Earnings Call: H2 2023

Jul 11, 2023

Good morning, and welcome to the Trifast plc investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and will publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Scott McMeekin, Interim CEO. Good morning, sir. Thank you, and good morning, everybody. I'm joined by Darren. Darren Hayes-Powell, I am the Chief Financial Officer. And by Dan. Hi, good morning. I am Dan Jack, and I am COO. If we just dive in a little bit to the highlights for 2023 first. I think we would have wished for a slightly better year. It was a dynamic, if not challenging year for sure. But through that, I think the team performed really well and came with, in the context of that year, pretty substantial results. Certainly on Dan's team, record contract wins is a real important highlight for me, because I think that indicates that the all-powerful and super important connection between our people and our customers remains as strong as it ever has been, or stronger. So congratulations on that, and I think that is a great success. The pandemic also brought us a lot of challenges in terms of inflation pressures, and there again, Dan and the team responded on pricing increases and so on. There will be more in the presentation about all of this, for sure. Through the back of the year, it became apparent that there was both an opportunity to, call it, improve the organization structure of the business, particularly in the U.K., and there was a need for a cost rationalization exercise, so-called Project X, which we kicked off at the end of the year and is carrying on as we speak today. I think this project has been really important, both from a cost reduction standpoint, cost rationalization, but more importantly from a long-term efficiency standpoint. It is a project that will position Trifast more succinctly or very strongly in the heart of the U.K. industrial base, and I think is also an opportunity for simplification through the operations and organization, which will lead to lots of benefits in terms of customer service and long term. The other side of that project is that we have built a substantial upside in the capacity, and I think that is a strong testament to what I hope comes through the presentation, which is a strong degree of confidence in the midterms. That said, a lot of work needed to be done to unwind the inventory working cap position that had been accumulated through the pandemic. I think Darren and Dan did an excellent job working through that as well as their teams. Really, really fantastic work. We have been able to bring down, as you will see in the presentation, in the details from Dan, we have been able to bring down the inventory about to where we were when we started into this last year. We have set some targets at sort of what does good look like at 22 weeks, and Darren will expand on that. I think working through rather complicated year but still a lot of growth, some cost rationalization, some substantial exercise to reduce complexity and cost in the business, and a customer refocus or a customer centricity exercise. I think those things combined to really provide us the confidence to carry on with our dividend policy, and connect through to a 1.5 pence dividend, which, you will see is a 7% upside. With that, Darren, maybe the next slide. I think we've communicated this slide before, and therefore, why we put it in this time was really to illustrate the point that we're on the same set of targets for the midterm. So we're very much targeting the same area, with a slight improvement in the return on capital. Darren, just a few comments. Yeah. So the return on capital employed was a target 10-15%. We've updated that to 12-16% now. That actually reflects the bound to our confidence in the UOP and how those dynamics of those two metrics go together. Thank you, Dan. Excuse me. If we go to the next slide. Thank you. If we then look forward into 2024 plan and beyond, where we're concentrating our effort. As I said in the first slide, we've started this customer centricity project, and underpinning underneath that are a couple of programs that Dan is going to explain in a little more detail, so-called Global 200 and True Profit and HYMS or high yield market segmentation. The purpose of those tools or those lenses and that strategy, the purpose of that is to really focus in on what is the ideal customer for the group, to rationalize the customer base around those ideal customer and customer relationships, to set in place the visibility that allows us to then improve the engagements with our key and core customers, and as well, prospects, going forward. So that really allows us to rationalize in this period some of our activity costs and some of our our transactions out of the system, but also allows us the lens to look forward and make sure we're on the right track. If we then look at point four on the slide, what we've done here is we've changed the organization structure, which was predominantly weighted around functional management orientation. We put in place very much a line-driven, market-oriented, organization structure, which is very much helping us in terms of both simplicity, a clear balance between authority and responsibility, but also, really allows us to be more tightly connected to the execution of our strategy. Part of that strategy is building this national distribution center in the U.K. I think integrating, we've integrated the European leadership organization together with the U.K. organization, and that just makes it a much more simple. There's also a cost reduction in that, but the fundamental reason was to make it a more aligned and more streamlined organization structure. Then I think the final point here, as I stressed earlier, was around the inventory or the working capital in general, which includes the inventory and also a new bank facility that Darren will explain as we get farther through. All things taken together, very much customer-oriented, customer aligned, building on the legacy of success of 50 years this year, of success of being very customer-focused and really taking that hopefully to the next step, which puts in place for the next 50 and beyond. With that, Darren, maybe some financials here, if you will, please. Okay. If I take you through some of the financial KPIs that we've got here. As Scott referred to, we had a challenging year in FY23, and you can see the impact in our profitability and our side, that side. Now I will take you through in a couple more slides, a little bit more deep dive as I unpick that. But I think one of the key things to look at this, two key metrics that have shown great performance. One is our growth, and again, I'll take you through more detail with Dan in a moment. But also that we've got our working capital under control, and again, that is something strong for us into the future. If I unpack these KPIs in a little bit more detail. If I start looking at first about the growth. At a constant exchange rate, we grew 9.1%. If I take you through the regional numbers, I'll then hand to Dan to talk about a little bit more about the sector detail. But if I go through one region at a time. First, Europe grew by 10.4%. We saw growth across most of our European businesses, and we were really particularly pleased with the TR Kuhlmann, our German business, after taking some of the European distribution business from our U.K. division, performed very well in FY23. However, they were impacted, or it was with TR VIC, our Italian business, as the home and health sector started to reduce at the tail end and start of FY23. Overall, though, we're very pleased with a 10.4% growth in Europe. If I then make us to Asia. Asia is a story of two halves. The first half, we saw both our contract and distribution business performing exceptionally well. As we discussed in our last announcement, in Q4, we saw one of our large Asian health and home customers start to destock. In essence, as soon as they started destocking, we managed our working capital, which I will talk about, but it also did cause us to actually have a drop-off of sales in the last quarter of FY 2023. If I then take us down into North America. North America, we saw some great growth at obviously a 50.3%, exceptionally good growth, obviously from a low base, of which 28.5% was organic growth, and 28.8% was actually due to the Falcon acquisition of five months of sales. What we are really pleased to see is our North American new team, plus the integration of the acquisition of Falcon, has really shown North America to really perform well, and we are really excited about the future in that region. If I then take us down to U.K. U.K. overall remained flat. This is after the transfer of the European distribution business to Kuhlmann, but we saw some great growth both in the light vehicle, energy tech, and infrastructure sectors. Overall, we are very pleased to see all the regions have actually performed in FY 2023. If I hand to Dan, I would just go through. Dan, can you just go through some of the sectors? Yeah. Thanks, Darren. I am just going to pull out a couple of things to talk to you. Firstly, heavy vehicle and light vehicle both saw great growth in our last year. Predominantly that comes from three places. Firstly, price. We have talked to you about price not being a project, but being an ongoing, permanent set of metrics that we put into our total sales community. Price drove the revenue of heavy vehicle and light vehicle. So did volume. Volume comes from two places. One was new business, and we have called out record new contract wins of GBP 25.6 million. Some of that started in FY 2023. Then volume through supply chain availability of microchips. We will have seen in FY 2022 and FY 2021 a decline in demand because microchips were not available and really did impact our revenue from those sectors. What we see now is an availability improving. Less bad, less often is how we describe that in FY 2023. Even in this year, we still see there is a stuttering of availability from time to time, but we see that improving in this half of FY 2024. Health and home. Darren has already alluded to the fact, particularly in Europe, that we saw a decline in demand. Inside health and home, there is what you might call white goods or domestic appliances. Clearly that is a consumer confidence discretionary spend item that is impacted by macro influences. That is inflation and cost of living and interest rates. Those things have created a decline in demand, particularly from H1 into H2 of FY 2023. It is fair to say that we have not seen a bounce back of that. So de-stocking has not been replaced by restocking as we go into FY 2024. That said, in health and home, we have seen an uptake on specific things related to health, personal fitness, and also to medical, to wellbeing as institutions invest in equipment that is there for the long term. Then the final one I would touch on is distributors. It is a longstanding sales channel for us at TR. We are very proud of our distribution channel. But by default, distributors are there to serve the needs that are immediate, where people do not have inventory and they need to buy it off the shelf. We saw that decline as the industry was over-inventoried in FY 2023, so people would buy from us less often through the distribution channel. That has actually continued into the first half of this year. Thanks, Darren. Thank you. If I take us down to the next metric or into the operating margins that we do. If we do it in the constant exchange rate, the operating margin percentage dropped by 2%. If I unpack that by region again. Firstly, Europe dropped by 1.4%. This is very much driven by the inflationary costs that we saw in our TR big factory, especially in energy and raw materials. We have actually, by the end of FY 2023, put pricing mechanisms in with our key customers to ensure that we fairly pass these costs on to our final customer, but it did impact us during FY 2023. In Asia, we saw an increase of +2.6%, which we are really pleased about with the tailing off because of the health and home de-stocking of one of our key customers. But we really got some great performance from our distribution businesses in Asia. So we are very happy with the overall Asian performance. North America, as we have talked about it with the new North American team, is actually from a low base, has actually moved from a negative into a positive, so a growth of 4.3%. But we are really pleased about that. Again, we are talking about how we see that grow in our lower index North American business. Then U.K. U.K. was the biggest drop. This dropped 3.1%, and it was probably in three areas to talk about. First is the net inventory reduction, which we did as we clean up the inventory. I will talk a little more about that when we talk about our restructuring, what we plan to do in FY 2024 into the future. We also saw all our three distribution business start to tail off. That caused us some financial impacts, as referenced by Dan earlier. We also had the transfer of the European business from our TRF UK, which is our largest distributor to the European distributor business, actually moving down into Kuhlmann. But overall, we saw a 2% drop. If I unpack this further and talk a little bit more about profit before tax, and the dynamics and how that actually hits the bottom line now. As you can see, we've seen a drop of 4.5 million. If I take it to the major ones, major elements, we talked about the growth, the revenue growth. That's actually given us a positive impact, as you can see, is the first blue bar. The other impacts that we've actually faced into our margins is first about when we talked about the slow-up of the de-stocking from the Asia business from one of our key Asia customers. What we immediately did is actually slowed up the factories. This means that the factories did not fully absorb all the overhead costs, and therefore there was an impact to our finance. But it was to ensure that we manage our working capital, which is why we're very focused on working capital as part of our day-to-day activity. The second element was an increase in the net stock write-offs. We see this in a global basis, but the net stock write-off actually impacted our gross margin. The inflationary activity that we take normally across the globe, but especially, just to point out the TR VIC inflation, especially due to energy, which came up exceptionally high during FY23. The other area is overheads. Overheads have increased. First, investment in people. We've alluded to the North American team that we've actually built up, but we've also built up the global team, both the global supply chain and a global sales team to actually help the overall regions as we grow our market. We also had compliance teams we put in place during FY23. Other factors was Atlas or D365, our largest distributor, TR UK, was fully now live and actually the cost of D365 licenses and that part of our cost as we are an ongoing business as we move forward. Overall inflationary impacts, things like audit costs and professional fees that are continuing to cost us more as we go forward. The other element to make sure, and I talk more about on the banking page, is also the interest rates that we do actually have around us at the moment and the cost of actually serving our loan facility. They're the key drivers in the profit before tax. If I move us on now to more of the cash orientated or the net debt side of things. What we've actually got is I'd like to focus probably on the working capital first. One thing we're very happy with is we have actually brought our stock levels back down to FY22 levels. If you remember at half year, they went up. We've now brought them back under control. We now have 29—at the end of FY 2023, we had 29 weeks of inventory, and we have a task and a real drive and target to bring that down to 22 weeks by the end of FY 2024. Big focus on working capital. Creditors obviously improved as we have brought down our inventory, but we will get back to a more balanced level and we focus of course, on debtors as well. Overall, working capital is very much of a laser focus that Dan and I take as we manage our working capital and putting initiatives in place to improve that over the next year. If I then move us on to the next page, banking facilities. At the end of FY 2023, we had GBP 10 million headroom. What we did, and what I am announcing today is that we also negotiated a new loan facility this June, this year in FY 2024, and it is two parts. First is, we renegotiated our RCF at GBP 70 million, and second, with the support of the UK government for an export development guarantee, we have got GBP 50 million now that we have supported over a five-year term. This allows us GBP 120 million of facility. This gives us opportunity for our strategic investments into the future when we get back, and we are rightly positioned to do what we want to do on acquisitions and investments. But I think what we are pleased to see is our leverage that we come with that. We are managing our leverage at 2.19, and during FY 2024, we have now broken below the two level, which is done all more in focused ways of bringing leverage down. Very pleased with making sure we have facilities and loan facilities for the future. If I move us onto other items, Scott talked about at the start about the restructuring. We are restructuring our UK operational base. We have six sites or six more small warehouses. We are centralizing to a national distribution center, in Midlands. We have now have the leases signed, and we have the keys, and we are starting to fit that national distribution center out. We are excited about the future of this. We see this being a savings on an annual basis of greater than GBP 5 million, and we will start to see some of those savings at the end of 2024. But during FY 2023, we actually put a charge to the accounts on restructuring of GBP 4.2 million, GBP 2.8 million of that being cash orientated, most of that being redundancy payments. But again, we are excited about the future of what the NDC will bring as we get the efficiencies and the increased capacity to develop that market segment. Okay. Then if I move us now down to strategic, and I will hand over to Dan. Yeah, thanks, Dan. This slide is intended to really talk to the points that both Scott and Darren mentioned earlier in the deck, a commitment to our midterm targets, in particular, focusing on our underlying operating margin. I am going to walk you from left to right. Of course, you can see our FY23 position, and on the far-hand right side, you can see our midterm goals, 10% and greater, 10%-13% being what both Darren and Scott have iterated already. The first block really ties a little bit to what Scott and Darren have referenced in terms of our national distribution center. That is clearly bringing about a productivity, by reducing our footprint. It is not just that. We are looking at all of our group services. We are looking at data and technology to be an enabler of efficiency. In particular, we are very keen, as we grow, not to see a linear relationship between revenue and operating expense. To bring about efficiencies on a daily basis and on a structural basis. We see that adding accretive upside to our current operating margin. The middle bucket that you can see there really addresses two things. Firstly, of course, it says purchasing and supplier focus. What that actually means, it means firstly that we have created an organizational structure to overcome some of our inefficiencies of the past. In the past, we have been talking to the same supplier across different post codes and countries. We have built an organizational design in the last two years that creates one voice of TR to our supply base, which we value very greatly. When we take that organizational design and we add the data from D365 and the unification of data and part numbers and aggregation of demand, that gives us a more leveraged conversation. As we do that, we improve not just price points, we also improve the balance sheet through credit term negotiation, inventory terms improve through nearshoring or through consignment agreements with our supply base. We really see that as an upside that overlaps both between operational improvements, supplier improvements, and even into customer enhancements. The final column here, it says G200 and HYMS, which is something Scott referenced at the beginning. The next slide unpacks that a bit further. To say twofold, one is, as we grow, as we win new business, we continue to win at accretive margins, and that is very important for us. Secondly, that the price conversation that we talked about with regards to ensuring that we pass cost through to our customer base, we continue to do that on a periodic basis, something that we review constantly rather than once a year or when inflation headwinds require it to do so. So moving a muscle memory here to provide a price which customers are prepared to pay for as they recognize our value. We focus then typically on the ideal customer, which takes me on to the next slide, please Darren, we have a rich history at TR, 50 years of history, frankly, where we have always been, and I trust we always will remain, entirely customer centric. We have a focus on customer service and customer relationships, which I think is exceptional and almost unique in our industry today. What we have done also has been all things to all people. What we need to do and what we are doing, is bringing our focus into a much narrower funnel of customers with upside. The first place we go is to measure it. Something that we've talked about a lot internally is called True Profit. It's a lens of performance at a transactional level. Think about it as EBITDA minus the cost of working capital. That allows you to work True Profit at transactional level. Once we have that in place, that allows us to work out the profitability on a commodity, a customer, a sector, a region, salesperson. That allows us to make decisions. Some of those decisions might be to address price, to reduce OPEX costs, to do something differently with the customer. It also shows us where we make money and where we can then focus. The truly profitable customers, we take that lens and apply it across our Global 200 customer base. Our G200 then, goes through the lens of True Profit, and at the same time, we apply a perspective on their growth, their compound annual growth rate, that is greater than our average. We're looking for more profitable, faster growing customers inside our own customer base first and foremost. That can be by adding part numbers, that could be by adding services, that could be by adding locations, growing that business as a default. Then alongside those customers that we've identified in the High Yield Market Segmentation, looking at their peer community, looking at the TR 100, the target 100 customers that are peer groups to those G200 customers. It's not overly complicated, it's not rocket science, but it creates simplification, it creates focus across the entire organization, and allows us to have a confidence in outcomes that, in the past at least, have been a little bit scattergun. Darren Hayes-Powell, if you could go on to the next slide. We've often said that this industry is very sticky, not easy to penetrate new companies. So how might we go about addressing those target customers that are peers to profitably fast-growing customers? Often there's an inflection point of change. That change might come through legislation, like the Right to Repair bill that came through the EU and the U.K. that said all sorts of appliances, to stop them being disposed of in landfill, needed to have the ability to be repaired. Therefore, you stop welding something and you start screwing or unscrewing something. That created a greater degree of fastener content and allowed us to have conversations with customers and want to be customers in equal measure. Likewise, emission standards change, as we all know, and so electrification and hybrid powertrains have become a norm in our vernacular. But in reality, a few years ago, it was considered something of a pipe dream. Those changes to technology design allow us to have engineering biased conversations at the design stage that allow our parts to be specified in early on. Frankly, for us, the earlier on, the better. Perhaps then to address that too, we develop our product ranges in anticipation of these changes, knowing that certain parts and fasteners change design as things are light weighted or made stronger or made smaller, the fastener content changes. Where we lean into our engineering community, our customer facing community, and our own intercompany manufacturing competencies, that brings about an engineering-led innovation. The final slide, Darren, for me, is on sustainability. Two perspectives to bring to this slide. Firstly is our supply chain partners. We have supply chain charters in place with our partner suppliers, to ensure that they have those responsibilities, both at a social and governance level, but of course at an environmental level, that allow us to confidently step forward and say that we're meeting our own expectations. That's a learning curve, that's a partnership, that's a transition, that's a progress. Likewise, with those supply chain partners, we're also looking at the opportunities to near shore, so that we can take out cost, we can take out time and pace. We create pace by taking out time. We can improve our stock turns, and frankly, we're also able to avoid any carbon taxes that might be around the corner from just legislative change. The other perspective is with customers. Customers changing their procurement strategies, thinking about either disruption through geopolitics on the other side of the world and/or meeting legislative standards from, say, the European Union, which we've done recently. A Swedish well-known truck manufacturer legislated or mandated that the fastener content of the bill of material be Europe only. Could only be Europe, couldn't be anywhere else in the world. So we were able to take our TR VIC facility and the investment we made there, combined with our supply chain partners within Europe, and provide a solution to our customer that resoundingly was a success. So whether it's a customer driven, legislative driven, balance sheet driven activity, these come together with a focus on sustainability. Thanks, Darren. Yeah, thank you. Okay, so I hope this picture of this business illustrates a business that has a very long-standing and a very proud legacy of customer commitment. We're taking that to the next level. We're simplifying and rationalizing the amount of customers that we want to work with, which allows us to focus on those customers which we engage with in a very proactive way. We've also simplified the organization structure, which brings about a whole opportunity of change in that area. We've implemented sprints now in our management, so we're running our projects in quarterly sprints, which is just increasing the pace of execution, which I think is quite an important piece. Certainly, we have some sectors with the economic conditions in the background, some will be less beneficial or less positive than others. We are dealing with that, and I think we are dealing with that in a very positive way with the team. I hope that this presentation has been able to demonstrate that we have been aggressive where we have to in taking complexity and cost out of the system. We are doing it in an intelligent way with smart lenses, so to speak, about where we can actually see strategic opportunities in conjunction with cost reductions. I hope that message has come through. Lots of care, lots of work. Darren and Dan have worked really well and really hard on working cap and getting working cap sorted out, primarily inventory, but right across. With Darren's refi, that is obviously a huge opportunity for us when we are back on track where we want to be and able to get back to investment and acquisitions, as you said, Darren. I think all that combined should really give us a clear view statement of why we were able to stay with our dividend policy and bring that to the market. I think going forward, whilst what we are implementing today is dealing with the urgent, with the quarters at hand, obviously we have no choice. We have to do those things. We have made a lot of changes in the four months or whatever it is that we have been working on it. But those are changes which are also setting in place the foundations for future growth. This gets us to why the statement about the midterms and the confidence we have in the midterm targets remains intact, because we see so many opportunities in this business going forward. I hope that looking forward the next time that we have an opportunity to speak in public, you will hear about a lot of really exciting projects that we have initiated that will be concluded by then. I think that for me is what gives me the excitement to really have the confidence in where we are driving this business. I see this as an amazing opportunity. Yes, challenged. It is a balanced message that we have to find here, challenging background and enormous opportunities with great people in this business. With that, I would like to close the presentation and ask for questions. Scott, Darren, Dan, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab situated on the top right-hand corner of your screen. Just while the company take a few moments to review those questions submitted today, I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your investor dashboard. As you can see, we have received a number of questions throughout today's presentation. Could I please ask you to read out the questions and give responses where appropriate to do so, and I will pick up from you at the end. Sure. Darren, you want to take this question on margin? There's a question actually being given through on margin for the U.K. I talked a little bit about that when I talked about obviously the impacts that we've got in FY 2023 was really in three areas. Just to repeat then, obviously that's the distribution businesses and the transfer to Kuhlmann business from TRF UK. This is just the U.K. element of the margins. Also stock write-offs are the key drivers in that slide as we start to look at the U.K. But that's part of the reason when we talked about restructuring the U.K. to actually now put down the cost improvements, but also get an efficient organization in the U.K. from the national distribution center that we're doing in the Midlands. Sure. Thank you, Darren. Dan, you want to take this question on growth? Yeah. There's a question that says: Where do you think you will see the greatest growth geographically? Where is your focus, U.K., U.S., Europe, et cetera? I think if we took it at a percentage level, certainly we see the growth in the U.S.A. being the fastest. Darren called out a relatively low base earlier on our 50% growth in the last year. But it's also one of the largest manufacturing industrial hubs in the world. The North American focus remains significant. Darren called out the fact that we had invested in our team there and will continue to do so. I would say that at a percentage level, for sure the U.S. will probably grow fastest. But in sort of quantitative GBP, we also see the European business growing significantly as a result of some of these contract wins. Of course, we're aiming to grow all our businesses profitably over time. But I would say if you're asking specifically, then for sure, the U.S. would probably be the one to call out the most. Yep. You want to speak two minutes about what's gone on in Asia? That might be useful in terms of growth as well. Yeah. So our Asian business, as Darren Hayes-Powell called out earlier, had grown 2.6% FY23. Within that, we had some mixed dynamics of health and home destocking and our own, obviously, manufacturing, serving, distribution. We sit right in the heart of Asia across several locations, and we're bringing about, right now, an organizational design that is intended to maximize the Global 200 program that we talked about a few slides ago, with a sales force that is entirely focused on growing truly profitably, as it were. And we're putting in resource there. Jeremy Scholefield, who's part of our global leadership team, is spending the next two years working through the development program with Andy Chin and the other leaders in the area. Dan Jack, there's one more question. Everybody wants to ask you questions today. Okay. So one more about price. Uh-huh. The question here is: How have price increases been received by customers given new wins, et cetera? I assume you still remain competitive. Firstly, the price increase reception from customers, I'd say that all customers have a robust conversation with us. No customer high-fives the thought of paying more for the components it receives today than yesterday. What I would say is that the team, and it really is a team game, have been able to articulate the reasons why costs have increased and why we need to recover that value. There's been a maturity of that conversation over time. Sometimes it's a mechanism that we can apply to large customers, and sometimes it's just a discrete price conversation. We haven't lost any major customers throughout that time period because we are so customer-centric, like I said earlier. The relationship that we have with our customers, on the whole, remains intact and healthy. Yes, we do remain competitive. But where we focus our competitive strengths will be around an engineering bias-led conversation, not just standard parts for standard applications. Good. Thanks, Dan. Darren, there's a question about the strength of the pound, et cetera, the effects. Okay. We are a global business. Obviously, having the American division that we talked about there, obviously the growth of 50 basis points, a large proportion of that organic, some of that actually the acquisition of Falcon. Yes, there are things, but what the key things we are actually seeing at the moment is we have our loan facilities in different currencies, so that allows us some natural hedge. And we do, because we have a global business, actually allow us to offset some of these currencies across the globe. So, we are utilizing really natural hedging. That is the key thing to actually manage that currency. Super. Thank you, Darren Hayes-Powell. Dan Jack, there is a question: Could you discuss the debtor days and likely future movements in this place? In this, please. Shall I- Yeah, please. Yeah, go for it, Dan. Debtor days are in a good position. When we talk about working capital, both Dan and I, both creditors, debtors, and stock, we are very much concentrating on our working capital. Debtor days have been under pressure a little bit as we have gone through this current, but at the moment we are pulling down the debtor days and we are extending the creditor days. We are looking at focused. Some of our customers we work closely with. As you have talked about when I have talked about the net debt walk, very much working capital is a laser focus that Dan and I have. We have weekly meetings on all the elements of working capital to make sure working capital is under control. Fantastic. Let us see. Have I missed any good questions? Bear with me one second. Well, the- Sorry. Go ahead. I was going to just say, the one question that there's a few questions that have been asked, hopefully we've answered during the presentation, but one was the operating profit margin, the 10%, when will you get there in that structure? We have already recommitted now, as you hear from this presentation, on our midterm targets. Dan outlined the three buckets that we see is actually driving it from the 4.9% at AER up to the higher figures of 10% to 13%, which we recommitted in the midterm. Good. Let me take this last question and then pass over to you, Dan. I heard U.K. locations are to be closed or reduced. How does this impact sales in the U.K.? What I would say on that, having already done exactly a similar rationalization exercise in the U.S. for one of our competitors some years ago, it was an amazing. So sure there was a simplification. You can see a cost reduction activity. But actually, what ended up was much better service for our customers, because we were just so much a better organization. By centralizing everything, it's a consolidation of having one person in a role in one location and another person in a role in another location. Putting them together just meant there was all the synergies, both management and redundancy and effort, and just better all the way through. We did that in the U.S. environment, which was about 1,000 miles in one direction and 1,500 miles in the other direction from that distribution facility. So I'm pretty confident that in the U.K., given the size of the U.K. geographically, we should be able to not impact our customers in any way. In fact, we're doing this with a view to both grow existing customers, but also by adding capacity for more business in the U.K. Dan, you want to add something to that? Probably just to tidy up some of that. I've heard that the U.K. locations are to be reduced. Yes, Dan's already said it, Scott said it. We're having a national distribution center where we'll hold the bulk of our inventory. We do have a couple of forward stocking locations within our plan, and we remain with regional offices, sometimes flexi office space, sometimes fixed office space. We will be and remain a long-term employer in the Uckfield area. There's substantial functions that still remain that aren't tied to a warehouse that need to be housed. We want to be adapting our working environment to be more hybrid and to reflect today's environment, of course. But yes, we are putting the bulk of our stock under one roof to scale up, frankly, to give us the space to grow, because we had outgrown all of our current facilities. Thanks, Dan. Another question here is, are the levels of stock write-off a function of increase following the pandemic? As a result, should we expect the level of write-offs decline from here? Darren? To answer that is, I think there's a lot more focus on stock. That's something Dan and I have weekly meetings on stock. In doing that, we have made sure that we have got the right stock in the right locations and the right age stock. The straight answer to that is, yes, there's been a big focus in cleaning it up. Do I think it won't as large write-offs into the future? No, I don't. I believe this was a focus cleaning up of our inventory. So we're much. The correct inventory in the correct location, and we now actually have initiatives to actually bring that down. As I talked, we have 29 weeks at the end of FY23, and our target is 22 weeks by the end of FY24. Super. Thank you. This looks like another one for you, Dan. What portion of our fasteners are non-metal? Where are you positioned regarding plastics and other materials usage, lighter weight, "and growth"? Great question. We don't actually carry percentage of revenue that is metal, non-metal. But certainly, we have seen one of our largest growing areas is in plastic fasteners. That has been something that we have dedicated resource on, so we have a team that just has plastics as a competence. We've been training our workforce, our sales and engineering teams, our inside desk salespeople on the sale of plastic components, and we see the use of those things growing over time. In particular, in this last year, we've secured quite a lot of contract wins have some relationship to plastic componentry. We're quite excited by that. Yes, lighter weight materials will become more of an activity, particularly as light weighting in, let's say, passenger vehicles and trucks requires, because the batteries are so heavy, it requires everything else to be strong and light. Thank you. Another question here. I am just taking them in order. With lots of changes happening, can you talk a little about how you are judging the impact on staff motivation, morale, et cetera? I think there is probably several parts of this equation. One is both is geographic. There is much more change happening in the U.K. than there is outside at this point of time. There has been changes in every area, and there will be some further changes in the non-U.K. areas. I think in the U.K., let me address that first, specifically. I am going to hand it over to you, Dan, and maybe Darren, you would like to have a comment there too, because you guys have been both very specifically involved. I think at a high level in my mind, there is probably several parts. For people that have been engaged in the business, we did a survey, I am going to say two or three years ago. Do not quote me on that, I might be a little bit wrong on that timing. But the survey essentially said that our people were very willing to try to sacrifice whatever necessary work time, do whatever to try to make the business better. I think that is such an amazing and powerful statement about the type of people and the people that are in the TR business. Yes, that is one very powerful sort of ingredient that is brought. I think the second part about motivation is that, for people that are inspired by challenge, then I would say we are actually moving in their direction. What we are trying to achieve here is a culture. You will hear us speak more about the winning team and the three Cs of the winning team, which I cannot really get into that much detail here on this call. But essentially, people that are motivated by challenge, they will feel very at home here and they feel. I think we see already lots of people joining and saying, "This is great. We are so happy that we are turning this business around and really driving a customer focus and a profit focus through the business." I would say from that side, very positive. The negative side, obviously, is for quite a legal requirement. We were unable to do more than simply just make proposals about what might be happening. We could not really be clear and had to say that a lot of employees were at risk, their positions were at risk. Anytime you have uncertainty like that, it is a terrible situation for everyone. Of course, people that probably weren't at risk, they wouldn't know, and they didn't know. That I think caused quite a lot of issues in terms of the morale side of your question. Now I think we are through that. Some of the big steps that have happened is we have now been able to clarify what our plans could be and solidify and confirm or make those plans concrete, especially around the NDC. That makes people's lives start, let us say it is a path to making people's lives a little bit less uncertain, and that is always a good thing. I think in the U.K., that is how I would say. Outside of the U.K., I think people are just excited about where they see the business winning and growing and moving. I think it's a slightly less complex but really inspiring and exciting question. For people that are looking for challenge, we're the right employer. If you want to come and build a career and really learn transferable skills that you can deploy in the business when you're here, and they'll be welcomed if you need to move to another business or another job opportunity. I think it's really positive where we're going with that on the challenge. Dan? I wouldn't add anything. No? No. No. Okay. Then we have, what is your bad debt experience been recently? I think we've got our key customers that we work very closely with. Yes, I think everybody's had some strains, but we have not had real, and our fingers crossed and I'll touch wood at this present time, we've not had major issues in our bad debts. Yeah or problems with it. But we do a very close relationship and close eye on our customers, and hence, going back to that question on working capital, part of it is making sure we get our past dues, et cetera, down to a level that we are happy and that we manage with our customers. Not a major issue for us at this present time, but I am touching wood to make sure nothing happens into the future. Super. I think one of the last questions here, and probably we're. It says, "What can we expect," I beg your pardon, "regarding Project Atlas costs going forward?" Dan? I alluded to it a little bit when I was presenting. Our largest one went online, that's TRF. The U.K. division is now online with D365, which is the project that we're talking about, which was called Project Atlas. Hungary has gone on this year, and we got one more unit to go on. Then we are complete to where we wanted to do for that project to actually complete that overall. One thing just to mention now with the project, we would not be able to enact the initiatives we've done in the U.K. without the system because we need the information to understand what we should do in our accounts. And also the True Profit actually builds from that information. Yeah. It's a great enabler to allow us to into the future in the systems, and I know Dan explained that a little bit earlier. But going back to the cost side of it, by the end of FY 2024, we would have completed what we wanted to complete in Project Atlas, and therefore the cost will be completing this year, FY 2024. Yeah. I would just add to that, Dan, thank you, that I think the project team has got to the point now where they are really expert at implementing a system. That has helped immensely where we went through the early learning phase with implementing the rollouts into countries, which was obviously a challenge. But I think at this point now, we are really confident and have proven in the track record that we are able to execute in a reasonable timeframe at a reasonable cost. So if we do decide to go further with Atlas, that is a really good team behind at this point. One last question, which just came in. "How regularly are the new- Covenants new covenants tested?" Okay. The answer is we do this quarterly. This is done with the banks. Going back to the banks, we have had some really strong three partner banks that we work very closely with, and we will do the covenants on interest cover and leverage on a quarterly basis with them. But we have strong banking relationships, which is great for us as Trifast. I think you covered the last question, which just came in about one bank or multiple. Okay. One bank or multiple. We have three core banks that we work with. Good. I think that is. We'll give it another minute. In that last minute, I would just say from my side, it's been really exciting to work these four and a half months. I think, yeah, there's been a lot of change and there's probably a lot more to go. But we're setting in place really the cornerstones for not only getting the business financially structured differently in the shortest possible term, and getting our balance sheet structured the way we want it. But also, and importantly, I think the critical piece is we're really setting up for the midterm here and how we really drive forward. Let me check if there's any last ones. There is. Oh, no, sorry. That's it. That's it. We're fine. Good. Okay. I would say, we'll give it one 30 seconds more and then one, two, three in closing. Darren, would you like to make any last minutes? Thank you very much for the opportunity to talk to you and thank you very much for taking the time to listen to us. Super. Scott, Darren, Dan, thank you for updating investors today. Can I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, and I am sure will be greatly valued by the company. On behalf of the management team of Trifast plc, we would like to thank you for attending today's presentation and good afternoon to you all. Thank you all. Thank you very much.