Interim Results

Trifast PLC 21 November 2000 Trifast plc 'Global Assembly Partners' Interim Results for the six months ended 30 September 2000 'Growth Momentum Continues' Turnover £60.83m +13% Operating profit before goodwill amortisation £6.04m +11% Operating profit £5.88m +12% Profit before taxation £5.69m +11% Earnings per shareAdjusted fully diluted 5.70p +10% Interim dividend per share 1.26p +10% Manufacturing supplier agreements in Asia to provide competitive edge sourcing being finalised Pursuing acquisition targets within our International triangle Progressing supplier alliances to enable the Group to become the 'Single Global Supplier' to its multi-national OEM's 'We are pleased to report a good first half performance, which has met our expectations. 'The Directors are very positive about the future prospects and the many opportunities that lie ahead.' FULL STATEMENT ATTACHED Enquiries: Malcolm Diamond, Chief Executive Today: 020 7282 8000 (8.15am - 12.00 noon) John Wilson, Group Finance Director Today: 020 7678 8000 (12.30pm - 2.30pm) Trifast plc Mobile: 07979 518493 (MMD)/0411 103915 (JW) Thereafter: 01825 747487 Web-site: www.trifast.com Email: ceooffice@trifast.com Fiona Tooley Today: 020 7282 8000 (8.15am - 2.30pm) Citigate Dewe Rogerson Mobile: 07785 703523 Thereafter: 0121 631 2299 -2- Trifast plc Interim Results for the six months ended 30 September 2000 JOINT STATEMENT BY THE CHAIRMAN, DAVID DUGDALE AND CHIEF EXECUTIVE, MALCOLM DIAMOND Results We are pleased to report a good first half performance, which has met our expectations. In a year where we have significant planned investment and re-alignment programmes that will enable us to maintain our leading market position, the focus of the business teams is to be commended. Turnover for the six months ended 30 September 2000 increased 13% to £60.83 million (1999: £54.0 million). Our International operations performed well contributing 24% of sales and 30% to operating profits. Gross margins have been maintained. The Group's pre-tax profits for the period were £5.69 million (1999: £5.11 million). Operating profits before goodwill amortisation amounted to £6.04 million (1999: £5.43 million) - both up by 11% on the comparable half. Adjusted fully diluted Earnings per Share increased 10% to 5.70 pence (1999: 5.18 pence). Group overheads remained in line with budget at 18.8% of sales. Capital expenditure continues to be material with £1.6 million expended in the first half and a further planned £1.9 million during the remainder of the year. Depreciation stood at £800,000. Since the end of the last financial year, stocks have increased by £2.4 million to £22 million principally to service the requirements of some new major logistics contracts which although previously highlighted are beginning to come on stream. However, debtor management remains a priority and although debtor days marginally increased this has been offset by control of creditor payments. No significant bad debts were incurred in the period. Shareholders' funds were £36.4 million compared to £33.2 million in March 2000. Gearing rose from 7% to 15% in the comparable period. The Balance Sheet remains strong, which will allow us comfortably to finance some of our future plans in the short-term. Taking into account the 3 for 1 share bonus issue in August, a 10% increase in the interim dividend to 1.26 pence (1999: 1.14 pence) will be paid on 11 January 2001 to shareholders on the Register as at 1 December 2000. Review After considerable organic and acquisitive growth over the last five years, we have developed from being solely a manufacturer and distributor of industrial fastenings into a leading provider of multi-product inventory management solutions for our ever increasing global customer base. To reflect the enhanced supply chain role TR Europe has been established and will embrace the UK's principal trading subsidiary, TR Fastenings as well as other UK companies and our operations in Scandinavia, Ireland, Hungary and Holland. TR Europe will focus its sales activities into four clearly defined sectors - Information Technology, Home Appliances, 1st Tier Automotive and Industrial. continued... -3- This major restructuring now mirrors the successful operational format already adopted in the Americas and Asia, so harmonising our strategy of focusing on customers' needs through our international triangle network whilst also meeting the demand for supply chain logistics in other emerging industrial hot spots around the world. The UK Hub & Satellite operation, which will provide operational efficiencies going forward, is due for completion in early 2001. The Southern Hub will gain additional capacity following the relocation of the Group's central support services to modest refurbished offices near the Uckfield operation in the New Year. The Central England Hub, now under construction in Wednesbury will allow us to consolidate and enhance our Midland's presence. The freehold property occupied by Stringers in Coventry has already been sold slightly above book value. Competitive advantages have been achieved through our own designed dedicated software programme 'New Horizons' which links all our TR business groups providing them with up-to date vital information on our key customers and also tracking all the components used within our and their organisations. More recently the program has been extended to allow sales of branded proprietary products via the 'web' when customers are ready to e-trade. Our International businesses have once again performed strongly, in particular Scandinavia and the Americas where growth was 10% ahead of budget. In October, we sold our non -core power transmission business in Norway to the management for net asset value. Our Shanghai facility which became fully operational at the end of the last financial year showed rapid growth whilst our Malaysian and Singapore operations benefited from the improvement in their respective economies. With the ever-increasing opportunities in Mainland Europe and across the Atlantic we have decided to establish a taxable presence in both Mexico and Hungary both of which will be operational by the year-end, with the benefits beginning to come through in the latter part of 2001. A feasibility study has been commissioned to examine the practicalities and benefits of establishing a Central European manufacturing capability and we expect to report on its findings at our next Preliminary Results. Our people and their training are key to the success of this business and we continue to invest heavily in this area. We have formulated a 'Fastrack' development programme which identifies outstanding front line personnel who can undergo 2 years of intensive management training grooming them to take up key roles around the Group and become the 'drivers' in the future success of Trifast. In August, we announced the appointment of Ben Stevens to the Trifast Board as a non-executive director. He is responsible for acquisitions within BAT plc, having previously headed up a succession of BAT operations, mainly in third world economies so he brings to the Group considerable operational and international expertise, which will be invaluable to us, as we roll out our exciting plans of overseas expansion. In the New Year, we are bringing in a TR Europe Purchasing Director and a Logistics Consultant to spearhead our campaign to leverage our strong purchasing power position. By focusing on achieving leaner supply chain solutions on an on-going basis, we will improve our revenue and margin, which can only impact positively on the Group's earnings ability in the future. continued... -4- Prospects The Directors are very positive about the future prospects and the many opportunities that lie ahead. Whilst we are investing in the UK, it is vital to concentrate our efforts on building further our international manufacturing and supplier capabilities through alliances, partnerships as well as acquisitions, which will drive our ambition to become the 'Single Global Supplier' to a high proportion of our 40 multi-national strategic customers. We are actively co-ordinating a 'harmonised group' of major suppliers, which will give us world-wide capability for category 'C' products. In addition, we are currently negotiating two new manufacturing alliances within Asia. We also continue to actively pursue acquisition opportunities within the area of our International triangle. -5- Trifast plc CONSOLIDATED PROFIT AND LOSS ACCOUNT Unaudited Interim Results for the six months ended 30 September 2000 Note Six months Six months Year Ended Ended Ended 30 September 30 September 31 March 2000 2000 1999 £'000 £'000 £'000 Turnover 2 60,826 53,994 113,313 Cost of sales (43,372) (38,208) (80,774) __________ __________ __________ Gross profit 17,454 15,786 32,539 Net operating (11,410) (10,359) (21,078) expenses __________ __________ __________ Operating profit 6,044 5,427 11,461 before goodwill amortisation Goodwill (164) (152) (317) amortisation __________ __________ __________ Profit on 5,880 5,275 11,144 ordinary activities before interest Net interest (194) (164) (343) __________ __________ __________ Profit on 5,686 5,111 10,801 ordinary activities before taxation Taxation on 3 (1,706) (1,533) (3,317) profit on ordinary activities __________ __________ __________ Profit on 3,980 3,578 7,484 ordinary activities after taxation Dividends 4 (898) (810) (2,451) __________ __________ __________ Retained profit 8 3,082 2,768 5,033 ========= ========= ========= 6 Earnings per share1 Basic 5.58p 5.06p 10.55p Diluted 5.47p 4.97p 10.44p Adjusted diluted 5.70p 5.18p 10.89p ========= ========= ========= The results for the period were derived wholly from continuing operations. 1 restated see note 5 -6- Trifast plc SUMMARISED CONSOLIDATED BALANCE SHEET Unaudited Interim Results as at 30 September 2000 Note 30 September 30 September 31 March 2000 2000 1999 £'000 £'000 £'000 Goodwill 5,904 6,181 6,068 Tangible fixed 14,177 12,475 13,621 assets __________ __________ __________ Current assets 7 52,579 47,010 51,009 Creditors: (28,510) (27,297) (29,566) amounts falling due within one year __________ __________ __________ Net current 24,069 19,713 21,443 assets __________ __________ __________ Total assets 44,150 38,369 41,132 less current liabilities Creditors: amounts falling (6,934) (7,776) (7,038) due after more than one year Provisions for (825) (736) (874) liabilities and charges __________ __________ __________ Net assets 36,391 29,857 33,220 ========= ========= ========= Capital and reserves Called up share 3,564 886 891 capital Share premium 3,229 5,668 5,872 Revaluation 1,017 - 1,017 reserves Merger reserve 783 1,111 947 Profit and loss 8 27,798 22,192 24,493 account __________ __________ __________ Equity 9 36,391 29,857 33,220 shareholders' funds ========= ========= ========= -7- Trifast plc SUMMARISED CONSOLIDATED CASH FLOW STATEMENT Unaudited Interim Results for the six months ended 30 September 2000 Note Six months Six months Year ended ended ended 31 March 30 September 30 September 2000 2000 1999 £'000 £'000 £'000 Net cash inflow from 10 3,606 7,305 11,071 operating activities Returns on investment (206) (157) (338) and servicing of finance Taxation paid (1,349) (421) (3,553) Net cash outflow from 11 (1,276) (3,871) (4,776) investing activities Equity dividends paid (1,628) (1,476) (2,290) __________ __________ __________ Cash (outflow)/inflow before use of liquid (853) 1,380 114 resources and financing Net cash 12 (49) 2,549 2,066 (outflow)/inflow from financing __________ __________ __________ (Decrease)/increase (902) 3,929 2,180 in cash in the period ========= ========= ========= -8- Trifast plc NOTES TO THE INTERIM STATEMENT Unaudited Interim Results for the six months ended 30 September 2000 1. Basis 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 2000. 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 2000 have been extracted from the full Annual Report and Accounts filed with the Registrar of Companies on which the Auditors gave an unqualified report. 2. Turnover Six months ended Six months ended Year ended 30 September 2000 30 September 1999 31 March 2000 £'000 £'000 £'000 Analysis by activity Industrial 60,536 53,959 113,237 fastenings Other activities 290 35 76 __________ __________ __________ 60,826 53,994 113,313 ========= ========= ========= 3. Taxation The charge for tax is an estimate based on the anticipated effective rate of tax for the year ending 31 March 2001. 4. Dividends The Directors have declared an interim dividend of 1.26p per ordinary share to be paid on 11 January 2001 to shareholders on the register on 1 December 2000. 5. Bonus Issue The prior period number of shares in issue have been restated to reflect the 3 for 1 bonus issue effected 25 August 2000. 6. Earnings per Share The calculation of earnings per 5p ordinary share is based on profit on ordinary activities after goodwill amortisation and after taxation and the weighted average number of shares in the period of 71,267,901 (September 1999: 17,672,658 restated 70,690,632; March 2000: 17,727,819 restated 70,911,276). 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 72,699,343 (September 1999: 17,995,693 restated 71,982,772; March 2000: 17,914,700, restated 71,658,800). continued... -9- The adjusted fully diluted earnings per share is presented so as to show more clearly the underlying performance of the Group and is calculated as above using the profit on ordinary activities before goodwill amortisation but after tax. 7. Current Assets Six months ended Six months ended Year ended 30 September 2000 30 September 1999 31 March 2000 £'000 £'000 £'000 Stocks 22,083 16,768 19,627 Debtors 26,422 23,625 26,331 Cash at bank and 4,074 6,617 5,051 in hand __________ __________ __________ 52,579 47,010 51,009 ========= ========= ========= 8. Profit and Loss Account Six months ended Six months ended Year ended 30 September 30 September 31 March 2000 2000 1999 £'000 £'000 £'000 Opening balance 24,493 19,783 19,783 Retained profit for 3,082 2,768 5,033 period Exchange differences 59 (63) (192) Transfer from merger 164 152 317 reserve Capitalisation of reserves on issue of shares to qualifying - (448) (448) employees share ownership trust __________ __________ __________ 27,798 22,192 24,493 ========= ========= ========= 9. Reconciliation of Movements in Shareholders' Funds Six months ended Six months ended Year ended 30 September 30 September 31 March 2000 2000 1999 £'000 £'000 £'000 Profit for the 3,980 3,578 7,484 financial period Dividends (898) (810) (2,451) __________ __________ __________ Retained profit for 3,082 2,768 5,033 the period Issue of ordinary 30 1,212 1,422 shares Capitalisation of reserves on issue of shares to qualifying - (448) (448) employees share ownership trust Exchange 59 (63) (192) gains/(losses) Revaluation - - 1,017 __________ __________ __________ Net addition to 3,171 3,469 6,832 shareholders' funds Opening 33,220 26,388 26,388 shareholders' funds __________ __________ __________ Closing 36,391 29,857 33,220 shareholders' funds ========= ========= ========= continued... -10- 10. Net Cash Flow from Operating Activities Six months Six months Year ended ended ended 31 March 2000 30 September 30 September £'000 2000 1999 £'000 £'000 Operating profit after goodwill 5,880 5,275 11,144 amortisation Depreciation charge 800 682 1,474 Loss on sale of 47 189 192 tangible fixed assets Goodwill amortisation 164 152 317 (Increase)/decrease in working (3,285) 1,007 (2,056) capital __________ __________ __________ 3,606 7,305 11,071 ========= ========= ========= 11. Net Cash Outflow from Investing Activities Six months ended Six months ended Year ended 30 September 2000 30 September 1999 31 March 2000 £'000 £'000 £'000 Capital expenditure and 1,276 2,009 2,913 financial investment Acquisitions and - 1,862 1,863 disposals __________ __________ __________ 1,276 3,871 4,776 ========= ========= ========= 12. Net Cash (Outflow)/Inflow from Financing Six months Six months Year ended ended ended 31 March 2000 30 September 30 September £'000 2000 1999 £'000 £'000 Issue of ordinary share 30 216 425 capital (Decrease)/increase in (79) 2,333 1,641 debt __________ __________ __________ (49) 2,549 2,066 ========= ========= ========= 13. Reconciliation of Net Cash Flow to Movement in Debt Six months Six months Year ended ended ended 31 March 2000 30 September 30 September £'000 2000 1999 £'000 £'000 (Decrease)/increase in cash in the (902) 3,929 2,180 period Cash outflow/(inflow) from decrease/(increase) in 79 (2,333) (1,641) debt and lease financing __________ __________ __________ Change in net debt resulting from (823) 1,596 539 cash flows Loans and finance leases acquired - (365) (365) with subsidiaries Translation difference (26) 10 (2) __________ __________ __________ Movement in net debt in the (849) 1,241 172 Period Net debt at beginning (3,678) (3,850) (3,850) of period __________ __________ __________ Net debt at end of the (4,527) (2,609) (3,678) period ========= ========= ========= -11- Independent Review Report by KPMG Audit Plc to Trifast plc Introduction We have been instructed by the company to review the financial information set out on pages 5 to 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. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the Directors. The Listing Rules of the Financial Services Authority require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where they are to be changed in the next annual accounts in which case any changes, and the reason for them, are to be disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4: Review of interim financial information issued by the Auditing Practices Board. A review consists principally of making enquiries of Group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 September 2000. KPMG Audit Plc Chartered Accountants Crawley

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