Final Results

Trifast PLC 22 June 2004 Issued by Citigate Dewe Rogerson Ltd, Birmingham Date: Tuesday, 22 June 2004 Embargoed: 7.00am Trifast plc Preliminary Results for the year ended 31 March 2004 Year Year March 2004 March 2003 Sales £102.35m £103.63m EBITDA (pre-exceptionals) £6.44m £6.00m Operating Profit (pre-goodwill and exceptionals) £5.03m £4.40m Pre-tax profit (pre-goodwill and exceptionals) £4.65m £3.95m Pre-tax profit (post-goodwill and exceptionals) £3.43m £2.23m Adjusted diluted EPS 4.06p 3.94p Diluted EPS 2.24p 1.96p Dividend - full year 2.00p 1.90p Demand improved during H2 across all sectors Trifast win market share in the UK, despite overall decline in manufacturing Focus on driving sales in Asia and Central Europe Over 50% of profits derive from outside UK "In what has been a year in which we have had a lack of visibility and a challenging global environment, the Group has focused on real value and returns which has improved our overall profitability and built on our market position both in the UK and on an international front. "Although both the UK and global economies remain difficult to predict, we have more opportunities today than we have seen for a number of years to exploit and further strengthen our market position through extending relationships with our existing customer base, winning new business and, through consolidation in the sector across Mainland Europe and China, we see great opportunities to expand our already established distribution network. "This, together with an operationally efficient network provides the solid foundation for further progress by the Group, and with trading in the first two months of the new financial year reflecting firmer demand and a sustained recovery in key sectors of our business, we remain confident of achieving a satisfactory performance over the coming year." 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 - 12.30pm) 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 --------------------------- -2- Trifast plc Preliminary Results for the year ended 31 March 2004 STATEMENT BY THE CHAIRMAN, ANTHONY ALLEN AND CHIEF EXECUTIVE, JIM BARKER INTRODUCTION The last year has once again provided opportunities for Trifast to work to our strengths and obtain a creditable set of results. In what has been a year in which we have had a lack of visibility and a challenging global environment, the Group has focused on real value and returns which has improved our overall profitability and built on our market position both in the UK and on an international front. Our strategies of concentrating on our core competences of fastener supply and expanding our overseas market have stood us in good stead. During the year we have seen more than 50% of our profit coming from markets outside the UK. We have achieved this by supporting and growing our own foreign subsidiaries and marketing more directly using both exhibitions and our website which is now available in 8 languages. We have also appointed new distributors within mainland Europe to cover areas to which we previously had no access. The Group has been able to take advantage of its working partnerships with Sub-Contract Manufacturers as demand from OEM's has increased whilst excess capacity has decreased. This has given some confidence that a recovery will be sustainable, and with our unique position of being able to provide technical expertise, cost-effective manufacturing and global logistics, the Group will be able to exploit its strengths and capabilities. We will continue to provide a high quality service through our international network, strictly focusing on real value and returns for both the business and our shareholders. RESULTS Pre-tax profit (pre-goodwill and exceptional items) increased by 18% from £3.95 million to £4.65 million on a reduced turnover of £102.35 million (2003: £103.63 million). Pre-tax profit, post goodwill and exceptional items amounted to £3.43 million compared to £2.23 million last year after taking into account an adverse impact on currency movements on the business which amounted to over £0.6 million. Adjusted diluted earnings per share were marginally up from 3.94 pence to 4.06 pence, an increase of 3%, whilst diluted earnings per share were 2.24 pence compared to 1.96 pence. Further details on the results are contained in the Group Finance Director's Review. DIVIDEND In view of the Board's confidence in the continuing development of the Group, the Directors are recommending an increased final dividend of 1.34 pence per ordinary share. This, together with the interim dividend of 0.66 pence per share already paid to shareholders makes a total for the year of 2.00 pence, an increase of 5.3% over 2003. The dividend, which is subject to shareholder approval at our Annual General Meeting on 23rd September 2004 will be paid on 20th October 2004 to shareholders on the Register as at 2nd July 2004. REVIEW The performance by our Asian operations were ahead of expectations and in terms of local currency outperformed budget, despite the slower start in the first quarter due to the SARs issue. The recovery was reflected in higher demand by the end of the fourth quarter. continued... -3- Within this region, China has continued to dominate growth with strong demand from our global customers such as Nokia, Motorola and Ericsson. During the year we expanded our facility in Shanghai to keep up with the rapid increase in business. The reported strong first half performance from Singapore and Malaysia has continued as we experience a sustained recovery (albeit at lower levels than historically) from the technology and related products sector. During the first half we reported a slow down in the Taiwan operation which chiefly supplied product to the USA automotive sector. We are pleased to announce that the Taiwan business has shown some improvement, partly also due to the slight up turn in the USA economy and partly due to the increasing amount of new automotive business in Europe that we have secured and which is supplied from Taiwan. The US operation, although benefiting from the working partnership with TR Asia, whilst in overall terms has improved its performance, it has had a difficult year and its result was disappointing. During the new financial year, we will be concentrating our efforts on developing the sales and marketing activities which will be carried out by a newly established global sales team that has been drawn from our successful and well established UK and Asian sales teams. Steven Tan our TR Asia Executive Director, will continue to oversee the US operation and to develop product approvals and partnerships with US-based OEM's and Contract Manufacturers. Within the European business, the UK operation produced a satisfactory result improving on its position in 2003. Although the UK market dynamics have continued to be difficult, we witnessed signs of a recovery within engineering, in particular from the telecoms and high-tech sectors, whilst our automotive and household appliance business has remained steady. Within mainland Europe, TR Hungary once again saw its revenues continuing to increase significantly. Therefore, to support the underlying growth opportunities that we are pursuing, of which a number have already started to result in revenue, we have increased our operational base and already we are seeing benefits from this action; we expect to deliver further growth in this important territory over 2004/5. In Scandinavia, the investments made in the first half have already started to pay off as we convert a number of opportunities which we were pursuing at the end of 2003 and which will come on stream in terms of sales during the new financial year. A £1million contract in Poland, as expected has contributed to the Group's last quarter result. Overall the performance of the operation in Holland has been satisfactory in its pursuit of the automotive business. France was disappointing in terms of results. We believe there is a viable business opportunity for Trifast in that location, and to that end we have increased personnel and training in the sales team, and we expect to see progress during the coming year. We have also secured across the businesses a number of new contracts both from existing and new customers and the increased level of enquiries has been very encouraging and ahead of this time last year. As part of our on-going review of the business to ensure that we remain competitive, operationally efficient and continue to improve our profitability, we have made a number of positive changes which have included the consolidation of some of our UK business units and the further investment in people, training and systems technology. continued... -4- Following the expiry of the lease in Dublin, this operation is currently being consolidated with our Belfast business and the combined business will be relocated into new purpose built facilities following the sale of our existing freehold site in Belfast in March 2004. In February 2004 the Group also sold one of its freehold properties in Uckfield and entered into an agreement to lease one floor of the building for its central Finance and Human Resource activities. Over the next twelve months we hope there will be further opportunities to consolidate our business units in order to enhance our operational efficiencies, profitability and add value through our high quality service we give to our customers. WEB-SITE As we and many other businesses both locally and globally continue to witness growth being driven and supported by technology, we examined and researched how this additional business line could expand our market penetration, build on our established TR brand within our target market sectors and territories whilst contributing to the overall profitability of the business. As a result, in September 2003, we launched our e-business web-site where, in addition to customers being able to specify product on-line, they can access engineering data on over 10,000 standard and specialist products as well as tap into a comprehensive engineering knowledge database. We are pleased to report that the site itself has been very well received within our market and registrations since launch have exceeded 5,000. It is the most visited industrial fastener web site in the world. This provides us with a very useful data capture facility from which to build a profile of new and existing customers to whom we can market and channel new products and services. MANAGEMENT AND PEOPLE Within the Group Finance team, Mark Belton has from April 2004 assumed the responsibilities from Stuart Lawson for Company Secretary. Mark also continues in his role as European Financial Controller. On behalf of the Board and shareholders, we would like to welcome all new staff who joined the Group during the last twelve months. We would also like to thank all our staff in all our operations for their hard work, dedication and commitment over the last year which has enabled us to deliver a very satisfactory result and we look forward to working together with them over the next year to achieve even further progress during 2004/5. After 10 years as Chairman David Dugdale decided to retire in December 2003 and Anthony Allen moved up to Chairman January 2004. On behalf of the whole organisation, we would like to thank David for his wise counsel over the many years that he has been associated with the Group and we wish him well in the future. We would like to take this opportunity to welcome Eric Hutchinson who has just joined the Group as a Non-Executive Director. Eric who is Group Finance Director with Spirent PLC brings to your Board additional technical skills in financial control, tax and treasury, which add further strength to the Board's skills base. In addition, his in-depth knowledge of the electronic manufacturing and distribution sectors, broad international experience as well as a wealth of experience in corporate governance and strategic planning will be invaluable as the Group continues to move forward. Ben Stevens after nearly four years with the Group, has decided to step down as a Non-Executive Director and leaves the Group at the end of June 2004. This is to enable Ben to focus on his increasing executive responsibilities as Regional Director - Europe, for British American Tobacco (Holdings) Ltd. On behalf of the Board, we would also like to thank Ben for his valuable contribution that he has made to the Group since 2000. continued... -5- PROSPECTS With TR already recognised as one of the leading brands in the industry, our aim continues to remain focused on positioning TR as the premier brand in Europe. Although both the UK and global economies remain difficult to predict, we have more opportunities today than we have seen for a number of years to exploit and further strengthen our market position through extending relationships with our existing customer base, winning new business and, through consolidation in the sector across Mainland Europe and China, we see great opportunities to expand our already established distribution network. This, together with an operationally efficient network provides the solid foundation for further progress by the Group, and with trading in the first two months of the new financial year reflecting firmer demand and a sustained recovery in key sectors of our business, we remain confident of achieving a satisfactory performance over the coming year. -6- Trifast plc Preliminary Results for the year ended 31 March 2004 FINANCIAL REVIEW BY THE GROUP FINANCE DIRECTOR, STUART LAWSON Once again I am pleased to be able to report results for the Trifast Group, which are an improvement upon the previous years results. With 18% profits growth (see Results section below) comes a 5% dividend growth to shareholders and a renewed optimism of winning within the Company. During the year we have had to contend with more price pressure from customers, raw material price increases, continued uncertainty in the US market, rapid expansion in Eastern Europe and China, and large movements in currency rates. All have been challenges that we have confronted and successfully dealt with. RESULTS Profit before tax, goodwill amortisation and exceptional items was £4.65 million (2003: £3.95 million) an increase of 18% on a turnover of £102.35 million (2003: £103.63 million). Profit before tax after goodwill and exceptional items was £3.43 million (2003: £2.23 million) an increase of 54%. We can also report the continuing improvement of our gross margin which has increased to 24.8% (pre-exceptionals). This increase predominantly reflects the continued review of operational costs, the focus on product mix and more specifically the higher margins of our core fastenings business rather than the lower margin Category 'C' components. Overheads remain under tight control at £20.4 million (pre-goodwill and exceptional costs) representing 19.9% of turnover (2003: 20.5%). As we reported last year, we continue to believe that this level of overhead is appropriate to support current levels of business and maintainable as the business grows over the forthcoming year. EXCEPTIONAL CHARGE This year we finalised our UK restructuring programme and undertook a review of our US operations which resulted in an exceptional charge of £0.89 million, broken down as follows:- •Staff restructuring at Senior Management level in the UK £0.30 million •Write-off of stock not required for the style of customers to be targeted by the US business moving forward. £0.59 million This was partially off-set by an exceptional profit of £0.38 million made on the sale of two freehold properties during the period, resulting in a net exceptional charge for the year of £0.51 million. The Company also utilised further the restructuring provision set up in 2002 leaving a balance of £0.32 million that will be utilised within the next four years on leasehold rentals and dilapidations. continued... -7- CASH POSITION AND FINANCING Cash generation was positive before debt repayments of £1.46 million. We also absorbed the effects of current year and prior year exceptional charges amounting to the value of £0.90 million. Controls continue to be very tight on working capital and we have seen our gross debtor days reduce to 63 days (2003: 67 days), which in an industry of 60 days credit terms we feel is very creditable. Creditor days reduced slightly to 70 days (2003: 72 days). Our net debt position improved significantly to £8.54 million (2003: £10.50 million) despite drawing down funds to make the second and third (final) deferred payments on our Taiwanese acquisition of £1.66 million, resulting in a reduced gearing level of 24.3% (2003: 29.1%). At the year end we had a cash balance of £3.31 million which was predominately 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. We have now set up full UK cash pooling and some European pooling arrangements and will be working with bankers to try to set up similar arrangements in Asia. These pooling arrangements assist the Group in maximising the use of our total cash resources. In these times of fluctuating currency rate movements we continue to monitor our currency exposure daily. During the year the weakness of the US dollar in the second half of the year has been off-set to some extent by the strength of the Euro throughout the period, but currency movements still had an adverse effect on currency translation of overseas profits of £0.14 million and a direct transactional cost to the profits of £0.48 million. As reported last year, we felt that the change in the mix of our business, the increased focus on levels of stock holdings for customers and the work being undertaken with suppliers would result in reduced stock levels and we are pleased to report a reduction in net stock of £1.73 million to £18.68 million (2003: £20.41 million). It should be noted that £0.59 million of this relates to the exceptional write-off in the US and £0.60 million relates to forex movements. Within this reduction is also a £0.40 million increase in our standard proprietary products, so the real effect of our work on stock level reduction in the year is a healthy £0.94 million or 5%. With net stock days at an average of 110 and average customer stock level of 3 months, we now feel that this level is appropriate for our current level of business and should sustain some future growth as well. Net interest payable reduced again this year to £0.37 million (2003: £0.45 million) with the interest paid element being £0.43 million (2003: £0.55 million). This reduction is a result of the continued repayment of our debt and the slight reduction in interest rates around the world. We continue to hold all our loans on variable rates which we still feel is appropriate at this time, although we continue to review these with our bankers. Net interest cover, on a pre-exceptional and goodwill basis has once again improved increasing from 10 times last year to 13 times currently. Capital expenditure remains under tight control at £0.70 million with depreciation at £1.41 million. We believe this level of expenditure to be low and would expect increases in the current period, particularly in our Asian manufacturing base. continued... -8- During the period we made an exceptional profit of £0.38 million on the sale of two freehold buildings. The first was an administration building for the Group Services which was under-utilised following the restructuring. We have leased back 50% of this building. The second was our site in Belfast which was in need of major renovation to adequately service our business, but which was located on a plot of land suitable for development. This site was sold to a development company who will provide us with a new purpose built property. Neither of these sales has had any negative impact on the operation of the business. We have received net cash of £0.48 million from this (after repayment of mortgage) and hold a debtor at the year-end of £1.15 million, this will be paid in July 2004. Our bank facilities are reviewed annually and currently provide adequate headroom for our foreseeable business requirements. TAXATION The tax charge for the year was £1.81 million which after adjusting for goodwill amortisation, timing differences predominately in the US not recognised as a deferred tax asset and a prior year adjustment represents an effective tax charge of 29.2%. This is higher than last year due to increased profits in the UK which are at higher tax rates. The timing differences in the US represent losses which at present we are unable to recognise a deferred tax asset on, this may reverse in the future. DIVIDEND A final dividend of 1.34 pence per share (2003: 1.27 pence) is proposed bringing the total for the year to 2.00 pence (2003: 1.90 pence), an increase of over 5% on the prior year. This total dividend is covered by profit after tax. PENSIONS Trifast operates predominantly 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 Company with these schemes. INTERNAL CONTROL With the continued 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. This review is becoming more complex and advanced as we continue to refine it with each review. During the period we implemented a new management information system and we continue to learn as we develop our systems to support the Global business that we operate. We have been greatly supported in this area by the knowledge of our Non-Executive Directors in businesses larger than Trifast. COMPANY SECRETARY With effect from 1 April 2004 Mark Belton, ACA, took over the role of Company Secretary. This was a position that I had held for nine years and it was felt that I needed to free up some time to focus on my core role. Mark has been with the Group for five years and has been assisting me in the role for the last two years. Mark retains his responsibilities as European Financial Controller and we wish him all the best in his new position. Finally, I would like to thank our shareholders for their continued support and look forward to presenting my third report next year with further improvements in our profitability and the continued growth of the Trifast Group. -9- Trifast plc Preliminary Results Consolidated Profit and Loss Account for the year ended 31 March 2004 Note 2004 2003 Results pre- Exceptional Total Results pre- Exceptional Total exceptional costs* exceptional Costs costs costs £000 £000 £000 £000 £000 £000 Turnover 1 102,353 - 102,353 103,631 - 103,631 Cost of sales (76,976) (590) (77,566) (78,018) - (78,018) ------- -------- ------- -------- -------- ------ Gross profit 25,377 (590) 24,787 25,613 - 25,613 Administration expenses - Before goodwill (16,608) (297) (16,905) (17,317) (871) (18,188) - Goodwill (709) - (709) (742) - (742) ------- -------- ------- -------- -------- ------ Total administrative expenses (17,317) (297) (17,614) (18,059) (871) (18,930) Distribution costs (3,743) - (3,743) (3,893) - (3,893) ------- -------- ------- -------- -------- ------ Operating profit 4,317 (887) 3,430 3,661 (871) 2,790 Loss on termination of operations - - - - (113) (113) Exceptional profit on disposal of fixed assets - 376 376 - - - ------- -------- ------- -------- -------- ------ Profit on ordinary activities before interest and taxation 1 4,317 (511) 3,806 3,661 (984) 2,677 Interest receivable 53 - 53 95 - 95 Interest payable and similar charges 4 (427) - (427) (547) - (547) ------- -------- ------- -------- -------- ------ Profit on ordinary activities before taxation 2 3,943 (511) 3,432 3,209 (984) 2,225 Tax charge on profit on ordinary activities 5 (1,806) (817) ------- ------ Profit for the financial year 1,626 1,408 Dividends 6 (1,438) (1,365) ------- ------ Retained profit for the financial year 9 188 43 ======= ====== Earnings per share: 7 Basic 2.26p 1.96p Diluted 2.24p 1.96p Adjusted diluted 4.06p 3.94p ======= ======= All amounts in the profit and loss account are derived from continuing operations for the current and prior year. * further details on the exceptional costs are given in note 3. -10- Trifast plc Preliminary Results Consolidated Balance Sheet at 31 March 2004 Note 2004 2003 £000 £000 £000 £000 Fixed assets Intangible assets 11,195 12,638 Tangible assets 10,180 13,197 -------- -------- 21,375 25,835 Current assets Stocks 8 18,679 20,406 Debtors 24,043 23,040 Cash at bank and in hand 3,312 4,252 -------- -------- 46,034 47,698 Creditors: amounts falling due (22,878) (25,521) within one year -------- -------- Net current assets 23,156 22,177 -------- -------- Total assets less current 44,531 48,012 liabilities Creditors: amounts falling due after more than one (9,698) (12,327) year Provisions for liabilities and (540) (1,193) charges -------- -------- Net assets 34,293 34,492 ======== ======== Capital and reserves Called up share capital 3,594 3,593 Share premium account 4,594 4,588 Revaluation reserve 652 1,017 Profit and loss account 25,453 25,294 -------- -------- Equity shareholders' funds 9 34,293 34,492 ======== ======== -11- Trifast plc Preliminary Results Consolidated Cash Flow Statement for the year ended 31 March 2004 2004 2003 £000 £000 £000 £000 Cash flow from operating activities 3,985 5,035 Return on investments and servicing of (366) (472) finance Taxation (885) (1,033) Capital expenditure 368 (762) Acquisitions and disposals (933) (1,146) Equity dividends paid (1,387) (1,314) -------- -------- (3,203) (4,727) -------- -------- Cash inflow before financing 782 308 Financing Issue of ordinary share capital 7 - Decrease in debt (1,459) (3,180) -------- -------- Net cash outflow from financing (1,452) (3,180) -------- -------- Decrease in cash in the year (670) (2,872) ======== ======== -12- Trifast plc Preliminary Results Reconciliation of net cash flow to movement in net debt for the year ended 31 March 2004 2004 2003 £000 £000 Decrease in cash in the year (670) (2,872) Cash outflow from decrease in debt and lease financing 1,459 3,180 ------- -------- Change in net debt resulting from cash flows 789 308 Translation difference 1,172 (216) ------- -------- Movement in net debt in the year 1,961 92 Net debt at beginning of year (10,503) (10,595) ------- -------- Net debt at end of the year (8,542) (10,503) ======= ======== Consolidated statement of total recognised gains and losses for the year ended 31 March 2004 2004 2003 £000 £000 Profit for the financial year 1,626 1,408 Dividends (1,438) (1,365) Currency translation differences on foreign currency net investments (394) (87) ------- -------- Total recognised losses relating to the financial year (206) (44) ======= ======== Note of historical cost profits and losses for the year ended 31 March 2004 2004 2003 £000 £000 Reported profit on ordinary activities before taxation 3,432 2,225 Realisation of property revaluation gains of previous years 365 - ------- -------- Difference between a historical cost depreciation charge and the actual depreciation (10) (10) charge calculated on the revalued amount ------- -------- Historical cost profit on ordinary activities before taxation 3,787 2,215 ------- -------- Historical cost profit for the year retained after taxation and dividends 543 33 ======= ======== -13- Trifast plc Preliminary Results NOTES 1. Geographical segments The Group's turnover, analysed by geographical market of destination, is as follows: 2004 2003 £000 £000 United Kingdom 58,795 63,123 European Union (excluding UK) 19,773 17,796 Europe - other 6,998 4,767 North and South America 9,488 10,779 Far East 6,847 6,916 Other 452 250 ------ ------ 102,353 103,631 ------ ------ The Group's turnover, profit before tax and net assets, analysed by geographical market of origin, are as follows: UK Asia Rest of World Group 2004 2003 2004 2003 2004 2003 2004 2003 £000 £000 £000 £000 £000 £000 £000 £000 Turnover Continuing businesses 68,514 73,302 17,776 17,763 24,891 20,838 111,181 111,903 Inter segment (4,086) (5,155) (3,853) (2,705) (889) (412) (8,828) (8,272) sales ------ ------ ------ ------ ------ ------ ------ ------ Sales to third 64,428 68,147 13,923 15,058 24,002 20,426 102,353 103,631 parties Profit/(loss)before interest and taxation Segment profit/ (loss) 2,220 3,031 3,771 3,804 518 (356) 6,509 6,479 before goodwill Goodwill amortisation (88) (87) (449) (482) (172) (173) (709) (742) Exceptional items 146 (871) - - (657) - (511) (871) ------ ------ ------ ------ ------ ------ ------ ------ Loss on termination - (113) - - - - - (113) of operations ------ ------ ------ ------ ------ ------ ------ ------ Segment profit/ 2,278 1,960 3,322 3,322 (311) (529) 5,289 4,753 (loss) Central - - - - - - (1,483) (2,076) costs ====== ====== Profit on ordinary activities 3,806 2,677 before interest and ====== ====== taxation Segment net assets 15,990 10,727 6,808 6,267 9,622 10,564 32,420 27,558 Central net assets - - - - - - 1,873 6,934 ------ ------ ------ ------ ------ ------ ------ ------ 15,990 10,727 6,808 6,267 9,622 10,564 34,293 34,492 ====== ====== ====== ====== ====== ====== ====== ====== 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 2004 2003 £000 £000 Profit on ordinary activities before taxation is stated after charging and (crediting): Auditors' remuneration: Audit 180 152 Tax services 60 63 Other services 10 49 Audit Fees paid to other Group auditors - 19 Depreciation and other amounts written off tangible fixed assets: Owned 1,332 1,507 Leased 71 90 Amortisation on intangible assets 8 - Hire of plant and machinery - operating leases 17 19 Hire of other assets - operating leases 922 1,009 Loss on disposal of fixed assets 16 22 Rents receivable from property - (5) Net exchange losses/(gains) 480 (95) Goodwill amortisation 709 742 The total amount charged for the hire of plant and machinery amounted to £20,000 (2003: £22,000). This comprises rentals payable under operating leases as well as depreciation on plant and machinery held under finance leases together with the related finance charges. The audit fee included for the Company was £33,000 (2003: £33,000). 3. Exceptional costs £000 a) Cost of sales. This cost relates to the write-off of obsolete stock in TR Fastenings Inc (USA), which has been identified as not relevant for the customer base moving forward. (590) b) Administrative expenses. Final redundancy costs of the restructuring programme started during the year ended 31 March 2002. (297) c) Disposal of fixed assets 376 Exceptional profit on sale of two freehold properties. 376 -------- Net exceptional costs (511) ======== The operating cash flow impact of all the exceptional items above was £297,000 outflow in respect of redundancy payments. The tax effect of the above items is a £93,000 tax charge. continued... -15- 4. Interest payable and similar charges 2004 2003 £000 £000 On bank overdraft 67 4 Finance charges payable in respect of finance leases and hire purchase contracts - 1 Loans and mortgages 354 531 Other 6 11 ------ ------ 427 547 ====== ====== 5. Taxation Analysis of charge in period 2004 2003 £000 £000 £000 £000 UK corporation tax Current tax on income for the period (423) (16) Adjustments in respect of prior periods (36) (39) Double taxation relief 19 - ------- ------ (440) (55) Foreign tax Current tax on income for the period (914) (600) Adjustments in respect of prior periods 12 18 ------- ------ (902) (582) ------ ------ Total current tax (1,342) (637) Deferred tax Origination/reversal of timing differences (355) (143) Adjustment in respect of previous years (109) (37) ------- ------ (464) (180) ------ ------ Tax charge on profit on ordinary activities (1,806) (817) ====== ====== continued... -16- Factors affecting the tax charge for the current period The current tax charge for the period is higher (2003: lower) than the standard rate of corporation tax in the UK 30% (2003: 30%). The differences are explained below: 5. Taxation (continued) 2004 2003 £000 £000 Current tax reconciliation Profit on ordinary activities before tax 3,432 2,225 ------ ------ Current tax charge at 30% (2003: 30%) (1,030) (668) Effects of: Expenses not deductible for tax purposes - Goodwill amortisation (213) (223) - Other (254) (221) Timing differences on exceptional items 102 185 Deferred tax assets not recognised (459) (34) Capital allowances for period in excess of depreciation 9 4 Utilisation of tax losses 171 69 Different tax rates on overseas earnings 356 272 Adjustments to tax charge in respect of previous periods (24) (21) ------ ------ Total current tax charge (see above) (1,342) (637) ====== ====== 6. Dividends Ordinary shares: 2004 2003 £000 £000 Interim paid - 2004: 0.66p per share (2003: 0.63p) 474 453 Final proposed - 2004: 1.34p per share (2003: 1.27p) 964 912 ------ ------ Total dividend 1,438 1,365 ------ ------ 7. Earnings per share 2004 2003 Weighted average number of ordinary shares in issue - basic 71,871,642 71,868,150 Adjustment in respect of share options 538,805 131,809 -------- ------- Weighted average number of ordinary shares in issue - diluted 72,410,447 71,999,959 ======== ======= -17- 7. Earnings per share (continued) 2004 2003 EPS EPS ----------------- ----------------- Earnings Basic Diluted Earnings Basic Diluted £000 £000 Profit for the financial year 1,626 2.26p 2.24p 1,408 1.96p 1.96p Adjustments: Goodwill amortisation charge 709 0.99p 0.98p 742 1.03p 1.03p Operating exceptional items 887 1.23p 1.23p 871 1.21p 1.20p Exceptional profit on disposal of (376) (0.52p) (0.52p) - - - fixed assets Loss on termination of - - - 113 0.16p 0.16p operations Tax charge/(credit) on 93 0.13p 0.13p (295) (0.41p) (0.41p) exceptional items ------- ------- -------- ------- ------- ------ Adjusted earnings and EPS 2,939 4.09p 4.06p 2,839 3.95p 3.94p ======= ======= ======== ======= ====== ======= 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. 8. Stocks Group 2004 2003 £000 £000 Raw materials and consumables 549 519 Work in progress 382 448 Finished goods and goods for resale 17,748 19,439 -------- ------- 18,679 20,406 ======== ======= The Group consignment stock held from suppliers at the year end, which was not included on the balance sheet, was £96,000 (2003: £70,000). This stock will be invoiced to the Group as it is drawn down. continued... -18- 9. Reconciliations of movements in shareholders' funds Group Company 2004 2003 2004 2003 £000 £000 £000 £000 Profit/(loss) for the financial year 1,626 1,408 (3,420) (2,335) Dividends (1,438) (1,365) (1,438) (1,365) -------- -------- -------- -------- Retained profit/(loss) for the year 188 43 (4,858) (3,700) Issue of ordinary shares 7 - 7 - Exchange differences (394) (87) - - -------- -------- -------- -------- Net reduction to shareholders' funds (199) (44) (4,851) (3,700) Opening shareholders' funds 34,492 34,536 21,640 25,340 -------- -------- -------- -------- Closing shareholders' funds 34,293 34,492 16,789 21,640 ======== ======== ======== ======== 10. The financial information set out above does not constitute the company's statutory accounts for the years ended 31 March 2003 or 2004 but is derived from those accounts. Statutory accounts for 2003 have been delivered to the Registrar of Companies and those for 2004 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. 11. This statement is not being posted to shareholders. The Report & Accounts for the year ended 31 March 2004 will be posted to shareholders in July 2004. 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 23 September 2004 at 12.00noon, 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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