Preliminary Results for the Y
Issued by Citigate Dewe Rogerson Ltd, Birmingham
Wednesday, 16 June 2010
Embargoed: 7.00am
Preliminary Results for the year ended 31 March 2010
"New three-phased strategy playing a key role in the TR recovery story"
Key points - financial
|
|
H1 |
H2 |
Full Year |
Full Year |
|
|
30.09.09 |
31.03.10 |
2010 |
2009 |
|
Continuing Operations |
|
|
|
|
|
Revenue |
£39.85m |
£46.09m |
£85.94m |
£104.90m |
|
Adjusted EBITDA* |
£0.59m |
£1.54m |
£2.13m |
£4.55m |
|
Overheads |
£9.87m |
£10.29m |
£20.16m |
£23.41m |
|
Adjusted pre-tax profit* |
- |
£0.92m |
£0.92m |
£2.54m |
|
Operating cash generation |
£2.25m |
£1.66m |
£3.91m |
£5.91m |
|
Net debt |
£5.57m |
£4.68m |
£4.68m |
£8.40m |
* excludes discontinued operations and separately disclosed items
Key points - commercial
· Return to 'sales led' structure
· By the year-end and ahead of management expectations, all TR business units traded profitably whilst stocks were reduced by £3.8m
· Recovering optimism coming through from customers and key TR sectors
· Market positioning substantially improved, both domestically and with multinationals
· Sales daily run-rate continues to perform well and enquiry levels are higher than for many months. Global sales contracts secured beginning to come on stream and the focus on key sectors is driving further opportunities.
· Trading in Asia remains buoyant in both manufacturing and in distribution, whilst UK, Europe and the US are beginning to recover
· Broadening leadership team to drive strategy
"The uplift in Q4 in the year being reported has continued into Q1 of the current financial year and we would hope to report further positive news as we go through the period. Our focus will remain sales-led with margin improvement, tight control on costs and working capital, the reduction in debt and the ability to continue to generate cash."
"The on-going optimism of customers from within the key sectors we serve which include medical equipment, electronics and automotive, provides a solid foundation for us to remain cautiously optimistic that Trifast is now positioned for recovery."
"We anticipate the Group will make further progress during this current financial year as we implement "Phase 2" of our growth strategy and the Directors are confident that TR remains on target with its three-pronged strategy and stated objective to return the business back to stronger levels of profitability."
|
Enquiries: |
|
|
Trifast plc |
Citigate Dewe Rogerson |
|
Malcolm Diamond, Executive Chairman |
Fiona Tooley, Director |
|
Mobile: +44 (0)7979 518493 (MMD) or +44 (0)20 7 638 9571 (7.15am-10.00am) |
Today: +07785 703523 or +44 (0)20 7638 9571 |
|
Jim Barker, Chief Executive |
Keith Gabriel, Senior Account Manager |
|
Mobile: + (0)7769 934148 |
+44 (0)121 362 4035 |
|
Office Telephone: +44 (0)1825 747366
|
|
|
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.
Trifast plc
Review of the year ended 31 March 2010
Joint Statement by: Malcolm Diamond, Chairman and Jim Barker, Chief Executive.
Introduction
The recovering optimism initially witnessed in our Q3 period by customers followed through into Q4 particularly within some of the sectors we serve. This, together with our implemented 'Phase 1' recovery strategy instigated during the year by the Board has seen the Group improve its market positioning significantly by the end of March 2010. As we finished the year, all 21 business units traded profitably and ahead of management expectations, this underpins our confidence that TR's recovery can be sustained.
As we enter the second year since we returned to Trifast in March 2009, it is pleasing to report that our recovery plan is performing ahead of target, however, as a team, we are well aware of the need continually to apply ourselves to a further array of improvement opportunities that have been clearly identified during Phase 1 of our turnaround programme.
Key operational targets for year 2010/11 are vendor development, internal warehousing, logistics and freight, transactional sales within the UK and Europe as well as HR management (including the restoration of staff appraisals and management training schedules that had been abandoned in 2007).
The Rebuild Strategy
Manufacturing demand for assembly components is increasingly Asia centric and the activity in this region clearly demonstrates that an economic recovery has now arrived in the Far East whilst Europe ticks over at a steadily increasing rate, with the UK manufacturing presence regaining momentum. America is gradually showing more activity, and with Trifast having only a minor market share there, there is increasing opportunity for us to grow the business in this region going forward, especially as we are gaining a good reputation for TR branded products.
This demand profile provides a clear and simple pointer to our strategic planning.
Historically, multinationals based in the UK employed local staff who wanted the reassurance of locally held component supplies along with local sales and technical support. Being a sales/customer led organisation, during the nineties, TR successfully established a network of branches across the UK to satisfy this demand.
The market is different now. Many multinationals, especially in Scotland, have fled to lower cost countries, plus the present day sophistication with freight logistics has drastically reduced - even removed the need to hold stock within a network of localised warehouses, with current best practice creating centralised stocking "Hubs" feeding long distance overnight next-day customer deliveries. We have already benchmarked such systems against successful hub based organisations in Sweden and Denmark which serve their network of Western European mainland customers on a next-day delivery basis from a single stockholding location.
However, this strategy has to be combined with retaining knowledgeable sales and technical customer facing personnel placed geographically local to their existing and potential clients.
Therefore, this removes stock duplication, reduces incoming freight and packaging costs, warehousing and materials handling costs, simplifies quality control and enhances the scope for vendor management - and all without sacrificing customer care and service reaction speed.
Key points include broadening leadership teams and investing in processes and expertise whilst also continuing to 'work smarter' to further profitability and efficiencies.
It is both rare and motivating in the current economic climate to be able to implement a cost rationalisation strategy that reduces indirect costs without the loss of key employees. This is the main element of Phase 2 - our 'rebuild' year.
This in turn permits us to return to making capital investment within our Asian manufacturing and distribution facilities.
Group Structure
As we have previously indicated, the Board's review of the TR Group business will remain on-going so we not only ensure that we have the core skills to drive the business forward but that they also accurately reflect our commercial position.
Whilst in the main, the restructuring of our Asian and Mainland Europe operations is complete, TR's UK programme remains in progress and whilst a number of issues have already been addressed we anticipate further consolidation during the current year: these plans are well advanced and we expect to roll-out the initiatives over coming months.
People
The Trifast Board are keen to acknowledge the enthusiasm and willingness of the TR teams around the world; they have all embraced our continuous improvement and "working smarter" philosophy in the key areas of service, supply chain, logistics, pricing and packaging.
In what has been one of the toughest two-year periods for the business, on behalf of all stakeholders we thank every one of our people for their hard work and determination to pull this business around and working with the management towards a sustained recovery.
Our ability to sustain our continuous improvement momentum is, of course, totally dependent on the commitment, energy and focus of our entire workforce, which to date has been outstanding; however, with many having to accept a four-day working week during much of 2009 plus a pay freeze for the last two years, it would be irresponsible of the Board to fail to attempt at least a partial remedy to this situation during the financial year ending March 2011.
Broadening the skills of the Board
As Trifast continue their recovery strategy, a key element is to ensure that the Board is even more operationally focused with Group wide responsibility and authority in order to implement new initiatives quickly and consistently.
In order to drive our next phase of growth across our global operations and to ensure continuity and implementation of consistent policies across the Group the Board is making a number of senior appointments at both Board and Senior Management level:-
We welcome the following to the Main Board with effect from today (16 June 2010):
· Mark Belton appointed Group Finance Director
· Seamus Murphy, Director of Operations, HR and IT
· Glenda Roberts, Group Sales Director
Taking on Senior Posts are:-
· Roberto Bianchi as Director of Sourcing
· Keith Gibb as SD TR Branded Products
· Ian Carlton as Director of Quality
The last twelve months has enabled the Main Board to work with the management teams around the business and we expect these appointments to play key roles in driving this business forward in the future.
The Board is mindful of the fact that the above additions stretches the ratio of Independent Directors (NEDs) to Executives beyond recommended Best Practice. It is considered that, with the high level of time commitment and support being received from the two incumbent Independent Directors, the recruitment of a third director is not an immediate business priority. Nevertheless, the Board has agreed to revisit the situation by Q4 of this financial year.
Further details of all our people can be found on our website www.trifast.com
Financing and Banking Facilities
We believe the banking facilities put in place in the latter part of the year provide the Company with adequate resources to achieve its short term financial objectives and also form an important part of enabling us to deliver our strategy going forward.
Our on-going focus remains on working capital and cash management; as a result, debt and stock levels continue to reduce, and at the same time, we have had sufficient scope to allow the Trifast teams to compete effectively.
Further details of the Group's banking facilities are contained within the Group Finance Review.
Current Trading
The uplift in Q4 in the year being reported has continued into Q1 of the current financial year ending March 2011 and we would hope to report further positive news as we go through the period.
Our focus will remain sales-led with margin improvement, whilst also mindful of retaining a tight control on costs and working capital, reducing debt and continuing the ability to generate cash.
Whilst a growing number of UK manufacturers are enjoying a rise in demand for their products overseas and in UK markets we have to be mindful of the number of external macro-factors which could slow global and UK economic recovery.
This apart, looking at Trifast, as we have already touched on, trading in Asia remains buoyant in both manufacturing and in distribution, whilst UK, Europe and the US are beginning to recover.
We are encouraged with sales daily run-rate and enquiry levels are higher than for many months. Global sales contracts successfully secured in the latter part of 2009 are beginning to come on stream and the focus on key sectors is driving further opportunities. This coupled with the on-going optimism of customers from within the key sectors we serve which include medical equipment, electronics and automotive, provides a solid foundation for us to remain cautiously optimistic that Trifast is now positioned for recovery.
Summary
We anticipate the Group will make further progress during this current financial year as we implement "Phase 2" of our growth strategy.
The Directors are confident that TR remains on target with its three-pronged strategy and stated objective, to return the business back to stronger levels of profitability through lean logistics, targeted sales and marketing with on-going margin improvement.
We look forward to updating throughout the coming year of our progress.
Finance Review by Mark Belton, Group Finance Director
A review of the year is set out in the Joint Chairman's and CEO Statement.
Results for the year
The income statement for the year ended 31 March 2010 can be summarised as follows:
|
|
H1 |
H2 |
Full Year |
Full Year |
|
|
30.09.09 |
31.03.10 |
2010 |
2009 |
|
Continuing Operations |
|
|
|
|
|
Revenue |
£39.85m |
£46.09m |
£85.94m |
£104.90m |
|
Adjusted EBITDA* |
£0.59m |
£1.54m |
£2.13m |
£4.55m |
|
Overheads |
£9.87m |
£10.29m |
£20.16m |
£23.41m |
|
Adjusted pre-tax profit* |
- |
£0.92m |
£0.92m |
£2.54m |
|
Pre-tax profit/(loss) from continuing operations |
£0.18m |
£(2.99)m |
£(2.81)m |
£(11.00)m |
|
Operating cash generation |
£2.25m |
£1.66m |
£3.91m |
£5.91m |
|
Net debt |
£5.57m |
£4.68m |
£4.68m |
£8.40m |
*These figures exclude discontinued operations and take into account the separately disclosed items below, which the management believe provide a better understanding of the Company's underlying profit.
Revenue
As indicated in our 2010 half-year statement, turnover reached its lowest point in Q4 2009 (January to March 2009). This level remained unchanged for the first half of 2010 providing some degree of stability. Then in H2 2010 we began to see a gradual rise, in particularly Q4 2010 (Jan '10 - Mar '10) as demand increased, reflecting now, what we believe be the underlying usage.
Adjusted pre-tax profit operating margins
To stem the losses of H2 2009 (Oct '08 - Mar '09), Management continued to cut costs and improve efficiencies, thus enabling the Group to breakeven during H1 2010. Further rationalisation was undertaken during H2 2010 primarily in the UK (which had been the hardest hit by the recession).
As at 31 March 2010 the Board is encouraged in being able to show an underlying profit figure for the Group of £0.92 million (2009: £2.54 million). The underlying profit figure is derived before separately disclosed items as stated below. The Board believe this profit figure provides a better understanding of the Group's underlying performance.
Asia was the first area to see demand increase, followed slowly by Mainland Europe, then the UK and USA. This was reflected in the Regional underlying results before Central costs, with Asia showing an adjusted profit of £2.79 million, whilst the UK and the Rest of the World lagged behind with adjusted losses of £0.59 million and £0.34 million respectively.
Gross profit margins by the year end stood at 24.4% compared with 25.3% in 2009. This decrease is due to fixed overheads being spread over a lower revenue base. However a clearer picture is shown when comparing to H2 2009, which had a gross profit margin of 22.8%. This shows an increase of 1.6 percentage points reflecting the efficiency savings made during the year.
Overheads are down by £3.25 million compared to last year based on the saving initiatives already implemented. If we exclude the foreign exchange cost swing between the years of £1.07 million, the true overhead savings were actually £4.32 million.
The Board continue to remain vigilant and review areas where efficiencies can be made. However, they are mindful that to achieve on-going growth, further investment will be required.
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:
|
(i) |
Sale of associate |
£0.33 million |
|
(ii) |
Restructuring programme |
(£3.42 million) |
|
(iii) |
Expense of changing banking facilities |
(£0.52 million) |
|
|
Intangible amortisation |
(£0.26 million) |
|
|
IFRS 2 credit |
£0.14 million |
|
|
|
|
|
|
|
(3.73 million) |
i) Sale of associate
On 24 September 2009, the Company sold its 25% shareholding in the associate undertaking, Techfast Holding Bhd. Techfast is a Malaysian company, listed on the Kuala Lumpur Stock Exchange. The sale generated a one-off gain and a positive cash impact of £0.33 million.
ii) Restructuring programme
Phase 1 of the restructuring programme has been implemented, totalling £3.42 million in the year. £2.80 million is in relation to closures and downsizing of sites within the UK. £0.62 million refers to redundancy / compensation payments, £0.56 million of which, relates to the UK.
The cash effect of the above restructuring costs will total £3.42 million, £0.63 million of which had been incurred during 2010.
iii) Expense of changing banking facilities
In February 2010 the Group renegotiated its old banking facilities and secured new more flexible banking arrangements. The cost of achieving this was £0.52 million in respect of one-off legal, due diligence, and bank arrangement fees. £0.30 million of the £0.52 million cash outflow was incurred during 2010.
Interest and interest cover
Net interest before one-off financing cost has fallen significantly from £0.80 million to £0.15 million. This is due to the Group's lower net debt levels and reduced interest base rates.
Net interest cover has increased from 5.7 to 14.2 (defined as EBITDA to net interest, before the one-off separately disclosed items).
Going forward, it is anticipated that finance expenses will increase as higher banking charges have been agreed as part of the new banking facilities.
To protect against significant interest rate increases, the Company has taken out a 3% fixed cap interest rate hedging instrument for three years.
Taxation
Overall there was a tax credit of £0.62 million, ETR 22%; (2009: a tax charge of £0.52 million, ETR 4.7%) in the year. This largely reflects a deferred tax credit as a result of the increase in the UK's deferred tax asset in relation to brought forward losses.
All of the 2010 current tax charge related to overseas operations.
Balance Sheet and Funding
At 31 March 2010, total shareholder equity amounted to £40.18 million (2009:£42.47 million) a decrease of 5.4%, reflecting the loss incurred in the period.
Net working capital fell by £3.58 million, largely as a result of the Group's reduction in gross stock levels in order in generate cash.
As a result of the Group's concerted effort to generate cash, the Board is pleased to show that Net Debt reduced significantly from £8.40 million in 2009 to £4.68 million as at 31 March 2010.
In February 2010 the Group's banking facilities were changed in order to provide more security and flexibility. The existing Gross Debt of £14.82 million was repaid and the overdraft facility of £6.00 million cancelled; replacing these were a 3 year Asset Based Lending facility of £13.50 million (as at 31 March 2010, £7.22 million was utilised), a bridging loan of £2.00 million and a term loan of £4.00 million (as at 31 March 2010 the amount outstanding was £4.88 million).
Trading forecasts show that these new facilities provide sufficient headroom up until the date of renewal. In addition current forecasts show that the Group will retain liquidity headroom beyond this date, however the Board are keen to renegotiate terms of facilities with the Bank to provide the Group with more security and flexibility for the longer-term.
As a result of the above changes, Gross debt at 31 March 2010 was £12.10 million a reduction of £2.72 million. Overall gearing is down to 12% (2009: 20%) reflecting the reduced Net Debt position.
The Group's net cash balances were £7.42 million (2009: £6.42 million) of which £7.81 millionwas held in foreign currencies (2009: £6.42 million). As a Group, our policy is, where possible to hold the same local currency as the respective local entity. We monitor exchange rates and buy and sell currencies in order to minimise our open exposure to foreign exchange rates but remain mindful of operational requirements. We do not speculate on rates.
Cash Flow
Cash generation is a continual key objective of the Group. Stock levels have been driven down to an optimum level, but without being detrimental to the business.
Cash generated from operations was £3.91million before tax (2009: £5.91 million). However, during the year, cash paid out on one-off separately disclosed items was £2.61 million, which reflects that the underlying cash generation was £6.52 million and the true cash generated from working capital was £7.80 million.
Debtor days remain strong at 69 (2009: 70) and bad debts in the period were £0.07 million, which is felt acceptable given the current economic climate.
Capital expenditure in the period was modest at £0.22 million. Although conservation of cash is still extremely important, the Board will not stifle Capex plans that will expand the business and lead to future cash and profit generation.
Dividend
No dividend payment is being proposed in respect of the year ended 31 March 2010.
As already indicated, the restoration of a yield is an important issue and it is the Directors intention to redress the situation as soon as practical.
Consolidated income statement
for year ended 31 March 2010
|
|
Note |
2010 |
2009 |
|
|
|
£000 |
£000 |
|
Continuing operations |
|
|
|
|
|
|
|
|
|
Revenue |
3 |
85,935 |
104,901 |
|
Cost of sales |
|
(64,927) |
(78,312) |
|
Gross profit |
|
21,008 |
26,589 |
|
Other operating income before separately disclosed items: |
|
218 |
156 |
|
Sale of associate |
2 |
332 |
- |
|
Total other operating income |
|
550 |
156 |
|
Distribution expenses |
|
(2,146) |
(2,814) |
|
|
|
|
|
|
Administrative expenses before separately disclosed items: |
|
(18,015) |
(20,593) |
|
IFRS2 credit / (charge) |
|
143 |
(55) |
|
Intangible amortisation |
2, 7 |
(261) |
(266) |
|
Goodwill impairment |
2, 7 |
- |
(8,303) |
|
Settlement claim |
2 |
- |
(555) |
|
Restructuring costs |
2 |
(3,420) |
(3,701) |
|
Impairment of associate |
2 |
- |
(659) |
|
|
|
|
|
|
Total administrative expenses |
|
(21,553) |
(34,132) |
|
Operating loss |
4 |
(2,141) |
(10,201) |
|
|
|
|
|
|
Financial income |
|
96 |
99 |
|
Financial expenses before separately disclosed items: |
|
(246) |
(896) |
|
Expense of changing banking facilities |
|
(517) |
- |
|
Total financial expenses |
|
(763) |
(896) |
|
Net financing costs |
|
(667) |
(797) |
|
Loss before tax |
2, 3 |
(2,808) |
(10,998) |
|
Taxation |
5 |
621 |
(520) |
|
Loss from continuing operations (attributable to equity shareholders of the Parent Company) |
|
(2,187) |
(11,518) |
|
|
|
|
|
|
Discontinued operations |
3, 6 |
|
|
|
Loss from discontinued operations (net of income tax) |
|
- |
(3,792) |
|
Loss for the period |
|
(2,187) |
(15,310) |
|
Loss per share (total) |
|
|
|
|
Basic |
12 |
(2.57p) |
(17.98p) |
|
Diluted |
12 |
(2.57p) |
(17.98p) |
|
|
|
|
|
|
Loss per share (continuing operations) |
|
|
|
|
Basic |
12 |
(2.57p) |
(13.53p) |
|
Diluted |
12 |
(2.57p) |
(13.53p) |
|
|
|
|
|
|
Dividends |
|
|
|
|
Interim paid 2010 - nil (2009: 0.93p) |
11 |
- |
793 |
Statements of comprehensive income for year ended 31 March 2010
|
|
Group |
Company |
||
|
|
2010 |
2009 |
2010 |
2009 |
|
|
£000 |
£000 |
£000 |
£000
|
|
(Loss)/profit for the year |
(2,187) |
(15,310) |
4,530 |
(8,900) |
|
Other comprehensive income: |
|
|
|
|
|
Foreign currency translation differences |
42 |
7,135 |
- |
-
|
|
Net (loss)/gain on hedge of net investment in foreign subsidiary |
(1) |
7 |
- |
- |
|
Other comprehensive income recognised directly in equity net of income tax |
41 |
7,142 |
- |
- |
|
Total comprehensive (expense)/income recognised for the Year (attributable to equity shareholders of the Parent Company) |
(2,146) |
(8,168) |
4,530 |
(8,900) |
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 |
Consolidated statement of changes in equity for year ended 31 March 2009
|
|
Share Capital |
Share Premium |
Translation Reserve |
Retained Earnings |
Total Equity |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
|
Balance at 1 April 2008 |
4,248 |
12,167 |
1,816 |
34,734 |
52,965 |
|
Total comprehensive income for the year: |
|
|
|
|
|
|
Loss for the year |
- |
- |
- |
(15,310) |
(15,310) |
|
Other comprehensive income: |
|
|
|
|
|
|
Foreign currency translation differences |
- |
- |
7,135 |
- |
7,135 |
|
Net gain on hedge of net investment in foreign subsidiary |
- |
- |
7 |
- |
7 |
|
Total other comprehensive income |
- |
- |
7,142 |
- |
7,142 |
|
Total comprehensive income/(expense) recognised for the year |
- |
- |
7,142 |
(15,310) |
(8,168) |
|
Transactions with owners, recorded directly in equity
|
|
|
|
|
|
|
Share based payment transactions |
14 |
- |
- |
41 |
55 |
|
Dividends |
- |
- |
- |
(2,382) |
(2,382) |
|
Total transactions with owners |
14 |
- |
- |
(2,341) |
(2,327) |
|
Balance at 31 March 2009 |
4,262 |
12,167 |
8,958 |
17,083 |
42,470 |
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 |
Company statement of changes in equity for the year ended 31 March 2009
|
|
Share Capital |
Share Premium |
Merger Reserve |
Retained Earnings |
Total Equity |
|
|
£000 |
£000 |
£000 |
£000 |
£000
|
|
Balance at 1 April 2008 |
4,248 |
12,167 |
2,393 |
3,393 |
22,201 |
|
Total comprehensive income for the year: |
|
|
|
|
|
|
Loss for the year |
- |
- |
- |
(8,900) |
(8,900) |
|
Other comprehensive income: |
|
|
|
|
|
|
Foreign currency translation differences |
- |
- |
- |
- |
- |
|
Net gain/(loss) on hedge of net investment in foreign subsidiary |
- |
- |
- |
- |
- |
|
Total other comprehensive income |
- |
- |
- |
- |
- |
|
Total comprehensive expense recognised for the year |
- |
- |
- |
(8,900) |
(8,900) |
|
Transactions with owners, recorded directly in equity |
|
|
|
|
|
|
Utilisation of merger reserve |
- |
- |
(872) |
872 |
- |
|
Share based payment transactions |
14 |
- |
- |
41 |
55 |
|
Dividends |
- |
- |
- |
(2,382) |
(2,382) |
|
Total transactions with owners |
14 |
- |
(872) |
(1,469) |
(2,327) |
|
Balance at 31 March 2009 |
4,262 |
12,167 |
1,521 |
(6,976) |
10,974 |
Statements of Financial Position
at 31 March 2010
|
|
Note |
Group |
Company |
||
|
|
|
2010 |
2009 |
2010 |
2009 |
|
|
|
£000 |
£000 |
£000 |
£000 |
|
Non-current assets |
|
|
|
|
|
|
Property, plant and equipment |
|
7,740 |
8,606 |
2,624 |
2,711 |
|
Intangible assets |
7 |
16,358 |
16,380 |
- |
- |
|
Equity investments |
|
- |
- |
21,874 |
21,874 |
|
Deferred tax assets |
|
2,046 |
707 |
- |
- |
|
|
|
|
|
|
|
|
Total non-current assets |
|
26,144 |
25,693 |
24,498 |
24,585 |
|
Current assets |
|
|
|
|
|
|
Stocks |
8 |
20,141 |
23,952 |
- |
- |
|
Trade and other receivables |
|
20,458 |
18,362 |
1,397 |
1,677 |
|
Cash and cash equivalents |
9 |
7,420 |
9,063 |
2,176 |
4,019 |
|
|
|
|
|
|
|
|
Total current assets |
|
48,019 |
51,377 |
3,573 |
5,696 |
|
|
|
|
|
|
|
|
Total assets |
3 |
74,163 |
77,070 |
28,071 |
30,281 |
|
Current liabilities |
|
|
|
|
|
|
Bank overdraft |
9 |
- |
2,641 |
6,524 |
5,728 |
|
Other interest-bearing loans and borrowings |
10 |
12,103 |
2,547 |
4,877 |
1,135 |
|
Trade and other payables |
|
16,701 |
14,838 |
1,215 |
1,175 |
|
Tax payable |
|
847 |
8 |
- |
- |
|
Provisions |
|
841 |
1,166 |
- |
517 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
30,492 |
21,200 |
12,616 |
8,555 |
|
Non-current liabilities |
|
|
|
|
|
|
Other interest-bearing loans and borrowings |
10 |
- |
12,271 |
- |
10,446 |
|
Provisions |
|
3,144 |
781 |
- |
- |
|
Deferred tax liabilities |
|
346 |
348 |
94 |
306 |
|
|
|
|
|
|
|
|
Total non-current liabilities |
|
3,490 |
13,400 |
94 |
10,752 |
|
Total liabilities |
3 |
33,982 |
34,600 |
12,710 |
19,307 |
|
Net assets |
|
40,181 |
42,470 |
15,361 |
10,974 |
|
Equity |
|
|
|
|
|
|
Share capital |
11 |
4,262 |
4,262 |
4,262 |
4,262 |
|
Share premium |
|
12,167 |
12,167 |
12,167 |
12,167 |
|
Reserves |
|
8,999 |
8,958 |
1,521 |
1,521 |
|
Retained earnings |
|
14,753 |
17,083 |
(2,589) |
(6,976) |
|
|
|
|
|
|
|
|
Total equity |
|
40,181 |
42,470 |
15,361 |
10,974 |
Statements of cash flows
for year ended 31 March 2010
|
|
Note |
Group |
Company |
||
|
|
|
2010 |
2009 |
2010 |
2009 |
|
|
|
£000 |
£000 |
£000 |
£000 |
|
Cash flows from operating activities |
|
|
|
|
|
|
(Loss)/profit for the year |
|
(2,187) |
(15,310) |
4,530 |
(8,900) |
|
Adjustments for: |
|
|
|
|
|
|
Depreciation, amortisation and impairment |
|
1,329 |
9,780 |
87 |
9,419 |
|
Financial income |
|
(96) |
(99) |
(2) |
(51) |
|
Financial expense |
|
763 |
896 |
520 |
678 |
|
Loss on sale of property, plant and equipment and investments |
|
10 |
436 |
- |
- |
|
Loss on disposal of subsidiary |
6 |
- |
2,950 |
- |
- |
|
Dividends received |
|
- |
- |
(5,289) |
(4,679) |
|
Equity settled share based payment (credit)/charge |
|
(143) |
55 |
(105) |
(32) |
|
Gain on sale of associate |
|
(332) |
- |
(332) |
- |
|
Impairment of associate |
|
- |
659 |
- |
500 |
|
Taxation |
|
(621) |
585 |
(212) |
136 |
|
Operating cash outflow before changes in working capital and provisions |
|
(1,277) |
(48) |
(803) |
(2,929) |
|
Change in trade and other receivables |
|
(1,983) |
8,078 |
242 |
(356) |
|
Change in stocks |
|
3,748 |
2,746 |
- |
- |
|
Change in trade and other payables |
|
1,599 |
(5,847) |
113 |
373 |
|
Change in provisions |
|
1,821 |
976 |
(667) |
508 |
|
Cash generated from/(used) in the operations |
|
3,908 |
5,905 |
(1,115) |
(2,404) |
|
Tax recovered/(paid) |
|
119 |
(2,270) |
- |
- |
|
|
|
|
|
|
|
|
Net cash from operating activities |
|
4,027 |
3,635 |
(1,115) |
(2,404) |
|
Cash flows from investing activities |
|
|
|
|
|
|
Proceeds from sale of property, plant and equipment |
|
13 |
41 |
- |
- |
|
Interest received |
|
97 |
103 |
3 |
51 |
|
Proceeds from sale of associate |
|
332 |
- |
332 |
- |
|
Disposal of discontinued operation, net of cash disposed of |
6 |
- |
(104) |
- |
(573) |
|
Acquisition of property, plant and equipment |
|
(220) |
(730) |
- |
(29) |
|
Dividends received |
|
- |
- |
5,289 |
4,679 |
|
Net cash from investing activities |
|
222 |
(690) |
5,624 |
4,128 |
|
Cash flows from financing activities |
|
|
|
|
|
|
Proceeds from new loan |
10 |
12,103 |
- |
4,877 |
- |
|
Repayment of long term borrowings |
|
(14,818) |
(2,732) |
(11,581) |
(1,506) |
|
Dividends paid |
11 |
- |
(2,382) |
- |
(2,382) |
|
Interest paid |
|
(620) |
(1,030) |
(444) |
(799) |
|
|
|
|
|
|
|
|
Net cash from financing activities |
|
(3,335) |
(6,144) |
(7,148) |
(4,687) |
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents |
|
914 |
(3,199) |
(2,639) |
(2,963) |
|
Cash and cash equivalents at 1 April |
|
6,422 |
8,247 |
(1,709) |
1,254 |
|
Effect of exchange rate fluctuations on cash held |
|
84 |
1,374 |
- |
- |
|
|
|
|
|
|
|
|
Cash and cash equivalents at 31 March |
9 |
7,420 |
6,422 |
(4,348) |
(1,709) |
Notes
1 Basis of preparation
The financial statements are prepared 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 accounting policies below.
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 have been secured and covenants and facilities are in place to provide appropriate headroom against our forecasts.
The asset backed lending facility (max £13.50 million) has a three year term. The Group term loan of £4.00m is due to be repaid by 31 December 2010. Current forecasts show that the Group has sufficient liquidity headroom to continue to operate within its facilities beyond this date. However, management remain keen to renegotiate term facilities with the bank to provide the Group with more secure and flexible facilities for the longer term.
As a result, the Group has held a number of positive discussions with its bankers about its future borrowing needs and no matters have been drawn to its attention to suggest that renewal, if required, may not be forthcoming on acceptable terms.
Considering the Directors understanding of the bank's current position and in conjunction with its 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
|
|
Note |
2010 |
2009 |
|
|
|
£000 |
£000 |
|
|
|
|
|
|
Underlying profit before tax |
|
915 |
2,541 |
|
|
|
|
|
|
Separately disclosed items within other operating income: |
|
|
|
|
Sale of associate |
|
332 |
- |
|
|
|
|
|
|
Separately disclosed items within administrative expenses |
|
|
|
|
Goodwill impairments |
7 |
- |
(8,303) |
|
Restructuring costs |
|
(3,420) |
(3,701) |
|
Impairment of associate |
|
- |
(659) |
|
Settlement claim |
|
- |
(555) |
|
Intangible amortisation |
7 |
(261) |
(266) |
|
IFRS 2 share based payment credit/(charge) |
|
143 |
(55) |
|
|
|
|
|
|
Separately disclosed items within financial expenses |
|
|
|
|
Expense of changing banking facilities |
|
(517) |
- |
|
|
|
|
|
|
Loss from continuing operations before tax |
|
(2,808) |
(10,998) |
2010 restructuring costs of £3.42 million include £2.80 million in relation to closures and downsizing of sites within the UK. The remaining £0.62 million refers to redundancy/compensation, £0.56 million of which relates to our UK operations.
The sale of the associate related to the sale of our 25% shareholding in the associate undertaking Techfast Holding Bhd, a company listed on the Kuala Lumpur Stock Exchange. This resulted in a net profit and cash inflow of £0.33 million.
The change in our banking facilities related to one-off fees including legal, due diligence and bank arrangement fees, which in total amounted to £0.52 million.
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.
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, Mexico and Costa Rica |
|
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 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 |
|
|
|
|
|
|
|
|
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 |
|
Impairment loss |
- |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
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) |
|
March 2009 |
UK |
Mainland Europe/ USA |
Asia |
Common Costs |
Total |
|
|
|
|
|
|
|
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
|
|
|
|
|
|
Revenue* |
|
|
|
|
|
|
Revenue from external customers |
58,881 |
20,717 |
25,303 |
- |
104,901 |
|
Inter segment revenue |
2,749 |
369 |
3,900 |
- |
7,018 |
|
|
|
|
|
|
|
|
Total revenue |
61,630 |
21,086 |
29,203 |
- |
111,919 |
|
|
|
|
|
|
|
|
Segment result before separately disclosed items |
789 |
732 |
3,906 |
(2,886) |
2,541 |
|
|
|
|
|
|
|
|
Separately disclosed items (see note 2) |
|
|
|
|
(13,539) |
|
|
|
|
|
|
|
|
Loss before tax from continuing operations |
|
|
|
|
(10,998) |
|
|
|
|
|
|
|
|
Discontinued Turkish business loss before tax (see note 6) |
|
|
|
|
(3,727) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before tax |
|
|
|
|
(14,725) |
|
|
|
|
|
|
|
|
Specific disclosure items |
|
|
|
|
|
|
Depreciation and amortisation |
458 |
72 |
588 |
359 |
1,477 |
|
Impairment loss |
- |
- |
1,503 |
7,608 |
9,111 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets and liabilities |
|
|
|
|
|
|
Segment assets |
24,487 |
9,884 |
30,739 |
11,960 |
77,070 |
|
Segment liabilities |
(11,743) |
(2,117) |
(6,561) |
(14,179) |
(34,600) |
*Of the Asian external revenue, £2.01 million (2009: £3.3 million) was sold into the American market and £4.68 million (2009: £5.2 million) sold into the European market.
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.
Revenue is derived solely from the manufacture and logistical supply of industrial fasteners and category 'C' components.
4 Expenses and auditors' remuneration
Included in loss for the year are the following:
|
|
Note |
2010 |
2009 |
|
|
|
£000 |
£000 |
|
|
|
|
|
|
Depreciation |
|
1,068 |
1,211 |
|
Impairment/amortisation of acquired intangibles |
7 |
261 |
9,377 |
|
Forex loss/(gain) |
|
524 |
(546) |
|
Auditors' remuneration: |
|
|
|
Audit of these financial statements |
34 |
34 |
|
Audit of financial statements of subsidiaries pursuant to legislation |
164 |
155 |
|
Other services relating to taxation |
84 |
120 |
|
All other services |
47 |
33 |
5 Taxation
|
Recognised in the income statement |
Note |
2010 |
2009 |
|
|
|
£000 |
£000 |
|
Current UK tax expense |
|
|
|
|
Current year |
|
- |
755 |
|
Double taxation relief |
|
- |
(755) |
|
|
|
- |
- |
|
Current tax on foreign income for the year |
|
790 |
1,079 |
|
Adjustments for prior years |
|
(76) |
(31) |
|
|
|
|
|
|
|
|
714 |
1,048 |
|
|
|
|
|
|
Total current tax |
|
714 |
1,048 |
|
Deferred tax expense |
|
|
|
|
Origination and reversal of temporary differences |
|
(1,254) |
(475) |
|
Adjustments for prior years |
|
(81) |
(53) |
|
|
|
|
|
|
|
|
(1,335) |
(528) |
|
Tax in income statement from continuing operations |
|
(621) |
520 |
|
Tax from discontinued operations |
6 |
- |
65 |
|
|
|
|
|
|
Total tax in income statement |
|
(621) |
585 |
Reconciliation of effective tax rate ("ETR") and tax expense
|
|
2010 |
ETR |
2009 |
ETR |
|
|
£000 |
% |
£000 |
% |
|
|
|
|
|
|
|
Loss for the period |
(2,187) |
|
(15,310) |
|
|
Tax from continuing operations |
(621) |
|
520 |
|
|
Tax from discontinued operations |
- |
|
65 |
|
|
Loss before tax |
(2,808) |
|
(14,725) |
|
|
|
|
|
|
|
|
Tax using the UK corporation tax rate of 28% (2009: 28%) |
(786) |
28 |
(4,123) |
28 |
|
Goodwill impairment |
- |
- |
2,325 |
(16) |
|
Impairment of associate |
- |
- |
185 |
(1) |
|
Tax suffered on dividends |
94 |
(3) |
579 |
(4) |
|
Non-deductible expenses |
168 |
(6) |
294 |
(2) |
|
IFRS2 share option (credit)/charge |
(7) |
- |
164 |
(1) |
|
Sale of associate |
(93) |
3 |
- |
- |
|
Deferred tax assets not recognised |
343 |
(12) |
616 |
(4) |
|
Losses from discontinued operations |
- |
- |
1,107 |
(8) |
|
Different tax rates on overseas earnings |
(183) |
6 |
(478) |
3 |
|
Over provided in prior years |
(157) |
6 |
(84) |
1 |
|
Total tax in income statement |
(621) |
22 |
585 |
(4) |
6 Discontinued operation
In March 2009, the Group sold the Turkish business (TR Keba Ltd) back to Keba's original management team and this was shown as a discontinued operation as at 31 March 2009.
|
|
2009 |
|
|
£000 |
|
|
|
|
Results of discontinued operation |
|
|
Revenue |
2,697 |
|
Expenses |
(3,474) |
|
Results from operating activities |
(777) |
|
Income tax |
(65) |
|
Results from operating activities, net of income tax |
(842) |
|
Loss on sale of discontinued operation (including goodwill impairment) |
(2,950) |
|
|
|
|
Loss for the period |
(3,792) |
|
|
|
|
Basic loss per share |
(4.45p) |
|
Diluted loss per share |
(4.45p) |
|
|
|
|
Cash flows from/(used in) discontinued operation |
|
|
Net cash used in operating activities |
(426) |
|
Net cash from investing activities |
387 |
|
Net cash used in financing activities |
(2) |
|
Net cash used in discontinued operation |
(41) |
|
|
|
|
Effect of disposal on the financial position of the Group |
|
|
Goodwill |
808 |
|
Property, plant and equipment |
65 |
|
Stock |
1,031 |
|
Trade and other receivables |
939 |
|
Cash and cash equivalents |
104 |
|
Deferred tax liabilities |
(207) |
|
Trade and other payables |
210 |
|
Net assets and liabilities |
2,950 |
|
|
|
|
Consideration received, satisfied in cash |
- |
|
Cash disposed of |
(104) |
|
Net cash outflow |
(104) |
7 Intangible assets - Group
|
|
Goodwill |
Other |
Total |
|
|
£000 |
£000 |
£000 |
|
|
|
|
|
|
Cost |
|
|
|
|
Balance at 1 April 2008 |
27,001 |
2,152 |
29,153 |
|
Effect of movements in foreign exchange |
2,586 |
- |
2,586 |
|
|
|
|
|
|
Balance at 31 March 2009 |
29,587 |
2,152 |
31,739 |
|
|
|
|
|
|
Balance at 1 April 2009 |
29,587 |
2,152 |
31,739 |
|
Effect of movements in foreign exchange |
(476) |
- |
(476) |
|
|
|
|
|
|
Balance at 31 March 2010 |
29,111 |
2,152 |
31,263 |
|
Amortisation and impairment |
|
|
|
|
Balance at 1 April 2008 |
4,636 |
689 |
5,325 |
|
Amortisation for the year |
- |
266 |
266 |
|
Impairment losses on continuing operations |
8,303 |
- |
8,303 |
|
Impairment loss on discontinued operations |
808 |
- |
808 |
|
Effect of movements in foreign exchange |
657 |
- |
657 |
|
|
|
|
|
|
Balance at 31 March 2009 |
14,404 |
955 |
15,359 |
|
|
|
|
|
|
Balance at 1 April 2009 |
14,404 |
955 |
15,359 |
|
Amortisation for the year |
- |
261 |
261 |
|
Effect of movements in foreign exchange |
(715) |
- |
(715) |
|
|
|
|
|
|
Balance at 31 March 2010 |
13,689 |
1,216 |
14,905 |
|
|
|
|
|
|
Net book value |
|
|
|
|
At 1 April 2008 |
22,365 |
1,463 |
23,828 |
|
|
|
|
|
|
At 31 March 2009 |
15,183 |
1,197 |
16,380 |
|
|
|
|
|
|
At 31 March 2010 |
15,422 |
936 |
16,358 |
Other intangible assets are made up of customer relationships acquired as part of the acquisition of Serco Ryan Ltd. The remaining amortisation period of this asset is 3.5 years.
There were no impairments made during 2010 (2009: £9.11 million).
The following cash generating units have significant carrying amounts of goodwill:
|
|
2010 |
2009 |
|
|
£000 |
£000 |
|
|
|
|
|
Special Fasteners Engineering Co. Ltd (Taiwan) ('SFE') |
8,927 |
8,688 |
|
TR Fastenings AB (Sweden) |
1,063 |
1,063 |
|
Lancaster Fastener Company Ltd (UK) |
1,245 |
1,245 |
|
Serco Ryan Ltd (within TR Fastenings Ltd) (UK) |
4,083 |
4,083 |
|
Other |
104 |
104 |
|
|
15,422 |
15,183 |
The Group tests goodwill annually for impairment. The recoverable amount of cash generating units are determined from value in use calculations.
Value in use was determined by discounting the future cash flows generated from the continuing use of the unit. In this method, the free cash flows after funding internal needs of the subject company are forecast for a finite period of 5 years based on actual operating results, budgets and economic market research. Beyond the finite period, a terminal (residual) value is estimated using an assumed stable cash flow figure.
The values assigned to the key assumptions represent management's assessment of future trends in the fastenings market and are based on both external and internal sources of historical data.
The table below highlights the key assumptions:
|
|
Taiwan |
UK |
Sweden |
|||
|
|
2010 |
2009 |
2010 |
2009 |
2010 |
2009 |
|
Pre-tax discount rate |
17% |
16% |
17% |
16% |
17% |
16% |
|
|
|
|
|
|
|
|
|
Growth rate |
4% |
4% |
3% |
3% |
2% |
2% |
Long-term growth rate
Five year management plans are used for the Group's value in use calculations. Long-term growth rate into perpetuity has been determined as the lower of:
- the nominal GDP rates for the country of operation; and
- the long-term compound annual growth rate in EBITDA in years six to ten estimated by management.
Pre-tax risk adjusted discount rate
The discount rate applied to the cash flows of each of the Group's operations is based on the risk free rate for ten year bonds issued by the government in the respective market, adjusted for a risk premium to reflect both the increased risk of investing in equities and the systematic risk of the specific Group operating company.
In making this adjustment, inputs required are the equity market risk premium (that is the increased return required over and above a risk free rate by an investor who is investing in the market as a whole) and the risk adjustment, beta, applied to reflect the risk of the specific Group operating company relative to the market as a whole.
In determining the risk adjusted discount rate, management has applied an adjustment for the systematic risk to each of the Group's operations determined using an average of the betas of comparable listed fastener distribution and manufacturing companies and, where available and appropriate, across a specific territory. Management has used a forward-looking equity market risk premium that takes into consideration both studies by independent economists, the average equity market risk premium over the past ten years and the market risk premiums typically used by investment banks in evaluating acquisition proposals.
The table above discloses pre-tax discount rates of 17% across the three CGU's. This reflects that certain components increase the discount rate in one region more than others, such as higher cost of debt in Asia. However, the slower recovery and automotive exposure in the UK & Sweden means a higher territorial premium has been applied. Overall, the Board is confident the pre-tax adjusted discount rates adequately reflect the circumstances in each region and are in accordance with IAS36.
Sensitivity to changes in assumptions
Other than as disclosed below, management believes that no reasonably possible change in any of the above key assumptions would cause the carrying value of any cash generating unit to exceed its recoverable amount.
The estimated value in use at 31 March 2010 of the Group's operations in Taiwan, UK and Sweden were S$ 0.80 million, £3.02 million and £0.30 million above their respective carrying value and, consequently, any material adverse change in key assumptions would, in isolation, cause an impairment loss to be recognised.
The tables below show the key assumptions used in the value in use calculation for Taiwan, UK and Sweden and the amount by which each key assumption must change in isolation in order for the estimated recoverable amount to be equal to its carrying value.
|
|
Taiwan |
UK |
Sweden |
|
|
|
|
|
|
Pre-tax adjusted discount rate |
18% |
19% |
18% |
|
Budgeted change in EBITDA |
3% |
15% |
11% |
|
Long term growth rate |
3.6% |
0.2% |
0.3% |
Other subsidiaries are not included in the calculation as their individual cash generating units show a significant headroom over the goodwill carrying value.
The £0.24 million increase in the goodwill of SFE refers to a foreign exchange gain, as the investment is held in Singapore dollars within TR Asia Investment Pte.
8 Stocks
|
|
Group |
|
|
|
2010 |
2009 |
|
|
£000 |
£000 |
|
|
|
|
|
Raw materials and consumables |
1,625 |
2,109 |
|
Work in progress |
749 |
376 |
|
Finished goods and goods for resale |
17,767 |
21,467 |
|
|
20,141 |
23,952 |
9 Cash and cash equivalents/bank overdrafts
|
|
Group |
Company |
||
|
|
2010 |
2009 |
2010 |
2009 |
|
|
£000 |
£000 |
£000 |
£000 |
|
|
|
|
|
|
|
Cash and cash equivalents per balance sheet |
7,420 |
9,063 |
2,176 |
4,019 |
|
Bank overdrafts per balance sheet |
- |
(2,641) |
(6,524) |
(5,728) |
|
Cash and cash equivalents per cash flow statements |
7,420 |
6,422 |
(4,348) |
(1,709) |
10 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. More information about the Group and Company's exposure to interest rate and foreign currency risk will be contained in the Report & Accounts.
|
|
|
|
Current |
Non-Current |
||
|
Initial Loan Value Company |
Rate |
Maturity |
2010 |
2009 |
2010 |
2009 |
|
|
|
|
£000 |
£000 |
£000 |
£000 |
|
Bridging loan £2.00m |
Base +4.00% |
2010 |
1,210 |
- |
- |
- |
|
Term loan £4.00m |
Libor +3.75% |
2010 |
3,667 |
- |
- |
- |
|
Acquisition SEK 30m |
Libor +0.95% |
2009 |
- |
64 |
- |
- |
|
Acquisition £15.0m |
Libor +0.91% |
2012 |
- |
1,071 |
- |
10,446 |
|
|
|
|
4,877 |
1,135 |
- |
10,446 |
|
Other Group |
|
|
|
|
|
|
|
Acquisition $21.78m |
Libor +0.80% |
2011 |
- |
1,412 |
- |
1,825 |
|
Asset based lending £13.50m (maximum) |
Base (+2.25% to 2.75%) |
2013 |
7,226 |
- |
- |
- |
|
|
|
|
7,226 |
1,412 |
- |
1,825 |
|
Total Group |
|
|
12,103 |
2,547 |
- |
12,271 |
The Company's bridging and terms 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 dependent on the receivables and stock levels at that point in time. 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.
11 Capital and reserves
Capital and reserves - Group and Company
Please refer to Statements of changes in equity that will be contained in the Report & Accounts.
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
|
|
Number of Ordinary shares |
|
|
|
2010 |
2009 |
|
|
|
|
|
In issue at 1 April |
85,246,086 |
84,965,427 |
|
Shares issued |
- |
280,659 |
|
|
|
|
|
In issue at 31 March - fully paid |
85,246,086 |
85,246,086 |
|
|
2010 |
2009 |
|
|
£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:
|
|
2010 |
2009 |
|
|
£000 |
£000 |
|
|
|
|
|
Final paid 2009 - nil p (2008: 1.87p) per qualifying ordinary share |
- |
1,589
|
|
Interim paid 2010 - nil p (2009: 0.93p) per qualifying ordinary share |
- |
793 |
|
|
- |
2,382 |
After the Balance sheet date no final dividend per qualifying ordinary share was proposed by the Directors (2009: nil p).
|
|
2010 £000 |
2009 £000 |
|
Final proposed 2010 - nil p, (2009: nil p) per qualifying ordinary share |
- |
- |
12 Earnings per share
Basic earnings per share
The calculation of basic earnings per share at 31 March 2010 was based on the loss attributable to ordinary shareholders of £2.19 million (2009: loss of £15.31 million) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2010 of 85,246,086 (2009: 85,136,525), calculated as follows:
Weighted average number of ordinary shares
|
|
2010 |
2009 |
|
|
|
|
|
Issued ordinary shares at 1 April |
85,246,086 |
84,965,427 |
|
Effect of shares issued |
- |
171,098 |
|
Weighted average number of ordinary shares at 31 March |
85,246,086 |
85,136,525 |
Diluted earnings per share
The calculation of diluted earnings per share at 31 March 2010, was based on loss attributable to ordinary shareholders of £2.19 million (2009: loss of £15.31 million) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2010 of 86,262,349 (2009: 85,136,525), calculated as follows:
Weighted average number of ordinary shares (diluted)
|
|
2010 |
2009 |
|
|
|
|
|
Weighted average number of ordinary shares at 31 March |
85,246,086 |
85,136,525 |
|
Effect of share options on issue |
1,016,263 |
- |
|
Weighted average number of ordinary shares (diluted) at 31 March |
86,262,349 |
85,136,525 |
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)
|
2010
EPS
|
2009
EPS
|
||||
|
|
Earnings
£000
|
Basic
and
Diluted (1)
|
Adjusted
Diluted
(2)
|
Earnings
£000
|
Basic
|
Diluted
|
|
Loss for the financial year
|
(2,187)
|
(2.57p)
|
(2.54p)
|
(15,310)
|
(17.98p)
|
(17.98p)
|
|
Separately disclosed items:
|
|
|
|
|
|
|
|
Goodwill & intangible impairment
|
261
|
0.31p
|
0.30p
|
8,569
|
10.07p
|
10.07p
|
|
Associate impairment
|
-
|
-
|
-
|
659
|
0.77p
|
0.77p
|
|
Sale of associate
|
(332)
|
(0.39p)
|
(0.38p)
|
-
|
-
|
-
|
|
Restructuring costs
|
3,420
|
4.01p
|
3.97p
|
3,701
|
4.35p
|
4.35p
|
|
Settlement claim
|
-
|
-
|
-
|
555
|
0.65p
|
0.65p
|
|
IFRS2 Share option
|
(143)
|
(0.17p)
|
(0.17p)
|
55
|
0.06p
|
0.06p
|
|
Tax charge on adjusted
items |
(958)
|
(1.12p)
|
(1.11p)
|
(1,036)
|
(1.22p)
|
(1.22p)
|
|
|
|
|
|
|
|
|
|
Adjusted
|
61
|
0.07p
|
0.07p
|
(2,807)
|
(3.30p)
|
(3.30p)
|
|
EPS (Continuing operations) |
2010 EPS |
2009 EPS |
||||
|
|
Earnings £000 |
Basic and Diluted (1) |
Adjusted Diluted (2) |
Earnings £000 |
Basic |
Diluted |
|
Loss for the financial year |
(2,187) |
(2.57p) |
(2.54p) |
(11,518) |
(13.53p) |
(13.53p) |
|
Separately disclosed items: |
|
|
|
|
|
|
|
Goodwill & intangible impairment |
261 |
0.31p |
0.30p |
8,569 |
10.07p |
10.07p |
|
Associate impairment |
- |
- |
- |
659 |
0.77p |
0.77p |
|
Sale of associate |
(332) |
(0.39p) |
(0.38p) |
- |
- |
- |
|
Restructuring costs |
3,420 |
4.01p |
3.97p |
3,701 |
4.35p |
4.35p |
|
Settlement claim |
- |
- |
- |
555 |
0.65p |
0.65p |
|
IFRS2 Share option |
(143) |
(0.17p) |
(0.17p) |
55 |
0.06p |
0.06p |
|
Tax charge on adjusted items |
(958) |
(1.12p) |
(1.11p) |
(1,036) |
(1.22p) |
(1.22p) |
|
|
|
|
|
|
|
|
|
Adjusted |
61 |
0.07p |
0.07p |
985 |
1.15p |
1.15p |
(1) The diluted loss per share 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 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.
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).
13 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 2009 or 2010 but is derived from those accounts. Statutory accounts for 2009 have been delivered to the Registrar of Companies and those for 2010 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.
14 Annual General Meeting
The Annual General Meeting will be held on 21 September 2010, 12noon at Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW.
15 This Preliminary statement is not being posted to shareholders. The Report & Accounts for the year ended 31 March 2010 will be posted to shareholders in late July. Further copies will be available from the Company Secretary, Trifast plc, Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW or on-line www.trifast.com.
This information is provided by RNS
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