Dear Shareholder


As Chairman of the Trifast Remuneration Committee (the 'Committee'), I am pleased to introduce our Remuneration report for 2016, which has been prepared by the Committee in accordance with the relevant legal and accounting regulations and approved by the Board.

The remuneration policy at Trifast seeks to attract, incentivise and retain those team members who are critical to executing our business strategy. Within this, any structure will aim to deliver a fitting mix of:

  • fixed and variable compensation
  • cash and equity components

The Committee appreciates the importance of ensuring that strong year-on-year corporate performance is rewarded whilst aligning the interests of executives and shareholders over the longer term.

Looking back

Considering the financial performance of the Group, this has been a good year. Underlying diluted EPS increased by 15.1% and ROCE remained healthy at 18.5%. Considering strategic issues, it was another significant year which saw Jim Barker retire from the position of Chief Executive Officer and the completion of another acquisition which supports value creation for shareholders. The details with regard to Jim's remuneration during the year can be found in the Remuneration Report. In accordance with the Rules of the deferred equity scheme, Jim was deemed to be a good leaver and given his service and commitment to the Company the Committee exercised its discretion to allow early vesting of previously deferred shares.

When considering the bonus targets for the year to 31 March 2016, the Committee was conscious of making them challenging yet achievable. As a result, threshold growth was, in line with policy, set at RPI + 5% (after adjusting for a full year contribution from VIC), whilst, to attain maximum pay-out, the Group would have needed to show year-on-year EPS growth of 23%.

Against this bonus structure, taking into account the ROCE hurdle (group WACC +2%) and given the EPS outlined above, the Committee assessed that performance in the year to 31 March 2016 justified an annual bonus of 150% being 75% of the maximum bonus potential. This is for each Executive Director and made up of a 50% cash bonus and a 100% equity award, the latter being deferred for three years. The Committee was satisfied with personal performance against pre-determined individual objectives and that there was no requirement to apply a reduction to the formulaic corporate bonus outturn.

Remuneration policy

The current remuneration policy was approved by the majority of shareholders at the last AGM on 16 September 2015 and we again sought to engage with shareholders who cast a meaningful number of votes against its adoption.

It has been important to the Group that stability and momentum be maintained during a time of management transition and the Committee has remained mindful of that in considering its approach. Whilst the current policy has served the Group well, the Committee believes that it will be appropriate to formulate a new policy in the short term, particularly the aspects that consider longer term remuneration. Consideration of a suitable policy has commenced and shareholders will be consulted before the end of this financial year.

Jonathan Shearman

Jonathan Shearman |
Chairman of the Remuneration Committee

Neil Warner

Neil Warner |
Senior Independent Non-Executive Director

Scott Mac Meekin

Scott Mac Meekin |
Independent Non-Executive Director

The remuneration policy at Trifast seeks to attract, incentivise and retain those team members who are critical to executing our business strategy"

Looking ahead

The Group remains committed to continued growth in earnings from both organic performance and acquisitions. For the most part, the Executive team and NEDs have again chosen to freeze their salaries in the coming year. In the case of Glenda Roberts and Geoff Budd, salaries have been increased, by 11% and 5% respectively, in line with the policy and to reflect increased responsibilities. Further details of these changes may be found below.

With regard to the bonus scheme for the year to 31 March 2017, threshold performance will be set in accordance with the current Remuneration Policy. For maximum bonuses to be paid, Group EPS will once again need to demonstrate significant year-on-year growth. Whilst the actual level of EPS required is deemed commercially sensitive in the year in which it applies, we will, as in previous years, make it available in next year's accounts.

The following contains a summary of the Remuneration Policy a full copy of which can be found via the Company website. The pages thereafter, contain the Remuneration Report which shows in greater detail how we have applied the current policy during the year under review.

In concluding, we have an excellent management team and it is appropriate that they feel motivated and rewarded. We believe that our approach enables this and so look forward to your support in approving the relevant resolution at July's AGM.

Attendance in
Jonathan Shearman (Chairman)
Neil Warner — appointed 16 June 2015
Scott Mac Meekin
Neil Chapman — retired 16 June 2015

Jonathan Shearman
Chairman of the Remuneration Committee
13 June 2016

Directors' remuneration policy

This section of the Remuneration report contains details of the policy that will govern current remuneration. It has been developed to support the business strategy and was initially approved by shareholders on 18 September 2014 and subsequently re-approved on 16 September 2015.

1) Policy tables — Executives

ElementExecutive team
Base salary from 1 April 2016Range of £180,000 to £250,000 in line with benchmarking and prevailing industry
Pension*20% of salary
Annual bonus — cashMaximum — 100%
On target — 50%
Threshold — 35%
Annual bonus measure — cashROCE hurdle of 200bps in excess of the Group's WACC
Thereafter, based on underlying diluted EPS performance
Reduction of up to 15% should personal objectives not be achieved
Annual bonus — deferred equityMaximum — 100%
On target — 100%
Threshold — 70%
Annual bonus measure — deferred equityROCE hurdle of 200bps in excess of the Group's WACC
Thereafter, based on EPS performance
Reduction of up to 15% should personal objectives not be achieved
Any shares awarded are deferred for three years
Shareholding requirementMinimum holding of 250,000 shares†
Malus and clawbackThe Committee would consider clawback of the equity portion should EPS growth on a rolling three-year basis turn negative
Changes in policyNone

* Malcolm Diamond does not participate in the Company pension plan. From 1 April 2016, the remaining Executives have the option to take pension payments in the form of a cash allowance, adjusted for Employer's National Insurance.
† by 31 March 2019.

2) Contracts

During the year all Executive Directors had rolling service contacts with a notice period of 12 months. Non-Executive Director contracts have a three month notice period except in the event of a change of control, when a 12 month notice period would apply.

Annual report on remuneration — audited information

This section of the Remuneration report contains details as to how the Company's remuneration policy was implemented during the year ended 31 March 2016.

1) Executive Director single figure for remuneration

Annual bonus4
Deferred equity
(face value)
MM Diamond20010020021521
Prior year200200200190619
JC Barker (retired 30 September 2015)125621259321
Prior year250250250160766
MR Belton32251132251445622
Prior year2002002001340653
CL Foster (appointed 1 October 2015)10050100720277
Prior year
GP Budd190951901638529
Prior year1901901901538623
GC Roberts180901801836504
Prior year1801801801636592
Prior year totals1,0201,0201,020791143,253
  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, Geoff Budd and Glenda Roberts are members of the Company's non-contributory pension plan (2015: Mark Belton, Geoff Budd and Glenda Roberts) This is an HMRC approved defined contribution scheme. The rate of Company contribution to this scheme is 20% of base salary
  3. All figures for Mark Belton reflect his position as Group FD during the first half of the financial year and Group CEO thereafter
  4. See additional details for variable pay element of remuneration below

Additional details for variable pay element of remuneration: annual bonus

A portion of the annual bonus for the year ended 31 March 2016 will be paid in cash following the publication of the annual results and the remainder deferred in equity for three years. In accordance with the Directors' Remuneration Policy, all five remaining Executive Directors have been awarded a cash bonus and deferred equity bonus as a percentage of base salary of 50% and 100% respectively (2015: 100% and 100%). This is equivalent to 75% of the maximum annual bonus opportunity. In addition, JC Barker has been awarded a bonus pro rata to the percentage of the year for which he was a Director.

The performance targets, actual performance achievement and resulting annual bonus as a percentage of the base salaries of the Executive Directors are summarised below for the year to 31 March 2016:

performance target
performance target*
Actual EPSBonus achieved^
Group EPS†100%9.4p incorporating a bonus of 105% of salary (35% cash; 70% deferred equity)10.7p incorporating a bonus of 200% of salary (100% cash; 100% deferred equity)10.0p50%100%

* On target performance is deemed commercially sensitive and therefore not stated. Maximum performance EPS is stated after the deduction of any incremental bonus payments
^ As percentage of salary
† Underlying diluted EPS

In the year under review, both the ROCE hurdle and all personal objectives were achieved.

The number of shares needed to award the face value of the deferred equity bonus is based on the average share price from 1 January to 31 March. In 2016 this was 868,186 shares and 117p (2015: 980,390 and 104p).

2) Non-Executive Director single figure for remuneration

Core fee
Chairing of
Audit or Rem
NW Warner — appointed 16 June 20163244444
Prior year
JPD Shearman405550
Prior year405550
SW Mac Meekin40545
Prior year40545
NS Chapman — retired 16 June 20161922225
Prior year4055555
Prior year totals12010155150

3) Payments to past Directors and for loss of office

  1. Payments have and will be made from 1 October 2015 until 30 June 2016 to JC Barker following his retirement from the position of Group CEO. These salary and benefit amounts have not been included in table 1 as they relate to consultancy services provided to the Group since his retirement from the Board. All of these were in line with the Group's contractual obligations and its Remuneration Policy. In addition, a pro rata bonus of £62,000 has been awarded for the year to 31 March 2016 in relation to his qualifying services as a Director up until retirement, as set out in the single figure of remuneration table above.
  2. Furthermore, given his position as a good leaver, the Committee has used its discretion with regard to timing, such that the deferred equity awards for years ended 31 March 2014 of 277,778 shares (value at 31 March 2016 price; £353,000), 2015 of 240,292 shares (value at 31 March 2016 price; £305,000)) and 2016 of 106,395 shares (value at 31 March 2016 price; £135,000) vested, subject to a two-year clawback period, on 30 June 2016 (2015: nil).
  3. Included in the table above is a £14,000 payment in lieu of notice for Neil Chapman following his retirement on 16 June 2015.

4) Statement of Directors' shareholdings

Vested but
shares which
count toward
Total of all
interests at
31 March
Executive Directors
Malcolm Diamond250,000553,8001,000,000597,0342,150,83426,5712,177,405Yes
Jim Barker5573,2291,000,000624,4652,197,6942,197,694N/A
Mark Belton250,000250,000593,622843,62218,000861,622Yes
Clare Foster6250,00085,11685,11685,116No
Geoff Budd250,000307,264548,047855,311855,311Yes
Glenda Roberts250,000150,000499,059649,05917,571666,630Yes
Non-Executive Directors
Neil Warner722,75022,75022,750N/A
Jonathan ShearmanN/A
Scott Mac MeekinN/A
Neil Chapman8N/A
  1. by 31 March 2019
  2. Including options exercised in the year
  3. Granted 30 September 2009
  4. Total of current beneficial holding, vested but unexercised options and deferred equity awards
  5. Retired 30 September 2015
  6. Appointed 1 October 2015
  7. Appointed 16 June 2015
  8. Retired 16 June 2015

Deferred equity bonus shares:

of shares
Face valueNumber
of shares
Face valueNumber
of shares
Face valueNumber
of shares
Face value
Malcolm Diamond234,568190,000192,233200,000170,233200,000597,034590,000
Jim Barker
(retired 30 September 2015)
Mark Belton209,877170,000192,233200,000191,512225,000593,622595,000
Clare Foster
(appointed 1 October 2015)
Geoff Budd203,704165,000182,622190,000161,721190,000548,047545,000
Glenda Roberts172,840140,000173,010180,000153,209180,000499,059500,000

* Outside of the malus and clawback noted in policy table 1, the deferred equity bonus shares have no further performance measures once awarded. A service condition of three years, with a good leaver clause applies.

Historic long term incentive awards

The options that were agreed with shareholders and granted on the change of management in 2009, requiring a three month average share price greater than 51p, combined with a ROCE in excess of 10%, vested during the year ended 31 March 2013. 2,000,000 of the options granted to the Board remain outstanding at 31 March 2016 (2015: 2,000,000).

2009 share options:

NameOutstanding at 1 April 2015Options
Outstanding at
31 March
Executive Directors
Malcolm Diamond1,000,0001,000,000
Jim Barker — retired 30 September 20151,000,0001,000,000

^ Excluding SAYE plans (see previous table).

No other Executive or Non-Executive Directors have outstanding options under the 2009 share option scheme.

The aggregate gains made on exercising share options in the year totalled £nil (2015: £3,697,000).

There have been no changes in the interests of any Directors between 31 March 2016 and 14 June 2016.

Annual report on remuneration — Unaudited information

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 seven year period from 31 March 2009. The Remuneration Committee believes it is appropriate to monitor the Company's performance against these indices as the Company is a constituent of both.

5) Performance graph

6) Performance and pay

The table below shows the single figure remuneration and levels of bonus payout for the Group CEO during the past seven years:

Annual cash
bonus payout
Equity award
payout against

* This was a year considered as part of the performance period for the 2009 option scheme.
† 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.

7) Percentage change in CEO remuneration

The table below compares the percentage increase in the CEO's total pay (excluding pension) with that of the UK division which is the most appropriate allowing a consistent tax regime and inflationary environment. In both cases, salaries are reviewed annually in April:

Group CEOSalary250250
Jim Barker /
Mark Belton*
Taxable benefits1616
Annual bonus — cash125250(50.0%)
Annual bonus — deferred250250
UK employeesSalary10,0369,5625.0%
Taxable benefits3623319.4%
Annual bonus9188992.1%

* Jim Barker 1 April 2015 to 30 September 2015 Mark Belton 1 October 2015 to 31 March 2016

8) Relative importance of spend on pay

The following table shows the relative spend on pay during the past two financial years when compared to other disbursements from profit:

from profit
during year to
31 March
from profit
during year to
31 March
Dividend distributions£2.44m£1.57m55.4%
Group spend on pay (including Directors)£23.74m£22.05m7.7%
Other payroll costs£7.78m£7.60m2.4%

9) Implementation of policy in the coming year

The remuneration policy's implementation for the forthcoming year is summarised as follows:

StructureThe main elements of Executive remuneration are:
  • Base salaries as follows:

    Malcolm Diamond (Executive Chairman)— £200,000
    Mark Belton (Chief Executive Officer)— £250,000
    Clare Foster (Chief Financial Officer)— £200,000

    Increased to reflect additional responsibilities

    Geoff Budd (TR Europe Managing Director)— £200,000
    Glenda Roberts (Group Sales Director)— £200,000

  • Annual bonus scheme where maximum opportunity is 200% of base salary (100% cash; 100% equity deferred for three years) for each of the Executive Directors based on:
    Initial ROCE hurdle of WACC +2% (to be met before any bonus will be payable)
    Threshold of underlying diluted EPS growth of RPI + 5% (required as the minimum performance for any bonus to be paid)
    Any bonus awarded will be reduced by up to 15% should personal objectives, set so as to support the ongoing business strategy, not be achieved. Given their nature, objectives are commercially sensitive for both the year in question and subsequent years.
  • Non-Executive Directors fees
    Neil Warner — £55,000
    Jonathan Shearman — £50,000
    Scott Mac Meekin — £45,000
Pay for performanceThe key principle for incentives is to provide a strong link between reward and Group performance to align the interests of Executives with those of shareholders.

10) Functioning of Remuneration Committee

The objective of the Remuneration Committee is to develop a remuneration policy for the Executive Directors and other key Executives that attracts, incentivises and retains them. Within this, the Committee has and will attempt to reward exceptional performance, defined as significant growth in EPS. This policy is reviewed on an annual basis.

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.

The Committee had three meetings during the year. All members of the Committee attended each of these meetings. On most occasions, the Executive Chairman and CEO were both invited to attend to ensure the Committee was in possession of all the relevant facts. During these meetings the Committee initially confirmed the remuneration structure for the year to 31 March 2015 and then considered any appropriate changes for the year to 31 March 2016 and beyond, including reflecting on shareholder feedback.

During the year the committee received independent advice from PwC in relation to the remuneration structure, governance issues and other matters considered by the Committee in the year. The fees paid by the Company to PwC for services to the Committee during the financial year was £0.02m. The Group also retains PwC with regard to taxation services and consulting services in the ordinary course of business of Trifast. The Committee believes that this does not create a conflict of interest and the advice they receive is independent and objective. PwC is a signatory to the Remuneration Consultants' Code of Conduct which requires its advice to be objective and impartial.

The Committee consults with the Company Secretary regarding issues on areas of remuneration and Corporate Governance. With regard to senior Executives in the Company (excluding Board Directors), the Committee also takes advice from the Executive Board.

11) Statement of AGM voting

The Group is committed to ongoing shareholder dialogue and takes an active interest in voting outcomes. Where there are substantial votes against resolutions in relation to Directors' remuneration, the reasons for any such vote will be sought and any actions in response detailed in the Chairman's letter.

The table below shows the actual voting on the 2015 Remuneration Report at the AGM held on 16 September 2015:

Votes for%Votes against%Votes withheld
2015 Remuneration report67,486,36098.0355,4600.568,825,391

The following table sets out actual voting in respect of the approval of the 2015 remuneration policy at the AGM held on 16 September 2015:

Votes for%Votes against%Votes withheld
2015 Remuneration policy53,708,02878.013,288,67419.368,825,391

This report was approved by the Board of Directors and signed on its behalf by:

Jonathan Shearman
Chairman of the Remuneration Committee
13 June 2016