Interim Results

Trifast PLC 25 November 2003 Issued by Citigate Dewe Rogerson Ltd, Birmingham Date: Tuesday, 25 November 2003 Embargoed: 7.00am Trifast plc "Leading distributors and manufacturers of a comprehensive range of industrial fastenings" Six months to Six months to Year ended 30 September 30 September 31 March 2003 2003 2002 Turnover £50.297m £51.938m £103.631m Operating profit before goodwill £2.345m £2.202m £4.403m amortisation and exceptional items Operating profit £1.758m £1.531m £2.790m Profit before taxation, goodwill amortisation £2.193m £1.958m £3.951m and exceptional items Profit on ordinary activities before taxation £1.606m £1.287m £2.225m Earnings per share Adjusted diluted 2.13p 1.99p 3.94p Diluted 1.41p 1.05p 1.96p Basic 1.42p 1.05p 1.96p Dividend per share - Interim 0.66p 0.63p - - Full Year - - 1.90p "Our aim is to ensure that we continue to build our TR brand as the premier brand in Europe. "Over recent years businesses have seen a change in the way that markets operate and visibility has proved to be more challenging with these first half trading results certainly not reflecting an improvement in overall market conditions. The strong actions we have taken as a Company ensure that we remain both competitive and profitable as we move forward in this ever changing environment. "Although we expect global recovery to remain slow, we have implemented a number of initiatives which we believe will continue to assist the Group in improving its trading performance and we remain confident that we will be able to report a further improvement at the time of our year-end results." David Dugdale, Chairman 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)/07765 253895 (SL) 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 2003 Statement by the Chairman, David Dugdale Introduction The Group has continued to make good progress across all sectors and markets in which we operate. Our first half results reflect a creditable performance by all our operations. Although we have witnessed an on-going slowdown in our UK based business as have many others, our international growth has been very encouraging in particular in Asia where recovery has been steady. These results clearly reflect our continuing focus on building on our solid day-to-day transactional business whilst also further developing our relationships with both Original Equipment Manufacturers ("OEM's") and Contract Manufacturers as part of our global fastener management programme. With the major restructuring and reorganisation programme initiated in 2001 completed in this period, the business is benefiting from a leaner and more efficient operational structure which will allow us to further exploit the number of opportunities that exist across the key continents particularly in Mainland Europe and the Far East. Results Turnover for the six months ended 30 September 2003 was £50.3 million against £51.9 million in the comparable period, with Europe accounting for 82.5%, the Far East 13.4% and the Americas 4.1%. Operating profits in the period (pre-goodwill and exceptionals) were £2.35 million against £2.20 million in the first half of the previous year (post goodwill and exceptionals £1.76 million (2002: £1.53 million)) and the net interest charge was £152,000 which was covered 15 times by operating profits. Overall operating margins in the period remained constant. Adjusted diluted earnings per share (pre-goodwill and exceptionals) improved from 1.99 pence in 2002 to 2.13 pence, an increase of 7.0% (diluted 1.41p (2002: 1.05p)). In the first half, capital expenditure was £330,000 with depreciation at £700,000 (2002: £890,000). During the second half we have planned expenditure of around £500,000. Stocks in the first half are slightly up on the comparable period reflecting the up-turn in business towards the latter part of the period, although compared to the year end they have decreased from £20.4 million to £19.9 million. During the period, we generated positive cashflows from our trading activities which were used to pay interest, tax, dividend and make repayments on existing gross debt balances. Debtor management continues to be a priority and once again no significant bad debts were incurred in the period. Debtor days remain healthy at 68. Net debt at the end of the period stood at £10.8 million compared to £10.3 million at 30 September 2002 resulting in gearing of 30%. The Balance Sheet remains solid with shareholders' funds standing at £34.9 million (year ended March 2003: £34.5 million). continued... -3- Dividend In line with the Group's progressive dividend policy, we are pleased to announce a 5% increase in the interim dividend to 0.66 pence per ordinary share (2002: 0.63 pence) which will be paid on 21 January 2004 to shareholders on the Register as at 5 December 2003. Review I am pleased to report that all our businesses have been able to improve their position which has resulted in all operations trading more profitably during the six month period being reported. In Europe, as part of our marketing drive in particular within Central and Eastern Europe, we have reorganised and focused our Scottish hub, where we have considerable engineering and product knowledge to support the increased enquiries coming from this region through the new Global & European sales teams structure. The Continental European territory has seen an improvement in both sales and margins, in particular on branded and licensed products together with a number of new customers across the sectors being secured in the period under review. Both sales and manufacturing within the UK region have been clearly re-structured into accountable teams which are supported by a leaner, more defined operational management team which aims to achieve maximum efficiency. Part of the on-going improvement in this territory will be gained through further operational efficiencies and the implementation of specifically targeted marketing campaigns definitive to each sector. Our UK manufacturing business, Hank, experienced challenging conditions but recorded an improved performance over last year. This business now falls within our principal European operation and through its business intelligence it is now aligned to more accurately manufacturing our Group requirements which directly reflects what our customers are demanding. Within Hungary, where we have seen revenues double, albeit from a low level, we expect to increase our operational base in order to support the improving market opportunities that exist. In Scandinavia, we have already upgraded our facilities in order to support the growing local business and a new £1 million industrial contract has been secured in Poland which will start to generate profit towards the last quarter of this financial year. Our Dutch operations are currently pursuing a number of automotive opportunities within Germany. TR Asia produced a very creditable performance with sales up 10% year on year despite the SARS outbreak which impacted our first quarter's performance. Within our Asian territories, China was the best performing region with growth coming from the strong demand from our global telecom customers such as Motorola and Nokia whilst Singapore witnessed an improvement in its computer and related products sector which contributed to a stronger performance in this period. One area which proved to be disappointing was our direct business to the USA from Taiwan where, due to the slowdown in automotive manufacture, demand from distributors was slower than anticipated. Our American operation, working in partnership with TR Asia has improved its performance, clearly benefiting from its joint business focus to develop product approvals and partnerships with US based OEM's and Contract Manufacturers. We have recently appointed a new General Manager who will concentrate on acting as the key liaison between Asia and USA. continued... -4- As we continuously examine and research new ways to do business both successfully and profitably whilst expanding our market penetration, the Group has opened its e-business web-site (www.trifast.com). The site launched in September, contains data on thousands of standard and specialist fasteners as well as a comprehensive engineering knowledge base which we will continue to add to ensure that we operate one of the most comprehensive fastener websites. The site has already attracted much interest and the registrations to date are promising as they provide us not only with a new customer base but a database into which we can further market our products and services. Our aim is to ensure that we continue to build our TR brand as the premier brand in Europe. People As I indicated at the Annual General Meeting in September, I have decided, after ten years with the Group, that I shall retire at the end of December. I shall be handing over the helm to Anthony Allen who joined the Group at the beginning of 2003 as a Non-Executive Director. I would like to thank all the staff, directors and shareholders for their support over the time I have been with the Group and I would like to wish everyone continued success in the future. Following Anthony Allen's appointment as Chairman from January, it is our intention to seek the appointment of a further Independent Non-Executive Director to the Main Board. Prospects Over recent years, businesses have seen a change in the way that markets operate and visibility has proved to be more challenging with these first half trading results certainly not reflecting an improvement in overall market conditions. The strong actions we have taken as a Company ensure that we remain both competitive and profitable as we move forward in this ever changing environment. We believe that the declining UK manufacturing sector will continue to be very challenging for all businesses that support it. We have already seen a stabilisation and indeed an improvement in some areas of our business as we have strictly focused on 'real value and returns' and completed our exit from low margin business. This, together with the opportunities that exist for both new business and consolidation in the sector across Mainland Europe and Asia, offers exciting times ahead for businesses like ourselves. We now have in place an operationally efficient network supported by a more focused and leaner management team that provides support to both day to day transactional business and manage relationships with our global partners. Although we expect global recovery to remain slow, we have implemented a number of initiatives which we believe will continue to assist the Group in improving its trading performance and we remain confident that we will be able to report a further improvement at the time of our year-end results. -5- Consolidated Profit and Loss Account Unaudited interim results for the six months ended 30 September 2003 Note Six months Six months Year ended ended ended 30 September 30 September 31 March 2003 2002 2003 £'000 £'000 £'000 Turnover Existing operations 50,297 51,938 103,631 Cost of sales (38,185) (39,444) (78,018) ------------ ------------ ---------- Gross profit 12,112 12,494 25,613 Net operating expenses (9,767) (10,292) (21,210) (excluding exceptional costs and goodwill amortisation) ------------ ------------ ---------- Operating profit before goodwill 2,345 2,202 4,403 amortisation and exceptional items Exceptional costs (225) (266) (871) Goodwill amortisation (362) (405) (742) ------------ ------------ ---------- Operating profit 1,758 1,531 2,790 Loss on termination of operations - - (113) ------------ ------------ ---------- Profit on ordinary activities before interest 1,758 1,531 2,677 Net interest (152) (244) (452) ------------ ------------ ---------- Profit on ordinary activities before taxation 1,606 1,287 2,225 Taxation on profit on ordinary activities 2 (584) (530) (817) ------------ ------------ ---------- Profit on ordinary activities after taxation 1,022 757 1,408 Dividends 3 (474) (453) (1,365) ------------ ------------ ---------- Retained profit 8 548 304 43 ------------ ------------ ---------- Earnings per share 4 Basic 1.42p 1.05p 1.96p Diluted 1.41p 1.05p 1.96p Adjusted diluted 2.13p 1.99p 3.94p The results for the period were derived wholly from continuing operations. -6- Summarised Consolidated Balance Sheet Unaudited interim results as at 30 September 2003 Note 30 September 30 September 31 March 2003 2002 2003 £'000 £'000 £'000 Intangible fixed assets 12,078 12,959 12,638 Tangible fixed assets 12,565 13,465 13,197 ------------- ------------ ---------- 24,643 26,424 25,835 Current assets 6 46,008 48,087 47,698 Creditors: amounts falling due (24,388) (25,080) (25,521) within one year ------------- ------------ ---------- Net current assets 21,620 23,007 22,177 ------------- ------------ ---------- Total assets less current liabilities 46,263 49,431 48,012 Creditors: amounts falling due (10,577) (13,663) (12,327) after more than one year Provisions for liabilities and charges (749) (1,037) (1,193) ------------- ------------ ---------- Net assets 34,937 34,731 34,492 ============= ============ ========== Capital and reserves Called up share capital 3,593 3,593 3,593 Share premium 4,588 4,588 4,588 Revaluation reserve 1,017 1,017 1,017 Profit and loss account 7 25,739 25,533 25,294 ------------- ------------ ---------- Equity shareholders' funds 8 34,937 34,731 34,492 ============= ============ ========== -7- Summarised Consolidated Cash Flow Statement Unaudited interim results for the six months ended 30 September 2003 Note Six months Six months Year ended ended ended 30 September 30 September 31 March 2003 2002 2003 £'000 £'000 £'000 Net cash inflow from operating activities 9 1,799 3,706 5,035 Returns on investment and servicing of finance (196) (279) (472) Taxation paid (205) (468) (1,033) Capital expenditure and financial investment (218) (371) (762) Acquisitions and disposals (959) (1,162) (1,146) Equity dividends paid (913) (862) (1,314) ------------ ------------ ----------- Cash (outflow)/inflow before use of liquid (692) 564 308 resources and financing Net cash outflow from financing Net decrease in debt (618) (1,843) (3,180) ------------ ------------ ---------- Decrease in cash in the period 10 (1,310) (1,279) (2,872) ============ ============ ========== -8- Notes to the Interim Statement Unaudited interim results for the six months ended 30 September 2003 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 2003. 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 2003 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 2004, adjusted for prior year items as shown below: Six months ended Six months ended 30 September 2003 30 September 2002 £'000 £'000 Current tax on income for the period UK Tax 5 85 Foreign Tax 551 327 Adjustments in respect of prior years 28 118 ------------- ------------ 584 530 ============= ============ 3 Dividends The directors have declared an interim dividend of 0.66 pence per ordinary share to be paid on 21 January 2004 to shareholders on the register on 5 December 2003. 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 2002: 71,868,150; March 2003: 71,868,150). 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 72,485,104 (September 2002: 71,868,150; March 2003: 71,999,959). The adjusted fully diluted earnings per share is presented so as to show more clearly the underlying performance of the group and is calculated as above using the profit on ordinary activities before goodwill amortisation and exceptional items but after tax. 5 Exceptional Costs These costs relate to the additional redundancies of the restructuring program started during the year ended 31 March 2002. continued... -9- 6 Current assets 30 September 2003 30 September 2002 31 March 2003 £'000 £'000 £'000 Stocks 19,952 19,595 20,406 Debtors 22,439 22,550 23,040 Cash at bank and in hand 3,617 5,942 4,252 ------------- ------------ ----------- 46,008 48,087 47,698 ============= ============ =========== 7 Profit and loss reserve Six months ended Six months ended Year ended 30 September 2003 30 September 2002 31 March 2003 £'000 £'000 £'000 Opening balance 25,294 25,338 25,338 Retained profit for period 548 304 43 Exchange differences (103) (109) (87) ------------- ------------ ----------- Closing Balance 25,739 25,533 25,294 ============= ============ =========== 8 Reconciliation of movements in shareholders' funds Six months ended Six months ended Year ended 30 September 2003 30 September 2002 31 March 2003 £'000 £'000 £'000 Profit for the financial period 1,022 757 1,408 Dividends (474) (453) (1,365) ------------- ------------ ----------- Retained profit for the period 548 304 43 E xchange differences (103) (109) (87) ------------- ------------ ----------- Net addition to/(reduction in) shareholders' funds 445 195 (44) Opening shareholders' funds 34,492 34,536 34,536 ------------- ------------ ----------- Closing shareholders' funds 34,937 34,731 34,492 ============= ============ =========== 9 Net cash flow from operating activities Six months ended Six months ended Year ended 30 September 2003 30 September 2002 31 March 2003 £'000 £'000 £'000 Operating profit after goodwill amortisation 1,758 1,531 2,790 Loss on termination of operations - - (113) Depreciation charge 701 889 1,597 Loss/(profit) on sale of tangible fixed assets 17 (4) 22 Goodwill amortisation 362 405 742 (Increase)/decrease in working capital (1,039) 885 (3) ------------- ------------ ----------- 1,799 3,706 5,035 ============= ============ =========== continued... -10- 10 Reconciliation of net cash flow to movement in debt Six months Six months Year ended ended ended 30 September 30 September 31 March 2003 2002 2003 £'000 £'000 £'000 Decrease in cash in the period (1,310) (1,279) (2,872) Cash outflow from 618 1,843 3,180 decrease in debt and lease financing ------------- ------------ ----------- Change in net debt resulting from cash flows (692) 564 308 Translation difference 360 (226) (216) ------------- ------------ ----------- (Increase)/decrease in net debt in the period (332) 338 92 Net debt at beginning of period (10,503) (10,595) (10,595) ------------- ------------ ----------- Net debt at end of the period (10,835) (10,257) (10,503) ============= ============ =========== -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. This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Listing Rules of the Financial Services Authority. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or the conclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the directors. The Directors are responsible for preparing the interim report in accordance with the Listing Rules 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 2003. KPMG Audit plc Chartered Accountants Crawley 24 November 2003 This information is provided by RNS The company news service from the London Stock Exchange

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