Interim Results - Pre-tax Profit Up 11%
Trifast PLC
23 November 1999
Leading distributors and manufacturers of a comprehensive
range of industrial fastenings predominantly in the electrical
and electronics sector
Trifast reports a further strong uplift in its half-year
performance
Turnover £54m + 24%
14% organic growth
Operating profit - pre-goodwill £5.43m + 14%
Pre-tax profit up to £5.11m + 11%
Earnings per share - adjusted fully diluted 20.73p +12%
Interim dividend increased +10% to 4.57p
Strong cash generation in the first half
Alliance established in Hungary
New intranet based marketing tool launched to drive
international sales
Major new logistics projects
'The buoyant start to the year that we reported in June has
continued with Asia, Scandinavia, USA and UK performing well.
Business in the UK and internationally continues to offer a
number of exciting opportunities afforded by both the rapidly
changing marketplace and our belief in our own strengths and
capabilities to not only respond to these changes but to also
anticipate them.
We continue to look forward with confidence for this financial
year and beyond.'
Malcolm Diamond, Chief Executive
FULL STATEMENT ATTACHED
Web-site: http//www.trifast.com
e-mail: ceooffice@trifast.com
Enquiries:
Malcolm Diamond, Chief Executive
John Wilson, Group Finance Director Tel: 0171-638-9571
(8.00am - 12.30pm)
Trifast plc 0171-621-0011
(12.45pm - 2.30pm)
Mobile: 07979 518493
Thereafter: 01825-747487
Fiona Tooley
Citigate Dewe Rogerson Tel: 0171-638-9571/0121-631-2299
Mobile:0385-703523
Trifast plc
Interim Results for the six months ended 30th September 1999
Joint Statement by the Chairman, David Dugdale and
Chief Executive, Malcolm Diamond
Results
We are pleased to be able to report on another strong first
half performance by the Group, despite the continuing
difficult and challenging markets affecting some of our
customers.
Turnover for the six months to 30th September increased by 24%
from £43.7million to £54.0million of which 14% was organic
growth.
The Group's pre-tax profit for the period was £5.11million
(1998: £4.62m), an increase of 11%. Operating profits before
goodwill amortisation were £5.43million (1998: £4.76m) which
was an increase of 14%. Fully diluted earnings per share,
adjusted for goodwill, improved by 12% to 20.73 pence (1998:
18.48p).
Group overheads, expressed as a percentage of sales, have
increased during the period due to one-off costs of re-
structuring, re-location to new facilities, the new
Scandinavian logistics contract and acquisitions research,
which on one project involved extensive due diligence. Also, a
book loss on the sale of our old Singapore factory was
absorbed.
We have continued to invest heavily in our operations with
around £1.8million of capital expenditure in the first half
and a further £1.7million planned for the remainder of the
year. Strong cash generation and effective stock and debtor
control leave the balance sheet in a strong position going
forward. Gearing at the end of the period was 7% (1998: 22%).
Bad debts were minimal at 0.035% of revenue.
An interim dividend of 4.57 pence (1998: 4.17p), an increase
of 10%, will be paid on 12th January 2000 to shareholders on
the Register as at 10th December 1999.
Review
The buoyant start to the year that we reported in June has
continued with Asia, Scandinavia, USA and UK performing well.
Southern Ireland and Holland were constrained by several key
customers delaying the adoption of new logistics contracts
until early 2000. However, as these businesses are largely
embryonic, the effect on the Group has been minimal and we
expect these operations will make contributions next year.
We continue to roll out our international expansion programme.
During the period, we expanded our activities by acquiring FCF
International AB for £3.48million in Sweden which
significantly strengthened our Scandinavian presence and
market positioning. FCF is a strong business with good
management bringing access to new market sectors which, as a
team, we are exploiting. An example of this was the
successful securing of a £2 million pa fastener management
contract with Lear Seating which becomes operational in the
second half. FCF's reported profit for the period has been
impacted by our investment in setting up logistics for this
contract and the implementation of a new computer system.
Lancaster Fasteners acquired in July 1998, as we anticipated,
has expanded its European mainland sales, and is also now
working closely with our Dutch subsidiary, Miller Holdings as
a distribution and stockholding satellite for the Continent.
In July we completed the trade sale of our non-core steel
stockholding business in Coventry.
Our ambition to re-focus branded product sales has been
fulfilled with the centralising of stocks and a co-ordinated
sales team in TR Uckfield. This has released our TR Edenbridge
facility to house a dedicated team for another new major
logistics project that is anticipated to come on stream in the
last quarter of the financial year.
Our Japanese and Intec business managers have initiated the
establishment of TR in Hungary through an alliance with a well
established and respected local company. As part of this
alliance, our partner provides leased offices, warehousing,
materials handling equipment and vehicles. More importantly
it gives the Group local technical and logistics support,
which is required to service the burgeoning group of multi-
national electronics manufacturers that have identified
Central Europe as a high skill/low cost base for high volume
assembly. Management and IT resources will be provided from
the UK. Compared to either an acquisition or green-field
development, this business venture gives us a rapid start-up
with significant opportunity for a modest expenditure and
minimal risk. It is likely that we will adopt this format in
other countries, for example in Mexico and Brazil where our
customers also require local support.
However, we continue to invest from our own cash resources in
our long established key geographical centres, with moves to
new 40,000 sq. ft. facilities in both Scotland and Singapore
being completed in the first half.
Our internal 'Fit for the Future' programme continues to
gather momentum by re-aligning people, premises utilisation
and stock in certain parts of the UK in order to yield greater
efficiencies and returns. This activity has also been combined
with selectively confronting the problem of a small number of
key customers that had previously been provided with too high
a level of investment and service relative to the prices they
were prepared to pay. There are early indications that this
is having a positive effect on our gross profit margin.
In order to sustain our commitment to 'Continuous
Improvement', TR in the UK has pledged to adopt the Business
Excellence Model championed by The British Quality Foundation.
The Industrial Society has been appointed by the Group to
provide training and support throughout the Business
Improvement Matrix.
Year 2000
Following the statement contained in our March 1999 Report and
Accounts and our web site, we have now completed the work on
our own systems and equipment in addition to our customer and
supplier programmes.
As it is impossible to say that every aspect of our business
and all our customers and suppliers will be 100% compliant, we
have now put in place contingency plans at each of our sites.
These plans are designed to deal with any unforeseen situation
that may arise and includes systems monitoring and checks from
1st January 2000 as well as site integrity.
The Directors are confident that the action of our 'Bug-
Busters' team has significantly reduced the business risks
associated with the Year 2000 and will ensure the Group's
ability to trade in the Millennium year.
Prospects
A global marketing strategy aimed at multi-national
manufacturers has been devised and launched internally as 'New
Horizons'. This is an intranet based programme that will also
work through the internet. It is anticipated that by the
middle of the Year 2000, this system will be driving our
international sales strategy and will be unique to the
marketplace.
Business in the UK and internationally continues to offer a
number of exciting opportunities afforded by both the rapidly
changing marketplace and our belief in our own strengths and
capabilities not only to respond to these changes but also to
anticipate them.
We continue to look forward with confidence for this financial
year and beyond.'
Consolidated Profit and Loss Account
Unaudited interim results for the six months ended 30
September 1999
Six Six
months months
Note ended ended Year
30 30 ended
September September 31 March
1999 1998 1999
£'000 £'000 £'000
Turnover 2
Continuing 51,784 43,695 95,429
operations
Acquisitions 2,210 - -
_______ _______ _______
53,994 43,695 95,429
Cost of sales (38,208) (31,126) (68,676)
_______ _______ _______
Gross profit 15,786 12,569 26,753
Net operating (10,359) (7,806) (17,006)
expenses
_______ _______ _______
Operating profit
before goodwill
amortisation
Continuing 5,400 4,743 9,747
operations 27 - -
Acquisitions
_______ _______ _______
Operating profit
before goodwill 5,427 4,763 9,747
amortisation
Goodwill
amortisation (104) (44) -
Continuing (48) - -
operations
Acquisitions
_______ _______ _______
Profit on ordinary
activities before 5,275 4,719 9,747
interest
Net interest (164) (102) (263)
_______ _______ _______
Profit on ordinary
activities before 5,111 4,617 9,484
taxation
Taxation on profit
on ordinary 4 (1,533) (1,397) (3,093)
activities
_______ _______ _______
Profit on ordinary
activities after 3,578 3,220 6,391
taxation
Dividends 5 (810) (731) (2,206)
_______ _______ _______
Retained profit 8 2,768 2,489 4,185
======= ======= =======
Earnings per share 6
Basic 20.24p 18.48p 36.58p
Fully diluted 19.88p 18.23p 36.12p
Adjusted fully 20.73p 18.48p 36.96p
diluted
======= ======= =======
Trifast plc
Summarised Consolidated Balance Sheet
Unaudited interim results as at 30 September 1999
30 30
September September 31 March
Note 1999 1998 1999
£'000 £'000 £'000
Tangible fixed 12,475 10,697 10,700
assets
Goodwill 6,181 4,239 4,039
_______ _______ _______
Current assets 7 47,010 37,447 39,870
Creditors: amounts
falling due (27,297) (21,182) (22,011)
within one year
_______ _______ _______
Net current assets 19,713 16,265 17,859
_______ _______ _______
Total assets less
current 38,369 31,201 32,598
liabilities
Creditors: amounts
falling due after (7,776) (5,877) (5,424)
more than one
year
Provisions for
liabilities and (736) (700) (786)
charges
_______ _______ _______
Net assets 29,857 24,624 26,388
======= ======= =======
Capital and
reserves
Called up share 886 876 876
capital
Share premium 5,668 5,004 5,008
Merger reserve 1,111 825 721
Other reserves - 43 -
Profit and loss 8 22,192 17,876 19,783
account
_______ _______ _______
Equity 9 29,857 24,624 26,388
shareholders'
funds
======= ======= =======
Trifast plc
Summarised Consolidated Cash Flow Statement
Unaudited interim results for the six months ended 30
September 1999
Six Six
months months
ended ended Year
30 30 ended
Note September September 31 March
1999 1998 1999
£'000 £'000 £'000
Net cash inflow from
operating activities 10 7,305 2,404 8,277
Returns on
investment and (157) (105) (275)
servicing of
finance
Taxation paid (421) (427) (2,935)
Net cash outflow from
investing activities 11 (3,871) (4,806) (5,622)
Equity dividends (1,476) (1,311) (2,042)
paid _______ _______ _______
Cash inflow/(outflow)
before use of liquid 1,380 (4,245) (2,597)
resources and
financing
Net cash inflow from 12 2,549 3,771 3,310
financing
_______ _______ _______
Increase/(decrease)
in cash in the 3,929 (474) 713
period ======= ======= =======
Notes to the Interim Statement
Unaudited interim results for the six months ended 30
September 1999
1 Basis of preparation
The interim financial statements have been prepared on
the basis of accounting policies set out in the Group
financial statements for the year ended 31 March 1999.
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 1999 have been
extracted from the full Annual Report and Accounts filed
with the Registrar of Companies on which the Auditors
gave an unqualified report.
2 Turnover
Six months Six months Year
ended ended ended
30 September 30 31 March
1999 September 1999
£'000 1998 £'000
£'000
Analysis by
activity
Industrial 51,749 43,627 95,266
fastenings
Acquisitions 2,210 - -
Other 35 68 163
activities
_______ _______ _______
53,994 43,695 95,429
======= ======= =======
3 Acquisitions
During the period under review the group acquired FCF
International AB for total consideration of £3,477,000.
In accordance with FRS 10, goodwill arising on this
acquisition of £2,294,000 has been capitalised and is
being amortised over 20 years.
Notes to the Interim Statement (continued)
4 Taxation
The charge for tax is an estimate based on the
anticipated effective rate of tax for the year ending 31
March 2000.
5 Dividends
The directors have declared an interim dividend of 4.57p
per ordinary share to be paid on 12 January 2000 to
shareholders on the register at 10 December 1999.
6 Earnings per share
The calculation of earnings per 5p ordinary share is
based on profit on ordinary activities after goodwill
amortisation and after taxation and the weighted average
number of shares in the period of 17,672,658 (September
1998: 17,425,149; March 1999: 17,475,875).
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
17,995,693 (September 1998: 17,659,149; March 1999:
17,696,730).
The adjusted fully diluted earnings per share is
presented so as to show more clearly the underlying
performance of the group and is calculated as above using
the profit on ordinary activities before goodwill
amortisation but after tax.
7 Current assets
Six months Six months Year
ended ended ended
30 30 31 March
September September 1999
1999 1998 £'000
£'000 £'000
Stocks 16,768 15,485 16,253
Debtors 23,625 20,316 20,850
Cash at bank and 6,617 1,646 2,767
in hand
_______ _______ _______
47,010 37,447 39,870
======= ======= =======
Notes to the Interim Statement (continued)
8 Profit and loss account
Six months Six months Year
ended ended ended
30 30 31 March
September September 1999
1999 1998 £'000
£'000 £'000
Opening balance 19,783 15,384 15,384
Retained profit 2,768 2,489 4,185
for period (63) (41) 23
Exchange
differences
Transfer from
revaluation - - 43
reserve
Transfer from
merger reserve 152 44 148
Capitalisation of
reserves on issue
of shares to
qualifying (448) - -
employees share
ownership trust
_______ _______ _______
22,192 17,876 19,783
======= ======= =======
9 Reconciliation of movements in shareholders' funds
Six months Six months Year
ended ended Ended
30 30 31 March
September September 1999
1999 1998 £'000
£'000 £'000
Profit for the
financial 3,578 3,220 6,391
period
Dividends (810) (731) (2,206)
_______ _______ _______
Retained profit for
the period 2,768 2,489 4,185
Issue of ordinary 1,212 888 892
shares
Capitalisation of
reserves on issue
of shares to
qualifying (448) - -
employees share
ownership trust
Exchange (63) (41) 23
gains/(losses)
_______ _______ _______
Net addition to
shareholders' 3,469 3,336 5,100
funds
Opening
shareholders' 26,388 21,288 21,288
funds
_______ _______ _______
Closing
shareholders' 29,857 24,624 26,388
funds
======= ======= =======
Notes to the Interim Statement (continued)
10 Net cash flow from operating activities
Six months Six months Year
ended ended ended
30 30 31 March
September September 1999
1999 1998 £'000
£'000 £'000
Operating profit
after goodwill 5,275 4,719 9,747
amortisation
Net depreciation 871 481 1,180
charge
Goodwill 152 44 148
amortisation
Decrease/(increas
e) in 1,007 (2,840) (2,798)
working
capital
_______ _______ _______
7,305 2,404 8,277
======= ======= =======
11 Net cash outflow from investing activities
Six months Six months Year
Ended ended ended
30 30 31 March
September September 1999
1999 1998 £'000
£'000 £'000
Capital
expenditure and 2,009 819 1,608
financial
investment
Acquisitions and
Disposals 1,862 3,987 4,014
_______ _______ _______
3,871 4,806 5,622
======= ======= =======
12 Net cash inflow from financing
Six months Six months Year
ended ended Ended
30 30 31 March
September September 1999
1999 1998 £'000
£'000 £'000
Issue of ordinary
share capital 216 13 17
Increase in debt 2,333 3,758 3,293
_______ _______ _______
2,549 3,771 3,310
======= ======= =======
Notes to the Interim Statement (continued)
13 Reconciliation of net cash flow to movement in debt
Six months Six months Year
ended ended ended
30 30 31 March
September September 1999
1999 1998 £'000
£'000 £'000
Increase/(decrease)
in cash in the 3,929 (474) 713
period
Cash inflow from
increase in debt
and lease (2,333) (3,758) (3,293)
financing
_______ _______ _______
Change in net debt
resulting from
cash flows 1,596 (4,232) (2,580)
Loans and finance
leases acquired
with subsidiaries (365) (389) (504)
Translation 10 11 12
difference
_______ _______ _______
Movement in net
debt in the period 1,241 (4,610) (3,072)
Net debt at
beginning of (3,850) (778) (778)
period
_______ _______ _______
Net debt at end of
the period (2,609) (5,388) (3,850)
======= ======= =======
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 4 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 Listing Rules of the London
Stock Exchange require that the accounting policies and
presentation applied to the interim figures should be
consistent with those applied in preparing the preceding
annual accounts except where they are to be changed in the
next annual accounts in which case any changes, and the reason
for them, are to be disclosed.
Review work performed
We conducted our review in accordance with guidance contained
in Bulletin 1999/4: Review of interim financial information
issued by the Auditing Practices Board. A review consists
principally of making enquiries of Group management and
applying analytical procedures to the financial information
and underlying financial data and, based thereon, assessing
whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review is
substantially less in scope than an audit performed in
accordance with Auditing Standards and therefore provides a
lower level of assurance than an audit. Accordingly we do not
express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material
modifications that should be made to the financial information
as presented for the six months ended 30 September 1999.
KPMG Audit Plc
Chartered Accountants
Crawley
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