Interim Results
Trifast PLC
23 November 2004
Issued by Citigate Dewe Rogerson Ltd, Birmingham
Date: Tuesday, 23 November 2004
Embargoed: 7.00am
Strong First Half Performance by Trifast
Leading global distributors and manufacturers of a comprehensive range of
industrial fastenings
Interim Results
for the six months ended 30 September 2004
Six months ended Six months ended Year ended
30 September 30 September 31 March
2004 2003 2004
Turnover + 5% £53.04m £50.30m £102.35m
Operating profit + 49% £2.63m £1.76m £3.43m
Profit before
taxation, goodwill + 30% £2.85m £2.19m £4.65m
amortisation & exceptional
items
Profit on ordinary
activities before + 56% £2.51m £1.61m £3.43m
taxation
Earnings per share
Adjusted diluted + 30% 2.76p 2.13p 4.06p
Diluted + 62% 2.28p 1.41p 2.24p
Basic + 62% 2.30p 1.42p 2.26p
Dividend per share + 5% 0.69p 0.66p 2.00p
Net cash inflow from
operating activities + 142% £4.36m £1.80m £3.98m
Net debt £5.46m £10.84m £8.54m
"Overall, the business has performed very well during the first half of the
financial year with operating profit up 49% on 2003.
"The strongest performance came from Europe, as a whole, where we witnessed an
84% improvement in operating profit.
"The current level of business and higher levels of enquiries gives us the
confidence that we will be able to report further progress at the year-end."
Anthony Allen, Chairman, Jim Barker, Chief Executive
FULL STATEMENT ATTACHED
Enquiries:
Jim Barker, Chief Executive
Stuart Lawson, Group Finance Director Fiona Tooley
Trifast plc Citigate Dewe Rogerson
Today: 020 7282 8000 (8.00am - 2.00pm) Today: 020 7282 8000
Mobile: 07769 934148 (JB) or 07765 253 895 (SL) Mobile: 07785 703523
Thereafter: 01825 747366 Thereafter: 0121 455 8370
Web-site: www.trifast.com
Web-presentation available on Group web-site from 25 November 2004
-2-
Trifast plc
Interim Results
for the six months to 30 September 2004
STATEMENT BY THE CHAIRMAN, ANTHONY ALLEN AND CHIEF EXECUTIVE, JIM BARKER
Introduction
By focussing on our core competence, fastener manufacture and distribution,
Trifast has increased its market presence, substantially improved margins and
overall returned the Group to achieving solid returns in earnings despite rises
in raw material prices, some cost down pressures and the global market sectors
in which we operate remaining relatively flat.
Results
Turnover for the six months ended 30 September 2004, was £53.0 million against
£50.3 million in 2003. Approximately 20% of sales are to Mainland Europe, 61%
remain in the UK, with the balance going to Asia and North America.
Operating profit in the period was £2.6 million against £1.8 million in the
comparable period, whilst profit before tax amounted to £2.5 million (2003: £1.6
million). 39% of our operating profit arose from Asia and the USA with 61% from
UK and Mainland Europe. Overall gross margins have improved from 24.1% to 26.7%.
Net interest charge in the six months was £124,000 and was covered 24 times
(2003:15 times).
Adjusted diluted earnings per share improved from 2.13 pence in 2003 to 2.76
pence. (Diluted earnings per share improved from 1.41 pence in 2003 to 2.28
pence).
Capital expenditure remained modest at £267,000 with depreciation at £655,000
(2003: £701,000). During the second half we anticipate a further spend of
£600,000 principally covering new plant and machinery in Asia.
We have continued to generate cash from our trading activities which has been
used to reduce the Group's debt. Since September last year, we have reduced our
net debt position from £10.8 million to £5.5 million which is also well below
our position in March 2004 of £8.5 million. Gearing at the end of the interim
period was 15% compared to 30% in 2003 and 24% at the year ended March 2004.
Debtor management remains a priority and once again no significant bad debts
were incurred in the period. Debtor days were 65 compared to 68 at the last half
year.
The Balance Sheet continues to remain solid with shareholders' funds at £35.5
million (2003: £34.9 million: March 2004: £34.3 million).
Dividend
In line with our progressive Dividend policy, a 5% increase in the interim
dividend to 0.69 pence per ordinary share has been declared (2003: 0.66 pence
per share). This interim dividend will be paid on 19 January 2005 to
shareholders on the Register as at 1 December 2004.
Review
Overall, the business has performed very well during the first half of the
financial year with operating profit up 49% on 2003.
The strongest performance came from Europe, as a whole, where we witnessed an
84% improvement in operating profit.
continued...
-3-
Within Asia, we are experiencing record production levels and margins remain
strong. We have increased production in Singapore, whilst also investing in
plant and machinery in Taiwan and we have extended our warehousing capability to
match current and anticipated demand. Approximately half of the increase in
Group stocks is due to this business growth and relates to direct line feed
sales in China and greater levels of finished goods coming out of Singapore.
Our US business has performed near to breakeven. During the period, we relocated
the finance and operational functions from Los Angeles to Phoenix. The LA
operation is now purely a sales function and with the restructured business now
in place we expect to see further improvements in returns by the end of the
year. We will continue to monitor this operation very closely.
At the beginning of the year, although we predicted our UK business would
decrease, in fact this has increased and our market share strengthened. Our
focus on higher margin transactional business continues to benefit the Group
whilst the volume of low margin business has all but ceased.
Within our UK manufacturing, we have completed the turnaround and Hank is now
continuing to trade profitably. This business remains focussed on specialist
manufacture delivering a quick to market response for small batch specialist
runs.
Our global sales team are exploiting their strong relations with Contract
Manufacturers and Global Key Accounts and we expect to see a much stronger
second half performance from this area of our business, especially in China and
Mainland Europe.
Mainland Europe has been a strong overall performer; in particular our
operations in Scandinavia where sales to the Baltic region and Poland have
increased significantly. Other key territories include Hungary, the Czech
Republic and Romania.
Over the last 12 months, we have carried out a full global IT review. Trifast
plans to operate on a two-platform set-up, one in Asia and one covering the USA
and Europe. Both systems will be interactive and will result in improved
efficiencies through better delivery of service and systems to our customers. We
are now well into this project and expect to complete it by the Summer of 2005.
E-business
Twelve months ago, we launched an exciting new web-site which incorporated an
e-business channel from which we could market our extensive 100,000 product
portfolio to both existing and new customers globally.
It remains one of the leading fastener sites targeted by engineers and buyers
alike. The on-line purchasing portal added to the site this year which allows
customers to checks stocks, place and track orders has also proved very
successful.
Management and People
The on-going improvement in the Group's trading position is principally due to
the high calibre of personnel and their levels of motivation.
The Group places great importance on investing in its people, systems and
technology. Our internally developed management training programme has
identified a number of our people who have the strengths and leadership
capabilities to take on higher management positions and responsibilities. As
part of our own on-going succession planning module, we are looking to develop
and build these individuals strengths as part of their overall training regime.
We have also had a number of changes to the Non-Executive make-up of the Main
Board.
continued...
-4-
In June, as previously reported, Eric Hutchinson was appointed a Non-Executive
Director, Chairman of the Audit Committee and senior independent Non-Executive
Director. After nearly four years with Trifast, Ben Stevens decided to step down
from the Board at the end of June to focus on his external executive
responsibilities. We would like to thank Ben for his quality guidance and wise
counsel during his four years with Trifast. Andrew Cripps joined the Board in
October as a Non-Executive Director and Chairman of the Remuneration Committee.
We welcome both Eric and Andrew to the Company: both have a range of technical
skills which add-value to the Board and are crucial and invaluable to the team
and the business as it continues its international development.
After an association with the Group which spans 26 years, John Wilson who
retired as Group Finance Director in 2000, has decided to retire and relinquish
his Non-Executive role at the end of December. On behalf of all who knew and
worked with John, we wish him well for the future.
Sussex Business Awards - Company of the Year, Sponsored by Deloitte
We are pleased to announce that we have been voted "Company of Year 2004" by
Sussex Business Awards. The judges' comments were: "TR Fastenings (Trifast)
showed fast implementation of a new and more resilient business model, an
empowering approach to people and a continued commitment to product and service
quality".
This accolade has been achieved by the hard work, dedication and commitment by
our people and we would like to thank them for making this possible.
Prospects
Although market pick up continues to be modest and visibility limited, we remain
confident in the Group's future despite the current shortage in some raw
materials and the increasing prices of some commodities such as steel and oil.
The improvement in our profitability will continue through our own initiatives
and actions which keep us ahead of our competitors in particular in the UK,
whilst we also remain competitive in the overall global environment.
The current level of business and higher levels of enquiries gives us the
confidence that we will be able to report further progress at the year-end.
-5-
Trifast plc
Consolidated Profit and Loss Account
Unaudited interim results for the six months to 30 September 2004
Note Six months Six months Year ended
ended ended
30 September 30 September 31 March
2004 2003 2004
£'000 £'000 £'000
Turnover 53,044 50,297 102,353
Cost of sales (38,896) (38,185) (76,976)
Exceptional cost of
sales - - (590)
------------ ------------ ----------
Gross profit 14,148 12,112 24,787
Net operating
expenses (excluding
exceptional (11,173) (9,767) (20,351)
costs and goodwill
amortisation)
Exceptional costs - (225) (297)
Goodwill
amortisation (343) (362) (709)
------------ ------------ ----------
Operating profit 2,632 1,758 3,430
Exceptional profit
on disposal of
fixed assets - - 376
------------ ------------ ----------
Profit on ordinary
activities before
interest 2,632 1,758 3,806
Net interest (124) (152) (374)
------------ ------------ ----------
Profit on ordinary
activities before
taxation 2,508 1,606 3,432
Taxation on profit
on ordinary
activities 2 (852) (584) (1,806)
------------ ------------ ----------
Profit on ordinary
activities after
taxation 1,656 1,022 1,626
Dividends 3 (496) (474) (1,438)
------------ ------------ ----------
Retained profit 6/7 1,160 548 188
Earnings per share 4 2.30p 1.42p 2.26p
Basic 2.28p 1.41p 2.24p
Diluted 2.76p 2.13p 4.06p
Adjusted diluted
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 2004
Note 30 September 30 September 31 March
2004 2003 2004
£'000 £'000 £'000
Intangible
fixed assets 10,935 12,078 11,195
Tangible fixed
assets 9,842 12,565 10,180
Investments 128 91 127
------------ ------------ ----------
20,905 24,734 21,502
Current assets 5 49,572 45,917 45,907
Creditors:
amounts falling
due within one
year (25,492) (24,388) (22,878)
------------ ------------ ----------
Net current
assets 24,080 21,529 23,029
------------ ------------ ----------
Total assets
less current
liabilities 44,985 46,263 44,531
Creditors:
amounts falling
due after more
than (8,981) (10,577) (9,698)
one year
Provisions for
liabilities and
charges (491) (749) (540)
------------ ------------ ----------
Net assets 35,513 34,937 34,293
============ ============ ==========
Capital and
reserves
Called up share
capital 3,594 3,593 3,594
Share premium 4,598 4,588 4,594
Revaluation
reserve 652 1,017 652
Profit and loss
account 6 26,669 25,739 25,453
------------ ------------ ----------
Equity
shareholders'
funds 7 35,513 34,937 34,293
============ ============ ==========
-7-
Trifast plc
Summarised Consolidated Cash Flow Statement
Unaudited interim results for the six months ended 30 September 2004
Note Six months Six months Year ended
ended ended
30 September 30 September 31 March
2004 2003 2004
£'000 £'000 £'000
Net cash inflow
from operating
activities 8 4,362 1,799 3,985
Returns on
investment and
servicing of
finance (125) (196) (366)
Taxation (661) (205) (885)
Capital expenditure (267) (218) 368
Acquisitions and
disposals (32) (959) (933)
Equity dividends
paid - (913) (1,387)
Cash
inflow/(outflow)
before use of
liquid 3,277 (692) 782
resources and
financing
Net cash outflow
from financing (982) (618) (1,452)
------------ ------------ ----------
Increase/(decrease)
in cash in the
period 9 2,295 (1,310) (670)
============ ============ ==========
-8-
Trifast plc
Notes to the Interim Statement
Unaudited interim results for the six months ended 30 September 2004
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 2004.
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 2004 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 2005, adjusted for prior year items as shown below:
Six months ended Six months ended
30 September 2004 30 September 2003
£'000 £'000
Current tax on income for the period
UK Tax 122 5
Foreign Tax 737 551
Adjustments in respect of prior years (7) 28
------------- -------------
852 584
============= =============
3 Dividends
The directors have declared an interim dividend of 0.69 pence per ordinary share
to be paid on 19 January 2005 to shareholders on the register at 1 December
2004.
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 71,890,674 (September 2003:
71,868,150; March 2004: 71,871,642).
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 72,542,379
(September 2003: 72,485,104; March 2004: 72,410,447).
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 and exceptional
items but after tax.
continued...
-9-
5 Current assets
30 September 2004 30 September 2003 31 March 2004
£'000 £'000 £'000
Stocks 21,220 19,952 18,679
Debtors 22,772 22,348 23,916
Cash at bank and in
hand 5,580 3,617 3,312
------------- ------------ -----------
49,572 45,917 45,907
============= ============ ===========
6 Profit and loss reserve
Six months Six months Year ended
ended ended
30 September 30 September 31 March
2004 2003 2004
£'000 £'000 £'000
Opening balance 25,453 25,294 25,294
Retained profit for
period 1,160 548 188
Realisation of
property - - 365
revaluation gains of previous
years
Exchange differences 56 (103) (394)
------------- ------------- -----------
Closing Balance 26,669 25,739 25,453
============= ============= ===========
7 Reconciliation of movements in shareholders' funds
Six months ended Six months ended Year ended
30 September 2004 30 September 2003 31 March 2004
£'000 £'000 £'000
Profit for the
financial period 1,656 1,022 1,626
Dividends (496) (474) (1,438)
------------- ------------ -----------
Retained profit for
the period 1,160 548 188
Issue of ordinary
shares 4 - 7
Exchange differences 56 (103) (394)
------------- ------------ -----------
Net addition
to/(reduction in) 1,220 445 (199)
shareholders' funds
Opening shareholders'
funds 34,293 34,492 34,492
------------- ------------ -----------
Closing shareholders'
funds 35,513 34,937 34,293
============= ============ ===========
8 Net cash flow from operating activities
Six months ended Six months ended Year ended
30 September 2004 30 September 2003 31 March 2004
£'000 £'000 £'000
Operating profit after
goodwill 2,632 1,758 3,430
amortisation
Depreciation charge 655 701 1,403
Amortisation on
intangible assets 7 - 8
Loss on sale of
tangible fixed assets 7 17 16
Goodwill amortisation 343 362 709
Decrease/(increase) in
working 718 (1,039) (1,581)
capital
------------- ------------ -----------
4,362 1,799 3,985
============= ============ ===========
continued...
-10-
9 Reconciliation of net cash flow to movement in debt
Six months ended Six months ended Year ended
30 September 2004 30 September 2003 31 March 2004
£'000 £'000 £'000
Increase/(decrease) in
cash in 2,295 (1,310) (670)
the period
Cash flow from
decrease in debt 986 618 1,459
and lease financing
------------- ------------ -----------
Change in net debt
resulting 3,281 (692) 789
from cash flows
Translation difference (197) 360 1,172
------------- ------------ -----------
Movement in net debt
in the 3,084 (332) 1,961
period
Net debt at beginning
of period (8,542) (10,503) (10,503)
------------- ------------ -----------
Net debt at end of the
period (5,458) (10,835) (8,542)
============= ============ ===========
-11-
Independent review report by KPMG Audit Plc to Trifast Plc
Introduction
We have been engaged by the company to review the financial information set out
on pages 5 to 10 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.
This report is made solely to the company in accordance with the terms of our
engagement to assist the company in meeting the requirements of the Listing
Rules of the Financial Services Authority. Our review has been undertaken so
that we might state to the company those matters we are required to state to it
in this report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the company for
our review work, for this report, or the conclusions we have reached.
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 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 2004.
KPMG Audit Plc
Chartered Accountants
Crawley
22 November 2004
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