Interim Results

Trifast PLC 25 November 2002 Issued by Citigate Dewe Rogerson Ltd, Birmingham Date: Monday, 25 November 2002 Embargoed: 7.00am Trifast plc "Leading distributors and manufacturers of a comprehensive range of industrial fastenings" Six months to Six months to Six months to 30 September 2002 30 September 2001 31 March 2002 Turnover £51.938m £52.309m £51.601m Operating profit £2.202m £1.603m £1.026m (pre-goodwill and exceptionals) Profit before taxation £1.958m £1.262m £0.704m (pre-goodwill and exceptionals) Profit after taxation £0.757m £0.098m (£3.711)m (post-goodwill and exceptionals) Earnings per share Adjusted diluted 1.99p 1.67p (0.16)p Diluted 1.05p 0.14p (5.16)p Dividend per share 0.63p 0.60p 1.20p "We are pleased to report that the Group has made considerable progress in the first half. "We have never been better focused to deal with the uncertainties in the market place and one of our key objectives has been to establish a more even balance of business. "The second half has started well with trading in line with our expectations. Enquiry levels remain encouraging across the Group with both product and transactional business and global fastener management projects continuing to be won. "Therefore, whilst we are cautious, we are confident that with the traditionally stronger second half we can continue to improve the profitability of the Group and look forward to reporting on our progress at the year-end." David Dugdale, Chairman Jim Barker, Chief Executive FULL STATEMENT ATTACHED Enquiries: Jim Barker, Chief Executive John Wilson, 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)/07711 103915 (JW) Mobile: 07785 703523 Thereafter: 01825 747366 Thereafter: 0121 455 8370 Web-site: www.trifast.com Email: ceooffice@trifast.com -2- Trifast plc Interim Results for the six months ended 30 September 2002 Joint Statement by David Dugdale, Chairman and Jim Barker, Chief Executive Introduction We are pleased to report that the Group has made considerable progress in the first half. With the restructuring programme almost complete and the operational efficiencies beginning to bear fruit, together with a number of exciting global supply partnerships being developed with existing and new customers, we have a solid foundation from which to continue a sustainable growth pattern. We have never been better focused to deal with the uncertainties in the market place and one of our key objectives has been to establish a more even balance of business. Our main exposure remains the electronics and telecoms sectors which have continued to be affected by slower demand and excess stocks within the supply chain. However, we have seen some stability return with sales in the first half in this sector accounting for 30% against 36% in the comparable period and 28% in the second half of last year. Additionally, our focused marketing drive to improve the balance of our business particularly within the Tier 1 automotive and industrial sectors has begun to pay off and we have grown this sector to 22% of our sales, compared to 18% in the six months to September 2001. Other sectors we supply including domestic appliances, distributors and security have remained fairly static. Results Turnover for the six months ended 30 September 2002 was £51.94 million against £52.31 million in the comparable period, with Europe accounting for 81%, the Far East 15% and the Americas 4%. Group exports as a percentage of turnover was 18.2%, an increase from 15.5% in 2001. The cost-down programme implemented in 2001/2 is near completion with the staff head count 7% lower in this period when compared to 2001. In addition, the overheads (pre-goodwill and exceptionals) continue to improve as a percentage of sales. Stocks have been reduced by nearly £3 million from their level at 30 September 2001. Operating profits in the period (pre-goodwill and exceptionals) increased 37.4% to £2.20 million against £1.60 million in the first half of the previous year and the net interest charge was £244,000 which was covered 9 times by operating profits. Pre-tax profits (after goodwill and exceptionals) showed a marked improvement from £157,000 in 2001 to £1.29 million - an eight fold increase. Adjusted diluted earnings per share (pre-goodwill and exceptionals) improved from 1.67 pence in 2001 to 1.99 pence, an increase of 19%. In the first half, capital expenditure was approximately £400,000 with depreciation at £889,000. During the second half we have planned expenditure of around £300,000. Prior to debt repayments, the Group generated over £500,000 of cash in the six months. Debtor management continued to be a priority with no significant bad debts being incurred in the period. Although debtor days have remained static at 75 at the half year, it is an improvement on the year ended March 2002 position of 82. Net debt at the end of the period stood at £10.26 million against £13.93 million at 30 September 2001 resulting in gearing of 28% compared to 37% in the comparable period. The balance sheet remains in good shape with shareholders' funds standing at £34.73 million. continued... -3- Dividend We indicated in our earlier statements that the Group intended to return to a progressive dividend programme. Therefore, we are pleased to announce a 5% increase in the interim dividend to 0.63 pence per ordinary share (2001:0.60 pence) which will be paid on 24 January 2003 to shareholders on the Register as at 6 December 2002. Review We have concentrated our efforts on developing existing profitable customer relationships within our core business whilst also focusing on transactional business. It is interesting to note that we have seen a different mix of business within our top customers compared to last year. This clearly reflects the change in the market place but more importantly our marketing drive which has resulted in successfully securing a number of new accounts with additional business from existing customers such as BAE Systems, Toshiba, and Flextronics. We are also beginning to see a resurgence from our Japanese customers, such as Sharp and Hitachi, and we are working on a number of new projects which are currently at the design stage. Over the last six months, we have also reviewed our low margin business and where we have been unable to negotiate more realistic returns we have started to exit the relationship and reduce our exposure. The European business has completed its restructuring and the three trading Hubs now provide a more focused and cost effective administrative and purchasing function to the smaller divisions who continue to manage on a day to day basis their key customer accounts. This has produced improved operational efficiencies, including greater flexibility of stock usage, better purchasing, automatic ordering, electronic invoicing and customer care which are paramount in our type of business. Our operations in Hungary, Holland and France continue to make progress. In the Scandinavian region the re-organisation and re-focus towards fastener orientated business with a particular emphasis on engineering has begun to reap benefits, with sales of our own manufactured Hank(R) products in the region increasing. We have also won our first export contract to Estonia, which provides a solid base on which to develop sales in the Baltic region. Our Far East operations produced a creditable performance with good sales growth coming from Singapore and Malaysia. Although there is still excess capacity and this market is forecast to remain weak, there are a number of strategic global partnership opportunities across all sectors and from across the Continents in which we are strongly represented. Therefore, we remain optimistic about further strengthening our position within this important Pacific region. Our American operation has improved its position on last year principally through its restructure and its enhanced working relationship with our Far East operations. Together, under the leadership of Executive Director Steven Tan, they have been focusing on a number of global OEM's to gain product specification approvals. With our US local presence supported by our strong Asian presence offering efficient, high quality low cost manufacturing this clearly gives us the competitive edge which is evidenced by the extension of an existing global OEM relationship where, in addition to supplying the UK facilities the contract has been extended to cover additional sites in the Americas, Australia, Asia and China. People As part of the significant restructuring and cost-down programme, Steven Franklin, Executive Director, left the Company at the end of August 2002. There will be two further changes to the Board structure over the coming months. continued... -4- John Wilson, who has been with the Group since 1978, and on the Board since 1985, has decided to retire and will relinquish his role as Group Finance Director on 31 December 2002. John has been a key player within the development of our business and on behalf of staff, shareholders and customers we would like to thank him for his hard work, contribution and commitment over many years. We are pleased to say that his experience will not be lost to us as he has agreed to remain on our Board as a Non-Executive Director. John will be succeeded by Stuart Lawson who will join the Board and will become Group Finance Director from 1 January 2003. Stuart has been with the Group since 1995 having joined us from KPMG. For the last six years, he has been the Group Financial Controller and Company Secretary for Trifast in addition to his responsibilities as Finance Director of the Group's European subsidiaries. We congratulate him on his appointment. Prospects The second half has started well with trading in line with our expectations. Enquiry levels remain encouraging across the Group with both product and transactional business and global fastener management projects continuing to be won. Although economic challenges exist and limited visibility remains, we are focused and committed to achieving further improvements through operational efficiencies, working closer with our customers and developing the opportunities that we have identified. Therefore, whilst we are cautious, we are confident that with the traditionally stronger second half we can continue to improve the profitability of the Group and look forward to reporting on our progress at the year-end. -5- Trifast plc Consolidated Profit and Loss Account Unaudited interim results for the six months ended 30 September 2002 Six months Six months Year ended ended ended Note 30 September 30 September 31 March 2002 2001 2002 £'000 £'000 £'000 Turnover Existing operations 51,938 52,309 103,910 Cost of sales (39,444) (40,260) (80,001) Gross profit 12,494 12,049 23,909 Net operating expenses (excluding exceptional costs and goodwill amortisation) (10,292) (10,446) (21,280) Operating profit before goodwill amortisation and exceptional items 2,202 1,603 2,629 Exceptional costs 5 (266) (770) (442) Goodwill amortisation (405) (335) (1,710) Operating profit 1,531 498 477 Loss on termination of operations - - (3,828) Profit/(loss) on ordinary activities before interest 1,531 498 (3,351) Net interest (244) (341) (663) Profit/(loss) on ordinary activities before taxation 1,287 157 (4,014) Taxation on profit/(loss) on ordinary activities 2 (530) (59) 401 Profit/(loss) on ordinary activities after taxation 757 98 (3,613) Dividends 3 (453) (431) (1,308) Retained profit/(loss) 8 304 (333) (4,921) Earnings per share 4 Basic 1.05p 0.14p (5.03)p Diluted 1.05p 0.14p (5.02)p Adjusted diluted 1.99p 1.67p 1.51p The results for the period were derived wholly from continuing operations. -6- Trifast plc Summarised Consolidated Balance Sheet Unaudited interim results as at 30 September 2002 30 September 30 September 31 March 2002 2001 2002 Note £'000 £'000 £'000 Intangible assets - goodwill 12,959 15,737 13,937 Tangible fixed assets 13,465 15,909 14,922 26,424 31,646 28,859 Current assets 6 48,087 50,291 49,945 Creditors: amounts falling due within one year (25,080) (24,433) (25,527) Net current assets 23,007 25,858 24,418 Total assets less current liabilities 49,431 57,504 53,277 Creditors: amounts falling due after more than one year (13,663) (17,534) (16,518) Provisions for liabilities and charges (1,037) (747) (2,223) Net assets 34,731 39,223 34,536 Capital and reserves Called up share capital 3,593 3,593 3,593 Share premium 4,588 4,585 4,588 Revaluation reserve 1,017 1,017 1,017 Merger reserve - 391 - Profit and loss account 7 25,533 29,637 25,338 Equity shareholders' funds 8 34,731 39,223 34,536 -7- Trifast plc Summarised Consolidated Cash Flow Statement Unaudited interim results for the six months ended 30 September 2002 Six months Six months Year ended ended ended 30 September 30 September 31 March 2002 2001 2002 Note £'000 £'000 £'000 Net cash inflow from operating activities 9 3,706 3,512 8,926 Returns on investment and servicing of finance (279) (222) (624) Taxation paid (468) (1,232) (2,370) Capital expenditure and financial investment (371) (881) (1,163) Acquisitions and disposals (1,162) (8,077) (8,077) Equity dividends paid (862) (1,789) (2,221) Cash inflow/(outflow) before use of liquid resources and financing 564 (8,689) (5,529) Net cash (outflow)/inflow from financing 10 (1,843) 10,412 9,441 (Decrease)/increase in cash in the period 11 (1,279) 1,723 3,912 -8- Trifast plc Notes to the Interim Statement Unaudited interim results for the six months ended 30 September 2002 1. Basic of preparation This interim statement has been prepared on the basis of accounting policies set out in the Group financial statements for the year ended 31 March 2002. 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 2002 have been extracted from the full Annual Report and Accounts filed with the Registrar of Companies on which the Auditors gave an unqualified report. 2. Taxation The charge for tax is an estimate based on the anticipated effective rate of tax for the year ending 31 March 2003, adjusted for prior year items as shown below: Six months ended 2002 2001 £'000 £'000 Current tax on income for the period 412 59 Adjustments in respect of prior years 118 - 530 59 3. Dividends The directors have declared an interim dividend of 0.63 pence per ordinary share to be paid on 24 January 2003 to shareholders on the register on 6 December 2002. 4. Earnings per share The calculation of earnings per 5p ordinary share is based on profit on ordinary activities after goodwill amortisation and after taxation and the weighted average number of shares in the period of 71,868,150 (September 2001: 71,853,855: March 2002: 71,854,565). The calculation of the adjusted 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 anti-dilutive potential ordinary shares have been disregarded. The number of shares used in the calculation amount to 71,882,679 (September 2001: 71,943,120: March 2002: 72,004,731). The adjusted diluted earnings per share is presented so as to show more clearly the underlying performance of the group and is calculated as above using the profit on ordinary activities before goodwill amortisation and exceptional items but after tax. 5. Exceptional costs These costs relate to the final elements of the restructuring programme started during the year ended 31 March 2002. continued... -9- 6. Current assets Six months Six months Year ended ended ended 30 September 30 September 31 March 2002 2001 2002 £'000 £'000 £'000 Stocks 19,595 22,509 19,788 Debtors 22,550 23,004 22,851 Cash at bank and in hand 5,942 4,778 7,306 48,087 50,291 49,945 7. Profit and loss reserve Six months Six months Year ended ended ended 30 September 30 September 31 March 2002 2001 2002 £'000 £'000 £'000 Opening balance 25,338 29,795 29,795 Retained profit/(loss) for period 304 (333) (4,921) Exchange differences (109) (82) (184) Transfer from merger reserve - 335 726 Capitalisation of reserves on issue of shares to QUEST - (78) (78) 25,533 29,637 25,338 8. Reconciliation of movements in shareholders' funds Six months Six months Year ended ended ended 30 September 30 September 31 March 2002 2001 2002 £'000 £'000 £'000 Profit/(loss) for the financial period 757 98 (3,613) Dividends (453) (431) (1,308) Retained profit/(loss) for the period 304 (333) (4,921) Issue of ordinary shares - 118 121 Capitalisation of reserves on issue of shares to qualifying QUEST - (78) (78) Exchange losses (109) (82) (184) Net addition to shareholders' funds 195 (375) (5,062) Opening shareholders' funds 34,536 39,598 39,598 Closing shareholders' funds 34,731 39,223 34,536 continued... -10- 9. Net cash flow from operating activities Six months Six months Year ended ended ended 30 September 30 September 31 March 2002 2001 2002 £'000 £'000 £'000 Operating profit after goodwill amortisation 1,531 498 477 Loss on termination of operations - - (3,828) Depreciation charge 889 871 1,966 (Profit)/loss on sale of tangible fixed assets (4) 24 241 Goodwill amortisation 405 335 1,710 Decrease in working capital 885 1,784 8,360 3,706 3,512 8,926 10. Net cash flow from financing Six months Six months Year ended ended ended 30 September 30 September 31 March 2002 2001 2002 £'000 £'000 £'000 Issue of ordinary share capital - 40 43 (Decrease)/increase in debt (1,843) 10,372 9,398 (1,843) 10,412 9,441 continued... -11- 11. Reconciliation of net cash flow to movement in debt Six months Six months Year ended ended ended 30 September 30 September 31 March 2002 2001 2002 £'000 £'000 £'000 (Decrease)/increase in cash in the period (1,279) 1,723 3,912 Cash flow from decrease/(increase) in debt and lease financing 1,843 (10,372) (9,398) Change in net debt resulting from cash flows 564 (8,649) (5,486) Loans and finance leases acquired with subsidiaries - (99) (99) Translation difference (226) (126) 47 Movement in net debt in the period 338 (8,874) (5,538) Net debt at beginning of period (10,595) (5,057) (5,057) Net debt at end of the period (10,257) (13,931) (10,595) 12. This statement will be posted to shareholders shortly. Further copies will be available from the Company's Registered Office: Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, or via ceooffice@trifast.com. -12- 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 11 and we have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the Directors. The Directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority, which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where they are to be changed in the next annual accounts in which case any changes, and the reason for them, are to be disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/ 4: Review of interim financial information issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of Group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 September 2002. KPMG Audit Plc Chartered Accountants Crawley 25 November 2002 This information is provided by RNS The company news service from the London Stock Exchange

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