Whilst pleased with this year's organic growth results, we have openly expressed our objective to accelerate expansion by strategic acquisitions; we have also committed to applying strict criteria to the structure and current/potential performance of selected targets. Although at any one time there is always at least one target under scrutiny, our selectivity clearly restricts our commitment to finalising a transaction; however, there are sufficient opportunities in our market for us to remain confident that continuing our search remains entirely legitimate.
This search for the 'right' acquisition has been highly active over a two year period since acquiring PSEP in Malaysia at the end of the 2011 calendar, and post the financial year end culminated in extending our business through the acquisition of Viterie Italia Centrale Srl ('VIC') in Italy which we completed on 30 May 2014. More detail about this acquisition can be found below and in Acquisition of Viterie Italia Centrale.
Meanwhile, our ongoing 'self help' initiatives continue to make material improvements around the business particularly with gross margins — thus providing tangible impetus to our ongoing financial progress.
Where our organic growth 'Hotspots' are developing
ASEAN Region (comprises Singapore, Malaysia, Thailand, Vietnam, Philippines and Indonesia)
The ASEAN Free Trade Area ('AFTA') is now revealing opportunities for TR as new factory investments are starting to favour the region, sometimes as an alternative to China. Part of local government incentives depend on the requirement for new participating beneficiary companies to source a minimum of 40% of materials and components from within the AFTA region. TR has two fastener factories in Malaysia and one in Singapore, thus providing a steady flow of potential new assembly customers moving into the region — sometimes from China.
For this reason, TR has strengthened personnel resources by setting up a subsidiary in Thailand and has registered for VAT in order to allow local currency invoicing. Our main sector targets are automotive (two and four wheel) and electronics (mainly consumer).
Once again, we congratulate and thank all of our colleagues around the world for these outstanding results yielded with less than a 1% increase in staff numbers employed"
Our operation in this region, Special Fasteners Engineering Co Ltd ('SFE') is already a strategic supplier to fastener distributors in Europe and the USA plus TR Fastenings as a group. Due to competitive pricing, quality and service for manufacturing specialised components, SFE is enjoying both full capacity and sufficient Return On Capital Employed ('ROCE') to actively seek opportunities to increase capacity of both buildings and plant, and these initiatives have gained full Trifast Board support.
Following extensive product and engineering training from TR colleagues in Europe last year, our Shanghai team (TR Formac) is gaining increasing business from sister plants of our existing automotive Tier 1 customers who are already long established with TR within Europe. This validates one of our core growth strategies set five years ago to develop global multi-national assembly customers that we can follow from country to country. The rising cost-driven trend for the major car manufacturers to establish 'global platforms' (the most costly component to developing the main floor pan) for example, the new imminent Ford medium saloon broadens our opportunities to offer common platform components, such as reclining seat bolts on a global basis ultimately to plants in Asia, Europe and the USA where uniformity of price, quality and availability is a minimum requirement to gain orders.
Shanghai is also gaining the benefit from mobile phone base station renewals as 4G technology supplants 3G, where the hardware is substantially different.
Our forecasting for the next three years reflects our confidence in the ongoing growth from both automotive and electronics sector dynamics within China.