Final Results

18th 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

  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
Total assets	1	92,684	95,303	40,520	43,792
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
Total current liabilities		24,494	29,079	6,568	8,107

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
Total liabilities	1	39,719	47,078	18,319	21,343
Net assets	1	52,965	48,225	22,201	22,449
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
Total equity		52,965	48,225	22,201	22,449

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)
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
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

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.

ENDFR ILFSDRLIDLIT

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Related Shares:

Trifast