Trifast Regulatory News (TRI)

Tuesday, 11 November 2014

Immediate release

Key financials

Continuing operations

Change

HY 2014

v

HY 2013

Half-year

30.9.14

Half-year

30.9.13

Full year

31.3.14

Ø Group revenue

+13.4%

£74.03m

£65.26m

£129.78m

Ø Gross profit %

+130bps

29.0%

27.7%

27.7%

Ø Operating profit before separately disclosed items

+45.6%

£7.07m

£4.86m

£9.70m

Ø Operating profit

+15.9%

£5.39m

£4.65m

£9.41m

Ø Pre-tax profit before separately disclosed items

+45.6%

£6.63m

£4.55m

£9.16m

Ø Pre-tax profit

+13.8%

£4.94m

£4.34m

£8.87m

Ø Adjusted diluted earnings per share

+39.5%

4.10p

2.94p

5.95p

Ø Basic earnings per share

+1.3%

3.10p

3.06p

6.08p

Ø Dividend

-interim

+50.0%

-

0.60p

-

0.40p

1.40p

Ø Net (debt) / cash

(£17.53m)

£3.55m

£2.03m

Ø Return on capital employed (ROCE)

+210bps

17.3%

15.2%

15.5%

2014 highlights

Ø Best six month's profit in the Company's history

Ø Gross margin up 130bps to 29.0%

Ø Overheads as a percentage of revenue reduced by 80bps to 19.4% over HY2013 period

Ø VIC acquisition in May 2014 has integrated well and contributed as expected during the period

Ø New investment in manufacturing plant initiated in Italy, Malaysia and Taiwan

Ø Continue to extend our geographic boundaries in the USA, Central Europe and Thailand

Ø Additional sales engineers recruited, inducted and starting to introduce new business

Ø Sales to distributors from Lancaster Fastener growing well into most of EU

FULL STATEMENT ATTACHED

Results briefing will be held at 12.15pm: The Purple Room, No.1 Cornhill, London EC3V 3ND

Conference dial-in facility: on request, please contact +44 (0)7785 703523 or email fiona@tooleystreet.com

Introduction

Our ambition this year was to continue our pace of organic growth, to complete on the acquisition of VIC in Italy and to continue our search and assessment of further suitable bolt-on acquisitions.

Global market overview & TR strategy update

"over 40% sales comes from global OEMs"

While the recent negative impact of macro-economic data and political events have affected the financial markets; within the Group's key customer base, comprising automotive, electronics/telecom, domestic appliances and fastener distributors, there has been no evidence of demand contraction. In late October, we conducted an in-depth audit of our order pipeline and concluded that it was as strong, if not stronger than ever before. However, there are no grounds for complacency as market dynamics can change rapidly.

Our core business is supplying Multi-national high volume assembly OEMs around the world with assembly components. They demand consistent quality, price and availability in order to supply automotive assemblies, mobile phone base stations, computer enclosures, cash dispensers etc. in their often numerous sister plants spread globally. We are now approved suppliers to over 40 such Multi-nationals, several of which own over 200 plants making comparable or identical finished products - yet our average penetration into each network is at the moment around 10% of their potential spend in our product range. Supplying Multi-nationals accounts for over 40% of current Group revenue and developing this business further is our backbone growth strategy. This is supplemented by significant sales of our specialist TR Branded products, next day delivery of a broad range of more standardised fasteners to UK OEMs and to UK and EU distributors and our new growing range of lightweight plastic fasteners and spacers.

We continue to extend our geographic boundaries in the USA, Central Europe and Thailand as we recruit new personnel resource in these regions.

Finally, the search for acquisition opportunities never ceases as we look to supplement organic growth with meaningful additions to our product range and customer reach within our strict acquisition criteria for niche businesses.

Reviewing our 2014 half year performance

"Strong organic and acquisitive growth"

On a constant currency basis the Group has grown organic revenue by 7.2% (18.7% including VIC), and actual organic profitability by 11.4% (45.6% including VIC). The acquisition of VIC was successfully concluded at the end of May this year and the MD, Carlo Perini has made rapid progress integrating into the senior management team within Europe and Asia - especially with new business development.

Our constant pursuit of improved operational efficiencies continues to yield margin and productivity gains, with no sign yet of reaching a level of diminishing returns, thus providing ongoing motivation to our managers to sustain our drive for 'continuous improvement' of processes and resource utilisation.

Performance "hot spots" during the period were: sales of our TR Branded specialist products via Lancaster Fastener and TR Fastenings to distributors in the UK and Europe (distributor demand is a reliable "barometer" of the dynamics within industrial assembly sectors); Hungary winning extra revenue from the electronics sector; and both TR UK and Holland gaining strong growth from the automotive sector in the period.

Our Asian factories continue to make excellent progress in refining their processes to ensure 'zero-defect' compliance with customer requirements within the telecoms/electronics and automotive sectors in order to offer a distinct competitive advantage.

We are pleased to confirm that, after many years of caution regarding new investment, the Group is now authorising expenditure on selective sophisticated component manufacturing plant in Asia and automated vertical product storage systems within the UK. We expect a maximum three year payback on these initiatives due to their high impact on productivity gains.

During this period we have also invested further in extensive leadership training programmes for all our UK main team leaders, as our succession planning objectives steadily take shape.

Viterie Italia Centrale Srl ('VIC')

"widening our offering and sector expertise"

On 30 May 2014, Trifast completed the acquisition of the entire issued capital stock of VIC, a manufacturer and distributor of fastenings systems based in Italy. The initial consideration of €27.00 million (£22.02m), was satisfied by €24.15 million (£19.65m) in cash and €2.85m (£2.37m) by the issue and allotment of 3,000,000 shares of 5 pence each in the Company to Carlo Perini, the Managing Director and 30% owner of VIC. A further payment may become due to the vendors depending upon the performance of VIC over the year ending 31 December 2014. If VIC generates an adjusted post-tax profit (as defined in the Acquisition Agreement) for the year ending 31 December 2014 which exceeds €3.00 million then for each €1 above this sum an additional €5 is payable to the vendors, subject to a maximum amount of €5.00 million (£4.07m).

VIC is complementary to the Group's business model and significantly strengthens the Group's presence in the domestic appliance market whilst also offering TR additional opportunities in existing electronic and automotive Tier 1 markets. It will also provide an additional competitive manufacturing facility in Europe to complement the Group's existing resources in Asia.

During the period VIC has both performed and integrated well; both VIC and TR management are encouraged by the growth opportunities deriving from sales and marketing working together.

2014 half-year key financials

"strong underlying organic growth"

The Group's revenue in the first six months of the financial year grew by 13.4% compared to HY 2013. This was largely due to the acquisition of VIC, which contributed £7.51 million during the period ended 30 September 2014. From an organic growth perspective the Group's revenue was up 1.9%. However, given that nearly 60% of the Group's revenue is now derived from its overseas operations and is earned in foreign currencies, the strong pound in the first half-year had a detrimental effect on the trading results compared to HY 2013. On a constant currency basis, revenue grew by 18.7% and organically by 7.2%. The effect of currencies on the individual regions is even more pronounced; TR UK showed organic revenue growth of 2.1%; TR Asia showed a decline in revenue of 5.9%, whereas on a constant currency basis it actually grew by 4.2%; TR Europe (excluding VIC) grew by 11.3% (constant currency 21.5%) and TR USA by 28.4% (constant currency 39.5%).

Gross profit increased by 130bps from HY 2013 to 29.0%, this was a combination of better sourcing, increased turnover over a relatively fixed base and improvement in warehouse efficiencies. Overheads remain tightly controlled and are currently running at 19.4% of revenue (HY 2013: 20.2%).

Group operating profit before separately disclosed items increased by 45.6% to £7.07 million compared to the same period last year (HY 2013: £4.86m). VIC contributed an operating profit of £1.66 million in the period, resulting in the rest of the Group growing organically by 11.4%. Organically, Europe grew the most at 52.3%, giving a contribution return of 8.9% excluding VIC (13.6% including VIC); TR Hungary and TR Holland performed exceptionally well, the former on the back of key Multi-national electronic customers and the latter on automotive business secured over the previous years. TR UK profits have grown 13.0% on HY 2013 resulting from the increase in revenue, better sourcing and continual efficiency improvements; they are now delivering a 9.1% return. TR Asia's profits increased by 3.0% due to tight control of overheads and a reduction in inventory provisioning; TR Asia's current return is still an impressive 14.0%. TR USA profits have increased by 9.7%, principally due to the top line growth which is beginning to expand into the automotive sector.

During the first half of this financial year the Group incurred foreign exchange losses of £0.36 million against a gain of £0.19m for HY 2013.

Interest costs increased in the period by £0.14 million to £0.45 million compared to HY 2013 due to new banking facilities put in place during the period to fund the acquisition of VIC. Interest cover (defined as EBITDA to net finance costs, before one-off separately disclosed items) remains very strong at 17.1 times (HY 2013: 17.6 times)

For the period under review, the Group incurred £1.69 million of separately disclosed items, which in the Directors' opinion should be shown separately in order to better understand the underlying performance of the Group going forward. These can be broken down as follows:

Pre-tax profit before separately disclosed items improved by 45.6% to £6.63 million (HY 2013: £4.55m). On a constant currency basis, this would have increased by a further £0.36 million with the biggest impact benefitting Asia. The Group's underlying EBITDA increased to £7.66 million (HY 2013: £5.43m) and represents 10.3% of Group revenue (HY 2013: 8.3%).

The taxation charge of £1.45 million (HY 2013: £1.02m) is recognised based on the estimated weighted average annual Group's effective corporate tax rates. The impact of VIC, which has an Effective Tax Rate ('ETR') of 35% has resulted in the estimated tax rate used for HY 2014 increasing to 29% (HY 2013: 26%).

The growth in organic earnings and the positive contribution from VIC has increased our ROCE by +210 bps to 17.3% (HY 2013: 15.2%) on a twelve month rolling basis.

Adjusted diluted earnings per share increased 39.5% to 4.10 pence (HY 2013: 2.94p) and basic earnings per share increased by 1.3% to 3.10 pence (HY 2013: 3.06p).

Balance sheet, cash flow and working capital

"tight controls and effective cash collection "

As at 30 September 2014, the total Shareholder equity amounted to £66.65 million, an increase of £4.98 million on 31 March 2014, predominantly from the retained earnings in the period of £1.92million and £2.56 million from the issue of shares being a mixture of options exercised and shares issued with respect to the acquisition of VIC.

Property, plant and equipment in the period increased by £3.83 million on 31 March 2014 and intangibles increased by £14.92 million as a result of VIC. The intangible assets purchased on the acquisition were made up of goodwill of £6.93 million, customer related and technology based intangibles of £8.05 million, which will be amortised over a weighted average 13.11 years and other intangibles of £0.05 million. Deferred tax liabilities have increased due to the liabilities of VIC acquired of £0.94 million, this will be reviewed in more depth at the year-end. The provisional fair value of the net assets acquired with VIC was £19.15 million.

Inventory, receivables and payables have all increased since 31 March 2014, in part to the acquisition, but also due to the increase in the level of business in the period. Net inventory weeks in the first half increased to 20.6 compared to 20.1 in HY 2013 and 19.1 weeks in FY 2014. Since the start of the current year, higher inventory levels were required to support the increase in demand largely from automotive customers and also to increase our branded product availability which carry longer inventory holding periods. We would expect these levels to reduce in the second half as new business starts to flow through the system.

Net debtor days have increased from 65 days in FY 2014 to 71 days (HY 2013: 69 days) reflecting the general increase in business and VIC's receivables, which historically have a longer lead cycle. Although VIC has the ability to factor their receivables 'without recourse', we are consciously not currently using this facility to full effect. Elsewhere, cash collection remains effective with minimal bad debts during the period under review. The increase in payables also includes potential deferred consideration of £4.07 million, which may become due to VIC's vendors.

Capex in the period was £0.46 million (HY 2013: £0.31m) with depreciation running at £0.58 million (HY 2013: £0.57m).

Cash flow clearly has been adversely affected by the increase in inventory and receivable days as well as the payment of acquisition and NI costs as set out above. For the period under review, cash used in operations was £0.36 million compared to cash generated of £3.36 million in HY 2013. We envisage that this position will improve in the second half of this year.

Finance and banking facilities

In May 2014, the Group agreed additional banking facilities with HSBC, comprising a term loan facility of up to €25.00 million, which was fully utilised to fund the acquisition of VIC, and a revolving multi-currency credit facility ('RCF') of up to £10.00 million, which currently is not being utilised, to replace the Group's previous RCF of €5.00 million. The Group also has an £18.30 million Asset Based Lending facility, which is used in the UK.

As at 30 September 2014, gross debt was £31.08 million (FY 2014: £13.47m) and net debt was £17.53 million, compared to a net cash position of £2.03 million at 31 March 2014, giving a net gearing ratio of 26.3% (HY 2013: 6.0%).

Outlook

"World of opportunity - strong momentum"

With further recent enhancements to our globally linked customer enquiry portal, the Group is now in a position to measure more accurately its forward order pipeline and at the time of writing, the business teams are reporting it to be at an historic all-time high by value.

By recruiting several additional sales engineers for the automotive and telecoms sectors during the first half year, we now have the necessary resources to continue the pace of organic growth. These investments have also been matched with new manufacturing plant for Italy and Asia, thus allowing more production to be placed in-house.

Meanwhile, margin improvement continues to be driven by on-going operational process efficiencies, particularly in warehouse storage, order picking and packaging. The 'self-help' programme initiated back in 2011 keeps on giving with regard to productivity and cost efficiencies, and clearly forms a solid foundation to the now well established 'continuous improvement'

philosophy and culture.

The order book position and current levels of organic growth are such that the Board remains optimistic about the Group's outlook and expects trading to exceed its expectations for the financial year as a whole. At the same time the Board continues to identify, approach and assess the next strategic acquisition opportunity through adopting the well proven investment criteria that have recently served Trifast well in Malaysia and Italy.

Dividend

"dividend underpins confidence in the future"

We are committed to a progressive dividend policy whilst balancing our investment in the business for the future benefit of all stakeholders, customers and colleagues alike. Given our confidence in our future, the Board is declaring an interim dividend of 0.60 pence per share, an increase of 50%, to be paid on 17 April 2015, to shareholders on the Register as at 20 March 2015. The shares will become ex-dividend on 19 March 2015.

Risks and uncertainties

The Directors do not consider that the principal risks and uncertainties of the Group have changed since the publication in July 2014 of the Group's Annual Report for the year ended 31 March 2014. A copy of this can be found on our website www.trifast.com.

No system can fully eliminate risk and therefore the understanding of operational risk is central to the management process within TR. The Group operates a system of internal control and risk management in order to provide assurance that we are managing risk whilst achieving our business objectives. Risk assessment reviews are regularly carried out by Management, with responsibilities for monitoring and mitigating personally allocated to a broad spread of individual managers. The review is analysed and discussed at Audit Committee meetings chaired by our Senior Independent Non-Executive Director.

As with all businesses, the Group faces risks, with some not wholly within its control, which could have a material impact on the Group, and may affect its performance with actual results becoming materially different from both forecast and historic results. Although there are indications that the macro-economic climate is slowly improving, it is too soon in Management's opinion to assume the worst is reliably over, and so we continue to remain vigilant for any indications of a reversal that could adversely impact expected results going forward. Past and future acquisitions can also carry impairment risks on goodwill should there be a sustained downturn in trading within an acquired subsidiary.

The long-term success of the Group depends on the on-going review, assessment and control of the key business risks it faces.

Trifast plc - Responsibility statement

We confirm that to the best of our knowledge:

• the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU;

• the interim management report includes a fair review of the information required by:

(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

By order of the Board

Malcolm Diamond MBE, Executive Chairman

Jim Barker, Chief Executive Officer

Mark Belton, Group Finance Director

11 November 2014

Notes

Six months

ended

30 September

2014

Six months

ended

30 September

2013

Year

ended

31 March

2014

£000

£000

£000

Continuing operations

Revenue

74,033

65,264

129,775

Cost of sales

(52,575)

(47,203)

(93,809)

Gross profit

21,458

18,061

35,966

Operating income

165

142

312

Distribution expenses

(1,490)

(1,542)

(2,927)

Administrative expenses before separately disclosed items:

2

(13,059)

(11,801)

(23,655)

Acquisition costs

(1,200)

-

-

Intangible amortisation

(238)

(166)

(221)

NI on exercise of 2009 Director options

(228)

-

-

IFRS 2 charge

(22)

(46)

(67)

Total administrative expenses

(14,747)

(12,013)

(23,943)

Operating profit

5,386

4,648

9,408

Financial income

56

19

85

Financial expenses

(503)

(328)

(619)

Net financing costs

(447)

(309)

(534)

Profit before tax

4,939

4,339

8,874

Taxation

5

(1,453)

(1,017)

(2,276)

Profit for the period

(attributable to equity shareholders of the parent company)

3,486

3,322

6,598

Earnings per share (total)

 - Basic

7

3.10p

3.06p

6.08p

 - Diluted

7

2.97p

2.90p

5.76p

Six months

ended

30 September

2014

Six months

ended

30 September

2013

Year ended

31 March

2014

£000

£000

£000

Profit for the period

3,486

3,322

6,598

Other comprehensive income / (expense):

Foreign currency translation differences

(349)

(3,495)

(5,083)

Net gain on hedge of net investment in foreign subsidiary

857

-

-

Other comprehensive income / (expense) recognised directly in equity, net of income tax

508

(3,495)

(5,083)

Total comprehensive income / (expense) recognised for the period

(attributable to equity shareholders of the parent company)

3,994

(173)

1,515

Unaudited results for the

six months ended 30 September 2014

Share

Capital

£000

Share

Premium

£000

Translation

Reserve

£000

Retained

Earnings

£000

Total

Equity

£000

Balance at 1 April 2014

5,435

18,488

6,888

30,856

61,667

Total comprehensive income for the period

Profit for the period

-

-

-

3,486

3,486

Other comprehensive income

Foreign currency translation differences

-

-

(349)

-

(349)

Net gain on hedge of net investment in foreign subsidiary

-

-

857

-

857

Total other comprehensive income

-

-

508

-

508

Total comprehensive income for the period

-

-

508

3,486

3,994

Transactions with owners, recorded directly in equity

Issue of share capital

240

2,316

-

-

2,556

Dividends

-

-

-

(1,568)

(1,568)

Total transactions with owners

240

2,316

-

(1,568)

988

Balance at 30 September 2014

5,675

20,804

7,396

32,774

66,649

Unaudited results for the

six months ended 30 September 2013

Share

Capital

£000

Share

Premium

£000

Translation

Reserve

£000

Retained

Earnings

£000

Total

Equity

£000

Balance at 1 April 2013

5,412

18,427

11,971

24,612

60,422

Total comprehensive income for the period

Profit for the period

-

-

-

3,322

3,322

Other comprehensive expense

Foreign currency translation differences

-

-

(3,495)

-

(3,495)

Total other comprehensive expense

-

-

(3,495)

-

(3,495)

Total comprehensive (expense) / income for the period

-

-

(3,495)

3,322

(173)

Transactions with owners, recorded directly in equity

Issue of share capital

11

11

-

-

22

Share based payment transactions

-

-

-

46

46

Dividends

-

-

-

(868)

(868)

Total transactions with owners

11

11

-

(822)

(800)

Balance at 30 September 2013

5,423

18,438

8,476

27,112

59,449

Group

Notes

30 September

2014

£000

30 September

2013

£000

31 March

2014

£000

Non-current assets

Property, plant and equipment

15,655

12,170

11,828

Intangible assets

31,883

17,347

16,959

Deferred tax assets

1,257

966

1,257

Total non-current assets

48,795

30,483

30,044

Current assets

Inventories

39,285

30,940

30,574

Trade and other receivables

35,532

29,073

27,665

Cash and cash equivalents

8

13,596

13,680

15,535

Total current assets

88,413

73,693

73,774

Total assets

137,208

104,176

103,818

Current liabilities

Bank overdraft

8

47

171

31

Other interest-bearing loans and borrowings

8

11,691

13,711

10,950

Trade and other payables

33,277

22,912

24,678

Tax payable

2,256

2,012

2,120

Dividends payable

6

1,134

868

-

Provisions

-

410

124

Total current liabilities

48,405

40,084

37,903

Non-current liabilities

Other interest-bearing loans and borrowings

8

19,389

3,350

2,524

Provisions

1,100

793

938

Deferred tax liabilities

1,665

500

786

Total non-current liabilities

22,154

4,643

4,248

Total liabilities

70,559

44,727

42,151

Net assets

66,649

59,449

61,667

Equity

Share capital

5,675

5,423

5,435

Share premium

20,804

18,438

18,488

Reserves

7,396

8,476

6,888

Retained earnings

32,774

27,112

30,856

Total equity

66,649

59,449

61,667

Notes

Six months

ended

30 September

2014

£000

Six months

ended

30 September

2013

£000

Year

ended

31 March

2014

£000

Group

Cash flows from operating activities

Profit for the period

3,486

3,322

6,598

Adjustments for:

Depreciation, amortisation & impairment

820

735

1,323

Financial income

(56)

(19)

(85)

Financial expense

503

328

619

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

(14)

11

26

Equity settled share-based payment charge

22

46

67

Taxation charge

1,453

1,017

2,276

Operating cash inflow before changes in

 working capital and provisions

6,214

5,440

10,824

Change in trade and other receivables

(3,700)

(2,770)

(1,336)

Change in inventories

(3,059)

(1,622)

(1,605)

Change in trade and other payables

148

2,505

4,281

Change in provisions

37

(198)

(339)

Net cash generated (used in) / from operations

(360)

3,355

11,825

Tax paid

(2,546)

(724)

(1,809)

Net cash (used in) / from operating activities

(2,906)

2,631

10,016

Cash flows from investing activities

Proceeds from sale of property, plant & equipment

16

3

12

Interest received

56

9

85

Acquisition of subsidiary, net of cash acquired

(18,610)

-

-

Acquisition of property, plant & equipment

(456)

(309)

(838)

Net cash used in investing activities

(18,994)

(297)

(741)

Cash flows from financing activities

Proceeds from the issue of share capital

2,556

22

84

Proceeds from new loan

20,337

2,543

-

Repayment of borrowings

(1,955)

(779)

(1,679)

Purchase / (payment) of finance lease liabilities

38

(50)

(51)

Dividends paid

(434)

-

(867)

Interest paid

(503)

(328)

(619)

Net cash from / (used in) financing activities

20,039

1,408

(3,132)

Net change in cash and cash equivalents

(1,861)

3,742

6,143

Cash and cash equivalents at start of period 1 April

15,504

10,555

10,555

Effect of exchange rate fluctuations on cash held

(94)

(788)

(1,194)

Cash and cash equivalents at end of period

8

13,549

13,509

15,504

1.

Basis of preparation

2.

Pre-tax profit before separately disclosed items

Six months

ended

30 September

2014

£000

Six months

ended

30 September

2013

£000

Year ended

31 March

2014

£000

Pre-tax profit before separately disclosed items

6,627

4,551

9,162

Separately disclosed items within administration expenses:

Acquisition costs

(1,200)

-

-

Intangible amortisation

(238)

(166)

(221)

NI on exercise of 2009 Director options

(228)

-

-

IFRS 2 share-based payment charge

(22)

(46)

(67)

Profit from continuing operations before tax

4,939

4,339

8,874

3.

Geographical operating segments:

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

Ø UK

Ø Mainland Europe

includes Norway, Sweden, Hungary, Ireland, Italy, Holland and Poland

Ø USA

includes USA and Mexico

Ø Asia

includes Malaysia, China, Singapore, Taiwan, Thailand and India

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 four distinct geographical regions, which the Board use to monitor and assess the Group.

Segment revenue and results under the primary reporting format for the six months ended 30 September 2014 and 2013 are disclosed in the table below:

September 2014

UK

Mainland

Europe

USA

Asia

Central costs, assets and liabilities

Total

£000

£000

£000

£000

£000

£000

Revenue*

Revenue from external customers

31,989

21,171

1,903

18,970

-

74,033

Inter segment revenue

929

184

25

2,868

-

4,006

Total revenue

32,918

21,355

1,928

21,838

-

78,039

Underlying operating result

2,920

2,877

193

2,661

(1,577)

7,074

Net financing costs

(147)

(46)

(1)

(38)

(215)

(447)

Underlying segment result

2,773

2,831

192

2,623

(1,792)

6,627

Separately disclosed items (see note 2)

Profit before tax

Specific disclosure items

Depreciation and amortisation

79

74

7

426

234

820

Assets and liabilities

Segment assets

38,016

29,768

1,728

47,148

20,548

137,208

Segment liabilities

(22,616)

(9,159)

(300)

(11,081)

(27,403)

(70,559)

September 2013

UK

Mainland

Europe

USA

Asia

 Central costs, assets and liabilities

Total

£000

£000

£000

£000

£000

£000

Revenue*

Revenue from external customers

31,345

12,274

1,482

20,163

-

65,264

Inter segment revenue

796

230

56

2,555

-

3,637

Total revenue

32,141

12,504

1,538

22,718

-

68,901

Underlying operating result

2,585

799

176

2,584

(1,284)

4,860

Net financing costs

(185)

(14)

-

(83)

(27)

(309)

Underlying segment result

2,400

785

176

2,501

(1,311)

4,551

Separately disclosed items (see note 2)

Profit before tax

Specific disclosure items

Depreciation and amortisation

71

25

7

473

159

735

Assets and liabilities

Segment assets

37,383

10,760

1,514

48,648

5,871

104,176

Segment liabilities

(26,500)

(2,737)

(111)

(12,134)

(3,245)

(44,727)

4.

Acquisition of Viterie Italia Centrale Srl ('VIC')

On 30 May 2014, the Group acquired the entire issued capital stock of VIC for an initial consideration of €27.00 million (£22.02m), satisfied by way of €24.15 million (£19.65m) in cash and €2.85m (£2.37m) by the issue and allotment of 3,000,000 shares of 5 pence each in the Company to Carlo Perini, the Managing Director and 30% owner of VIC.

In addition, a further payment of maximum €5.00 million (£4.07m) may be due to the Vendors depending upon the performance of VIC over the 12 month period ending 31 December 2014. If VIC generates an adjusted post-tax profit (as defined in the Acquisition Agreement) for the year ending 31 December 2014 which exceeds €3.00 million then for each €1 above this sum an additional €5 is payable to the Vendors, subject to a maximum amount of €5.00 million.

VIC is a manufacturer and distributor of fastenings systems and is complementary to the Group's business model; it significantly strengthens the Group's presence in the domestic appliance market whilst also offering TR additional opportunities in existing electronic and automotive Tier 1 markets. The business will also provide an additional competitive manufacturing facility in Europe to complement the Group's existing resources in Asia.

In the four months since acquiring VIC to 30 September 2014, the subsidiary contributed £1.63 million to the consolidated net profit for the period and £7.51 million to the Group's revenue. If the acquisition had occurred on 1 April 2014, Group revenue would have increased by an estimated £11.08 million and net profit would have been increased by an estimated £2.36 million. In determining these amounts management has assumed that the fair value adjustments that arose on the date of acquisition would have been the same as if the acquisition had occurred on 1 April 2014.

Effect of Acquisition

Recognised values on acquisition

£000

Property, plant and equipment

3,950

Intangible assets

8,108

Inventory

5,967

Trade and other receivables

4,589

Cash and cash equivalents

3,405

Trade and other payables

(4,703)

Corporation tax payable

(1,225)

Deferred tax liabilities

(941)

Net identifiable assets and liabilities

19,150

Consideration paid:

Initial cash price paid

22,015

Deferred consideration at fair value

4,067

Total consideration

26,082

Goodwill on acquisition

6,932

Intangible assets that arose on the acquisition include the following:-

Ø £5.45 million of customer relationships, with an amortisation period deemed to be 15 years

Ø £2.33 million of technology knowhow, with an amortisation period deemed to be 10 years

Ø £0.27 million of technological patents, with an amortisation period deemed to be 15 years

Ø £0.05 million of other intangibles, with an amortisation period deemed to be between 3-5 years

Goodwill is the excess of the purchase price over the fair value of the net assets acquired and is not deductible for tax purposes. It mostly represents potential synergies, e.g. cross-selling opportunities between VIC and Trifast Group and VIC's assembled workforce.

Fair values determined on a provisional basis

£000

Corporation tax payable

(1,225)

Deferred tax liabilities

(941)

The above have been determined on a provisional basis because an in-depth tax analysis has not yet been undertaken on the fair value adjustments - this will be completed by the financial year end.

4.

Acquisition of Viterie Italia Centrale Srl (continued)

Effect of Acquisition

The Group estimates that it will incur costs of £1.20 million in relation to the acquisition of VIC. These costs have been included in administrative expenses in the Group's consolidated statement of comprehensive income.

5.

Taxation

Six months

ended

30 September

2014

Six months

ended

30 September

2013

Year ended

31 March

2014

£000

£000

£000

Current tax on income for the period

UK tax

(69)

294

510

Foreign tax

1,562

842

1,603

Deferred tax expense

(50)

-

49

Adjustments in respect of prior years

10

(119)

114

1,453

1,017

2,276

6.

Dividend

The dividend payable of £1.13 million represents the final dividend recommended for the year ended 31 March 2014, approved by shareholders at the AGM on 18 September 2014 and paid to shareholders on the Register on 17 October 2014.

7.

Earnings per share

The calculation of earnings per 5 pence ordinary share is based on profit for the period after taxation and the weighted average number of shares in the period of 113,495,406 (HY2013: 108,439,566; FY2014: 108,533,645).

The calculation of the fully diluted earnings per 5 pence ordinary share is based on profit for the period after taxation. In accordance with IAS 33 the weighted average number of shares in the period has been adjusted to take account of the effects of all dilutive potential ordinary shares. The number of shares used in the calculation amount to 117,436,525 (HY2013: 114,411,329; FY2014: 114,485,387).

The adjusted diluted earnings per share, which in the Directors' opinion best reflects the underlying performance of the Group is detailed below:

Six months

ended

30 September

2014

£000

Six months

ended

30 September

2013

£000

Year ended

31 March

2014

£000

Profit for the period

3,486

3,322

6,598

Acquisition costs

1,200

-

-

Intangible amortisation

238

166

221

NI on exercise of 2009 Director options

228

-

-

IFRS 2 Share option

22

46

67

Tax adjustment

(354)

(170)

(66)

Adjusted profit

4,820

3,364

6,820

Basic EPS

3.10p

3.06p

6.08p

Diluted basic EPS

2.97p

2.90p

5.76p

Adjusted diluted EPS

4.10p

2.94p

5.95p

8.

Analysis of net (debt)/ cash

At

30 September

2014

£000

At

30 September

2013

£000

At

31 March

2014

£000

Cash and cash equivalents

13,596

13,680

15,535

Bank overdraft

(47)

(171)

(31)

Net cash and cash equivalents

13,549

13,509

15,504

Debt due within one year

(11,691)

(13,711)

(10,950)

Debt due after one year

(19,389)

(3,350)

(2,524)

(31,080)

(17,061)

(13,474)

Total

(17,531)

(3,552)

2,030

Reconciliation of net cash flow to movement in net debt

Six months

ended

30 September

2014

£000

Six months

ended

30 September

2013

£000

Year ended

31 March

2014

£000

Net (decrease) / increase in cash and cash equivalents

(1,861)

3,742

6,143

Net (increase) / decrease in borrowings

(18,420)

(1,714)

1,679

(20,281)

2,028

7,822

Exchange rate differences

720

(383)

(595)

Movement in net debt

(19,561)

1,645

7,227

Opening net cash / (debt)

2,030

(5,197)

(5,197)

Closing net (debt) / cash

(17,531)

(3,552)

2,030

Independent review report by KPMG LLP to Trifast plc

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2014 which comprises the consolidated income statement, the consolidated statement of comprehensive Income, the consolidated statement of changes in equity, the consolidated statement of financial position, the consolidated statement of cash flows and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This Report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA"). Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this Report, or for the conclusions we have reached.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this Half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2014 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.

Martin Newsholme

for and on behalf of KPMG LLP

Chartered Accountants, 1 Forest Gate, Brighton Road, Crawley, West Sussex, RH11 9PT

11 November 2014

Editor's Note

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:

LSE Listing: Ticker: TRI FTSE index sector: FTSE Small Cap and FTSE All-share indices

Group website: www.trifast.com

Follow us on: Twitter: www.twitter.com/trfastenings ; www.facebook.com/trfastenings : www.linkedin.com/company/tr-fastenings

Enquiries or for further details please contact:

Trifast plc

Malcolm Diamond MBE, Executive Chairman

Today: + 44 (0) 20 7418 8900 (Peel Hunt)

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

Jim Barker, Chief Executive

Mark Belton, Group Finance Director

Office: +44 (0) 1825 747630

Email: corporate.enquiries@trifast.com

TooleyStreet Communications

IR & media relations

Fiona Tooley

Tel: +44 (0)7785 703523

Email: fiona@tooleystreet.com

Peel Hunt LLP

Stockbroker & financial adviser

Justin Jones

Mike Bell

Tel: +44 (0)20 7418 8900

Electronic Communications

The Company is not proposing to bulk print and distribute hard copies of this half-yearly financial report for the six months ended 30 September 2014 unless specifically requested by individual shareholders. News updates, Regulatory News, and Financial statements, can be viewed and downloaded from the Group's website, www.trifast.com. Copies can also be requested via corporate.enquiries@trifast.com or, in writing to, The Company Secretary, Trifast plc, Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW