Preliminary Results for the year ended 31 March 11

RNS Number : 5931H
Trifast PLC
01 June 2011
 



 

Issued by Citigate Dewe Rogerson Ltd, Birmingham


Wednesday, 1 June 2011

Embargoed: 7.00am

 

Preliminary Results for the year ended 31 March 2011

 

 

 

Continuing operations

H1

30 September

2010

H2

31 March

2011

Full Year

31 March

2011

Full year

31 March

2010

Revenue

£52.04m

£54.05m

£106.09m

£85.94m

Underlying EBITDA¹

£2.48m

£2.78m

£5.26m

£2.13m

Underlying pre-tax profit¹

£1.72m

£2.05m

£3.77m

£0.92m

Pre-tax profit/(loss)

£1.48m

£1.04m

£2.52m

(£2.81m)

Operating cash generation

(£0.14m)

(£0.91m)

(£1.05m)

£3.91m

Net Debt

£5.63m

£7.14m

£7.14m

£4.68m

¹ Underlying profit and EBITDA is calculated before intangible amortisation, IFRS 2 charges, restructuring costs.

 

Key points

o    Sales led focus yielding the desired outcome

o    Geographically:

o      Asia continued to grow and provides firm foundation

o      UK this year's star performer, £3m swing into profitability

o      US/Mainland Europe improved to break-even

o    Key metrics:

o      Gross Margin improved to 25.2% (2010: 24.4%)

o      EBITDA margin up to 5.0% (2010: 2.5%)

o      ROCE 8.7% (2010: 2.4%)

o    Firm foundations in place

o    TR Direct (Day to day UK Transactional sales)

o    Investment in 'Automotive Centre of Excellence' in Holland

o    Global sales strategy - increasing representation in China, India, USA and UK

o    Encouraging start to the new fiscal year

 

 

"Trifast has clearly enjoyed the best of the global recovery in customer demand "catch up" for re-stocking, which now allows our strategy to develop market share to come into its own. These plans embrace most of our individual business teams across the Group but with special focus in Asia, the UK and America, and we look forward to reporting our progress as we go through the year."

Malcolm Diamond, Chairman & Jim Barker, CEO

 

 

Enquiries:


Trifast plc

Citigate Dewe Rogerson

Malcolm Diamond MBE, Executive Chairman

Fiona Tooley, Director

Mobile: +44 (0)7979 518493 (MMD)

or +44 (0)20 7638 9571 (7.15am-1pm today)

Today: +44 (0)7785 703523 or

+44 (0)20 7638 9571 (today)

Jim Barker, Chief Executive

+44 (0)121 362 4035

Mobile: + (0)7769 934148


Mark Belton, Group Finance Director

Keith Gabriel, Senior Account Manager

Thereafter: Telephone: +44 (0)1825 747366

+44 (0)121 362 4035

Arden Partners plc


Richard Day or Adrian Trimmings


Tel: +44 (0)20 7614 5900


 

Editors Note:

LSE Ticker: TRI

Group website: www.trifast.com

Trifast's trading business TR Fastenings is a leading international manufacturer and distributor of industrial fastenings to the assembly industries, with operations in Europe, the Americas and Asia. For more information, please visit www.trfastenings.com.



JOINT STATEMENT BY MALCOLM DIAMOND, EXECUTIVE CHAIRMAN

AND JIM BARKER, CHIEF EXECUTIVE

 

"Now that Phase 2 of our three year recovery plan is well under way, we are focusing on identifying the strategic building blocks for our international expansion required in   Phase 3."

 

Introduction

March 2011 provided us with an important milestone by recording the highest monthly invoice revenue since early 2008, a good fillip to the end of the year.

 

We indicated in our Business Review last year, that having instigated a substantial and sustained programme of sales revenue recovery, we needed to then address the major margin and efficiency opportunities that could be gained from our pricing policy, and from reviewing and potentially refining our supply chain and vendor base. As this is such a major undertaking over a prolonged period, incorporating over 2,000 vendors, this element of our "Rebuild" strategy as stakeholders will appreciate will take more time to deliver the required results; however, we are confident that tangible margin and indirect cost improvements will become increasingly yielded in the new financial year ending March 2012.

 

Foreign exchange variations, freight and raw material cost inflation are the enemies of long-term contracts, consequently, we are determined to minimise our margin erosion risk on both current and anticipated contracts by ensuring that a reasonable element of cost contingency is factored into our pricing going forward.

 

Despite the on-going economic nervousness, we have accepted that the "Buyers' Market" syndrome has to be tamed with commercial reality, inasmuch that most industrial buyers have seen their best days of lowest price.

 

We are delighted to confirm that this year's improved performance enabled us to provide a modest cost of living increase to all our European staff from April 2011 onwards,  thus breaking what has been almost a three year pay freeze.

 

"..... and now it's about the Margin."

 

The year under review has clearly demonstrated the benefits of concentrating our efforts on driving up our top line sales performance. This is evidenced over the last year by the 23% Group uplift in revenue. Whilst TR Asia once again achieved solid and profitable growth, the star performer in the year was the UK.  Alongside this, revenue enhancement combined with stable overheads moved our Mainland European and USA operations over the year from loss making to break-even.

 

Looking forward, we can now afford to concentrate on quality of earnings by examining how we can mitigate inflation within our cost modelling and subsequent pricing policy, and by leveraging our enhanced purchasing power with a reduced number of key vendors.

 

The Board is monitoring progress on margin improvement initiatives on a monthly basis. Seamus Murphy (Operations Director) will also be reviewing Systems and Logistics process improvements, and Geoff Budd (Commercial Director) providing tactical support on the sourcing and pricing of high volume/high specification customised components. Glenda Roberts (Group Sales Director) is reviewing our pricing on longer term contracts whilst Roberto Bianchi, the Director responsible for leading our supply chain and vendor development initiative, now reports progress to the Board on a monthly basis.



In order to maximise commercial opportunities that arise on a daily basis, all incoming customer enquiries from Europe and the USA that exceed £5,000 in value are recorded via our professionally supervised 'Central Enquiry Portal'. From this point, these enquiries are subsequently assessed by individual members of the Senior Management Team in order to advise and give direction on technical, commercial and sourcing issues back to the relevant individual business teams prior to them committing to a quotation.

This approach has introduced a more commercially and technically consistent control on how quotations are managed amongst the 15 individual TR business teams spread across Europe and the USA, and reduces a major risk in errors that could be caused by decisions being made at too junior or inexperienced a level.

 

UK Transactional Sales to end users have continued their double digit growth at margins that contribute materially to the requirement to improve our targeted levels of EBITDA. As a result, we have invested heavily in broadening out our ex-stock availability from around 1,600 products to over 4,000, and in April 2011 re-branded this increasingly important business to TR Direct.

 

An outstanding performer this year has been our Lancaster Fastener subsidiary. Based in North-West England, through its extensive catalogue product range it services UK and overseas distributors on a next day-delivery basis. It is the long established success of Lancaster's business model, with its above average return on sales that has inspired us to develop TR Direct in order to provide next-day delivery to end users by closely managing predictable stock availability, along with high and consistent quality standards.

 

Our Branded Products team selling fasteners for sheet metal and plastics mainly to UK and European distributors has also, in a highly competitive sector, achieved double digit growth at above Group average Gross profit margin. A combination of effective marketing, dedicated Customer Service, technical support and the flexibility provided by our own manufacturing facilities in Singapore have sustained this division's dynamics.

 

The strategic and profit benefits of our Asian manufacturing units in Singapore, Malaysia, Taiwan and China continue to encourage us, and so motivate both the Board and our Asian Management team to seek additional opportunities for growth and capital investment. We are also broadening our geographic reach on distribution through having established a small team in India, direct representation via an office in Thailand, and representation in Vietnam during the year. Our distribution business in Shanghai is also receiving additional investment in sales personnel and automated inspection equipment in order to support and sustain our international and local domestic growth impetus.

 

Due to the highly specialised and technical demands of the Automotive sector, we established TR Holland, with its experienced team and geographic location, as our 'Automotive Centre of Excellence'. The benefits of this decision are expected to start feeding through during the coming financial year.

 

The improving performance of the Group has now released some sales resource from Europe to support our targeted revival of revenue from US multinationals headquartered in North America. Over the last two years, TR Fastenings Inc. has steadily been recovering momentum by growing Branded Products sales to distributors but in that time has lacked the specialist personnel to develop US based electronics manufacturers with whom much of the global sourcing decisions are made. This vital missing link is now being addressed under the direct supervision of our Group Sales Director with the aim of achieving sustainable and consistent monthly trading profitability over the next financial year.

 

During the year, we were pleased to recruit a part time HR consultant which has restored a professional focus on this key element of managerial responsibility. All divisional HR co-ordinators within the UK and Europe have been re-trained and a dedicated 'staff accessible IT system' has been installed and planned to 'go live' in Q1 year ending March 2012.



During the third quarter of the year under review all TR's European divisions received visits by the Chairman and CEO, where, over a dedicated day, presentations and tours enabled every member of staff to interact directly with them and often on a one-to-one basis. Our Marketing and HR colleagues prepared a detailed printed brochure that outlined the Group's Business Plan, our Mission and Ethical Culture along with a pen-portrait/job-profile and photo of each Board Director. Our total UK and European staff of over 500 each directly received a personal copy during each presentation. This has all been very well received and we intend that this 'personal tour' will be repeated every year from now on.

 

Banking and Finance

The strengthening Trifast sales and profit performance over the past eighteen months has transformed our banking relationships from initially challenging to positively co-operative, both in the UK and in Singapore.

 

As our growth continues, cash management will remain a key focus, and we are encouraged by the enthusiasm and support shown to us by our banking providers towards our on-going business plan, both commercially and our strategic objectives.

 

People

Once again, we humbly recognise the irrepressible commitment, hard work and enthusiasm of our entire management and staff teams across the Group.  Senior management endeavour to communicate openly and honestly at every opportunity with our people as to the status of past, present and anticipated performance, which we hope has contributed to the positive Company culture which we currently enjoy.

 

However, it is the basic moral fibre that exists within the majority of individuals who work for TR that has been at the core of our ability to begin recovering not only market positioning, but also our standing amongst our loyal shareholders.

 

The Directors are truly appreciative of the support they have received from their management and staff during the year, and look forward to making the future even more rewarding for all our stakeholders.

 

Current Trading

We continue to be encouraged by our daily sales run rate, which of course, is now targeted at a higher level than for the year we are currently reviewing.

 

We have seen only minor impact from the Japanese natural disasters, mainly caused by component shortages for consumer electronics; however, this has not materially constrained current sales, although our vigilance remains high with selected customers whom we feel may be at risk. Meanwhile, at the time of writing, our own sources of supply have not been affected.

 

Summary

Trifast has clearly enjoyed the best of the global recovery in customer demand "catch up" for re-stocking, which now allows our strategy to develop market share to come into its own. These plans embrace most of our individual business teams across the Group but with special focus in Asia, the UK and America, and we look forward to reporting our progress as we go through the year.

 

Meanwhile, the Board are impatient to fulfil their objectives to fully restore Trifast to an even more acceptable level of performance by late 2012 that we hope will satisfy the aspirations of the majority of our staff and investors.



 

FINANCE REVIEW BY MARK BELTON, GROUP FINANCE DIRECTOR

 

"What a difference a year makes; it has been a pleasure to watch the initiatives that we put in place during 2009 and 2010 bear fruit and enable growth to be achieved quicker than our initial expectations."

 

Results for the year

An Operational Business Review of the year is set out in the Joint Chairman's and CEO Statement on pages 2-4; however, the financial results for the year ended 31 March 2011 can be summarised as follows:

 

 

Continuing operations

H1

30 September

2010

H2

31 March

2011

Full Year

31 March

2011

Full year

31 March

2010

Revenue

£52.04m

£54.05m

£106.09m

£85.94m

Underlying EBITDA¹

£2.48m

£2.78m

£5.26m

£2.13m

Underlying pre-tax profit¹

£1.72m

£2.05m

£3.77m

£0.92m

Pre-tax profit/(loss)

£1.48m

£1.04m

£2.52m

(£2.81m)

Operating cash generation

(£0.14m)

(£0.91m)

(£1.05m)

£3.91m

Net Debt

£5.63m

£7.14m

£7.14m

£4.68m

¹ Underlying profit and EBITDA is calculated before intangible amortisation, IFRS 2 charges, restructuring costs.

 

The underlying profit figure is derived before separately disclosed items, which are explained in detail later in this report. The Board believes this profit figure provides a better understanding of the Group's performance.

 

Revenue

As the Board indicated in the Group's Trading update issued on 20 April 2011, the business has continued to experience buoyant trading conditions; this is evidenced with the last month of the financial year being reported, achieving record sales since the changes made to Management and TR structure in early 2009, finishing with the final quarter of 2011 showing a 10.0% increase on the previous quarter.

 

Compared to last financial year, revenue increased quicker than we anticipated by an impressive 23.4%.  Part of this increase was brought about by re-stocking from customers and returning back to underlying usages again as the economy improved, but part was also from 'New wins' secured by the rejuvenated TR sales force. During the recession years ended March 2009 and 2010, we did not cut back on the sales teams and this has now begun to pay off, particularly in the UK.

 

Group Revenue was £106.09 million and, our key regions can be analysed as follows:

 

 

 

Continuing operations

Full Year

31 March

2011

Full year

31 March

2010

% increase

Revenue




UK

£57.13m

£46.46m

23.0%

Asia

£27.45m

£21.45m

28.0%

Europe / USA

£21.51m

£18.03m

19.3%

Total

£106.09m

£85.94m

23.4%

 

Clearly, the greatest growth was seen in Asia, particularly in the first half of the year. This growth slowed down in the second half, as overstocking in H1 started to readdress itself in H2. Our Chinese distribution site in Shanghai has been very successful over the years in handling transfer business from the Rest of the Group; however, we recognise that we cannot rely solely on transfer business alone and support from the Global Sales team will be utilised to generate new business leads in the forthcoming year.



 

The UK represents the largest proportion of sales at 53.9% and continues to show solid growth as business wins secured previously have now started to feed through. Although our European and American growth is impressive, we recognise work still needs to be done on some sites to further improve these territories' overall profitability.

 

Whilst Revenue growth is important to the business, key to the Group's on-going and future success is the quality of earnings and margin enhancement, and we will continue to focus on these areas over the forthcoming years.

 

Adjusted pre-tax profit operating margins

After having taken into account the additional costs and negative impact of foreign exchange, freight and material cost increases, points we highlighted in our last Interim Management Statement in February, Group profit before tax (before separately disclosed items) for the year was £3.77 million (2010: £0.92 million).

 

The improved revenue clearly helped contribute to the turnaround, but vigilant control over the cost base ensured that the benefit of this improved revenue largely went straight to the bottom line.

 

Despite the impact of foreign exchange and higher input costs, Gross profit margins improved, from 24.4% in 2010 to 25.2% in 2011, and with initiatives that we have already started in the new financial year, we believe there is further scope to see these margins improve going forward. 

 

Overheads increased by £2.44 million compared to the previous year; of this increase, £0.92 million related to bonuses to reward staff, a key motivational move by the Board as many of our people had not, through the difficult times received a pay rise for almost three years. £0.64 million related to foreign exchange losses with the majority incurred in Asia, where the local currencies continued to strengthen against Sterling, the US Dollar and the Euro.

 

Despite the significant increase in revenue, average headcount in the year being reported rose by a modest 2.1%, to 886 from 868 in 2010.

 

The underlying operating result between the Regions can be analysed as follows:

 

 

Continuing operations

Full Year

31 March

2011

Full year

31 March

2010

Underlying operating result



UK

£2.46m

(£0.55m)

Asia

£3.20m

£2.76m

Europe / USA

(£0.05m)

(£0.34m)

Central costs

(£1.29m)

(£0.80m)

Total before financing costs

£4.32m

£1.07m

Net financing costs

(£0.55m)

(£0.15m)

Total after financing costs

£3.77m

£0.92m

 

By territory, TR Asia continued to experienced growth; a strong recovery within our UK operations resulted in a positive swing of £3.01 million year-on-year, whilst our European operations and our US business caused us no major problems, achieving a breakeven position by the end of the period. This outcome was reflected in the Regional underlying operating results shown above.

 

The Board continues to be vigilant and review areas where efficiencies can continue to be made; however, we are mindful that to achieve ongoing growth further investment will be required over the next few years.



 

Separately disclosed items

The following items are shown separately in the Income Statement and need to be taken into consideration to truly understand the underlying performance of the Group:

 

Restructuring costs

£0.80m

Intangible amortisation

£0.26m

IFRS 2 charge

£0.19m

Total

£1.25m

 

Restructuring costs

Of the £0.80 million restructuring costs, £0.63 million relates to costs in moving our Chinese manufacturing plant in Suzhou out from the 'Free Trade Zone' into the local premises of one our Strategic Alliance Partners. This will cut down overheads, whilst at the same time increasing our capacity to serve the local markets more efficiently. The remaining £0.17 million refers to 'Rightsizing' our portfolio of UK properties, in order to match the size of the properties with the needs of our on-going operations.

 

Interest and interest cover

The banking facilities were re-negotiated in February 2010, consequently incurring higher bank charges going forward. In addition, the increase in business understandably resulted in more working capital being required, which in turn raised net debt. The knock on effect of these factors increased net interest in the period to £0.55 million (2010: £0.15 million).

 

Net interest cover, (which is defined as EBITDA to net interest, before the one-off separately disclosed items) remains strong at 9.5 times (2010: 14.2).

 

Taxation

Taxation in the period amounted to £0.88 million; Effective Tax Rate (ETR) 34.9% (2010: tax credit of £0.62 million, ETR 22.1%); however, the Group's blended tax rate based on the geographical tax regimes was 20%. The majority of the difference between this rate and the ETR was potential 'Deferred tax assets' of £0.33 million that could not be recognised. Of this, the majority related to losses and the move costs of the Chinese manufacturing plant out of the 'Free Trade Zone' in Suzhou; excluding these costs the ETR would have been 26.8%.

 

At the end of the period, all of the current tax charge related to overseas operations.

 

Balance sheet and funding

At 31 March 2011, total Shareholder equity amounted to £42.85 million (2010: £40.18 million) an increase of 6.6% reflecting the Group's profitability during this period.

 

To support the growth in the business, net working capital increased by £5.44 million. Group stock levels in 2009/2010 financial year had been driven down to an optimum level but subsequently  increased in the year being reported by £4.98 million in order to, as previously stated, service the increase in new and existing business contract gains and the range of transactional stock referred to in the Operational Business Review. Despite this rise, it is reassuring that Gross stock weeks, based on a three-month rolling basis fell to 22.0 (2010: 23.0) indicating that we continue to maintain tight control over our stock purchases.

 

Year-end net debt was £7.14 million, which is higher than at March 2010 (£4.68 million), but this was in-line with expectations given the increase in working capital.

 

Gross debt at 31 March 2011 was £14.28 million (31 March 2010: £12.10 million) and Gearing remains low at 16.7% (2010: 11.7%).



 

In February 2010, the Group's banking facilities were re-negotiated in order to provide more security and flexibility. The Group's bridging loan of £2.00 million was fully repaid by October 2010 and in November 2010, the Group's outstanding term loan of £3.00 million which originally had a provisional repayment date of December 2010, was extended to December 2012. The Group continued to trade well within its banking covenants.

 

Group net cash balances at March 2011 were £7.14 million (2010: net cash £7.42 million), of which £6.26 million was held in foreign currencies (2010: £7.81 million). As a Group, our policy is, where possible, for each subsidiary to trade in and hold its local currency. Recently, this has become more and more difficult as customers particularly in Asia have insisted on being invoiced in Euro or US Dollars, and as shareholders will be aware, these non local currency balances have been subject to the strengthening of Asian currencies and resulted in high foreign exchange losses through the trading cycle. We do monitor exchange rates, and buy and sell currencies in order to minimise our open exposure to foreign exchange rates where possible; and will always consider further ways in which we can reduce our risk to currency exposures.

 

Cash flow

Cash generation remains a key objective of the Group. The Board is mindful of its duty to re-invest in the Group for future expansion and earnings growth, and in the period utilised an additional £1.05 million of cash to meet this criteria. 

 

Cash paid out during the year on the one-off separately disclosed items was £0.90 million, reflecting a true underlying use of cash of £0.15 million.

 

Debtor days remain strong at 77 (2010: 69) and bad debts in the period remain low at £0.07 million (2010: £0.07 million).

 

Capital expenditure in the year was £0.30 million (2010: £0.22 million). As we informed shareholders in November 2010, due to increasing manufacturing demand and visibility in the Asia territory, the Board authorised the restoration of capital expenditure in this region. The Group continues to be prudent with cash but will invest as necessary, remaining mindful of ROCE which at March 2011 was 8.7% (March 2010: 2.4%).

 

Earnings per Share

The adjusted diluted Earnings per Share (EPS) which in the Directors' opinion best reflects the underlying performance of the Group, has increased significantly from 0.07p in 2010 to 3.03p in 2011 demonstrating the Group's positive earnings momentum.

 

Dividend

Since the Management change in 2009 when the share price stood at 8.5p, the Directors have concentrated on investing in the Group to achieve capital growth. Although no dividend is being proposed in respect of the year ended March 2011, it is now the Boards' desire to address dividend yield during the current fiscal year having delivered nearly a six-fold increase in the share price since the Management change.

 


 

Consolidated income statement

for year ended 31 March 2011

 


Note

2011

2010



£000

£000

Continuing operations








Revenue

3

106,089

85,935

Cost of sales


(79,368)

(64,927)

Gross profit


26,721

21,008

Other operating income before separately disclosed items


207

218

Sale of associate

2

-

332

Total other operating income


207

550

Distribution expenses


(1,941)

(2,146)





Administrative expenses before separately disclosed items


(20,660)

(18,015)

IFRS2 (charge)/credit

2

(189)

143

Intangible amortisation

2

(261)

(261)

Restructuring costs

2

(801)

(3,420)





Total administrative expenses


(21,911)

(21,553)

Operating profit/(loss)

4

3,076

(2,141)





Financial income


27

96

Financial expenses before separately disclosed items


(581)

(246)

Expense of changing banking facilities

2

-

(517)

Total financial expenses


(581)

(763)

Net financing costs


(554)

(667)

Profit/(loss) before tax

2, 3

2,522

(2,808)

Taxation

5

(879)

621

Profit/(loss) for the period

(attributable to equity shareholders of the Parent Company)


 

1,643

 

(2,187)

Profit/(loss) per share (total)




Basic

10

1.93p

(2.57p)

Diluted

10

1.83p

(2.57p)



 

Statements of comprehensive income

for year ended 31 March 2011

 


Group

Company


2011  

2010  

2011  

2010


£000

£000

£000

£000

 

Profit/(loss) for the year

1,643

(2,187)

6,932

4,530






Other comprehensive income:





Foreign currency translation differences

832

42

-

-

Net (loss) on hedge of net investment in foreign subsidiary

-

(1)

-

-

 

Other comprehensive income recognised directly in equity net of income tax

 

832

 

41

 

-

 

-

 

Total comprehensive income/(expense) recognised for the year

(attributable to the equity shareholders of the Parent Company)

 

2,475

 

(2,146)

 

6,932

 

4,530

 

 

Consolidated statement of changes in equity

for year ended 31 March 2011

 


Share

Capital

Share

Premium

Translation

Reserve

Retained

Earnings

Total

Equity


£000

£000

£000

£000

£000

 

Balance at 1 April 2010

4,262

12,167

8,999

14,753

40,181







Total comprehensive income for the year:






Profit for the year

-

-

-

1,643

1,643

Other comprehensive income:






Foreign currency translation differences

-

-

832

-

832







Total other comprehensive income

-

-

832

-

832







Total comprehensive income recognised for the year

-

-

832

1,643

2,475

 

 

 

Transactions with owners, recorded directly in equity












Share based payment transactions

-

-

-

189

189

Total transactions with owners

-

-

-

189

189







Balance at 31 March 2011

4,262

12,167

9,831

16,585

42,845



 

Consolidated statement of changes in equity

for year ended 31 March 2010

 


Share

Capital

Share

Premium

Translation

Reserve

Retained

Earnings

Total

Equity


£000

£000

£000

£000

£000

 

Balance at 1 April 2009

4,262

12,167

8,958

17,083

42,470







Total comprehensive income for the year:






Loss for the year

-

-

-

(2,187)

(2,187)

Other comprehensive income:






Foreign currency translation differences

-

-

42

-

42

Net loss on hedge of net investment in foreign subsidiary

-

-

(1)

-

(1)







Total other comprehensive income

-

-

41

-

41

 

Total comprehensive income/(expense) recognised for the year

 

-

 

-

 

41

 

(2,187)

 

(2,146)

 

 

 

Transactions with owners, recorded directly in equity






 

Share based payment transactions

 

-

 

-

 

-

 

(143)

 

(143)

Total transactions with owners

-

-

-

(143)

(143)

 

Balance at 31 March 2010

 

4,262

 

12,167

 

8,999

 

14,753

 

40,181

 

 

Company statement of changes in equity

for year ended 31 March 2011

 


Share

Capital

Share

Premium

Merger

Reserve

Retained

Earnings

Total

Equity


£000

£000

£000

£000

£000

 

Balance at 1 April 2010

4,262

12,167

1,521

(2,589)

15,361







Total comprehensive income for the year:






Profit for the year¹

-

-

-

6,932

6,932

Other comprehensive income:






Foreign currency translation differences

-

-

-

-

-

Net gain/(loss) on hedge of net investment in foreign subsidiary

-

-

-

-

-







Total other comprehensive income

-

-

-

-

-

 

Total comprehensive income recognised for the year

 

-

 

-

 

-

 

6,932

 

6,932

 

 

 

Transactions with owners, recorded directly in equity






Share based payment transactions

-

-

-

189

189

Total transactions with owners

-

-

-

189

189

 

Balance at 31 March 2011

 

4,262

 

12,167

 

1,521

 

4,532

 

22,482

 

¹ Profit for the year includes £6.2 million of an investment impairment reversal.



 

Company statement of changes in equity

for year ended 31 March 2010

 


Share

Capital

Share

Premium

Merger

Reserve

Retained

Earnings

Total

Equity


£000

£000

£000

£000

£000

 

Balance at 1 April 2009

4,262

12,167

1,521

(6,976)

10,974







Total comprehensive income for the year:






Profit for the year

-

-

-

4,530

4,530

Other comprehensive income:






Foreign currency translation differences

-

-

-

-

-

Net gain/(loss) on hedge of net investment in foreign subsidiary

-

-

-

-

-







Total other comprehensive income

-

-

-

-

-







Total comprehensive income recognised for the year

-

-

-

4,530

4,530

 

 

 

Transactions with owners, recorded directly in equity












Share based payment transactions

-

-

-

(143)

(143)

Total transactions with owners

-

-

-

(143)

(143)







Balance at 31 March 2010

4,262

12,167

1,521

(2,589)

15,361



 

Statements of financial position

at 31 March 2011

 


Note

Group

Company



2011 

2010

2011

2010



£000

£000

£000

£000

Non-current assets






Property, plant and equipment


7,078

7,740

2,566

2,624

Intangible assets


16,540

16,358

-

-

Equity investments


-

-

28,074

21,874

Deferred tax assets


1,980

2,046

240

-

 

Total non-current assets


 

25,598

 

26,144

 

30,880

 

24,498

 

Current assets






Stocks

6

25,116

20,141

-

-

Trade and other receivables


24,828

20,458

858

1,397

Cash and cash equivalents

7

7,142

7,420

373

2,176

 

Total current assets


 

57,086

 

48,019

 

1,231

 

3,573

 

Total assets

 

3

 

82,684

 

74,163

 

32,111

 

28,071

 

Current liabilities






Bank overdraft

7

2

-

4,064

6,524

Other interest-bearing loans and borrowings

8

13,283

12,103

1,333

4,877

Trade and other payables


20,625

16,701

3,232

1,215

Tax payable


1,054

847

-

-

Provisions


615

841

-

-

 

Total current liabilities


 

35,579

 

30,492

 

8,629

 

12,616

 

Non-current liabilities






Other interest-bearing loans and borrowings

8

1,000

-

1,000

-

Provisions


2,916

3,144

-

-

Deferred tax liabilities


344

346

-

94

 

Total non-current liabilities


 

4,260

 

3,490

 

1,000

 

94

 

Total liabilities

 

3

 

39,839

 

33,982

 

9,629

 

12,710

 

Net assets


 

42,845

 

40,181

 

22,482

 

15,361

 

Equity






Share capital


4,262

4,262

4,262

4,262

Share premium


12,167

12,167

12,167

12,167

Reserves


9,831

8,999

1,521

1,521

Retained earnings


16,585

14,753

4,532

(2,589)

 

Total equity


 

42,845

 

40,181

 

22,482

 

15,361



 

Statements of cash flows

for year ended 31 March 2011

 


Note

Group

Company



2011 

2010

2011

2010



£000

£000

£000

£000

Cash flows from operating activities






Profit/(loss) for the year


1,643

(2,187)

6,932

4,530

Adjustments for:






Depreciation, amortisation and impairment


1,346

1,329

57

87

Financial income


(27)

(96)

(1)

(2)

Financial expense


581

763

156

520

(Gain)/loss on sale of property, plant and equipment

 and investments


 

(7)

 

10

 

-

 

-

Dividends received


-

-

(1,972)

(5,289)

Investment impairment reversal


-

-

(6,200)

-

Equity settled share-based payment charge/(credit)


189

(143)

155

(105)

Gain on sale of associate


-

(332)

-

(332)

Taxation


879

(621)

(335)

(212)



             

             

             

             

Operating cash inflow/(outflow) before changes

 in working capital and provisions


 

4,604

 

(1,277)

 

(1,208)

 

(803)

Change in trade and other receivables


(4,068)

(1,983)

573

242

Change in stocks


(4,683)

3,748

-

-

Change in trade and other payables


4,165

1,599

2,019

113

Change in provisions


(1,069)

1,821

-

(667)



             

             

             

             

Cash (used)/generated from operations


(1,051)

3,908

1,384

(1,115)

Tax (paid)/recovered


(630)

119

-

-

Net cash (used)/from operating activities


(1,681)

4,027

1,384

(1,115)



             

             

             

             

Cash flows from investing activities






Proceeds from sale of property, plant and equipment


7

13

-

-

Interest received


27

97

1

3

Proceeds from sale of associate


-

332

-

332

Acquisition of property, plant and equipment


(298)

(220)

-

-

Dividends received


-

-

1,972

5,289

Net cash (used)/from investing activities


(264)

222

1,973

5,624

Cash flows from financing activities






Proceeds from new loan

8

4,724

12,103

-

4,877

Repayment of long term borrowings

8

(2,544)

(14,818)

(2,544)

(11,581)

Interest paid


(581)

(620)

(156)

(444)

Net cash from financing activities


1,599

(3,335)

(2,700)

(7,148)




             

             

             

Net change in cash and cash equivalents


(346)

914

657

(2,639)

Cash and cash equivalents at 1 April

7

7,420

6,422

(4,348)

(1,709)

Effect of exchange rate fluctuations on cash held


66

84

-

-

Cash and cash equivalents at 31 March

7

7,140

7,420

(3,691)

(4,348)


 

Notes

1          Basis of preparation

The financial statements areprepared in Sterling, rounded to the nearest thousand.  They are prepared on the historical cost basis with the exception of certain items which are measured at fair value as disclosed in the Report & Accounts.

 

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an on-going basis.  Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects current and future periods.

 

Judgements made by management in the application of IFRS that have significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed in the Report & Accounts.

 

A Review of the business activity and future prospects of the Group are covered in the Chairman's and CEO's Statement and the Directors' Business Review. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Finance Review.  Detailed information regarding the Group's current facility levels, liquidity risk and maturity dates are provided in the Report & Accounts.

 

Current trading and forecasts show that the Group will continue to be profitable and generate cash. The banking facilities and covenants that are in place provide appropriate headroom against our forecasts.

 

The repayment schedule of the Group term loan was extended in November 2010 and now requires the total loan to be repaid by 31 December 2012. The asset backed lending facility (max £14.20 million) has a three year term which ends February 2013. Current forecasts show that the Group has sufficient liquidity and headroom to continue to operate within these facilities.

 

Considering the current forecasts, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.



 

2        Underlying profit and separately disclosed items



2011

£000

2010

£000

 

Underlying profit before tax


3,773

915

 

Separately disclosed items within other operating income:




Sale of associate


-

332

 

Separately disclosed items within administrative expenses




Restructuring costs


(801)

(3,420)

Intangible amortisation


(261)

(261)

IFRS 2 share-based payment (charge)/credit


(189)

143

 

Separately disclosed items within financial expenses:




Expense of changing banking facilities


-

(517)

 

Profit/(loss) from continuing operations before tax


 

2,522

 

(2,808)

 

The 2011 restructuring costs of £0.80 million include £0.63 million in relation to moving our Chinese manufacturing plant in Suzhou out from the 'Free Trade Zone' into the local premises of one of our Strategic Alliance Partners.

 

The remaining £0.17 million refers to 'Rightsizing' our portfolio of properties within the UK.

 

3          Operating segmental analysis

Segment information, as discussed above, is presented in the consolidated financial statements in respect of the Group's geographical segments.  This reflects the Group's management and internal reporting structure, and the operating basis on which individual operations are reviewed by the Chief Operating Decision Maker (the Board).

 

Performance is measured based on segment underlying profit before finance costs and income tax as included in the internal management reports that are reviewed by the Chief Operating Decision Maker. This is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within the industry.

 

Inter-segment pricing is determined on an arm's length basis.

 

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. 

 

Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one period.

 

Geographical operating segments

The Group is comprised of the following main geographical operating segments:

 

UK

 


Mainland Europe / USA:

includes Norway, Sweden, Hungary, Southern Ireland, Holland, Poland, USA and Mexico

 

Asia:

includes Malaysia, China, Singapore and Taiwan



 

In presenting information on the basis of geographical operating segments, segment revenue and segment assets are based on the geographical location of our entities across the world, and are consolidated into the three distinct geographical regions, which the Board use to monitor and assess the Group.

 

 

March 2011

UK

Mainland

Europe/

USA

Asia

Common

Costs

Total


£000

£000

£000

£000

£000

 

Revenue






Revenue from external customers

57,125

21,509

27,455

-

106,089

Inter segment revenue

1,809

366

3,989

-

6,164

 

Total revenue

 

58,934

 

21,875

 

31,444

 

-

 

Operating result before separately

 disclosed items and financing costs

 

 

2,462

 

 

(50)

 

 

3,204

 

 

(1,289)

 

 

4,327

 

Net financing costs

 

(414)

 

4

 

11

 

(155)

 

(554)

 

Segment result before separately

 disclosed items

 

 

2,048

 

 

(46)

 

 

3,215

 

 

(1,444)

 

 

3,773

 

Separately disclosed items (see note 2)





 

(1,251)

 

Profit before tax





 

Specific disclosure items






Depreciation and amortisation

260

65

555

318

1,198

 

Assets and liabilities






Segment assets

34,693

10,256

31,497

6,238

82,684

Segment liabilities

(27,817)

(3,490)

(4,966)

(3,566)

(39,839)

 

 

 

 

 

March 2010

UK

Mainland

Europe/

USA

Asia

Common

Costs

Total


£000

£000

£000

£000

£000

 

Revenue






Revenue from external customers

46,464

18,027

21,444

-

85,935

Inter segment revenue

1,154

271

2,596

-

4,021

 

Total revenue

 

47,618

 

18,298

 

24,040

 

-

 

89,956

 

Operating result before separately

 disclosed items

 

 

(548)

 

 

(343)

 

 

2,759

 

 

(803)

 

 

1,065

 

Net financing costs

 

(42)

 

2

 

28

 

(138)

 

(150)

 

Segment result before separately

 disclosed items

 

 

(590)

 

 

(341)

 

 

2,787

 

 

(941)

 

 

915

 

Separately disclosed items (see note 2)





 

(3,723)

 

Loss before tax





 

(2,808)

 

Specific disclosure items






Depreciation and amortisation

318

49

615

347

1,329

 

Assets and liabilities






Segment assets

27,799

8,608

29,249

8,507

74,163

Segment liabilities

(21,351)

(2,031)

(4,356)

(6,244)

(33,982)

 

There were no major customers that represent more than 10% of the revenue.



 

There was no material difference in the UK, Europe Mainland and USA regions between the external revenue based on location of the entities and the location of the customers. Of the Asian external revenue, £2.53 million (2010: £2.01 million) was sold into the American market and £5.96 million (2010: £4.68 million) sold into the European market.

 

Revenue is derived solely from the manufacture and logistical supply of industrial fasteners and category 'C' components.

 

4          Expenses and auditors' remuneration

Included in profit / (loss) for the year are the following:


2011

2010


£000

£000




Depreciation

937

1,068

Amortisation of acquired intangibles

261

261

Forex loss

642

524

 

Auditors' remuneration:


2011

2010


£000

£000




Audit of these financial statements

38

34

Audit of financial statements of subsidiaries pursuant to legislation

142

139

Other services relating to taxation

26

53

Other services supplied pursuant to such legislation

12

12

 

5          Taxation

Recognised in the income statement

2011

2010


£000

£000

Current UK tax expense:



Current year

-

-

Double taxation relief

-

-


-

-

Current tax on foreign income for the year

968

790

Adjustments for prior years

(146)

(76)


822

714

 

 

Total current tax

 

 

822

 

 

714

 

Deferred tax expense



Origination and reversal of temporary differences

(114)

(1,254)

Adjustments for prior years

171

(81)


57

(1,335)

Tax in income statement from continuing operations

879

(621)



 

Reconciliation of effective tax rate ("ETR") and tax expense


2011

ETR

2010

ETR


£000

%

£000

%






Profit/(Loss) for the period

1,643


(2,187)


Tax from continuing operations

879


(621)


Profit/(Loss) before tax

2,522


(2,808)


 

Tax using the UK corporation tax rate of 28% (2010: 28%)

706

28

(786)

28

Tax suffered on dividends

118

5

94

(3)

Non-deductible expenses

109

4

168

(6)

IFRS2 share option (credit)

(224)

(9)

(7)

-

Sale of associate

-

-

(93)

3

Deferred tax assets not recognised

328

13

343

(12)

Different tax rates on overseas earnings

(213)

(8)

(183)

6

Adjustments in respect of prior years

32

1

(157)

6

Tax rate change

23

1

-

-




             

             

Total tax in income statement

879

35

(621)

22

 

On 23 March 2011 the Chancellor announced a reduction in the main rate of UK corporation tax to 26 per cent with effect from 1 April 2011. This change became substantively enacted on 29 March 2011 and therefore the effect of the rate reduction on the deferred tax balances as at 31 March 2011 has been included in the figures above.

 

The Chancellor also proposed changes to further reduce the main rate of corporation tax by one per cent per annum to 23 per cent by 1 April 2014, but these changes have not yet been substantively enacted and therefore are not included in the figures above.

 

6          Stocks


Group


2011

2010


£000

£000




Raw materials and consumables

1,907

1,625

Work in progress

702

749

Finished goods and goods for resale

22,507

17,767


25,116

20,141

 

7          Cash and cash equivalents/bank overdrafts


Group

Company


2011

2010

2011

2010


£000

£000

£000

£000






Cash and cash equivalents per balance sheet

7,142

7,420

373

    2,176

Bank overdrafts per balance sheet

(2)

-

(4,064)

(6,524)

Cash and cash equivalents per cash flow statements

7,140

7,420

(3,691)

(4,348)



 

8          Other interest-bearing loans and borrowings

This note provides information about the contractual terms of the Group and Company's interest-bearing loans and borrowings. For more information about the Company's exposure to interest rate and foreign currency risk, refer to the Group's Report & Accounts.

 




Current

Non-Current

Initial Loan Value Company

Rate

Maturity

2011

2010

2011

2010




£000

£000

£000

£000

 

Bridging loan £2.00m

Base +4.00%

2010

-

1,210

-

-

Term loan £4.00m

Libor +3.75%

2012

1,333

3,667

1,000

-




1,333

4,877

1,000

-

Other Group







Asset based lending £14.20m

(Maximum)

Base(+2.25%

to 2.75%)

2013

11,950

7,226

-

-




11,950

7,226

-

-

Total Group



13,283

12,103

1,000

-

 

The Company's bridging and term loans are secured by corporate guarantees and debentures over the Group's UK, Singapore and Swedish entities.

 

The asset based lending facility is secured over the receivables and stock of the Group's UK companies and the property of the Company. The amount available is dependant on the receivables and stock levels. Due to the revolving nature of this facility, it is shown as current on the Statement of financial position. However, the facility agreement runs until February 2013.

 

9          Capital and reserves

Capital and reserves - Group and Company

Refer to the Statements of Changes in Equity shown earlier.

 

The translation reserve comprises all foreign exchange differences arising from the translation of foreign operations, as well as from the translation of liabilities that hedge the Company's net investment in foreign subsidiaries.

 

The merger reserve has arisen under Section 612 Companies Act 2006 and is a non-distributable reserve.

 

Share capital



2011

2010

 

In issue at 1 April

85,246,086

85,246,086

Shares issued

-

-

In issue at 31 March - fully paid

85,246,086

85,246,086

 


2011

2010


£000

£000

Authorised



Ordinary shares of 5p each

10,000

10,000

Allotted, called up and fully paid



Ordinary shares of 5p each

4,262

4,262

 

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.



 

Dividends

During the year the following dividends were declared and paid by the Group:


2011

2010


£000

£000




Final paid 2010 - nil p (2009: nil p) per qualifying ordinary share

-

-

Interim paid 2011 - nil p (2010: nil p) per qualifying ordinary share

-

-


-

-

 

After the balance sheet date no final dividend per qualifying ordinary share was proposed by the Directors (2010: nil p).

 


2011

£000

2010

£000

Final proposed 2011 - nil p, (2010: nil p) per qualifying

 ordinary share

 

-

 

-

 

10        Earnings per share

Basic earnings per share

 

The calculation of basic earnings per share at 31 March 2011 was based on the profit attributable to ordinary shareholders of £1.64 million (2010: loss of £2.19 million) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2011 of 85,246,086 (2010: 85,246,086), calculated as follows:

 

Weighted average number of ordinary shares


2011

2010




Issued ordinary shares at 1 April

85,246,086

85,246,086

Effect of shares issued

-

-

Weighted average number of ordinary shares at 31 March

85,246,086

85,246,086

 

Diluted earnings per share

The calculation of diluted earnings per share at 31 March 2011 was based on profit attributable to ordinary shareholders of £1.64 million (2010: loss of £2.19 million) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2011 of 89,727,953 (2010: 86,262,349), calculated as follows:

 

Weighted average number of ordinary shares (diluted)


2011

2010




Weighted average number of ordinary shares at 31 March

85,246,086

85,246,086

Effect of share options on issue

4,481,867

1,016,263

Weighted average number of ordinary shares (diluted) at 31 March

89,727,953

86,262,349



The average market value of the Company's shares for the purposes of calculating the dilutive effect of share options was based on quoted market prices for the period that the options were outstanding.

 

 

 

EPS (Total)


2011

EPS


2010

EPS


Earnings

£000

Basic

Diluted

Earnings

£000

Basic

and

Diluted ¹

Adjusted

Diluted ²








Profit/(loss) for the financial year

1,643

1.93p

1.83p

(2,187)

(2.57p)

(2.54p)

Separately disclosed items:







Intangible amortisation

261

0.31p

0.29p

261

0.31p

0.30p

Sale of associate

-

-

-

(332)

(0.39p)

(0.38p)

Restructuring costs

801

0.94p

0.89p

3,420

4.01p

3.97p

IFRS 2 Share option

189

0.22p

0.21p

(143)

(0.17p)

(0.17p)

Tax charge on adjusted items

(174)

(0.20p)

(0.19p)

(958)

(1.12p)

(1.11p)

Adjusted

2,720

3.20p

3.03p

61

0.07p

0.07p

 

The 'Adjusted diluted' earnings per share is detailed in the above tables.  In the Directors' opinion, this best reflects the underlying performance of the Group and assists in the comparison with the results of earlier years (see note 2).

 

¹ The diluted loss per share in 2010 is equal to the basic loss per share of (2.57p) as IFRS does not allow loss per share to be reduced by the effect of share options in issue.

 

² However, the adjusted earnings per share in 2010 does need to reflect the dilutive effect of these share options and is therefore reconciled to non-adjusted loss per share in the tables above.

 

11      The financial information in this announcement which was approved by the Board of Directors does not constitute the Company's statutory accounts for the years ended 31 March 2010 or 2011 but is derived from those accounts. Statutory accounts for 2010 have been delivered to the Registrar of Companies and those for 2011 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 s498(2) or (3) Companies Act 2006.

 

This Preliminary announcement has been prepared in accordance with the accounting policies adopted under IFRS.

 

12      This Statement is not being posted to shareholders.  The Report & Accounts for the year ended 31 March 2011, together with the Notice of Meeting will be posted to shareholders in due course.  Further copies will be available on request from, The Company Secretary, Trifast plc, Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, or on-line www.trifast.com.

 

 

 

 

 

 

 

Forward-Looking Statements

This document contains certain forward-looking statements.  The forward-looking statements reflect the knowledge and information available to the Company during the preparation and up to the publication of this document.  By their very nature, these statements depend upon circumstances and relate to events that may occur in the future thereby involving a degree of uncertainty.  Therefore, nothing in this document should be construed as a profit forecast by the Company.


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