Capital allocation

How we allocate our capital.

It is the Board’s desire to maximise long-term returns. As such, the generation and disciplined deployment of free cash is a core aspect of Trifast’s strategy


Capital allocation considerations


The following framework and priorities have been established and these are refreshed as part of our annual budgeting process.

To allow a consistent approach across projects of varying kinds and also between years, the Board has defined cash flow return on investment as its future measure of choice and will look to allocate capital to projects which improve the prevailing return (assumed to already be in excess of the cost of capital).


Working capital

Growing revenue organically is an integral part of our strategy and indeed an area predisposed to higher returns. We stated at the time of the Placing (June 2020) that it was essential we have working capital to deploy, working on the basis that every additional pound of growth and new contract win requires 33p of working capital.

For the foreseeable future, we believe there is scope for continued increases in market share, such that we deliver average revenue growth in excess of global GDP. Our ability to facilitate this avenue of growth takes priority.

Working capital efficiency remains an ongoing focus, including an approach to other stakeholders which is fair.


Investment-driven growth

Sustainable long-term organic growth will always require investment. In addition to the working capital requirements outlined above, there continues to be opportunities to push further into capacity, capability and product range expansion, allowing us to protect and build our competitive advantage.

Over and above maintenance capital expenditure, the Board therefore pays particular attention to areas of spend that can become future generators of above-average returns. Building out our supply chain, increased digital capabilities and product launches would be typical of this sort of capital allocation.


Acquisitions and leverage/gearing

Alongside investment within our existing operations, non-organic growth also forms a critical part of Trifast’s strategy. As such, the Board has a well-defined and disciplined approach to acquisitions where our primary financial objective will be to target returns (as an absolute minimum) in excess of our WACC, over a reasonable time frame. 

The Board has determined that in the current macroeconomic and shareholder environment, it is appropriate to adopt a prudent but flexible capital structure and will seek to operate with gearing of between 1 and 1.5x adjusted net debt (before IFRS 16): Underlying EBITDA. Certain circumstances, such as an acquisition or a more uncertain macroeconomic environment, may support a temporary extension of this level.


Returns to shareholders

The Board recognises the role of dividends in forming part of our total shareholder return (TSR). As such, it is committed to a progressive dividend policy with a target pay-out ratio of between 3x and 4x adjusted earnings. For the medium term, the Board believes a pay-out ratio at the top end of this range is appropriate. This approach will ensure the Group is also able to prioritise investments which will support the Group’s strategic development and underpin capital appreciation.

Special dividends and share buy-backs, having been considered, do not currently form part of our capital allocation framework.



Equity ownership is a key aspect of our approach to Group-wide remuneration, aligning employees’ interests with those of shareholders; schemes exist to facilitate this. Given the desire to minimise earnings dilution from any such awards, the Board has deemed it appropriate to make ongoing use of the already established Employee Benefit Trust (EBT).



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