Last checked at 18 Jun 2008 07:00
18 June 2008
Trifast PLC
('Trifast' or 'the Company' or 'the Group')
Preliminary Results for the year ended 31 March 2008
Trifast, an international manufacturer and distributor of precision fasteners and components, is pleased to announce its preliminary results for the financial year ended 31 March 2008.
Commenting on the year's results, Steve Auld, Chief Executive, said:
"Thanks to the management initiatives we have adopted, we are now enjoying better operating returns as the quality of our business has improved, despite the challenges presented by the marketplace. As a result the operating profit* is at a seven year high."
Prospects
We have a number of initiatives in place focusing on the quality of sales, the identification of opportunities in new and existing markets, and capitalising on our existing Asian facilities and established supply chain. We face the future with confidence in spite of the uncertainties created by the world financial markets.
Financial and Operational Highlights:
Pre-tax profit* £8.81 million
Operating margin* at a seven year high of 8.2%
Full year dividend increased by 15%
Net debt reduced by £4.5m to £8.2m (Gearing of 15.5%)
Cash flow from operations* strong at £11.4m
Investment in key skills/training for staff
New European sales team established
* Pre intangible amortisation, associate impairment and IFRS2 charges.
Enquiries
| Trifast Group plc | |
| Steve Auld, Chief Executive Officer | Tel. 020 7360 4900 (18/6/08 only) |
| Stuart Lawson, Chief Financial Officer | thereafter 01825 747366 |
| Smithfield Consultants | |
| Reg Hoare / Will Swan / Will Henderson | Tel: 020 7360 4900 |
| Fairfax I.S. plc | |
| Steve Roberts / Simon Bennett | Tel: 020 7598 5368 |
For more information please visit www.trifast.com
Trifast plc
Preliminary Results for the year ended 31 March 2008
(Highlights from Income Statement)
| 31 March 2008 | 31 March 2007 | Percentage Change | |
| Revenue | £122.36m | £131.95m | - 7% |
| Gross profit | £33.71m | £34.72m | - 3% |
| Operating profit (before intangible amortisation, goodwill impairment, IFRS 2 charges and restructuring costs) | £9.95m | £9.74m | +2% |
| Operating profit | £7.14m | £6.36m | + 12% |
| Underlying Pre-tax profit (see table below) | £8.81m | £8.81m | same |
| Pre-tax profit (see table below) | £6.00m | £5.43m | +10% |
| Earnings per share | |||
| - Adjusted diluted - Basic - Diluted | 6.85p 4.23p 4.22p | 7.29p 4.70p 4.70p | -6% -10% -10% |
| Dividend | |||
| - Final - Full Year | 1.87p 2.80p | 1.66p 2.43p | +13% +15% |
| Underlying Pre-tax profit | 31 March | 31 March |
| 2008 | 2007 | |
|
|
| |
| Pre-tax profit | £6.00m | £5.43m |
| Add: Amortisation of intangible assets | £0.27m | £0.27m |
| Add: Material one-off items | £2.24m | £2.90m |
| Profit before taxation, amortisation and material one-off items | £8.51m | £8.60m |
| Add: IFRS2 share-based payments | £0.30m | £0.21m |
| Underlying Pre-tax profit | £8.81m | £8.81m |
Chairman's Statement
Trifast has made positive progress against the strategic objectives set last year, despite the challenging market conditions during the 2007/2008 financial year. The main feature of the year has been an improvement in the quality of the Group's earnings, set against a reduction in sales resulting from customer site closures, planned exits from low margin business and natural attrition.
Our strategy has been to focus on the net profitability by customer which has resulted in, where necessary, tough management decisions being taken not to supply certain customers or market sectors. The impact of these actions has resulted in the operating profit moving to a seven year high of 8.2%. We now have robust systems in place to ensure that new business won by Trifast is at levels of profitability which we consider acceptable.
The investment made in our new business strategy, including seeking business opportunities in new countries, has been another key management focus this year and we expect to begin to see the benefits of these initiatives in future years.
Trifast has invested in excess of £0.5 million on key skills training and development of its staff and has introduced new methods to nurture the talent within our management pool by offering them the appropriate opportunities to fulfil their career path development.
Whilst the current financial year is likely to remain challenging, due to the upheavals in the world economy, the steps that we have already taken mean that we are working from a position of confidence in our approach to building for the future. Our focused sales approach for Europe is already showing early signs of success through a marked improvement of the level of quality enquiries, and our world-class, ISO14001 accredited facilities in Asia continue to provide Trifast with a unique competitive advantage to satisfy the ever increasing demands of our multi-national customer base.
Dividend
In line with our confidence in the Group's prospects, the Board is recommending an increased final dividend of 1.87 pence per ordinary share (2007: 1.66 pence). This together with the interim dividend of 0.93 pence per share, makes a total for the year of 2.80 pence (2007: 2.43 pence), an increase of 15% over 2006/07.
The final dividend is subject to shareholder approval at the AGM to be held on 23rd September 2008 and will be paid on 15th October 2008 to the shareholders on the register as at 27th June 2008.
People
In January we welcomed Bill Wilson as a Non-Executive Director of the Company. Bill has replaced Andrew Cripps who retired as a Non-Executive Director on March 31, 2008. In addition, Steven Tan, an Executive Director of the Company and Managing Director of our Asian operations, retired during the year. The Board would like to thank both Andrew and Steven for their valuable contribution to the Group and service over the years.
Bill Wilson is a Director of the Euronext listed company, Eriks Group NV and has been, since November 2003, Chief Executive Officer of the international engineering and distribution group WYKO Group Ltd (part of Eriks Group NV) and brings with him a wealth of industry and international experience from which Trifast will benefit over the coming years.
On behalf of the Board, I also welcome all the new members of staff who joined the Group during the year and I would like to thank all of our employees for their hard work, commitment and dedication to the business.
Prospects
We have a number of initiatives in place focusing on the quality of sales, the identification of opportunities in new and existing markets, and capitalising on our existing Asian facilities and established supply chain. We face the future with confidence in spite of the uncertainties created by the world financial markets.
Directors' Business Review by Steve Auld CEO and Stuart Lawson CFO
Summary of Trading
Thanks to the management initiatives we have adopted, we are now enjoying better operating returns as the quality of our business has improved, despite the challenges presented by the marketplace. As a result the operating profit* is at a seven year high.
During the financial year under review we identified a number of new business opportunities, which we expect to take advantage of. Our business is now focused on two major geographical areas, namely, Europe and Asia and in addition, we have a smaller business in the United States.
Europe
A key platform of the new Trifast business strategy was the introduction of the new business sales team in Europe and we are pleased to be able to report that this process is largely complete.
We have recruited 20 new sales people to cover the following territories: UK (6), Ireland (2),Scandinavia (2), Germany (1), France (1), Holland (1), Hungary (1), Czech Republic (1), Poland (3), Turkey (2).
We are looking to secure new business opportunities in the following market sectors: Automotive, IT, Electronics, Telecommunications and Home Appliances. The whole of the activity is being guided by our European Marketing Director Keith Gibb who has been employed by the company for 18 years.
This investment we have made will undoubtedly benefit the TR Company in the future.
To be able to manage our current customer portfolio we have invested in the training of our Key Account Management Teams. These teams throughout Europe are being tasked to ensure that we are delivering in accordance with our customer expectations.
The main area of focus during these next trading quarters will be how we manage price increase pressures within our valuable customer base. The price increases from raw materials, energy and fuel are running at levels that we have not experienced before in our industry but we are well equipped as we have long standing relationships in existence with our sales team.
The responsibility for delivering this programme is Glenda Robert's our European Key Accounts Director who has been working for TR for 18 years and an Industry specialist for more than 30 years.
Under our new market strategy we have also identified new business opportunities in the Middle East and Africa (MEA). From the MEA region we have started to win new customer providing us with a new revenue stream. The target market in this new territory is construction where we are able to provide construction screws to the standard needed in the construction market.
In summary we have in place all of the key business platforms to operate a business strategy that we introduced in October 2006.
Asia
Even after 13 years of business operations in Asia the challenge for us is to keep pace with our expanding sub-contract manufacturers as they open new factory facilities. Sub-contractors are constantly in search of new low cost economies in which they can open new production facilities producing high volume consumer electronics. This challenge has become a prime focus for our own Asian factories and created a number of opportunities for Trifast.
Sales and marketing plans are being developed in Asia. We are looking to take full advantage of our expertise and capabilities in Taiwan (2 factories) and indeed Singapore. These three large manufacturing sites will be key to our future developments in this existing growth market.
We will be looking to strategically invest in this region to ensure that we remain at the cutting edge of fastener manufacture in Asia. This investment will allow us to move into potential growth markets which will cover aerospace and defence, vision & sound technology, medical and marine products.
Also in our plans we will be looking at potential new territories which will include Vietnam and India.
The growth of our business in China is totally driven by internal demand. We do not export from China and we only produce fasteners for the local market. Again we expect growth within this business sector during the next period as the established markets of IT, Electronics and Telecommunications are still progressing positively.
The Americas
In last year's Report and Accounts we announced that we would concentrate on our existing OEM customer base to ensure that these accounts received a world-class service for the products that they purchase.
We have introduced the Master Distributor Sales Programme (MDP) in the USA during the last trading year which is being developed. It is modelled on the European MDP which proved to be a success during the last 12 months. Currently this area is showing sales and profit growth from this programme on a month by month basis.
The Board believes this programme is producing the best prospects for the future in the USA and we will be looking at new investments to drive the MDP in the coming financial year.
Acquisitions
We have set a stringent set of criteria to be used in the evaluation of all potential acquisitions. We have reviewed a number of possible acquisitions during the year and have not found any that meet these targets. We will continue to review acquisition opportunities as and when suitable targets become available.
Review of our Performance
How do we measure value creation?
We continue to focus on creating value for our shareholders. In this section, as last year, we will review our performance for the year just ended and present our expectations for value creation in future years.
It is our view that long-term shareholder value comes from:
Market Competitiveness and reputation;
Operational Excellence.
In assessing whether the Group has created value, we recognise the importance of a return to shareholders. For this reason we have chosen to measure Return On Capital Employed (ROCE) and Total Shareholder Return (TSR).
What is ROCE?
ROCE is the profit before interest and tax (and pre intangible amortisation, associate impairment, IFRS2 charges and restructuring costs) shown as a percentage of the average total assets of a period less the current liabilities (excluding cash and short term debt).
It is a measure of management's utilisation of the net assets at its disposal and therefore a measure of the increased value being created within the business.
What is TSR?
TSR shows the return on investment a shareholder receives over a specified time frame. It is shown as a percentage and includes both the changes in share price and dividends received.
It is a total measure of management's ability to return over time both share price increase and dividend growth to the shareholders. It is an absolute measure. An increased TSR year on year means that value has been created.
So have we created value in 2007?
We are pleased to report that we have continued to grow the returns achieved from the capital employed in the business. However, we also have to report that as with the stock market in general this year we have seen a reduction in our share price, which although mitigated to some extent by our increased dividend levels has led to an overall reduction in our total shareholder return.
| Year End 31st March 2008 | Year End 31st March 2007 | Percentage Change | |
| ROCE | 16.26% | 15.97% | Up 2% |
| TSR | (23.15)% | 44.33% | n/a |
We believe that as our recent management initiatives continue to take effect, we will improve on these percentages and therefore continue to create value in the future for our shareholders.
So how did we perform financially during the year ended March 2008?
| 31st March 2008 Actual | 31st March 2007 Actual | Percentage Change | |
| £million | £million | ||
| Revenue | £122.4 | £131.9 | Down 7% |
Principle reasons for revenue decline in 2007/08
- revenue that we have exited from customers who did not meet Trifast’s
profitability levels.
| 31st March 2008 Actual | 31st March 2007 Actual | Percentage Change | |
| Gross Profit Margin* | 27.6% | 26.3% | Up 5% |
| Operating Margin* | 8.2% | 7.5% | Up 9% |
* before intangible amortisation, associate impairment, IFRS2 charges and restructuring costs
Principle reasons for margin improvement in 2008
- on-going change of mix in business to higher margin type products;
- improved purchasing initiatives including increased spend in
Asia and more importantly in our own factories;
- reduction of business in lower margin accounts;
- increased operational efficiency throughout all our sites;
- reduced central Group running costs;
- continued focus on quality assurance and customer service levels.
| 31st March 2008 Actual | 31st March 2007 Actual | Percentage Change | |
| £million | £million | ||
| Profit before tax, before intangible amortisation, associate impairment, IFRS2 charges and restructuring costs | £8.81m | £8.81m | same |
Principle reasons for same profit in 2008
- decreased revenue, see above;
- gross margin improvement, compensating for the reduction in revenues
see above;
- impact of FOREX on the consolidation of our profits from overseas
subsidiaries, impact in period £0.2m.
| 31st March 2008 Actual | 31st March 2007 Actual | Percentage Change | |
| Operating costs as a % of turnover* | 19.7% | 19.1% | +3% |
* before intangible amortisation, associate impairment, IFRS2 charges and restructuring costs
Principle reasons for decreased overhead efficiency in 2008
- decreased revenue, see above;
- over £0.5m spent on training staff for the benefit of TR future (2007:
£0.1m);
- continued investment in the recruitment of new high calibre sales staff;
- increased marketing costs around Mainland Europe and USA to raise the TR profile,
including attendance at exhibitions;
- general inflation of salaries especially in locations such as China, Taiwan and Hungary;
- a number of delayed restructuring costs that got charged in the year but were not
provided for in the prior year provision (£0.20m).
We are comfortable that Trifast has made satisfactory progress in most of the areas above as shown by the results. Having reduced our operating platform and improved our efficiencies over the last two years, our focus remains firmly on profitable sales growth. We currently have no sites going through any form of restructuring programme and so have all our teams focussed on sales development. At this time we have an enquiry log which is greater than it has been for the last five years. This represents a substantial interest from our market in our products and services.
Restructuring Costs
During the period, we completed the final part of the planned restructuring programme and have not shown any restructuring costs in this set of reported accounts. The main impact to us in the year was the time taken to get the teams back up to speed and adapted to the new structure and the impact of the cash flow from the prior three years restructuring provisions, which meant a cash outflow of £1.7m.
Investments
Having spent the prior year and the first half of this year focusing on Europe and the USA the Board spent the second half of the year looking into the Group's businesses in Asia. During this review it was concluded that the Investment that Trifast has in Techfast Bhd, Malaysia (a publicly quoted company in Malaysia) had suffered what the Board considered to be a permanent diminution in value against its holding costs in the books reflected by the significant decline in the Techfast's share price. To reflect this and in line with IAS39 the Board has decided to permanently impair £2.2m of the value of the investment in the current period, reducing the carrying value to £0.5m. The Company continues to work closely with the Techfast team and hopes that the Techfast business can produce stronger results in the future.
The effects of these results on Shareholder Value?
Earnings per Share
We are presenting an adjusted earnings per share measure that adds back the affect of material restructuring costs, goodwill charge and impairment and any related tax effect.
| 31st March 2008 Actual Per Share | 31st March 2007 Actual Per Share | Percentage Change | |
| Adjusted Diluted Earnings Per Share | 6.85 pence | 7.29 pence | Down 6% |
| Basic Earnings Per Share | 4.23 pence | 4.70 pence | Down 10% |
The diluted weighted average number of shares outstanding at the end of the period was 85,053,209 (2007: 84,584,980).
The reduction in the Earnings per Share calculations above was predominantly caused by the slight increase in our tax rate as a result of the movement of dividends from our Asia Group to the UK.
Dividend Payment
The Board continues to maintain its progressive dividend policy (an average increase of 6% per year for the last 5 years) and this year, as reported in our financial statement, will declare a full year dividend growth of 15% on the prior year, reflecting on the Board's confidence in the Group's prospects. Although on the face of it taking our dividend cover slightly below our targeted 3 times (2.7 times), once adjusted for the one-off associate impairment costs it represents cover of 3.8 times.
| 31st March 2008 Actual Per Share | 31st March 2007 Actual Per Share | Percentage Change | |
| Final Dividend Payment | 1.87 pence | 1.66 pence | Up 13% |
| Full Year Payment | 2.80 pence | 2.43 pence | Up 15% |
Have We Managed Our Assets Successfully?
As shown we have grown ROCE by 2% with the successful management of our working capital.
The stock level reduced slightly to £25.26m (2007: £25.61m) reflecting an underlying decrease in customer specific stock held and an increase in own branded product ranges held for the growth of the Master Distribution Programme (sales to distributors in the area of the world where we do not have a strong physical presence). We continue to focus on this area and drive initiatives to increase the return we generate from our stock asset using our strong Asian supply chain solutions. The stock reduction programme this year has been hit by the reduction in revenues from some larger customers and the increased stock holding of raw materials in the factories to protect us from the raw material price increases that have been on-going during the last quarter of the year.
Capital expenditure was in line with depreciation levels during the period at £1.11m (2007: £0.70m). This slight increase reflects a period of investment in our sites following a period of low investment during the restructuring process.
Our gross debt figure has reduced by £2.73m to £16.46m (2007: £19.19m) and our net debt figure has reduced by £4.51m to £8.21m (2007: £12.72m), this is a result of continued tight controls on customers' cash collection and suppliers payments and a slight reduction in the cash outflow relating to restructuring costs from previous years relative to the prior year.
Cash generation from operating activities was strong with £11.40m, (2007: £10.88m) being generated before the cash impact of the prior year's exceptionals of £1.70million, an increase of 5%.
At the year end the Group held net cash of £8.25m (2007: £6.47m). This has resulted in a reduced gearing level of 16% (2007:26%), which leaves the Group with the capacity to pursue its strategic plans.
Our £8.62m gross cash balance at the year end was held in foreign currencies. As a Group, our policy is to monitor exchange rates and buy or sell currencies in order to minimise our open exposure to foreign exchange risk, but we do not speculate on rates. During the year we have managed this exposure well with the net impact or our trading FOREX at a loss of £0.2m for the year (2007: nil impact).
Depreciation charges were similar at £1.15m (2007: £1.17m). We expect this to remain relatively constant for 2009.
Funding Our Operations
The business continues to generate cash for investment in both organic growth and future acquisitions. We will continue using some of the cash to strengthen the balance sheet by paying down debt. Some £2.38m (35% of free cash flow) will go to shareholders by way of dividend to give them a return on their investment.
To finance our operations the Board continues its policy of using a combination of retained earnings and external financing raised principally in the UK by the Parent Company, either in the form of debt or on the equity markets.
The net interest payable increased this year to £1.28m (2007: £1.03m) due to the increase in the interest rates and the increased average debt during the period as a result of the impact of the increased debt in 2007. We continue to regularly review all of our loans (which are currently all at variable rates) to ensure that we are getting a competitive interest rate level and that we are comfortable with the exposure to interest rate movements.
| March 2008 | March 2007 | Banking Covenants | |
| EBITDA:Net Interest * | 8.8 times | 10.7 times | ≥ 3 times |
| Net Debt:EBITDA * | 0.7 times | 1.2 times | ≤ 3 times |
* being earnings before interest, tax, depreciation and goodwill amortisation, associate impairment and also before restructuring costs.
The banking facilities are adequate for the current business requirements and offer headroom for future growth. We continue to review our banking facilities on an annual basis.
Taxation
The net charge for the year was £2.41m (2007: £1.45m) which after adjusting for associate impairment , represents an effective tax rate of 29% (2007: 27.0%).
During the period, the Group generated greater profits in its lower tax regions but also suffered an increased tax charge as a result of the level of profits paid up by dividend from the Asian Group to the UK, although this increases our tax rate by 11% points this is still the most effective way to repatriate funds to the UK parent company and means that our expected effective tax rate moving forwards is 30%.
Pensions
Trifast plc operates Defined Contribution schemes (e.g. Stakeholder) and so has not had to report any valuation shortfalls. All scheme payments are up-to-date and we see no financial exposure to the Group with these schemes.
Our Summary of 2008
We remain committed to our long term objective of profitable sales growth, with the focus being on the quality of business won. We have targeted particular growth areas and the business has been restructured so that we can provide the flexible solutions and excellent service levels that our customers demand. We have a strong management team and a highly motivated and experienced workforce and the breadth and spread of our customer base both geographically and in industrial sector gives the Board confidence that Trifast will effectively manage the challenges ahead.
Steve Auld Stuart Lawson
Chief Executive Officer Chief Financial Officer
18 June 2008
Consolidated income statement
for year ended 31 March 2008
| Note | 2008 | 2007 | ||
| £000 | £000 | |||
| Revenue | 1 | 122,364 | 131,946 | |
| Cost of sales | (88,650) | (97,224) | ||
|
|
| |||
| Gross profit | 33,714 | 34,722 | ||
| Other operating income | 298 | 220 | ||
| Distribution expenses | (2,805) | (2,868) | ||
| Administrative expenses before the following items: | (21,258) | (22,336) | ||
| IFRS2 charge | (303) | (213) | ||
| Intangible amortisation | (273) | (274) | ||
| Restructuring costs | 2 | - | (2,894) | |
| Impairment of associate | 2 | (2,236) | - | |
| Total administration costs | (24,070) | (25,717) | ||
| Operating profit | 2 | 7,137 | 6,357 | |
| Financial income | 156 | 144 | ||
| Financial expenses | (1,433) | (1,175) | ||
|
| ||||
| Net financing costs | (1,277) | (1,031) | ||
| Share of profit of associate | 140 | 100 | ||
|
| ||||
| Profit before tax | 6,000 | 5,426 | ||
| Taxation | 3 | (2,407) | (1,453) | |
|
| ||||
| Profit for the year (attributable to equity shareholders of the Parent Company) | 3,593 | 3,973 | ||
|
| ||||
| Earnings per share | 8 | |||
| Basic | 4.23p | 4.70p | ||
| Diluted | 4.22p | 4.70p | ||
| Dividends | 7 | |||
| Final proposed 2008 - 1.87p (2007:1.66p) | 1,589 | 1,406 | ||
| Interim paid 2008 - 0.93p (2007:0.77p) | 790 | 650 |
All amounts in the income statement are derived from continuing operations for the current and prior year.
Statements of recognised income and expense
for year ended 31 March 2008
| Group | Company | ||||
| Note | 2008 | 2007 | 2008 | 2007 | |
| £000 | £000 | £000 | £000 | ||
| Foreign exchange translation differences | 2,962 | (1,511) | - | - | |
| Net (loss)/gain on hedge of net investment in foreign subsidiary | (55) | 14 | - | - | |
|
|
| ||||
| Net income/(expense) recognised directly in equity | 7 | 2,907 | (1,497) | - | - |
| Profit for the year | 7 | 3,593 | 3,973 | 1,625 | 2,449 |
|
|
| ||||
| Total recognised income for the year | 7 | 6,500 | 2,476 | 1,625 | 2,449 |
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Balance sheets
at 31 March 2008
| Note | Group | Company | |||
| 2008 | 2007 | 2008 | 2007 | ||
| £000 | £000 | £000 | £000 | ||
| Non-current assets | |||||
| Property, plant and equipment | 8,570 | 8,324 | 2,775 | 2,776 | |
| Intangible assets | 23,828 | 23,316 | 4 | 16 | |
| Investments in associate | 659 | 2,836 | 500 | 2,736 | |
| Equity investments | - | - | 29,110 | 28,920 | |
| Deferred tax assets | 383 | 350 | - | - | |
|
|
| ||||
| Total non-current assets | 33,440 | 34,826 | 32,389 | 34,448 | |
|
|
|
|
| ||
| Current assets | |||||
| Stocks | 4 | 25,263 | 25,611 | - | - |
| Trade and other receivables | 25,363 | 28,109 | 2,877 | 4,088 | |
| Cash and cash equivalents | 5 | 8,618 | 6,757 | 5,254 | 5,256 |
|
|
| ||||
| Total current assets | 59,244 | 60,477 | 8,131 | 9,344 | |
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|
|
|
| ||
| Total assets | 1 | 92,684 | 95,303 | 40,520 | 43,792 |
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| ||
| Current liabilities | |||||
| Bank overdraft | 5 | 371 | 287 | 4,000 | 3,187 |
| Other interest-bearing loans and borrowings | 6 | 2,590 | 2,795 | 1,510 | 1,696 |
| Trade and other payables | 20,135 | 24,181 | 1,049 | 2,749 | |
| Tax payable | 1,328 | 192 | - | - | |
| Provisions | 70 | 1,624 | 9 | 475 | |
|
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| ||||
| Total current liabilities | 24,494 | 29,079 | 6,568 | 8,107 | |
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| Balance sheets (continued) at 31 March 2008 | Note | Group | Company | ||
| 2008 | 2007 | 2008 | 2007 | ||
| £000 | £000 | £000 | £000 | ||
| Non-current liabilities | |||||
| Other interest-bearing loans and borrowings | 6 | 13,865 | 16,394 | 11,582 | 13,047 |
| Provisions | 901 | 1,096 | - | - | |
| Deferred tax liabilities | 459 | 509 | 169 | 189 | |
|
|
| ||||
| Total non-current liabilities | 15,225 | 17,999 | 11,751 | 13,236 | |
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|
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|
| ||
| Total liabilities | 1 | 39,719 | 47,078 | 18,319 | 21,343 |
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|
| ||
| Net assets | 1 | 52,965 | 48,225 | 22,201 | 22,449 |
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| Equity attributable to equity holders of the parent | 7 | ||||
| Share capital | 4,248 | 4,236 | 4,248 | 4,236 | |
| Share premium | 12,167 | 12,046 | 12,167 | 12,046 | |
| Reserves | 1,816 | (1,091) | 2,393 | 2,393 | |
| Retained earnings | 34,734 | 33,034 | 3,393 | 3,774 | |
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|
| |||
| Total equity | 52,965 | 48,225 | 22,201 | 22,449 | |
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These financial statements were approved by the board of Directors on 17 June 2008 and were signed on its behalf by:
Cash flow statements
for year ended 31 March 2008
| Note | Group | Company | |||
| 2008 | 2007 | 2008 | 2007 | ||
| £000 | £000 | £000 | £000 | ||
| Cash flows from operating activities | |||||
| Profit for the year | 3,593 | 3,973 | 1,625 | 2,449 | |
| Adjustments for: | |||||
| Depreciation, amortisation and impairment | 1,425 | 1,445 | 4,021 | 138 | |
| Financial income | (156) | (144) | (301) | (312) | |
| Financial expense | 1,433 | 1,175 | 882 | 791 | |
| Gain on sale of property, plant and equipment and investments | (24) | (7) | - | - | |
| Dividends received | - | - | (9,373) | (5,550) | |
| Equity settled share-based payment expenses | 303 | 213 | 190 | 125 | |
| Profit from associate | (140) | (100) | - | - | |
| Impairment of associate | 2,236 | - | 2,236 | - | |
| Taxation | 2,407 | 1,453 | (20) | (123) | |
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|
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| ||
| Operating profit / (loss) before changes in working capital and provisions | 11,077 | 8,008 | (740) | (2,482) | |
| Change in trade and other receivables | 3,926 | 973 | 1,211 | (280) | |
| Change in stock | 1,357 | (1,066) | - | - | |
| Change in trade and other payables | (4,893) | 72 | (1,669) | 35 | |
| Change in provisions | (1,771) | 1,262 | (466) | 475 | |
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|
|
|
| ||
| Cash generated from the operations | 9,696 | 9,249 | (1,664) | (2,252) | |
| Tax paid | (1,454) | (1,668) | (3) | - | |
| Net cash from operating activities | 8,242 | 7,581 | (1,667) | (2,252) | |
|
|
|
|
| ||
| Cash flows from investing activities | |||||
| Proceeds from sale of property, plant and equipment | 74 | 64 | - | - | |
| Interest received | 153 | 145 | 301 | 311 | |
| Acquisition of subsidiary and associates, net of cash acquired | (4) | (4,761) | (4,097) | (4,850) | |
| Acquisition of property, plant and equipment | (1,113) | (683) | (100) | (14) | |
| Dividends received | 81 | - | 9,373 | 5,550 | |
|
|
| ||||
| Net cash from investing activities | (809) | (5,235) | 5,477 | 997 | |
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|
|
| ||
Cash flow statements (continued)
for the year ended 31 March 2008
| Note | Group | Company | |||
| 2008 | 2007 | 2008 | 2007 | ||
| £000 | £000 | £000 | £000 | ||
| Cash flows from financing activities | |||||
| Proceeds from the issue of share capital | 7 | 133 | 190 | 133 | 190 |
| Proceeds from new loan | - | 3,799 | - | 3,799 | |
| Repayment of borrowings | (2,739) | (2,810) | (1,651) | (1,741) | |
| Dividends paid | 7 | (2,196) | (1,899) | (2,196) | (1,899) |
| Interest paid | (1,462) | (1,090) | (911) | (720) | |
|
|
| ||||
| Net cash from financing activities | (6,264) | (1,810) | (4,625) | (371) | |
|
|
|
|
| ||
| Net change in cash and cash equivalents | 1,169 | 536 | (815) | (1,626) | |
| Cash and cash equivalents at 1 April | 6,470 | 6,252 | 2,069 | 3,695 | |
| Effect of exchange rate fluctuations on cash held | 608 | (318) | - | - | |
| Cash and cash equivalents at 31 March | 5 | 8,247 | 6,470 | 1,254 | 2,069 |
|
|
|
|
| ||
1 Segmental analysis
Segment information, 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.
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 segments
The Group is comprised of the following main geographical segments:
Europe/America: includes UK, Norway, Sweden, France, Hungary, Southern
Ireland, Holland, Turkey, Poland, USA, Mexico and Costa Rica
Asia: includes Malaysia, China, Singapore and Taiwan
In presenting information on the basis of geographical segments, segment revenue and segment assets are based on the geographical location of our entities across the world.
| Europe/USA | Asia | Central | Group | |||||
| 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | |
| £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | |
| Revenue* | ||||||||
| Revenue from external customers | 96,165 | 106,307 | 26,199 | 25,639 | - | - | 122,364 | 131,946 |
| Inter segment revenue | 4,462 | 4,664 | 3,312 | 3,543 | - | - | 7,774 | 8,207 |
|
|
|
|
| |||||
| Total revenue | 100,627 | 110,971 | 29,511 | 29,182 | - | - | 130,138 | 140,153 |
|
|
|
|
|
|
|
|
| |
| Segment result before items listed below | 6,037 | 6,104 | 6,504 | 5,793 | (2,452) | (2,059) | 10,089 | 9,838 |
| Impairment of associate | - | - | - | - | (2,236) | - | (2,236) | - |
| Intangible amortisation | (273) | (274) | - | - | - | - | (273) | (274) |
| Restructuring costs | - | (2,324) | - | - | - | (570) | - | (2,894) |
| Equity settled share based payments | (68) | (47) | (45) | (41) | (190) | (125) | (303) | (213) |
| Operating profit/(loss) before financing costs | 5,696 | 3,459 | 6,459 | 5,752 | (4,878) | (2,754) | 7,277 | 6,457 |
| Net financing costs | (1,277) | (1,031) | ||||||
|
|
| |||||||
| Profit on ordinary activities before taxation | 6,000 | 5,426 | ||||||
| Taxation | (2,407) | (1,453) | ||||||
|
| ||||||||
| Profit for the year | 3,593 | 3,973 | ||||||
|
|
| |||||||
| Assets and liabilities | ||||||||
| Segment assets | 56,388 | 59,667 | 27,638 | 24,744 | 8,658 | 10,892 | 92,684 | 95,303 |
| Segment liabilities | (14,245) | (18,892) | (7,661) | (8,521) | (17,813) | (19,665) | (39,719) | (47,078) |
|
|
|
|
|
| ||||
| Segment net assets/ (liabilities) | 42,143 | 40,775 | 19,977 | 16,223 | (9,155) | (8,773) | 52,965 | 48,225 |
|
|
|
|
|
|
|
|
| |
*Of the Asian external revenue, £4.5 million (2007:£4.9 million) was sold into the American market and £5.6million (2007:£1.5 million) sold into the European market.
There was no material difference in the European and American 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 and therefore considered to be only one business segment.
The share of the Associate Techfast (based in Malaysia) has been included in the Asia segment and not shown separately.
| Europe/USA | Asia | Central | Group | |||||
| 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | |
| £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | |
| Cashflows | ||||||||
| Operating activities | ||||||||
| Segment cashflow | 4,137 | 8,031 | 3,263 | 1,234 | 842 | (1,684) | 8,242 | 7,581 |
| Investing activities | ||||||||
| Segment cashflow | (324) | 677 | (480) | (791) | (5) | (5,121) | (809) | (5,235) |
| Financing activities | ||||||||
| Segment cashflow | (1,799) | (1,183) | (64) | (257) | (4,401) | (370) | (6,264) | (1,810) |
| Capital expenditure | ||||||||
| Segment cashflow | 464 | 354 | 549 | 315 | 100 | 14 | 1,113 | 683 |
2 Expenses and auditors' remuneration
Included in profit for the year are the following:
| 2008 | 2007 | |
| £000 | £000 | |
| Depreciation | 1,152 | 1,171 |
| Amortisation | 273 | 274 |
| Forex loss / (gains) | 170 | (47) |
| Restructuring costs - included in administrative expenses | - | 2,894 |
| Impairment of associate - included in administrative expenses | 2,236 | - |
|
|
|
2007 restructuring costs comprise £1.4 million redundancy payments, £0.4 million for compensation of loss of office and £1.1 million other restructuring costs, largely the result of the closure of our French site.
The Associate Techfast has been impaired by £2.2 million to a carrying value of £0.5 million in the Company (Group £0.7 million) to reflect Management's view on the recoverable amount (higher of value in use and fair value less costs to sell) and the continuing deterioration of Techfast's share price.
Auditors' remuneration:
| 2008 | 2007 | |
| £000 | £000 | |
| Audit of these financial statements | 42 | 42 |
| Audit of financial statements of subsidiaries pursuant to legislation | 193 | 183 |
| Other services relating to taxation | 75 | 65 |
| All other services | 27 | 28 |
|
|
|
3 Taxation
| Recognised in the income statement | 2008 | 2007 |
| £000 | £000 | |
| Current UK tax expense | ||
| Current year | 1,730 | 300 |
| Double taxation relief | (745) | (103) |
| Adjustments for prior years | (168) | 3 |
|
| ||
| 817 | 200 | |
|
|
| |
| Current tax on foreign income for the year | 1,729 | 1,431 |
| Adjustments for prior years | (39) | (92) |
|
| ||
| 1,690 | 1,339 | |
|
|
| |
| Total current tax | 2,507 | 1,539 |
| Deferred tax expense | ||
| Origination and reversal of temporary differences | (87) | (26) |
| Adjustments for prior years | (13) | (60) |
|
|
| |
| (100) | (86) | |
|
| ||
| Total tax in income statement | 2,407 | 1,453 |
Reconciliation of effective tax rate and tax expense
| 2008 | ETR | 2007 | ETR | |
| £000 | % | £000 | % | |
| Profit before tax | 6,000 | 5,426 | ||
|
|
| |||
| Tax using the UK corporation tax rate of 30% (2007: 30%) | 1,800 | 30 | 1,628 | 30 |
| Impairment of associate | 671 | 11 | ||
| Tax suffered on dividends | 856 | 14 | 169 | 3 |
| Effect of change in tax rate | (24) | - | - | - |
| Non-deductible expenses | 160 | 3 | 71 | 1 |
| IFRS2 share option charge | (11) | - | (73) | (1) |
| Associate tax | (18) | - | (30) | - |
| Deferred tax assets not recognised | 201 | 3 | 548 | 10 |
| Different tax rates on overseas earnings | (1,008) | (17) | (711) | (13) |
| Over provided in prior years | (220) | (4) | (149) | (3) |
|
|
| |||
| Total tax in income statement | 2,407 | 40 | 1,453 | 27 |
|
|
|
|
|
4 Stocks
| Group | ||||
| 2008 | 2007 | |||
| £000 | £000 | |||
| Raw materials and consumables | 1,223 | 1,297 | ||
| Work in progress | 612 | 637 | ||
| Finished goods and goods for resale | 23,428 | 23,677 | ||
|
| ||||
| 25,263 | 25,611 | |||
|
|
| |||
5 Cash and cash equivalents/bank overdrafts
| Group | Company | |||
| 2008 | 2007 | 2008 | 2007 | |
| £000 | £000 | £000 | £000 | |
| Cash and cash equivalents per balance sheet | 8,618 | 6,757 | 5,254 | 5,256 |
| Bank overdrafts per balance sheet | (371) | (287) | (4,000) | (3,187) |
|
|
|
| ||
| Cash and cash equivalents per cash flow statements | 8,247 | 6,470 | 1,254 | 2,069 |
UK overdrafts are secured by an unlimited multilateral guarantee between the UK trading companies.
6 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.
| Current
| Non-Current | |||||
| Initial Loan Value Company | Rate | Maturity | 2008 | 2007 | 2008 | 2007 |
| £000 | £000 | £000 | £000 | |||
| Acquisition $2.15m | Libor +0.95% | 2007 | - | 36 | - | - |
| Acquisition $3.45m | Libor +0.95% | 2008 | 87 | 176 | - | 88 |
| Acquisition £1.95m | Libor +0.90% | 2008 | 98 | 195 | - | 98 |
| Acquisition SEK30m | Libor +0.95% | 2009 | 254 | 217 | 64 | 272 |
| Acquisition £15.0m | Libor +0.91% | 2012 | 1,071 | 1,072 | 11,518 | 12,589 |
|
|
| |||||
| 1,510 | 1,696 | 11,582 | 13,047 | |||
|
|
|
|
| |||
| Other Group | ||||||
| Acquisition $21.78m | Libor +0.80% | 2011 | 1,018 | 1,032 | 2,283 | 3,347 |
| Funding $0.25m | Sibor +2% | 2008 | 62 | 61 | - | - |
| Funding $0.1m | Fixed 8% | 2007 | - | 6 | - | - |
|
|
| |||||
| 1,080 | 1,099 | 2,283 | 3,347 | |||
|
|
|
|
| |||
| Total Group | 2,590 | 2,795 | 13,865 | 16,394 | ||
|
|
|
|
| |||
All the bank loans, with the exception of the $0.25 million (funded in Singapore) included in the table above are secured by an unlimited multilateral guarantee between the UK trading companies.
7 Capital and reserves
Reconciliation of movement in capital and reserves - Group
| Share Capital £000 | Share Premium £000 | Translation Reserve £000 | Retained Earnings £000 | Total Equity £000 | |
| Balance at 1 April 2006 | 4,219 | 11,873 | 406 | 30,747 | 47,245 |
| Total recognised income and expense | - | - | (1,497) | 3,973 | 2,476 |
| Issue of shares | 17 | 173 | - | - | 190 |
| Equity-settled share based payment transactions | - | - | - | 213 | 213 |
| Dividends | - | - | - | (1,899) | (1,899) |
| Balance at 31 March 2007 | 4,236 | 12,046 | (1,091) | 33,034 | 48,225 |
| Balance at 1 April 2007 | 4,236 | 12,046 | (1,091) | 33,034 | 48,225 |
| Total recognised income and expense | - | - | 2,907 | 3,593 | 6,500 |
| Issue of shares | 12 | 121 | - | - | 133 |
| Equity-settled share based payment transactions | - | - | - | 303 | 303 |
| Dividends | - | - | - | (2,196) | (2,196) |
| Balance at 31 March 2008 | 4,248 | 12,167 | 1,816 | 34,734 | 52,965 |
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.
Reconciliation of movement in capital and reserves - Company
| Share capital | Share premium | Merger reserve | Retained earnings | Total Equity | |
| £000 | £000 | £000 | £000 | £000 | |
| Balance at 1 April 2006 | 4,219 | 11,873 | 2,393 | 3,099 | 21,584 |
| Total recognised income and expense | - | - | - | 2,449 | 2,449 |
| Issue of shares | 17 | 173 | - | - | 190 |
| Equity-settled share based payment transactions | - | - | - | 125 | 125 |
| Dividends | - | - | - | (1,899) | (1,899) |
| Balance at 31 March 2007 | 4,236 | 12,046 | 2,393 | 3,774 | 22,449 |
| Balance at 1 April 2007 | 4,236 | 12,046 | 2,393 | 3,774 | 22,449 |
| Total recognised income and expense | - | - | - | 1,625 | 1,625 |
| Issue of shares | 12 | 121 | - | - | 133 |
| Equity-settled share based payment transactions | - | - | - | 190 | 190 |
| Dividends | - | - | - | (2,196) | (2,196) |
| Balance at 31 March 2008 | 4,248 | 12,167 | 2,393 | 3,393 | 22,201 |
The merger reserve has arisen under Section 131 Companies Act 1985 and is a non-distributable reserve.
7 Capital and reserves (continued)
Share capital
| Ordinary shares | ||||
| In thousands of shares | 2008 £000 | 2007 £000 | ||
| On issue at 1 April | 84,708 | 84,380 | ||
| Issued for cash | 257 | 328 | ||
|
|
| |||
| On issue at 31 March - fully paid | 84,965 | 84,708 | ||
|
|
| |||
| 2008 | 2007 | |
| £000 | £000 | |
| Authorised | ||
| Ordinary shares of 5p each | 5,000 | 5,000 |
|
|
| |
| Allotted, called up and fully paid | ||
| Ordinary shares of 5p each | 4,248 | 4,236 |
|
|
|
During the year 257,392 ordinary shares of 5p were issued upon the exercising of Employee Share Options. 213,840 SAYE options were granted on 1 October 2002, at an exercise price of £0.50 per share and 1,052 SAYE options were granted on 1 October 2004 at an exercise price of £0.70. 25,000 Executive options were granted on 31 July 2002, at an exercise price of £0.565 per share and 17,500 Executive options were granted on 2 July 2003 at an exercise price of £0.65 per share.
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:
| 2008 | 2007 | |
| £000 | £000 | |
| Final paid 2007 - 1.66p (2006: 1.48p) per qualifying ordinary share | 1,406 | 1,249 |
| Interim paid 2008 - 0.93p (2007: 0.77p) per qualifying ordinary share | 790 | 650 |
|
| ||
| 2,196 | 1,899 | |
|
|
|
After the balance sheet date a final dividend of 1.87p per qualifying ordinary share (2007: 1.66p) was proposed by the Directors. These dividends have not been provided for.
| 2008 £000 | 2007 £000 | |
| Final proposed for 2008 - 1.87p (2007: 1.66p) per qualifying ordinary share | 1,589 | 1,406 |
8 Earnings per share
Basic earnings per share
The calculation of basic earnings per share at 31 March 2008 was based on the profit attributable to ordinary shareholders of £3,593,000 (2007: £3,973,000) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2008 of 84,819,205 (2007: 84,459,931), calculated as follows:
Weighted average number of ordinary shares
| 2008 | 2007 | |
| Issued ordinary shares at 1 April | 84,708,035 | 84,380,474 |
| Effect of shares issued | 111,170 | 79,457 |
|
| ||
| Weighted average number of ordinary shares at 31 March | 84,819,205 | 84,459,931 |
|
|
|
Diluted earnings per share
The calculation of diluted earnings per share at 31 March 2008 was based on profit attributable to ordinary shareholders of £3,593,000 (2007: £3,973,000) and a weighted average number of ordinary shares outstanding during the year ended 31 March 2008 of 85,053,209 (2007: 84,584,980), calculated as follows:
Weighted average number of ordinary shares (diluted)
| 2008 | 2007 | |
| Weighted average number of ordinary shares at 31 March | 84,819,205 | 84,459,931 |
| Effect of share options on issue | 234,004 | 125,049 |
|
| ||
| Weighted average number of ordinary shares (diluted) at 31 March | 85,053,209 | 84,584,980 |
|
|
|
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.
| 2008 EPS | 2007 EPS | |||||
| Earnings £000 | Basic | Diluted | Earnings £000 | Basic | Diluted | |
| Profit for the financial year | 3,593 | 4.23p | 4.22p | 3,973 | 4.70p | 4.70p |
| Adjustments: | ||||||
| Associate impairment | 2,236 | 2.64p | 2.63p | - | - | - |
| Restructuring costs | - | - | - | 2,894 | 3.43p | 3.42p |
| Tax charge on adjusted items | - | - | - | (698) | (0.83p) | (0.83p) |
|
|
|
| ||||
| 5,829 | 6.87p | 6.85p | 6,169 | 7.30p | 7.29p | |
|
|
|
|
|
|
| |
The 'Adjusted diluted' earnings per share is detailed in the above table. In the Directors' opinion, this best reflects the underlying performance of the Group and assists in the comparison with the results of earlier years.
9 The financial information in this announcement which was approved by the Board of Directors and does not constitute the Company's statutory accounts for the years ended 31 March 2007 or 2008 but is derived from those accounts. Statutory accounts for 2007 have been delivered to the Registrar of Companies and those for 2008 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 Section 237(2) of the Companies Act 1985.
This preliminary announcement has been prepared in accordance with the accounting policies adopted under IFRS.
10. This statement is not being posted to shareholders. The Report & Accounts for the year ended 31 March 2008 will be posted to shareholders in July 2008. Further copies will be available from Penny Williams at the Company's Registered Office: Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW.
11 The Annual General Meeting will be held on 23 September 2008 at 12.00 noon, at the Company's Registered Office as above.