Interim Results
Trifast PLC
25 November 2002
Issued by Citigate Dewe Rogerson Ltd, Birmingham
Date: Monday, 25 November 2002 Embargoed: 7.00am
Trifast plc
"Leading distributors and manufacturers of a comprehensive range of industrial
fastenings"
Six months to Six months to Six months to
30 September 2002 30 September 2001 31 March 2002
Turnover £51.938m £52.309m £51.601m
Operating profit £2.202m £1.603m £1.026m
(pre-goodwill and
exceptionals)
Profit before taxation £1.958m £1.262m £0.704m
(pre-goodwill and
exceptionals)
Profit after taxation £0.757m £0.098m (£3.711)m
(post-goodwill and
exceptionals)
Earnings per share
Adjusted diluted 1.99p 1.67p (0.16)p
Diluted 1.05p 0.14p (5.16)p
Dividend per share 0.63p 0.60p 1.20p
"We are pleased to report that the Group has made considerable progress in the
first half.
"We have never been better focused to deal with the uncertainties in the market
place and one of our key objectives has been to establish a more even balance of
business.
"The second half has started well with trading in line with our expectations.
Enquiry levels remain encouraging across the Group with both product and
transactional business and global fastener management projects continuing to be
won.
"Therefore, whilst we are cautious, we are confident that with the traditionally
stronger second half we can continue to improve the profitability of the Group
and look forward to reporting on our progress at the year-end."
David Dugdale, Chairman
Jim Barker, Chief Executive
FULL STATEMENT ATTACHED
Enquiries:
Jim Barker, Chief Executive
John Wilson, Group Finance Director Fiona Tooley
Trifast plc Citigate Dewe Rogerson
Today: 020 7282 8000 (8.00am - 12.30pm) Today: 020 7282 8000
Mobile: 07769 934148 (JB)/07711 103915 (JW) Mobile: 07785 703523
Thereafter: 01825 747366 Thereafter: 0121 455 8370
Web-site: www.trifast.com
Email: ceooffice@trifast.com
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Trifast plc
Interim Results for the six months ended 30 September 2002
Joint Statement by David Dugdale, Chairman and Jim Barker, Chief Executive
Introduction
We are pleased to report that the Group has made considerable progress in the
first half. With the restructuring programme almost complete and the operational
efficiencies beginning to bear fruit, together with a number of exciting global
supply partnerships being developed with existing and new customers, we have a
solid foundation from which to continue a sustainable growth pattern.
We have never been better focused to deal with the uncertainties in the market
place and one of our key objectives has been to establish a more even balance of
business.
Our main exposure remains the electronics and telecoms sectors which have
continued to be affected by slower demand and excess stocks within the supply
chain. However, we have seen some stability return with sales in the first half
in this sector accounting for 30% against 36% in the comparable period and 28%
in the second half of last year. Additionally, our focused marketing drive to
improve the balance of our business particularly within the Tier 1 automotive
and industrial sectors has begun to pay off and we have grown this sector to 22%
of our sales, compared to 18% in the six months to September 2001. Other
sectors we supply including domestic appliances, distributors and security have
remained fairly static.
Results
Turnover for the six months ended 30 September 2002 was £51.94 million against
£52.31 million in the comparable period, with Europe accounting for 81%, the Far
East 15% and the Americas 4%. Group exports as a percentage of turnover was
18.2%, an increase from 15.5% in 2001.
The cost-down programme implemented in 2001/2 is near completion with the staff
head count 7% lower in this period when compared to 2001. In addition, the
overheads (pre-goodwill and exceptionals) continue to improve as a percentage of
sales.
Stocks have been reduced by nearly £3 million from their level at 30 September
2001.
Operating profits in the period (pre-goodwill and exceptionals) increased 37.4%
to £2.20 million against £1.60 million in the first half of the previous year
and the net interest charge was £244,000 which was covered 9 times by operating
profits.
Pre-tax profits (after goodwill and exceptionals) showed a marked improvement
from £157,000 in 2001 to £1.29 million - an eight fold increase.
Adjusted diluted earnings per share (pre-goodwill and exceptionals) improved
from 1.67 pence in 2001 to 1.99 pence, an increase of 19%.
In the first half, capital expenditure was approximately £400,000 with
depreciation at £889,000. During the second half we have planned expenditure of
around £300,000.
Prior to debt repayments, the Group generated over £500,000 of cash in the six
months. Debtor management continued to be a priority with no significant bad
debts being incurred in the period. Although debtor days have remained static at
75 at the half year, it is an improvement on the year ended March 2002 position
of 82.
Net debt at the end of the period stood at £10.26 million against £13.93 million
at 30 September 2001 resulting in gearing of 28% compared to 37% in the
comparable period.
The balance sheet remains in good shape with shareholders' funds standing at
£34.73 million.
continued...
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Dividend
We indicated in our earlier statements that the Group intended to return to a
progressive dividend programme. Therefore, we are pleased to announce a 5%
increase in the interim dividend to 0.63 pence per ordinary share (2001:0.60
pence) which will be paid on 24 January 2003 to shareholders on the Register as
at 6 December 2002.
Review
We have concentrated our efforts on developing existing profitable customer
relationships within our core business whilst also focusing on transactional
business.
It is interesting to note that we have seen a different mix of business within
our top customers compared to last year. This clearly reflects the change in the
market place but more importantly our marketing drive which has resulted in
successfully securing a number of new accounts with additional business from
existing customers such as BAE Systems, Toshiba, and Flextronics. We are also
beginning to see a resurgence from our Japanese customers, such as Sharp and
Hitachi, and we are working on a number of new projects which are currently at
the design stage.
Over the last six months, we have also reviewed our low margin business and
where we have been unable to negotiate more realistic returns we have started to
exit the relationship and reduce our exposure.
The European business has completed its restructuring and the three trading Hubs
now provide a more focused and cost effective administrative and purchasing
function to the smaller divisions who continue to manage on a day to day basis
their key customer accounts. This has produced improved operational
efficiencies, including greater flexibility of stock usage, better purchasing,
automatic ordering, electronic invoicing and customer care which are paramount
in our type of business.
Our operations in Hungary, Holland and France continue to make progress.
In the Scandinavian region the re-organisation and re-focus towards fastener
orientated business with a particular emphasis on engineering has begun to reap
benefits, with sales of our own manufactured Hank(R) products in the region
increasing. We have also won our first export contract to Estonia, which
provides a solid base on which to develop sales in the Baltic region.
Our Far East operations produced a creditable performance with good sales growth
coming from Singapore and Malaysia. Although there is still excess capacity and
this market is forecast to remain weak, there are a number of strategic global
partnership opportunities across all sectors and from across the Continents in
which we are strongly represented. Therefore, we remain optimistic about
further strengthening our position within this important Pacific region.
Our American operation has improved its position on last year principally
through its restructure and its enhanced working relationship with our Far East
operations. Together, under the leadership of Executive Director Steven Tan,
they have been focusing on a number of global OEM's to gain product
specification approvals. With our US local presence supported by our strong
Asian presence offering efficient, high quality low cost manufacturing this
clearly gives us the competitive edge which is evidenced by the extension of an
existing global OEM relationship where, in addition to supplying the UK
facilities the contract has been extended to cover additional sites in the
Americas, Australia, Asia and China.
People
As part of the significant restructuring and cost-down programme, Steven
Franklin, Executive Director, left the Company at the end of August 2002.
There will be two further changes to the Board structure over the coming months.
continued...
-4-
John Wilson, who has been with the Group since 1978, and on the Board since
1985, has decided to retire and will relinquish his role as Group Finance
Director on 31 December 2002. John has been a key player within the development
of our business and on behalf of staff, shareholders and customers we would like
to thank him for his hard work, contribution and commitment over many years. We
are pleased to say that his experience will not be lost to us as he has agreed
to remain on our Board as a Non-Executive Director.
John will be succeeded by Stuart Lawson who will join the Board and will become
Group Finance Director from 1 January 2003. Stuart has been with the Group since
1995 having joined us from KPMG. For the last six years, he has been the Group
Financial Controller and Company Secretary for Trifast in addition to his
responsibilities as Finance Director of the Group's European subsidiaries. We
congratulate him on his appointment.
Prospects
The second half has started well with trading in line with our expectations.
Enquiry levels remain encouraging across the Group with both product and
transactional business and global fastener management projects continuing to be
won.
Although economic challenges exist and limited visibility remains, we are
focused and committed to achieving further improvements through operational
efficiencies, working closer with our customers and developing the opportunities
that we have identified.
Therefore, whilst we are cautious, we are confident that with the traditionally
stronger second half we can continue to improve the profitability of the Group
and look forward to reporting on our progress at the year-end.
-5-
Trifast plc
Consolidated Profit and Loss Account
Unaudited interim results for the six months ended 30 September 2002
Six months Six months Year
ended ended ended
Note 30 September 30 September 31 March
2002 2001 2002
£'000 £'000 £'000
Turnover
Existing operations 51,938 52,309 103,910
Cost of sales (39,444) (40,260) (80,001)
Gross profit 12,494 12,049 23,909
Net operating expenses
(excluding exceptional costs and goodwill amortisation) (10,292) (10,446) (21,280)
Operating profit before goodwill amortisation and
exceptional items 2,202 1,603 2,629
Exceptional costs 5 (266) (770) (442)
Goodwill amortisation (405) (335) (1,710)
Operating profit 1,531 498 477
Loss on termination of operations - - (3,828)
Profit/(loss) on ordinary activities before interest 1,531 498 (3,351)
Net interest (244) (341) (663)
Profit/(loss) on ordinary activities before taxation 1,287 157 (4,014)
Taxation on profit/(loss) on ordinary activities 2 (530) (59) 401
Profit/(loss) on ordinary activities after taxation 757 98 (3,613)
Dividends 3 (453) (431) (1,308)
Retained profit/(loss) 8 304 (333) (4,921)
Earnings per share 4
Basic 1.05p 0.14p (5.03)p
Diluted 1.05p 0.14p (5.02)p
Adjusted diluted 1.99p 1.67p 1.51p
The results for the period were derived wholly from continuing operations.
-6-
Trifast plc
Summarised Consolidated Balance Sheet
Unaudited interim results as at 30 September 2002
30 September 30 September 31 March
2002 2001 2002
Note £'000 £'000 £'000
Intangible assets - goodwill 12,959 15,737 13,937
Tangible fixed assets 13,465 15,909 14,922
26,424 31,646 28,859
Current assets 6 48,087 50,291 49,945
Creditors: amounts falling due within one year (25,080) (24,433) (25,527)
Net current assets 23,007 25,858 24,418
Total assets less current liabilities 49,431 57,504 53,277
Creditors: amounts falling due after more than
one year (13,663) (17,534) (16,518)
Provisions for liabilities and charges (1,037) (747) (2,223)
Net assets 34,731 39,223 34,536
Capital and reserves
Called up share capital 3,593 3,593 3,593
Share premium 4,588 4,585 4,588
Revaluation reserve 1,017 1,017 1,017
Merger reserve - 391 -
Profit and loss account 7 25,533 29,637 25,338
Equity shareholders' funds 8 34,731 39,223 34,536
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Trifast plc
Summarised Consolidated Cash Flow Statement
Unaudited interim results for the six months ended 30 September 2002
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2002 2001 2002
Note £'000 £'000 £'000
Net cash inflow from operating activities 9 3,706 3,512 8,926
Returns on investment and servicing of finance (279) (222) (624)
Taxation paid (468) (1,232) (2,370)
Capital expenditure and financial investment (371) (881) (1,163)
Acquisitions and disposals (1,162) (8,077) (8,077)
Equity dividends paid (862) (1,789) (2,221)
Cash inflow/(outflow) before use of liquid
resources and financing 564 (8,689) (5,529)
Net cash (outflow)/inflow from financing 10 (1,843) 10,412 9,441
(Decrease)/increase in cash in the period 11 (1,279) 1,723 3,912
-8-
Trifast plc
Notes to the Interim Statement
Unaudited interim results for the six months ended 30 September 2002
1. Basic of preparation
This interim statement has been prepared on the basis of accounting policies set
out in the Group financial statements for the year ended 31 March 2002.
This statement does not comprise full financial statements within the meaning of
Section 240 of the Companies Act 1985. The statement is unaudited but has been
reviewed by KPMG Audit Plc and their report is set out below.
The figures for the year ended 31 March 2002 have been extracted from the full
Annual Report and Accounts filed with the Registrar of Companies on which the
Auditors gave an unqualified report.
2. Taxation
The charge for tax is an estimate based on the anticipated effective rate of tax
for the year ending 31 March 2003, adjusted for prior year items as shown below:
Six months ended
2002 2001
£'000 £'000
Current tax on income for the period 412 59
Adjustments in respect of prior years 118 -
530 59
3. Dividends
The directors have declared an interim dividend of 0.63 pence per ordinary
share to be paid on 24 January 2003 to shareholders on the register on 6
December 2002.
4. Earnings per share
The calculation of earnings per 5p ordinary share is based on profit on ordinary
activities after goodwill amortisation and after taxation and the weighted
average number of shares in the period of 71,868,150 (September 2001:
71,853,855: March 2002: 71,854,565).
The calculation of the adjusted diluted earnings per 5p ordinary share is based
on profit on ordinary activities after goodwill amortisation and after taxation.
In accordance with FRS 14 the weighted average number of shares in the period
has been adjusted to take account of the effects of all dilutive potential
ordinary shares. The anti-dilutive potential ordinary shares have been
disregarded. The number of shares used in the calculation amount to 71,882,679
(September 2001: 71,943,120: March 2002: 72,004,731).
The adjusted diluted earnings per share is presented so as to show more clearly
the underlying performance of the group and is calculated as above using the
profit on ordinary activities before goodwill amortisation and exceptional items
but after tax.
5. Exceptional costs
These costs relate to the final elements of the restructuring programme started
during the year ended 31 March 2002.
continued...
-9-
6. Current assets
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2002 2001 2002
£'000 £'000 £'000
Stocks 19,595 22,509 19,788
Debtors 22,550 23,004 22,851
Cash at bank and in hand 5,942 4,778 7,306
48,087 50,291 49,945
7. Profit and loss reserve
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2002 2001 2002
£'000 £'000 £'000
Opening balance 25,338 29,795 29,795
Retained profit/(loss) for period 304 (333) (4,921)
Exchange differences (109) (82) (184)
Transfer from merger reserve - 335 726
Capitalisation of reserves on issue of
shares to QUEST - (78) (78)
25,533 29,637 25,338
8. Reconciliation of movements in shareholders' funds
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2002 2001 2002
£'000 £'000 £'000
Profit/(loss) for the financial period 757 98 (3,613)
Dividends (453) (431) (1,308)
Retained profit/(loss) for the period 304 (333) (4,921)
Issue of ordinary shares - 118 121
Capitalisation of reserves on issue of shares
to qualifying QUEST - (78) (78)
Exchange losses (109) (82) (184)
Net addition to shareholders' funds 195 (375) (5,062)
Opening shareholders' funds 34,536 39,598 39,598
Closing shareholders' funds 34,731 39,223 34,536
continued...
-10-
9. Net cash flow from operating activities
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2002 2001 2002
£'000 £'000 £'000
Operating profit after goodwill
amortisation 1,531 498 477
Loss on termination of operations - - (3,828)
Depreciation charge 889 871 1,966
(Profit)/loss on sale of tangible fixed
assets (4) 24 241
Goodwill amortisation 405 335 1,710
Decrease in working capital 885 1,784 8,360
3,706 3,512 8,926
10. Net cash flow from financing
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2002 2001 2002
£'000 £'000 £'000
Issue of ordinary share capital - 40 43
(Decrease)/increase in debt (1,843) 10,372 9,398
(1,843) 10,412 9,441
continued...
-11-
11. Reconciliation of net cash flow to movement in debt
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2002 2001 2002
£'000 £'000 £'000
(Decrease)/increase in cash in the period (1,279) 1,723 3,912
Cash flow from decrease/(increase) in
debt and lease financing 1,843 (10,372) (9,398)
Change in net debt resulting from
cash flows 564 (8,649) (5,486)
Loans and finance leases acquired with
subsidiaries - (99) (99)
Translation difference (226) (126) 47
Movement in net debt in the period 338 (8,874) (5,538)
Net debt at beginning of period (10,595) (5,057) (5,057)
Net debt at end of the period (10,257) (13,931) (10,595)
12. This statement will be posted to shareholders shortly. Further copies
will be available from the Company's Registered Office: Trifast House, Bellbrook
Park, Uckfield, East Sussex, TN22 1QW, or via ceooffice@trifast.com.
-12-
Independent review report by KPMG Audit Plc to Trifast plc
Introduction
We have been instructed by the company to review the financial information set
out on pages 5 to 11 and we have read the other information contained in the
interim report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the Directors. The Directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority, which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where they
are to be changed in the next annual accounts in which case any changes, and the
reason for them, are to be disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/
4: Review of interim financial information issued by the Auditing Practices
Board for use in the United Kingdom. A review consists principally of making
enquiries of Group management and applying analytical procedures to the
financial information and underlying financial data and, based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review is substantially less
in scope than an audit performed in accordance with Auditing Standards and
therefore provides a lower level of assurance than an audit. Accordingly we do
not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 September 2002.
KPMG Audit Plc
Chartered Accountants
Crawley
25 November 2002
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