www.trfastenings.com

LinkedIn: www.linkedin.com/company/tr-fastenings

Twitter: www.twitter.com/trfastenings

Facebook: www.facebook.com/trfastenings

Electronic communications

The Company is not proposing to bulk print and distribute hard copies of this half-yearly financial report for the six months ended 30 September 2021. Copies can be requested via Companysecretariat@trifast.com/corporate.enquiries@trifast.comor, in writing to, The Company Secretary, Trifast plc, Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW. News updates, Regulatory News and Financial statements, can be viewed and downloaded from the Group's website, www.trifast.com.

Forward-looking statements

This announcement contains certain forward-looking statements. These reflect the knowledge and information available to the Company during the preparation and up to the publication of this document. By their very nature, these statements depend upon circumstances and relate to events that may occur in the future thereby involving a degree of uncertainty. Therefore, nothing in this document should be construed as a profit forecast by the Company.

2

TRIFAST PLC

HALF-YEARLY FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021

BUSINESS REVIEW

Unless stated otherwise, current year comparisons with prior year are calculated at constant currency (CER) and where we refer to 'underlying', this is defined as being before separately disclosed items (see note 2). CER calculations have been calculated by translating the HY2022 figures by the average HY2021 exchange rate.

The impact of foreign exchange movements has decreased our AER revenue by 2.5%, £2.6m (HY2021: decreased by 0.4%, £0.5m),

our AER underlying profit before tax by 4.0%, £0.3m (HY2021: decreased by 0.9%, £nil) and our AER underlying diluted EPS by

3.7%, 0.17p (HY2021: decreased by 1.1%, 0.07p).

Our Group performance

CER

CER

AER

AER

HY20211

HY20201

Underlying measures

HY2022

change

HY2022

change

Revenue

£106.4m

31.4%

£103.8m

28.1%

£81.0m

£103.1m

Gross profit %

26.2%

(80)bps

26.3%

(70)bps

27.0%

28.8%

Underlying operating profit (UOP)3

£7.7m

73.7%

£7.4m

67.0%

£4.5m

£10.4m

Underlying operating profit %3

7.3%

180bps

7.2%

170bps

5.5%

10.1%

Underlying profit before tax3

£7.3m

84.2%

£7.0m

76.8%

£4.0m

£9.9m

Underlying diluted earnings per share3

4.59p

102.2%

4.42p

94.7%

2.27p

6.07p

Return on capital employed (ROCE)2,3

8.8%

330bps

5.5%

11.3%

GAAP measures

Operating profit

£5.7m

81.3%

£3.2m

£8.4m

Operating profit %

5.5%

160bps

3.9%

8.2%

Profit before tax

£5.3m

98.7%

£2.7m

£7.9m

Diluted earnings per share

3.22p

117.6%

1.48p

4.82p

  1. Presented after the reclassification of IFRS2 Share-based Payments, including related social security costs on exercise, into underlying results. For EPS, the impact has been a reduction of 0.04p from 2.31p. For ROCE, a reduction of 120bps from 7.8%
  2. The calculation for ROCE was changed in FY2021, and therefore restated above for HY2021, to reflect an add back of gross, rather than net debt. The impact of this change is a 110bps reduction from 6.6%. HY2020 has also been restated to add back gross rather than net debt. In addition IFRS16 Leases only became effective from 1 April 2019, therefore HY2020 ROCE has been calculated from a six month average, with underlying EBIT pro-rated for a full year
  3. Before separately disclosed items (see notes 2, 6 and 9)

The first half of FY2022 has been a story of strong recovery and solid growth, with revenues ending 31.4% up on HY2021 and also ahead of the HY2020 pre-Covid comparative period. We have seen high demand across all of our key sectors, with light vehicle sector growth outpacing global light vehicle production to record a 34.3% increase (8.5% - source: LMC Automotive Ltd), despite the well-publicisedsemi-conductor shortages.

Gross margins have remained in line with the second half of FY2021 at 26.2% (AER: 26.3%; FY2021 HY2: 26.1%) as the temporary impact of further cost price inflation has been offset by higher revenues and early price increase activity in our transactional business. Against HY2021 gross margins are 80bps lower (AER: 70bps lower at 26.3%; HY2021: 27.0%) largely due to the removal of government support schemes operating in the first half of the previous year.

UOP margin has increased strongly by 180bps to 7.3% (AER: 170bps to 7.2%; HY2021: 5.5%), and UOP by 73.7% to £7.7m (HY21: £4.5m) as operational gearing gains feed through into profits. The positive impact of this has been partially offset by the normalisation of overheads from a lowered HY2021 base, including the removal of government support schemes.

Reflecting the strong recovery, our underlying PBT is up 84.2% at CER to £7.3m (AER: 76.8%, to £7.0m, HY2021: £4.0m). This coupled with a reduction in our underlying effective tax rate has resulted in a marked increase in our underlying diluted earnings per share (EPS) at CER, up 102.2% to 4.59p and at AER, up 94.7% to 4.42p (HY2021: 2.27p).

3

PBT has increased 98.7% at AER to £5.3m (HY2021: £2.7m). In addition to the movements explained above, profit has reduced by £0.5m due to the costs incurred to date in acquiring Falcon Fastening Solutions Inc (Falcon). The reduction in our effective tax rate has resulted in diluted EPS increasing 117.6% to 3.22p (HY2021: 1.48p).

An investment in inventory of £16.3m, to support growth and secure supply, has led to a temporarily negative underlying cash conversion rate at AER of (51.9)% (HY2021: restated for IFRS2 and related NI costs 140.3%). This, in conjunction with the acquisition of Falcon (USA) on 31 August 2021 for £5.9m, net of cash acquired, means that we have ended the half-year back in an adjusted net debt position of £(5.1)m (FY2021: £13.3m adjusted net cash) with a low adjusted net debt to UEBITDA ratio of 0.27x. We continue to have undrawn facilities of c.£50m (FY2021: c.£63m), and an available accordion facility for a further £40m, providing us with the security and flexibility to continue to invest in our future growth.

Revenue (CER)

We have seen strong growth across all our regions, with revenue increases for the period ranging from 21.4% to 69.5%.

Europe has seen a 31.4% increase to £41.2m (AER 26.8% to £39.8m; HY2021: £31.4m), reporting record regional revenues, that are 11.2% ahead of HY2020. Health & home has seen the highest growth as the strong recovery in demand we saw at key multinational OEMs in the second half of FY2021 has continued. In Hungary we have seen increases in the Energy, tech and infrastructure (ET&I) sector as key customers raise production volumes and in Germany trading conditions in the general industrial sector have proved particularly buoyant. Despite semi-conductor shortages hampering OEM production volumes in the light vehicle sector, we have seen a strong recovery in demand across Holland, Sweden, Italy and Spain as start of production commences on new platform builds and previously won market share gains start to positively impact numbers.

Trading levels in the UK have rebounded even faster, recording 39.9% growth to £40.3m (HY2021: £28.8m) and ending 4.9% ahead of the HY2020 pre-Covid period. The largest increases have been due to higher distributor volumes and increased transactional pricing, with trading levels across our stainless steel, UK and EU distributor markets increasing by between 40% to 67%. Light vehicle sales have recovered, but remain below pre-Covid levels due to the impact of semi-conductor shortages. Whilst health and home and general industrial revenues are c.40% higher as demand returns to these key sectors.

In Asia, we have seen the smallest revenue increase of 21.4% to £27.2m (AER: 17.3% to £26.3m; HY2021: £22.4m), with trading remaining below pre-Covid levels by (8.2)%. The key reason for this is the temporary Summer lockdowns in Malaysia which impacted domestic light vehicle volumes as well as health & home production levels at one of our key multinational OEMs. Offsetting this, we have seen robust growth in Taiwan as distributor sales recovered to pre-Covid levels in key European end markets. In Singapore, strong growth was secured in the ET&I sector, supplemented by increased intercompany manufacturing and a new general industrial OEM operating in the cooling market has underpinned double digit growth in China, despite a strong HY2021 base.

In the USA, we have seen exceptionally high growth of 69.5% to £7.2m (AER: £2.4m to £6.7m; HY2021: £4.2m) and 19.0% up organically on the pre-Covid period. Organic growth, most noticeably due to new platform builds in the light vehicle sector, has driven 53.4% of this, with one month of revenue following the acquisition of Falcon on 31 August 2021 providing the remaining 16.1%.

Underlying operating profit (CER)

Region

HY2022

HY2021

Movement

HY2022

HY2021

Movement

UOP

UOP

UOP margin

UOP margin

Europe

£2.6m

£2.2m

£0.4m

6.3%

7.1%

(80)bps

UK

£4.0m

£0.4m

£3.6m

10.0%

1.5%

850bps

Asia

£3.4m

£3.2m

£0.2m

12.7%

14.2%

(150)bps

USA

£(0.2)m

£(0.2)m

-

(3.0)%

(4.4)%

140bps

The strong recovery in sales, has had the largest impact on UOP margins resulting in a net increase of 180bps to 7.3% (HY2021: 5.5%) as positive operational gearing gains feeds through to underlying profitability.

In Europe, despite a strong sales recovery, we have seen an overall 80bps reduction in UOP margins to 6.3%, £2.6m (HY2021: 7.1%, £2.2m). The positive impact of higher sales against a fixed and semi-fixed cost base has been more than offset by what we expect to be temporary increases in freight and raw material costs, most specifically in our Italian manufacturing site. With the normalisation of overheads from a lowered base, including the removal of government support schemes also hampering margin recovery. Transactional price benefits have already been instigated in the region, however the bigger pass-through of inflationary costs will take place in HY2 as changes to contractual pricing act to normalise gross margins.

In contrast in the UK, UOP margins have significantly improved year-on-year with an 850bps increase to 10.0%, £4.0m (HY2021: 1.5%, £0.4m). The largest reason for this is the increase in sales, supplemented by a positive product mix shift due to the rapid growth in higher margin distributor business. Transactional price increases have had a larger immediate positive impact in the region as a result. Freight costs have been higher, however raw material increases have yet to feed through in any significant way due to opening inventory levels. The normalisation of overheads from a lower base, including the removal of government support schemes, has also had a negative impact on overall UOP margins.

4

In Asia, UOP margins have decreased by 150bps to 12.7%, £3.4m (HY2021: 14.2%, £3.2m), although these remain relatively high due to the greater proportion of manufacturing revenues in the region. The lower increase in sales against the rest of the Group has reduced the positive operational gearing impact, whilst increases in raw material prices have been felt more immediately due to the manufacturing focus. The normalisation of overheads from a lowered base has had an impact on margins, with the removal of the much more generous government support schemes being by far the biggest element of this.

In the USA, we have seen a 140bps improvement in UOP margins, albeit that these remain negative at (3.0)%, £(0.2)m (HY2021: (4.4)%, £(0.2)m). The exceptional increase in sales has had by far the biggest impact on margins. However, as widely publicised, this has been partially offset by substantially higher freight costs, while the product mix shift away from ET&I and towards light vehicles has reduced overall gross margins. Looking ahead, we expect to return to profits over the course of HY2, as changes to contractual pricing passes through inflationary costs and normalises gross margins in the region.

Operating profit (AER)

Similar to underlying operating profit, the strong recovery in sales and positive operational gearing gains it brings, has had the biggest impact on the 160bps increase in operating margins from 3.9% to 5.5%. This has been partially offset by £0.5m of costs incurred in relation to the acquisition of Falcon in the period.

At a regional level, the movements at operating profit and margins broadly follow the movements at UOP level:

Region

HY2022

HY2021

Movement

HY2022

HY2021

Movement

operating profit

operating profit

operating margin

operating margin

Europe

£1.9m

£1.7m

£0.2m

4.9%

5.4%

(50)bps

UK

£3.3m

£(0.2)m

£3.5m

8.1%

(0.7)%

880bps

Asia

£3.3m

£3.2m

£0.1m

12.5%

14.1%

(160)bps

USA

£(0.3)m

£(0.2)m

£(0.1)m

(3.7)%

(4.4)%

70bps

Net financing costs (AER)

Net financing costs have reduced to £0.4m (HY2021: £0.5m) due to the decrease in average net debt in the period.

Taxation (AER)

The HY2022 underlying effective tax rate (UETR) and effective tax rate (ETR) are significantly lower at 13.7% and 16.4% than the previous half-year (HY2021: restated for IFRS2 and related NI costs 24.9% and 26.7%, FY2021: 23.9% and 25.6%).

This is as a result of a change in the mix of profits by legal entity, the substantively enacted UK tax rate change to 25% increasing the net deferred tax asset, and the movement in adjustments in respect of prior years.

Subject to future tax changes and excluding adjustments in respect of prior years, our normalised underlying ETR is expected to remain in the range of 22-25% going forward.

Earnings per share (AER)

The increase in underlying profit before tax and the reduction in our UETR, has significantly increased our underlying diluted EPS by 94.7% to 4.42p (HY2021: 2.27p). Diluted EPS has increased 117.6% to 3.22p (HY2021: 1.48p).

Dividend

The Company has declared an interim dividend of 0.70p (HY2021: nil) which will be paid on 14 April 2022 to members on the register as at 18 March 2022.

We continue to consider that an appropriate level of dividend cover is in the range of 3.0x to 4.0x. For the medium-term, the Board intends to target a pay-out at the top end of this range to allow for the expected ongoing organic growth, strategic investment and acquisitions.

Return on Capital Employed (AER)

As at 30 September 2021, the Group's shareholders' equity increased to £133.9m (FY2021: £131.8m). The £2.1m uplift reflects retained

earnings of £2.3m (HY2021: £0.5m), a net movement in shares of £(1.8)m and a foreign exchange reserve gain of £1.6m.

Over this increased asset base and given the strong growth in profits, our ROCE has increased 200bps from 31 March 2021 to 8.8% (FY2021: 6.8%).

At 30 September 2021, the number of ordinary shares held by the Employee Benefit Trust (EBT) to honour future equity award commitments had increased to 1,269,059 shares (FY2021: 329,087 shares).

Adjusted net debt (AER)

As at 30 September 2021, the Group had an adjusted net debt position of £(5.1)m (FY2021: adjusted net cash of £13.3m). Some £(5.9)m (net of £0.3m cash acquired) of this decrease relates to the acquisition of Falcon (USA) on 31 August 2021.

As a result of the £16.3m investment in inventory, to support growth and protect supply, our conversion rate of underlying EBITDA to underlying cash has been negative in the period at (51.9)% (HY2021 restated for IFRS2 and related NI costs: 140.3%). We expect this position to be temporary as inventory levels stabilise, albeit at higher levels, over the second half of the year.

5

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Trifast plc published this content on 23 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 November 2021 06:58:07 UTC.


© Publicnow 2021
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Sales 2022 215 M 271 M 271 M
Net income 2022 8,15 M 10,3 M 10,3 M
Net Debt 2022 15,5 M 19,5 M 19,5 M
P/E ratio 2022 16,8x
Yield 2022 1,90%
Capitalization 132 M 166 M 166 M
EV / Sales 2022 0,69x
EV / Sales 2023 0,59x
Nbr of Employees 1 300
Free-Float 87,0%
Chart TRIFAST PLC
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Trifast plc Technical Analysis Chart | TRI | GB0008883927 | MarketScreener
Technical analysis trends TRIFAST PLC
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TrendsNeutralBearishBearish
Income Statement Evolution
Consensus
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Mean consensus BUY
Number of Analysts 6
Last Close Price 100,00 GBX
Average target price 164,57 GBX
Spread / Average Target 64,6%
EPS Revisions
Managers and Directors
Mark R. Belton Chief Executive Officer & Executive Director
Clare Foster Chief Financial Officer & Director
Jonathan Paul David Shearman Non-Executive Chairman
Colin Coddington Director-Group Information Technology
Scott Mac Meekin Independent Non-Executive Director
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