Interim Results - Pre-tax Profit Up 11%

Trifast PLC 23 November 1999 Leading distributors and manufacturers of a comprehensive range of industrial fastenings predominantly in the electrical and electronics sector Trifast reports a further strong uplift in its half-year performance Turnover £54m + 24% 14% organic growth Operating profit - pre-goodwill £5.43m + 14% Pre-tax profit up to £5.11m + 11% Earnings per share - adjusted fully diluted 20.73p +12% Interim dividend increased +10% to 4.57p Strong cash generation in the first half Alliance established in Hungary New intranet based marketing tool launched to drive international sales Major new logistics projects 'The buoyant start to the year that we reported in June has continued with Asia, Scandinavia, USA and UK performing well. Business in the UK and internationally continues to offer a number of exciting opportunities afforded by both the rapidly changing marketplace and our belief in our own strengths and capabilities to not only respond to these changes but to also anticipate them. We continue to look forward with confidence for this financial year and beyond.' Malcolm Diamond, Chief Executive FULL STATEMENT ATTACHED Web-site: http//www.trifast.com e-mail: ceooffice@trifast.com Enquiries: Malcolm Diamond, Chief Executive John Wilson, Group Finance Director Tel: 0171-638-9571 (8.00am - 12.30pm) Trifast plc 0171-621-0011 (12.45pm - 2.30pm) Mobile: 07979 518493 Thereafter: 01825-747487 Fiona Tooley Citigate Dewe Rogerson Tel: 0171-638-9571/0121-631-2299 Mobile:0385-703523 Trifast plc Interim Results for the six months ended 30th September 1999 Joint Statement by the Chairman, David Dugdale and Chief Executive, Malcolm Diamond Results We are pleased to be able to report on another strong first half performance by the Group, despite the continuing difficult and challenging markets affecting some of our customers. Turnover for the six months to 30th September increased by 24% from £43.7million to £54.0million of which 14% was organic growth. The Group's pre-tax profit for the period was £5.11million (1998: £4.62m), an increase of 11%. Operating profits before goodwill amortisation were £5.43million (1998: £4.76m) which was an increase of 14%. Fully diluted earnings per share, adjusted for goodwill, improved by 12% to 20.73 pence (1998: 18.48p). Group overheads, expressed as a percentage of sales, have increased during the period due to one-off costs of re- structuring, re-location to new facilities, the new Scandinavian logistics contract and acquisitions research, which on one project involved extensive due diligence. Also, a book loss on the sale of our old Singapore factory was absorbed. We have continued to invest heavily in our operations with around £1.8million of capital expenditure in the first half and a further £1.7million planned for the remainder of the year. Strong cash generation and effective stock and debtor control leave the balance sheet in a strong position going forward. Gearing at the end of the period was 7% (1998: 22%). Bad debts were minimal at 0.035% of revenue. An interim dividend of 4.57 pence (1998: 4.17p), an increase of 10%, will be paid on 12th January 2000 to shareholders on the Register as at 10th December 1999. Review The buoyant start to the year that we reported in June has continued with Asia, Scandinavia, USA and UK performing well. Southern Ireland and Holland were constrained by several key customers delaying the adoption of new logistics contracts until early 2000. However, as these businesses are largely embryonic, the effect on the Group has been minimal and we expect these operations will make contributions next year. We continue to roll out our international expansion programme. During the period, we expanded our activities by acquiring FCF International AB for £3.48million in Sweden which significantly strengthened our Scandinavian presence and market positioning. FCF is a strong business with good management bringing access to new market sectors which, as a team, we are exploiting. An example of this was the successful securing of a £2 million pa fastener management contract with Lear Seating which becomes operational in the second half. FCF's reported profit for the period has been impacted by our investment in setting up logistics for this contract and the implementation of a new computer system. Lancaster Fasteners acquired in July 1998, as we anticipated, has expanded its European mainland sales, and is also now working closely with our Dutch subsidiary, Miller Holdings as a distribution and stockholding satellite for the Continent. In July we completed the trade sale of our non-core steel stockholding business in Coventry. Our ambition to re-focus branded product sales has been fulfilled with the centralising of stocks and a co-ordinated sales team in TR Uckfield. This has released our TR Edenbridge facility to house a dedicated team for another new major logistics project that is anticipated to come on stream in the last quarter of the financial year. Our Japanese and Intec business managers have initiated the establishment of TR in Hungary through an alliance with a well established and respected local company. As part of this alliance, our partner provides leased offices, warehousing, materials handling equipment and vehicles. More importantly it gives the Group local technical and logistics support, which is required to service the burgeoning group of multi- national electronics manufacturers that have identified Central Europe as a high skill/low cost base for high volume assembly. Management and IT resources will be provided from the UK. Compared to either an acquisition or green-field development, this business venture gives us a rapid start-up with significant opportunity for a modest expenditure and minimal risk. It is likely that we will adopt this format in other countries, for example in Mexico and Brazil where our customers also require local support. However, we continue to invest from our own cash resources in our long established key geographical centres, with moves to new 40,000 sq. ft. facilities in both Scotland and Singapore being completed in the first half. Our internal 'Fit for the Future' programme continues to gather momentum by re-aligning people, premises utilisation and stock in certain parts of the UK in order to yield greater efficiencies and returns. This activity has also been combined with selectively confronting the problem of a small number of key customers that had previously been provided with too high a level of investment and service relative to the prices they were prepared to pay. There are early indications that this is having a positive effect on our gross profit margin. In order to sustain our commitment to 'Continuous Improvement', TR in the UK has pledged to adopt the Business Excellence Model championed by The British Quality Foundation. The Industrial Society has been appointed by the Group to provide training and support throughout the Business Improvement Matrix. Year 2000 Following the statement contained in our March 1999 Report and Accounts and our web site, we have now completed the work on our own systems and equipment in addition to our customer and supplier programmes. As it is impossible to say that every aspect of our business and all our customers and suppliers will be 100% compliant, we have now put in place contingency plans at each of our sites. These plans are designed to deal with any unforeseen situation that may arise and includes systems monitoring and checks from 1st January 2000 as well as site integrity. The Directors are confident that the action of our 'Bug- Busters' team has significantly reduced the business risks associated with the Year 2000 and will ensure the Group's ability to trade in the Millennium year. Prospects A global marketing strategy aimed at multi-national manufacturers has been devised and launched internally as 'New Horizons'. This is an intranet based programme that will also work through the internet. It is anticipated that by the middle of the Year 2000, this system will be driving our international sales strategy and will be unique to the marketplace. Business in the UK and internationally continues to offer a number of exciting opportunities afforded by both the rapidly changing marketplace and our belief in our own strengths and capabilities not only to respond to these changes but also to anticipate them. We continue to look forward with confidence for this financial year and beyond.' Consolidated Profit and Loss Account Unaudited interim results for the six months ended 30 September 1999 Six Six months months Note ended ended Year 30 30 ended September September 31 March 1999 1998 1999 £'000 £'000 £'000 Turnover 2 Continuing 51,784 43,695 95,429 operations Acquisitions 2,210 - - _______ _______ _______ 53,994 43,695 95,429 Cost of sales (38,208) (31,126) (68,676) _______ _______ _______ Gross profit 15,786 12,569 26,753 Net operating (10,359) (7,806) (17,006) expenses _______ _______ _______ Operating profit before goodwill amortisation Continuing 5,400 4,743 9,747 operations 27 - - Acquisitions _______ _______ _______ Operating profit before goodwill 5,427 4,763 9,747 amortisation Goodwill amortisation (104) (44) - Continuing (48) - - operations Acquisitions _______ _______ _______ Profit on ordinary activities before 5,275 4,719 9,747 interest Net interest (164) (102) (263) _______ _______ _______ Profit on ordinary activities before 5,111 4,617 9,484 taxation Taxation on profit on ordinary 4 (1,533) (1,397) (3,093) activities _______ _______ _______ Profit on ordinary activities after 3,578 3,220 6,391 taxation Dividends 5 (810) (731) (2,206) _______ _______ _______ Retained profit 8 2,768 2,489 4,185 ======= ======= ======= Earnings per share 6 Basic 20.24p 18.48p 36.58p Fully diluted 19.88p 18.23p 36.12p Adjusted fully 20.73p 18.48p 36.96p diluted ======= ======= ======= Trifast plc Summarised Consolidated Balance Sheet Unaudited interim results as at 30 September 1999 30 30 September September 31 March Note 1999 1998 1999 £'000 £'000 £'000 Tangible fixed 12,475 10,697 10,700 assets Goodwill 6,181 4,239 4,039 _______ _______ _______ Current assets 7 47,010 37,447 39,870 Creditors: amounts falling due (27,297) (21,182) (22,011) within one year _______ _______ _______ Net current assets 19,713 16,265 17,859 _______ _______ _______ Total assets less current 38,369 31,201 32,598 liabilities Creditors: amounts falling due after (7,776) (5,877) (5,424) more than one year Provisions for liabilities and (736) (700) (786) charges _______ _______ _______ Net assets 29,857 24,624 26,388 ======= ======= ======= Capital and reserves Called up share 886 876 876 capital Share premium 5,668 5,004 5,008 Merger reserve 1,111 825 721 Other reserves - 43 - Profit and loss 8 22,192 17,876 19,783 account _______ _______ _______ Equity 9 29,857 24,624 26,388 shareholders' funds ======= ======= ======= Trifast plc Summarised Consolidated Cash Flow Statement Unaudited interim results for the six months ended 30 September 1999 Six Six months months ended ended Year 30 30 ended Note September September 31 March 1999 1998 1999 £'000 £'000 £'000 Net cash inflow from operating activities 10 7,305 2,404 8,277 Returns on investment and (157) (105) (275) servicing of finance Taxation paid (421) (427) (2,935) Net cash outflow from investing activities 11 (3,871) (4,806) (5,622) Equity dividends (1,476) (1,311) (2,042) paid _______ _______ _______ Cash inflow/(outflow) before use of liquid 1,380 (4,245) (2,597) resources and financing Net cash inflow from 12 2,549 3,771 3,310 financing _______ _______ _______ Increase/(decrease) in cash in the 3,929 (474) 713 period ======= ======= ======= Notes to the Interim Statement Unaudited interim results for the six months ended 30 September 1999 1 Basis of preparation The interim financial statements have been prepared on the basis of accounting policies set out in the Group financial statements for the year ended 31 March 1999. 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 1999 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 Turnover Six months Six months Year ended ended ended 30 September 30 31 March 1999 September 1999 £'000 1998 £'000 £'000 Analysis by activity Industrial 51,749 43,627 95,266 fastenings Acquisitions 2,210 - - Other 35 68 163 activities _______ _______ _______ 53,994 43,695 95,429 ======= ======= ======= 3 Acquisitions During the period under review the group acquired FCF International AB for total consideration of £3,477,000. In accordance with FRS 10, goodwill arising on this acquisition of £2,294,000 has been capitalised and is being amortised over 20 years. Notes to the Interim Statement (continued) 4 Taxation The charge for tax is an estimate based on the anticipated effective rate of tax for the year ending 31 March 2000. 5 Dividends The directors have declared an interim dividend of 4.57p per ordinary share to be paid on 12 January 2000 to shareholders on the register at 10 December 1999. 6 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 17,672,658 (September 1998: 17,425,149; March 1999: 17,475,875). The calculation of the fully 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 number of shares used in the calculation amount to 17,995,693 (September 1998: 17,659,149; March 1999: 17,696,730). The adjusted fully 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 but after tax. 7 Current assets Six months Six months Year ended ended ended 30 30 31 March September September 1999 1999 1998 £'000 £'000 £'000 Stocks 16,768 15,485 16,253 Debtors 23,625 20,316 20,850 Cash at bank and 6,617 1,646 2,767 in hand _______ _______ _______ 47,010 37,447 39,870 ======= ======= ======= Notes to the Interim Statement (continued) 8 Profit and loss account Six months Six months Year ended ended ended 30 30 31 March September September 1999 1999 1998 £'000 £'000 £'000 Opening balance 19,783 15,384 15,384 Retained profit 2,768 2,489 4,185 for period (63) (41) 23 Exchange differences Transfer from revaluation - - 43 reserve Transfer from merger reserve 152 44 148 Capitalisation of reserves on issue of shares to qualifying (448) - - employees share ownership trust _______ _______ _______ 22,192 17,876 19,783 ======= ======= ======= 9 Reconciliation of movements in shareholders' funds Six months Six months Year ended ended Ended 30 30 31 March September September 1999 1999 1998 £'000 £'000 £'000 Profit for the financial 3,578 3,220 6,391 period Dividends (810) (731) (2,206) _______ _______ _______ Retained profit for the period 2,768 2,489 4,185 Issue of ordinary 1,212 888 892 shares Capitalisation of reserves on issue of shares to qualifying (448) - - employees share ownership trust Exchange (63) (41) 23 gains/(losses) _______ _______ _______ Net addition to shareholders' 3,469 3,336 5,100 funds Opening shareholders' 26,388 21,288 21,288 funds _______ _______ _______ Closing shareholders' 29,857 24,624 26,388 funds ======= ======= ======= Notes to the Interim Statement (continued) 10 Net cash flow from operating activities Six months Six months Year ended ended ended 30 30 31 March September September 1999 1999 1998 £'000 £'000 £'000 Operating profit after goodwill 5,275 4,719 9,747 amortisation Net depreciation 871 481 1,180 charge Goodwill 152 44 148 amortisation Decrease/(increas e) in 1,007 (2,840) (2,798) working capital _______ _______ _______ 7,305 2,404 8,277 ======= ======= ======= 11 Net cash outflow from investing activities Six months Six months Year Ended ended ended 30 30 31 March September September 1999 1999 1998 £'000 £'000 £'000 Capital expenditure and 2,009 819 1,608 financial investment Acquisitions and Disposals 1,862 3,987 4,014 _______ _______ _______ 3,871 4,806 5,622 ======= ======= ======= 12 Net cash inflow from financing Six months Six months Year ended ended Ended 30 30 31 March September September 1999 1999 1998 £'000 £'000 £'000 Issue of ordinary share capital 216 13 17 Increase in debt 2,333 3,758 3,293 _______ _______ _______ 2,549 3,771 3,310 ======= ======= ======= Notes to the Interim Statement (continued) 13 Reconciliation of net cash flow to movement in debt Six months Six months Year ended ended ended 30 30 31 March September September 1999 1999 1998 £'000 £'000 £'000 Increase/(decrease) in cash in the 3,929 (474) 713 period Cash inflow from increase in debt and lease (2,333) (3,758) (3,293) financing _______ _______ _______ Change in net debt resulting from cash flows 1,596 (4,232) (2,580) Loans and finance leases acquired with subsidiaries (365) (389) (504) Translation 10 11 12 difference _______ _______ _______ Movement in net debt in the period 1,241 (4,610) (3,072) Net debt at beginning of (3,850) (778) (778) period _______ _______ _______ Net debt at end of the period (2,609) (5,388) (3,850) ======= ======= ======= 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 4 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 Listing Rules of the London Stock Exchange 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. 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 1999. KPMG Audit Plc Chartered Accountants Crawley

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