Final Results

Trifast PLC 22 June 2005 Issued by Citigate Dewe Rogerson Ltd, Birmingham Date: Wednesday, 22 June 2005 Embargoed: 7.00am Trifast plc Preliminary Results for the year ended 31 March 2005 Significant profits and earnings per share growth in challenging global markets Year Ended Year Ended March 2005 March 2004 Sales Â£103.82m Â£102.35m Operating Profit (pre-goodwill and Â£6.15m Â£5.03m +22% exceptionals) Pre-tax profit (pre-goodwill, exceptionals and profit on sale of fixed assets) Â£5.86m Â£4.65m +26% Pre-tax profit (post-goodwill and exceptionals) Â£5.56m Â£3.43m +62% Earnings per share: Adjusted diluted 5.76p 4.06p +42% Diluted 5.18p 2.24p +131% Basic 5.23p 2.26p +131% Final dividend 1.41p 1.34p Total for the year 2.10p 2.00p +5% Strong positive cash flow (pre-debt repayments) up from Â£0.8 million to Â£2.8 million Net debt reduced to Â£5.6 million Effective operational efficiency drives improving profitability Major presence to be established in China providing the capacity to manufacture 1.8 billion parts per year iStock (patent applied for), a revolutionary new concept in stock management to be launched "This creditable performance clearly underpins our strategy and overall objectives. Additionally, through the operational efficiencies and productivity improvements achieved across the businesses we will continue to exploit the strength of our brand both in the UK and overseas to operate efficiently and profitably even in challenging markets." "We remain confident that our business is positioned well to take advantage of market opportunities.... " Jim Barker, Chief Executive FULL STATEMENT ATTACHED Enquiries: Jim Barker, Chief Executive Fiona Tooley Stuart Lawson, Group Finance Director Citigate Dewe Rogerson Trifast plc Today: +44 (0)20 7282 8000 Today: +44 (0)20 7282 8000 (8.00am - 12.00noon) Mobile: +44 (0)77 85703523 +44 (0)20 7398 1600 (12.30pm - 2.30pm) Thereafter: +44(0) 121 455 8370 Mobile: +44 (0)7769 934148 (JB) or +44 (0)7765 253895 (SL) Thereafter: +44 (0)1825 747366 Web-site: www.trifast.com -2- Trifast plc Preliminary Results for the year ended 31 March 2005 STATEMENT BY THE CHAIRMAN, ANTHONY ALLEN AND CHIEF EXECUTIVE, JIM BARKER Introduction We are delighted to report an excellent profit performance with a modest increase in sales compared to last year. This is despite rises in raw materials and energy prices, continuing cost down pressures and the global market sectors in which we operate remaining challenging and to a certain extent, unpredictable. Our overall sales were up Â£1.5 million. The sales were adversely affected to the tune of Â£1.4 million by currency translation and we also witnessed a general slow down from some of our top customers which amounted to Â£10.0 million, so overall new business gained in the period was a very commendable Â£12.9 million. This creditable performance clearly underpins our strategy and overall objectives. Additionally, through the operational efficiencies and productivity improvements achieved across the businesses we will continue to exploit the strength of our brand both in the UK and overseas to operate efficiently and profitably even in challenging markets. Results Turnover in the twelve months ended 31 March 2005 was Â£103.8 million against Â£102.4 million in 2004. By destination, 48% of Group sales are now outside the UK, with 30% to Mainland Europe, 8% to Asia and 10% to the US. On the three major Continents from which TR operates, sales by origin were 80% from Europe, with 17% and 3% coming from Asia and North America respectively. On an operating profit basis, 59% was generated in Europe and 41% in Asia. Through our focus on quality margin business and value-add rather than volume, our fully-costed gross margins have risen from 24.8% to 26.0%. We are not prepared to chase top line sales growth at the expense of our profitability. The biggest profit growth has come from within Europe and principally from the UK. Pre-tax profit (pre-goodwill, exceptionals and profit on sale of fixed assets) significantly increased by 26% from Â£4.65 million to Â£5.86 million. Post-goodwill and exceptionals, profit amounted to Â£5.56 million compared to Â£3.43 million last year, representing an increase of 62%. Adjusted diluted earnings per share were 5.76 pence, an increase of 42%, whilst diluted earnings per share were 5.18 pence compared to 2.24 pence, up 131%. Further details on the financial results are contained in the Group Finance Director's Review. Dividend In line with our progressive dividend policy, the Directors are recommending an increased final dividend of 1.41 pence per ordinary share (2004: 1.34 pence). This, together with the interim dividend of 0.69 pence per share already paid to shareholders in January makes a total for the year of 2.10 pence, an increase of 5% over 2004. The final dividend, which is subject to shareholder approval at our Annual General Meeting on 20 September 2005 will be paid on 19 October 2005, to shareholders on the Register as at 1 July 2005. continued... -3- Review This financial period has seen the Group continue to strengthen its position, although the markets we operate in have produced mixed results. As a Group, Trifast has continued to work hard at initiating new and more efficient ways of working whilst also developing the opportunities presented to us by both our customers and the global and economic environment. One example of this is our revolutionary new concept on component stock management under the name of iStock, which is a patent pending system devised by TR to utilise the very latest IT technology to manage customers' inventory. The system incorporates state of the art wireless cameras which allow us to remotely monitor our customers' stock 24 hours a day. Not only does this offer customers the very highest service level it also allows us to install full stock management systems anywhere in the world. Although through our transactional business we have been able to pass on some raw material and commodity price increases we have, like others, continued to experience some cost-down pressures from our contractual business. Because of our close working relationships with our customers we are able to achieve the best possible price and to retain reasonable margins. Global Account Sales have seen a 12% increase in business over the last year from our customers who are located across Asia, Europe and the USA. As a Group, we are now supplying 53 countries with new business wins in the year from Hungary, Brazil, India, Estonia, UAE, China, Mexico, Romania and Poland. At the beginning of the year, we predicted that our profits in the UK business would decrease due to business transition and the impact of weaker output in manufacturing which would impact our European results. However, despite this drop we are pleased to report a very strong performance by our European operations with the exception of France. Sales by destination to Mainland Europe saw a 13% growth. Our Scottish business has been re-structured and as a result has successfully secured a notable aerospace contract expected to deliver sales of around Â£1 million per annum when it becomes fully effective during this new financial year. Our operation in Hungary continues to develop well. We have appointed commission agents in the Ukraine and Poland, both have delivered good enquiry levels and sales are already being generated. In Scandinavia, we produced a satisfactory performance and during the year, we achieved ISO 9001:2000 in Norway. Our business in this region is focused towards telecoms, electronics and automotive where we are benefiting from increased activity, as well as a number of new business wins from the Baltic countries and Poland. As a result of our global partnership with Electrolux we are now providing support from our office in Stockholm. In partnership with TR in Shanghai, they are working with another major customer on a fastener solutions contract. In Asia, we have continued to do well and Singapore remains focused on high-value add specialist production where we have undertaken a substantial investment in new plant which will enable us to produce new innovative and complex products for the sheet metal sector. In Taiwan, we have also undertaken a significant investment which provides us with a leading edge capability to produce sophisticated and more complicated parts for the automotive and general industrial sectors. The transfer of volume production to China is well documented as this industrial nation establishes itself as a major domestic and international manufacturing base. We have attained significant growth over the last two years, and have experienced higher volumes being produced albeit at a lower overall net margin. continued... -4- Trifast's aim is to build a major presence within the Chinese economy. We plan to invest US$5 million in a new purpose built manufacturing facility in China over the next 3 years to support the production of over 150 million parts per month. This decision is essential as we look to produce operationally efficient high quality product for worldwide consumption at competitive and profitable pricing. The re-structuring of our North American business is starting to produce results and although in the year being reported it performed near breakeven, under the newly recruited managing and sales directors, we anticipate a significant improvement in its performance during 2005/6. Web-site & e-business We are continually looking at ways we can keep our customers, investors and employees up-to-date with the developments and opportunities that exist for the business both internally and externally. The web-site, which remains one of the leading fastener sites targeted by engineers and buyers alike continues to develop. It incorporates an e-business channel that we use to extensively market our comprehensive portfolio of over 100,000 products to both new and existing customers across the globe. During the last year, we have been able to build on its successful foundations by adding additional capabilities such as an on-line purchasing portal which allows customers to check stocks, and monitor and track orders that they have placed. Organisational Structure Board Changes In June 2004, Eric Hutchinson joined the Group as a Non-Executive Director. Eric is also Chairman of the Group's Audit Committee. The Combined Code on Corporate Governance requires that the Audit Committee includes a member who has recent, significant and relevant financial experience and the Board believes that Eric is well placed to satisfy this through his career with Spirent Group (formerly known as Bowthorpe Holdings). In September 2004, we welcomed Andrew Cripps to the Board as a Non-Executive Director and Chairman of Trifast's Remuneration Committee. Andrew brings a wealth of knowledge gained from the variety of roles he has undertaken within the global business BAT. In particular, his M&A and strategic planning and development experience will be invaluable to Trifast as we continue to develop our global brand and positioning. Furthermore, on behalf of the Board, employees and shareholders, we would also like to take this opportunity to thank both Ben Stevens and John Wilson who, during the year, relinquished their Non-Executive roles. We wish them both well for the future. Management, People and Development Training At the year-end, the Group employed 944 people. We would like to thank all our staff for their continued support and dedication which has resulted in producing these commendable results and we were delighted to reward all those who qualified, with a performance related payment as a result of their efforts. As a result of our investment in people, we have established a significant pool of experience and expertise. This knowledge base is now being channelled into developing our international presence through secondments that range from a few weeks to two years. This fast-track approach has enabled us to develop more quickly our local functionality, efficiency and productivity. continued... -5- Our Annual Conference in September 2004 gathered together staff from across Asia and Europe. It provided an excellent forum for our people to better understand the cultures and business practices through team-working and communication. At the beginning of 2005, we carried out a staff survey across Europe which reflected an improvement in key areas since the previous one in 2002. Part of the survey highlighted the need to address remuneration packages across the staff network. After detailed research externally, we introduced improvements to our staff benefit and remuneration packages which included a childcare voucher scheme which allows staff to take advantage of the Government's tax and NI incentives. Works Councils Ahead of legislation, we have introduced works councils throughout most of our European locations. This has proved a positive mechanism for staff and management to work together to achieve a safe, happy and constructive working environment as well as providing a good communication base to share ideas and best practice. Sussex Business Awards - Company of the Year, Sponsored by Deloitte During the year, we were pleased to have been awarded "Company of Year 2004" by Sussex Business Awards. This accolade was achieved through the hard work, dedication and commitment by our people. Strategy - Looking forward Within Europe, our aim is to provide the most cost efficient fastener network and become the leading brand across this Continent. Although European manufacturing has experienced some decline as business has migrated to lower cost economies, coupled with raw materials cost and regulatory legislation increasing, we remain optimistic that over the next five years we have the structure, capabilities and skills to be able to double our European business through acquisitions and organic growth, whilst also optimising the cost base through consolidation of resources and the full development of links with suppliers on an international basis. With our significant presence in the Far East for volume and specialist manufacturing, the Group is in a much stronger position than that of our competitors as we are able to provide, through well established modern facilities run by an experienced team capable of partnering our diverse geographically-spread customer base, flexible solutions for their overall fastener requirements. Current Trading & Prospects Our sector continues to witness consolidation and we see a number of possible opportunities where we are confident that the Group could achieve expansion and enhancement of its product and service offering. This can be supported by cost-efficient manufacturing and distribution facilities in the Far East and Europe. The sectors in which we operate remain challenging and it is too early to predict the overall outcome of this financial year. We remain confident that our business is positioned well to take advantage of market opportunities and look forward to reporting our progress to shareholders, employees and customers over the next period. -6- Trifast plc Preliminary Results for the year ended 31 March 2005 FINANCIAL REVIEW BY THE GROUP FINANCE DIRECTOR, STUART LAWSON Once again, I am pleased to announce another successful year of profits growth for Trifast. Against a back-drop of raw material price increases, cost down pressures and a changing global marketplace, Trifast has succeeded in delivering a 42% increase in adjusted earnings per share (see Results section below) and has continued to increase the recommended dividend. In summary, the team has built on last years return to winning ways to deliver another very positive growth story. Results The profit before tax, goodwill amortisation, exceptionals and profit on sales of fixed assets was Â£5.86 million (2004: Â£4.65 million), an increase of 26.0%. This was achieved on a relatively flat turnover of Â£103.8 million (2004: Â£102.4 million), profit before tax after goodwill and exceptionals was Â£5.56 million (2004: Â£3.43 million), an increase of 62%. We have also continued the improvement of our gross margin from 24.8% last year (pre exceptionals) to 26.0%. The increase reflects the full year value of our operational changes, our continued focus on product mix and our on-going drive to be a value add provider to our customers. During the period we continued our focus on our core products and saw a continuing decline in the supply of low margin category 'c' components. Overheads remain under tight control at Â£19.7 million (pre goodwill and performance related pay awards) representing 19.0% of turnover (2004: 19.3%). We feel that this underlying level of overhead is appropriate to sustain current levels of business and has the capacity to support an element of sales growth. This all results in adjusted diluted earnings per share of 5.76p, an increase of 42% on last year's 4.06p with basic earnings per share increasing 131% to 5.23p. We have been asked a number of times about the impact of MG Rover and I can report that whilst we have no direct trading with them, we did supply Tier1/ Tier2 suppliers. It is therefore difficult to predict the overall impact of their demise, although we believe that the affect on Trifast sales should not be more than Â£0.5 million in the financial year ending 31 March 2006. Profit on the Sale of Fixed Assets During the period we completed the sale of two buildings. Firstly, a warehouse in Uckfield and secondly, the sale of our building in Stockholm, an area of which we then leased back from the landlord on a short term basis. The net profit on the sale of fixed assets was Â£0.38 million (2004: Â£0.38 million). We now feel that we have the required number of freehold properties and don't see any further disposals in the coming period. These sales, along with the sale of our Belfast building in March 2004, had a positive cash flow impact of Â£2.3 million. Working Capital and Treasury Management Cash generation during the year was strong with Â£2.77 million being generated before debt repayments of Â£2.24 million. We also absorbed the cash effect of prior year exceptionals (Â£0.15 million). EBITDA (pre goodwill and exceptionals) increased 21% to Â£7.81m (2004: Â£6.44m). Controls continue to be tight on working capital with debtor days at 63 (2004: 63 days), some 16% better than our industry average. Creditor days reduced slightly to 69 days (2004: 70 days) reflecting some new suppliers coming on board with interim terms. During the period we saw an increase in the net stock to Â£21.6 million (2004: Â£18.7 million). continued... -7- This increase was broken down as follows: Europe - an increase of Â£1.6 million, reflecting a number of new managed accounts won towards the end of the current year in the UK, Poland and Holland, and an increase in the products range available to merchants from our subsidiary, Lancaster Fasteners. We have also had the impact of increased stock levels which support a few of our major customers, as these customers' sales have slowed during the period. Asia - an increase of Â£1.3 million, reflecting the continuing growth of our Chinese distribution business, the improved manufacturing output in Taiwan to it's automotive customers and the increased stockholding ranges being made and held in Singapore to support the Group's product range drive. Overall our stock turn was 3 times, a reduction from last year's 3.4 times. We believe this reduction is a temporary position as our business gears up for some new accounts recently won and increases its focus on the sales of our higher margin product range. We would expect stock levels to settle down to a lower level which we feel would be adequate for us to provide the required level of security to our managed account customers and maintain the necessary levels of product line stocks to continue the drive forward in this very profitable area of our business. The above has meant that we have once again been able to significantly reduce our net debt position to Â£5.60 million (2004: Â£8.54 million) resulting in a reduced gearing level of 14.7% (2004: 24.3%). This puts us in a very strong position financially to take advantage of any opportunities in the current consolidating marketplace. At the year-end we had a net cash balance of Â£3.62 million of which Â£3.00 million was held in foreign currencies. As a Group, our policy is to monitor exchange rates and buy or sell currencies in order to minimise our open exposure to foreign exchange risk, but we do not speculate on rates. During the year, currency fluctuations negatively impacted our turnover by Â£1.4 million and profits by Â£0.15 million, and so as a global company in these times of fluctuating exchange rates, we must continue to monitor our group currency exposures on a daily basis. Net interest payable reduced again this year to Â£0.29 million (2004: Â£0.37 million) with the interest paid element being Â£0.33 million (2004: Â£0.43 million). This reduction was achieved (even after increases in interest rates) as a result of the continued repayment of our debt. We continue to review all of our loans which are currently in variable rates. Net interest cover, on a pre-exceptional and goodwill basis has again improved, increasing from 13 times to its current level of 23 times. Our banking facilities are reviewed annually and currently provide more than adequate headroom for our current and foreseeable business requirements. The Group's policy is to finance its operations through a combination of retained earnings and external financing raised principally by the parent company. Capital expenditure remains under tight control, although, as reported last year, did increase to a level of Â£0.84m (2004: Â£0.70m) with depreciation at Â£1.28m. Investment during the coming period is planned to increase above these levels as we implement plans to expand our Asian manufacturing base. Taxation The tax charge for the year was Â£1.80 million (2004: Â£1.81 million) which after adjusting for goodwill amortisation, timing differences (on US losses not recognised as a deferred asset) and withholding tax suffered within group, represents an effective tax rate of 23.4%. This is an improvement on last year's rate of 29.2% predominantly as a result of the large reduction in the tax losses in the USA for the current period and thus the reduced unrecognised deferred tax asset for the year. continued... -8- Dividend A final dividend of 1.41 pence per share (2004: 1.34 pence) is proposed, bringing the total for the year to 2.10 pence (2004: 2.00 pence), an increase of 5.0% on the prior year. This dividend is wholly covered by profit after tax. Pensions Trifast predominantly operates Defined Contribution Pension Schemes and so has not had to report any valuation shortfalls. All schemes payments are up to date and we see no financial exposure to the Group with these schemes. Internal Control With the on-going support of my senior finance team around the world, we continue to review the internal controls and procedures at all of our sites at least annually. We continue to refine these reviews as we do more of them and spread best practice around the group companies. Finally, I would like to thank my team for their continued support and hard work throughout the year and look forward to presenting the next stage of the Trifast success story in twelve months time. -9- Trifast plc Preliminary Results Consolidated Profit and Loss Account for the year ended 31 March 2005 2004 Note Results Exceptional Total pre-exceptional Costs 2005 costs Â£000 Â£000 Â£000 Â£000 Turnover 1 103,823 102,353 --- 102,353 Cost of sales (76,816) (76,976) (590) (77,566) -------------------------------------------------- Gross profit 27,007 25,377 (590) 24,787 Administration expenses - Before goodwill (17,435) (16,608) (297) (16,905) - Goodwill (686) (709) --- (709) -------------------------------------------------- Total administrative (18,121) (17,317) (297) (17,614) expenses Distribution costs (3,423) (3,743) --- (3,743) -------------------------------------------------- Operating profit 5,463 4,317 (887) 3,430 Profit on disposal of 384 --- 376 376 fixed assets -------------------------------------------------- Profit on ordinary activities 1 5,847 4,317 (511) 3,806 before interest and taxation Interest receivable 44 53 --- 53 Interest payable and similar 3 (331) (427) --- (427) charges -------------------------------------------------- Profit on ordinary activities 2 5,560 3,943 (511) 3,432 before taxation Tax charge on profit on ordinary 4 (1,801) (1,806) activities -------- ------- Profit for the 3,759 1,626 financial year Dividends 5 (1,510) (1,438) -------- ------- Retained profit for the financial 8 2,249 188 year ========= ======= Earnings per share: 6 Basic 5.23p 2.26p Diluted 5.18p 2.24p Adjusted diluted 5.76p 4.06p ========= ======= All amounts in the profit and loss account are derived from continuing operations for the current and prior year. -10- Trifast plc Preliminary Results Consolidated Balance Sheet at 31 March 2005 Note 2005 2004 Â£000 Â£000 Â£000 Â£000 Fixed assets Intangible assets 10,415 11,195 Tangible assets 8,463 10,180 Investments 126 127 -------- -------- 19,004 21,502 Current assets Stocks 7 21,573 18,679 Debtors 22,497 23,916 Cash at bank and in hand 4,161 3,312 -------- -------- 48,231 45,907 Creditors: amounts falling due (22,930) (22,878) within one year -------- -------- Net current assets 25,301 23,029 ------- ------- Total assets less current 44,305 44,531 liabilities Creditors: amounts falling due after more than one (7,413) (9,698) year Provisions for liabilities and (411) (540) charges ------- ------- Net assets 36,481 34,293 ======= ======= Capital and reserves Called up share capital 3,595 3,594 Share premium account 4,598 4,594 Revaluation reserve 465 652 Profit and loss account 27,823 25,453 ------- ------- Equity shareholders' funds 8 36,481 34,293 ======= ======= -11- Trifast plc Preliminary Results Consolidated Cash Flow Statement for the year ended 31 March 2005 2005 2004 Â£000 Â£000 Â£000 Â£000 Cash flow from operating activities 5,008 3,985 Return on investments and servicing of (282) (366) finance Taxation (1,680) (885) Capital expenditure 1,918 368 Acquisitions and disposals (734) (933) Equity dividends paid (1,460) (1,387) -------- -------- (2,238) (3,203) -------- -------- Cash inflow before financing 2,770 782 Financing Issue of ordinary share capital 5 7 Decrease in debt (2,237) (1,459) -------- -------- Net cash outflow from financing (2,232) (1,452) -------- -------- Increase/(decrease) in cash in the year 538 (670) ======== ======== -12- Trifast plc Preliminary Results Reconciliation of net cash flow to movement in net debt for the year ended 31 March 2005 2005 2004 Â£000 Â£000 Increase/(decrease) in cash in the year 538 (670) Cash outflow from decrease in debt and lease financing 2,237 1,459 --------------------- Change in net debt resulting from cash flows 2,775 789 Translation difference 162 1,172 --------------------- Movement in net debt in the year 2,937 1,961 Net debt at beginning of year (8,542) (10,503) --------------------- Net debt at end of the year (5,605) (8,542) ===================== Consolidated statement of total recognised gains and losses for the year ended 31 March 2005 2005 2004 Â£000 Â£000 Profit for the Financial Year 3,759 1,626 Dividends (1,510) (1,438) Currency translation differences on foreign currency net investments (66) (394) ------------------- Total recognised gains/(losses) relating to the financial year 2,183 (206) =================== Note of historical cost profits and losses for the year ended 31 March 2005 2005 2004 Â£000 Â£000 Reported profit on ordinary activities before taxation 5,560 3,432 Realisation of property revaluation gains of previous years 187 365 ------------------ Difference between a historical cost depreciation charge and the actual depreciation charge calculated on the revalued amount (7) (10) ------------------ Historical cost profit on ordinary activities before 5,740 3,787 taxation ------------------- Historical cost profit for the year retained after taxation and dividends 2,429 543 ================== -13- Trifast plc Preliminary Results NOTES 1. Geographical segments The Group's turnover, analysed by geographical market of destination, is as follows: 2005 2004 Â£000 Â£000 United Kingdom 54,439 58,795 European Union (excluding UK) 27,650 19,773 Europe - other 2,211 6,998 North and South America 9,660 9,488 Far East 9,052 6,847 Other 811 452 -------------------------- 103,823 102,353 ========================== The Group's turnover, profit before tax and net assets, analysed by geographical market of origin, are as follows: Europe Asia America Group 2005 2004 2005 2004 2005 2004 2005 2004 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Turnover Continuing businesses 88,279 89,343 21,199 17,776 3,120 4,062 112,598 111,181 Inter segment sales (4,751) (4,573) (3,879) (3,853) (145) (402) (8,775) (8,828) ------------------------------------------------------------------------ Sales to third parties 83,528 84,770 17,320 13,923 2,975 3,660 103,823 102,353 ======================================================================== Profit/(loss) before interest and taxation Segment profit/(loss) before goodwill 4,760 3,141 3,505 3,771 (189) (403) 8,076 6,509 Goodwill amortisation (88) (88) (426) (449) (172) (172) (686) (709) Exceptionals --- 79 --- --- --- (590) --- (511) ----------------------------------------------------------------------- Segment profit/(loss) 4,672 3,132 3,079 3,322 (361) (1,165) 7,390 5,289 Central (1,543) (1,483) costs ----------------- Profit on ordinary activities before interest and taxation 5,847 3,806 ================= Segment net assets 26,715 23,561 9,824 6,808 2,025 2,051 38,564 32,420 Central net (liabilities)/ assets --- --- --- --- --- --- (2,083) 1,873 ----------------------------------------------------------------------- 26,715 23,561 9,824 6,808 2,025 2,051 36,481 34,293 ======================================================================= Turnover is derived from the manufacture and logistical supply of industrial fasteners and category 'C' components. continued... -14- 2. Profit on ordinary activities before taxation 2005 2004 Â£000 Â£000 Profit on ordinary activities before taxation is stated after charging and (crediting) Auditors' remuneration: Audit 201 180 Further assurance services 28 10 Tax services 59 60 Depreciation and other amounts written off tangible fixed assets: Owned 1,202 1,332 Leased 61 71 Amortisation on intangible assets 13 8 Hire of plant and machinery - operating leases 35 17 Hire of other assets - operating leases 2,070 1,952 Profit on disposal of fixed assets (384) (376) Net exchange (gains)/losses (30) 480 Goodwill amortisation 686 709 The audit fee included for the Company was Â£41,500 (2004: Â£33,000). 3. Interest payable and similar charges 2005 2004 Â£000 Â£000 On bank overdraft 10 67 Loans and mortgages 317 354 Other 4 6 ------------- 331 427 ============= 4. Taxation Analysis of charge in period 2005 2004 Â£000 Â£000 Â£000 Â£000 UK corporation tax Current tax on income for the period 778 423 Adjustments in respect of prior periods 11 36 Double taxation relief (17) (19) ------- ------ 772 440 Foreign tax Current tax on income for the period 1,085 914 Adjustments in respect of prior periods (10) (12) ------- ------ 1,075 902 ------- ------ Total current tax 1,847 1,342 Deferred tax Origination/reversal of timing differences 25 355 Adjustment in respect of previous years (71) 109 ------- ------ (46) 464 ------- ------ Tax charge on profit on ordinary activities 1,801 1,806 ======= ====== continued... -15- 4. Taxation (continued) Factors affecting the tax charge for the current period The current tax charge for the period is higher (2004: higher) than the standard rate of corporation tax in the UK 30% (2004: 30%). The differences are explained below: 2005 2004 Â£000 Â£000 Current tax reconciliation Profit on ordinary activities before tax 5,560 3,432 ----------------- Current tax charge at 30% (2004: 30%) 1,668 1,030 Effects of: Expenses not deductible for tax purposes - Goodwill amortisation 206 213 - Other 251 254 Other timing differences 136 (102) Deferred tax assets not recognised 108 459 Capital allowances for period in excess of depreciation (2) (9) Utilisation of brought forward tax losses (159) (171) Different tax rates on overseas earnings (362) (356) Adjustments to tax charge in respect of previous periods 1 24 ---------------- Total current tax charge (see above) 1,847 1,342 ================ 5. Dividends Ordinary shares: 2005 2004 Â£000 Â£000 Interim paid - 2005: 0.69p per share (2004: 0.66p) 496 474 Final proposed - 2005: 1.41p per share (2004: 1.34p) 1,014 964 ---------------- Total dividend 1,510 1,438 ================ 6. Earnings per Share 2005 2004 Weighted average number of ordinary shares in issue - basic 71,890,674 71,871,642 Adjustment in respect of share options 622,601 538,805 ------------------------- Weighted average number of ordinary shares in issue - diluted 72,513,275 72,410,447 ========================= 2005 2004 EPS EPS --------------- --------------- Earnings Basic Diluted Earnings Basic Diluted Â£000 Â£000 Profit for the financial year 3,759 5.23p 5.18p 1,626 2.26p 2.24p Adjustments: Goodwill amortisation charge 686 0.95p 0.95p 709 0.99p 0.98p Operating exceptionals --- --- --- 887 1.23p 1.23p Profit on disposal of fixed assets (384) (0.53p) (0.53p) (376) (0.52p) (0.52p) Tax charge on exceptionals 115 0.16p 0.16p 93 0.13p 0.13p ------------------------------------------------------- Adjusted earnings and EPS 4,176 5.81p 5.76p 2,939 4.09p 4.06p ======================================================= The 'Adjusted diluted' earnings per share is detailed in the above table. In the Directors' opinion this best reflects the underlying performance of the Group and assists in the comparison with the results of earlier years. In accordance with FRS14 the weighted average number of shares in the period has been adjusted to take account of the effects of all dilutive potential ordinary shares. continued... -16- 7. Stocks Group 2005 2004 Â£000 Â£000 Raw materials and consumables 827 549 Work in progress 447 382 Finished goods and goods for resale 20,299 17,748 ---------------------- 21,573 18,679 ====================== The Group consignment stock held from suppliers at the year-end, which was not included on the balance sheet, was Â£10,000 (2004: Â£96,000). This stock will be invoiced to the Group as it is drawn down. 8. Reconciliations of movements in shareholders' funds Group Company 2005 2004 2005 2004 Â£000 Â£000 Â£000 Â£000 Profit/(loss) for the financial year 3,759 1,626 (1,713) (3,420) Dividends (1,510) (1,438) (1,510) (1,438) ------------------------------------ Retained profit/(loss) for the year 2,249 188 (3,223) (4,858) Issue of ordinary shares 5 7 5 7 Exchange differences (66) (394) --- --- ------------------------------------ Net increase/(reduction) to shareholders' funds 2,188 (199) (3,218) (4,851) Opening shareholders' funds 34,293 34,492 16,789 21,640 ------------------------------------ Closing shareholders' funds 36,481 34,293 13,571 16,789 ==================================== 9. Reconciliation of operating profit to net cash inflow from operating activities 2005 2004 Â£000 Â£000 Operating profit before exceptionals 5,847 4,317 Operating exceptionals --- (887) ----------------- Operating profit after exceptionals 5,847 3,430 Depreciation charge 1,263 1,403 Amortisation on intangible assets 13 8 (Profit) on sale of tangible fixed assets (384) (376) Goodwill amortisation 686 709 (Increase)/decrease in stocks (2,822) 1,114 Decrease/(increase) in debtors 364 (1,248) Increase/(decrease) in creditors and other provisions 41 (1,055) ----------------- Net cash inflows from operating activities 5,008 3,985 ================== 10. The financial information set out above does not constitute the company's statutory accounts for the years ended 31 March 2004 or 2005 but is derived from those accounts. Statutory accounts for 2004 have been delivered to the Registrar of Companies and those for 2005 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain statements under Section 237(2) of the Companies Act 1985. continued... -17- 11. This statement is not being posted to shareholders. The Report & Accounts for the year ended 31 March 2005 will be posted to shareholders in July 2005. Further copies will be available from Nicky Kember at the Company's Registered Office: Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW. 12. The Annual General Meeting will be held on 20 September 2005 at 12.00 noon, at the Company's Registered Office as above. This information is provided by RNS The company news service from the London Stock Exchange

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