REG - Trifast PLC - Preliminary results - year ended 31 March 2015 <Origin Href="QuoteRef">TRFT.L</Origin> - Part 2
16/07/2015 11:05
- Part 2: For the preceding part double click ID:nRSP2355Qa
31 (1,194) - -
Cash and cash equivalents at 31 March 9 15,014 15,504 (3,446) (2,957)
Notes
1 Preparation of the preliminary announcement
The preliminary results announcement for the year ended 31 March 2015 has been
prepared by the Directors based on the results and position reflected in the
statutory accounts. The statutory accounts are prepared in accordance with
International Financial Reporting Standards as adopted by the European Union
('Adopted IFRS').
The Board of Directors approved the preliminary announcement on 15 June 2015.
2 Underlying profit before tax and separately disclosed items
Note 2015 £000 2014 £000
Underlying profit before tax 14,308 9,162
Separately disclosed items within administrative expenses
IFRS2 share based payment charge (741) (67)
Intangible amortisation (551) (221)
Net acquisition costs 14 (750) -
Costs on exercise of executive share options (511) -
Release of closure provision for TR Formac (Suzhou) Co. Ltd 94 -
Profit before tax 11,849 8,874
3 Operating 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, and the operating basis on which
individual operations are reviewed by the Chief Operating Decision Maker (the
Board).
Performance is measured based on each segment's underlying profit before
finance costs and income tax as included in the internal management reports
that are reviewed by the Chief Operating Decision Maker. This is used to
measure performance as management believes that such information is the most
relevant in evaluating the results of certain segments relative to other
entities that operate within the industry.
Inter-segment pricing is determined on an arm's length basis.
Segment results, assets and liabilities include items directly attributable to
a segment as well as those that can be allocated on a reasonable basis.
Goodwill and intangible fixed assets acquired on business combinations outside
of Asia are included within 'common' segment assets. This reflects the
internal management reports that are reviewed by the Chief Operating Decision
Maker.
Segment capital expenditure is the total cost incurred during the period to
acquire segment assets that are expected to be used for more than one period.
Geographical operating segments
The Group is comprised of the following main geographical operating segments:
UK
Europe: includes Norway, Sweden, Hungary, Ireland, Holland, Italy and Poland
USA: includes USA and Mexico
Asia: includes Malaysia, China, Singapore, Taiwan, Thailand and India
3 Operating segmental analysis (continued)
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.
March 2015 UK£000 Europe£000 USA£000 Asia£000 Commoncosts£000 Total£000
Revenue
Revenue from external customers 65,463 46,316 4,311 38,651 - 154,741
Inter segment revenue 1,935 413 62 5,496 - 7,906
Total revenue 67,398 46,729 4,373 44,147 - 162,647
Underlying operating result 5,832 6,461 327 5,731 (3,077) 15,274
Net financing costs (308) (125) (1) (58) (474) (966)
Underlying segment result 5,524 6,336 326 5,673 (3,551) 14,308
Separately disclosed items (see note 2) (2,459)
Profit before taxation 11,849
Specific disclosure items
Depreciation and amortisation 170 202 16 837 543 1,768
Assets and liabilities
Segment assets 39,051 29,303 2,267 50,222 20,949 141,792
Segment liabilities (24,423) (9,763) (413) (11,878) (23,635) (70,112)
March 2014 UK£000 Europe£000 USA£000 Asia£000 Commoncosts£000 Total£000
Revenue
Revenue from external customers 63,237 25,365 2,817 38,356 - 129,775
Inter segment revenue 1,584 441 99 5,425 - 7,549
Total revenue 64,821 25,806 2,916 43,781 - 137,324
Underlying operating result 5,460 1,726 247 5,270 (3,007) 9,696
Net financing costs (359) (33) (1) (98) (43) (534)
Underlying segment result 5,101 1,693 246 5,172 (3,050) 9,162
Separately disclosed items (see note 2) (288)
Profit before taxation 8,874
Specific disclosure items
Depreciation and amortisation 146 47 13 907 210 1,323
Assets and liabilities
Segment assets 36,615 11,539 1,531 47,296 6,837 103,818
Segment liabilities (23,843) (3,562) (143) (12,036) (2,567) (42,151)
There was no material difference in the UK, Europe and USA regions between the
external revenue based on location of the entities and the location of the
customers. Of the Asian external revenue, £3.59m (2014: £3.08m) was sold into
the American market and £5.92m (2014: £5.54m) sold into the European market.
Revenue is derived solely from the manufacture and logistical supply of
industrial fasteners and category 'C' components.
4 Other operating income
2015 £000 2014 £000
Rental income received from freehold properties 155 163
Other income 197 149
352 312
5 Expenses and auditor's remuneration
Included in profit for the year are the following:
2015 £000 2014 £000
Depreciation 1,217 1,102
Amortisation of acquired intangibles 551 221
Operating lease expense 2,529 2,342
(Gain)/loss on disposal of fixed assets (3) 26
Auditor's remuneration:
2015 £000 2014 £000
Audit of these financial statements 41 40
Audit of financial statements of subsidiaries pursuant to legislation 183 153
Taxation compliance services 44 26
Other assurance services 22 30
Other services relating to transaction services 309 175
599 424
6 Taxation
Recognised in the income statement 2015£000 2014£000
Current UK tax expense:
Current year 580 510
Adjustments for prior years 77 53
657 563
Current foreign tax expense:
Current year 3,223 1,603
Adjustments for prior years 56 15
3,279 1,618
Total current tax 3,936 2,181
Deferred tax expense:
Origination and reversal of temporary differences (473) 49
Adjustments for prior years (8) 46
Deferred tax (income) expense (481) 95
Tax in Income statement 3,455 2,276
Tax recognised directly in equity 2015£000 2014£000
Current tax recognised directly in equity - IFRS2 share based tax credit (579) (41)
Deferred tax recognised directly in equity - IFRS2 share based tax charge/(credit) 450 (506)
Total tax recognised in equity (129) (547)
Reconciliation of effective tax rate ('ETR') and tax expense 2015£000 ETR% 2014£000 ETR%
Profit for the period 8,394 6,598
Tax from continuing operations 3,455 2,276
Profit before tax 11,849 8,874
Tax using the UK corporation tax rate of 21% (2014: 23%) 2,488 21 2,041 23
Tax suffered on dividends 171 1 115 1
Non-deductible expenses 236 2 247 3
Non-taxable receipts (184) (2) - -
IFRS2 share option credit (19) - (4) -
Deferred tax assets not recognised 289 3 (130) (1)
Different tax rates on overseas earnings 347 3 (182) (2)
Adjustments in respect of prior years 125 1 114 1
Tax rate change 2 - 75 1
Total tax in income statement 3,455 29 2,276 26
The UK Government has reduced the UK corporation tax rate to 20% with effect
from 1 April 2015 and these reductions have been reflected in the measurement
of deferred tax balances.
7 Inventories - Group
2015£000 2014£000
Raw materials and consumables 4,096 2,962
Work in progress 1,881 1,057
Finished goods and goods for resale 31,441 26,555
37,418 30,574
8 Trade and other receivables
Group Company
2015 £000 2014 £000 2015 £000 2014 £000
Trade receivables 37,876 26,330 - -
Non trade receivables and prepayments 1,988 1,335 51 55
Amounts owed by subsidiary undertakings - - 25,458 1,476
39,864 27,665 25,509 1,531
9 Cash and cash equivalents/bank overdrafts
Group Company
2015 £000 2014 £000 2015 £000 2014 £000
Cash and cash equivalents per Statement of financial position 15,453 15,535 1,292 743
Bank overdrafts per Statement of financial position (439) (31) (4,738) (3,700)
Cash and cash equivalents per Statements of cash flow 15,014 15,504 (3,446) (2,957)
10 Other interest-bearing loans and borrowings
This note provides information about the Group and Company's interest-bearing
loans and borrowings.
Initial loan value Rate Maturity Current Non-current
2015£000 2014£000 2015£000 2014£000
Group
Asset based lending LIBOR (+1.89%
to 2.25%) 2015 8,605 9,504 - -
PSEP acquisition loan Fixed 3.14% 2016 1,484 1,441 1,113 2,522
Finance lease liabilities Various 2015-19 8 5 36 2
Group and Company
VIC acquisition loan EURIBOR 2019 1,809 - 15,374 -
(+1.65%)
Total Group 11,906 10,950 16,523 2,524
Total Company 1,809 - 15,374 -
11 Trade and other payables
Group Company
2015£000 2014£000 2015£000 2014£000
Trade payables 17,147 14,370 - -
Amounts payable to subsidiary undertakings - - 2,604 2,589
Contingent consideration 3,617 - 3,617 -
Non-trade payables and accrued expenses 12,354 9,077 2,160 1,702
Other taxes and social security 1,364 1,231 3 26
34,482 24,678 8,384 4,317
12 Dividends
During the year the following dividends were recognised and paid by the
Group:
2015 £000 2014 £000
Final paid 2014 - 1.00 pence (2013: 0.80p) per qualifying ordinary share 1,135 867
Interim paid 2014 - 0.40 pence (2013: nil) per qualifying ordinary share 434 -
1,569 867
After the balance sheet date a final dividend of 1.50 pence per qualifying
ordinary share (2014: 1.00p) was proposed by the Directors and an interim
dividend of 0.60 pence (2014: 0.40p) was paid in April 2015.
2015 £000 2014 £000
Final proposed 2015 - 1.50 pence (2014: 1.00p) per qualifying ordinary share 1,743 1,135
Interim paid 2015 - 0.60 pence (2014: 0.40p) per qualifying ordinary share 697 434
2,440 1,569
Subject to shareholder approval at the Annual General Meeting which is to be
held on 16 September 2015, the final dividend will be paid on 16 October 2015
to members on the register at the close of business on 18 September 2015. The
ordinary shares will become ex-dividend on 17 September 2015.
13 Earnings per share
Basic earnings per share
The calculation of basic earnings per share at 31 March 2015 was based on the
profit attributable to ordinary shareholders of £8.39m (2014: £6.60m) and a
weighted average number of ordinary shares outstanding during the year ended
31 March 2015 of 113,540,187 (2014: 108,533,645), calculated as follows:
Weighted average number of ordinary shares
2015 2014
Issued ordinary shares at 1 April 108,684,180 108,230,910
Effect of shares issued 4,856,007 302,735
Weighted average number of ordinary shares at 31 March 113,540,187 108,533,645
Diluted earnings per share
The calculation of diluted earnings per share at 31 March 2015 was based on
profit attributable to ordinary shareholders of £8.39m (2014: £6.60m) and a
weighted average number of ordinary shares outstanding during the year ended
31 March 2015 of 118,768,522 (2014: 114,485,387), calculated as follows:
Weighted average number of ordinary shares (diluted)
2015 2014
Weighted average number of ordinary shares at 31 March 113,540,187 108,533,645
Effect of share options on issue 5,228,335 5,951,742
Weighted average number of ordinary shares (diluted) at 31 March 118,768,522 114,485,387
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 and deferred equity awards were
outstanding.
Underlying earnings per share
EPS (total) 2015EPS 2014EPS
Earnings£000 Basic Diluted Earnings£000 Basic Diluted
Profit after tax for the financial year 8,394 7.39p 7.07p 6,598 6.08p 5.76p
Separately disclosed items:
IFRS2 share option 741 0.65p 0.62p 67 0.06p 0.06p
Intangible amortisation 551 0.49p 0.46p 221 0.20p 0.19p
Net acquisition costs 750 0.66p 0.63p - - -
Costs on exercise of Executive share options 511 0.45p 0.43p - - -
Release of closure provision for TR Formac (Suzhou) Co. Ltd (94) (0.08p) (0.08p) - - -
Tax charge on adjusted items (541) (0.48p) (0.45p) (66) (0.06p) (0.06p)
Underlying profit after tax 10,312 9.08p 8.68p 6,820 6.28p 5.95p
The 'underlying diluted' earnings per share is detailed in the above tables.
In the Directors' opinion, this best reflects the underlying performance of
the Group and assists in the comparison with the results of earlier years (see
note 2).
14 Acquisition of Viterie Italia Centrale SPA ('VIC')
On 30 May 2014, the Group acquired the entire issued capital stock of VIC for
an initial consideration of E27.00m (£22.02m), satisfied by way of E24.15m (30
May: £19.65m) in cash and E2.85m (30 May: £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. The fair value of shares issued was
based on the market value at the date of the Acquisition Agreement.
At the date of acquisition, a further payment of up to E5.00m (31 March 2015:
£3.62m, 30 May 2014: £4.07m) was due to the Vendors. This was based upon the
achievement of certain performance conditions in VIC for the 12 month period
ended 31 December 2014. Under the agreement, E5 for each E1 above E3.00m of
adjusted post-tax profit (as defined in the Acquisition Agreement) was payable
to the Vendors, subject to a maximum amount of E5.00m. VIC generated a
sufficient adjusted post-tax profit for the year ended 31 December 2014 to
achieve the maximum payout in line with the agreement, payment will be made in
June 2015.
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 appliances market whilst also offering TR
additional opportunities in existing electronic and automotive markets. The
business will also provide an additional manufacturing facility in Europe to
complement the Group's existing resources in Asia and the UK.
In the ten months since acquiring VIC to 31 March 2015, the subsidiary
contributed £4.43m to the consolidated operating profit for the year and
£19.57m to the Group's revenue. If the acquisition had occurred on 1 April
2014, Group revenue would have increased by an estimated £4.45m and
consolidated operating profit would have been increased by an estimated
£0.59m. 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.
The acquisition had the following effects on the Group's assets and
liabilities.
Original fair value recognised£000 Adjustment to fair value£000 Revised recognised fair value£000
Property, plant and equipment 3,950 - 3,950
Intangible assets 8,108 - 8,108
Inventories 5,967 - 5,967
Trade and other receivables 4,589 302 4,891
Cash and cash equivalents 3,405 - 3,405
Trade and other payables (4,703) - (4,703)
Corporation tax payable (1,225) - (1,225)
Contingent liabilities - (302) (302)
Deferred tax liabilities (941) (2,323) (3,264)
Net identifiable assets and liabilities 19,150 (2,323) 16,827
Consideration paid:
Initial cash price paid 19,645 - 19,645
Equity instruments issued 2,370 - 2,370
Contingent consideration at fair value 4,067 - 4,067
Total consideration 26,082 - 26,082
Goodwill on acquisition 6,932 2,323 9,255
The fair value of trade receivables is £4.16m. The gross contractual cash
flows to be collected are £4.48m. The best estimate at acquisition date of the
contractual cash flows not to be collected are £0.32m.
On acquisition, contingent liabilities of £0.30m were recognised in respect of
legal claims. At 31 March 2015, £0.08m of this amount remains outstanding.
This is expected to be paid within 12 months. The Vendors are contractually
obliged to indemnify this risk, as detailed in the Acquisition Agreement.
Therefore a related indemnification asset was recognised for an equal amount.
Intangible assets that arose on the acquisition include the following:
· £5.45m of customer relationships, with an amortisation period deemed
to be 15 years
· £2.33m of technology know-how, with an amortisation period deemed to
be 10 years
· £0.27m of technological patents, with an amortisation period deemed to
be 15 years
· £0.05m of other intangibles, with an amortisation period deemed to be
between 3-5 years
14 Acquisition of Viterie Italia Centrale SPA ('VIC') (continued)
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.
As previously disclosed, the fair values of both corporation and deferred tax
were determined on a provisional basis in the 31 March 2014 Report and
Accounts. This was because an in-depth tax analysis had not yet been
undertaken on the fair value adjustments. This has now been completed and an
adjustment made, as detailed in the table above. The additional deferred tax
liability of £2.32m relates to the recognition of the intangible fixed assets,
net of the deferred tax impact from a downward revaluation of the property.
Effect of acquisition
The Group incurred costs of £1.20m in relation to the acquisition of VIC and a
£0.45m foreign exchange gain was made on the E5.00m contingent consideration
balance. The net amount of £0.75m has been included in administrative expenses
in the Group's consolidated statement of comprehensive income and forms part
of separately disclosed items, see note 2.
15 Preliminary statement
The financial information set out above does not constitute the Group's
statutory Report and Accounts for the years ended 31 March 2015 or 2014 but is
derived from the 2015 Report and Accounts. The Report and Accounts for 2014
have been delivered to the Registrar of Companies and those for 2015 will be
delivered in due course. The external auditor has reported on the 2015 Report
and Accounts; the report was (i) unqualified, (ii) did not include references
to any matters to which the external auditor drew attention by way of emphasis
without qualifying the reports and (iii) did not contain statements under
section 498(2) or (3) of the Companies Act 2006.
16 Communications
The Company is not proposing to bulk print and distribute hard copies of this
Preliminary statement unless specifically requested by individual
shareholders. News updates, Regulatory News, and previous years' Report and
Accounts, can be viewed and downloaded from the Group's website,
www.trifast.com.
The Report and Accounts for the year ended 31 March 2015, together with the
Notice of Meeting will be posted to shareholders and uploaded to the National
Storage Mechanism and the Group's website, www.trifast.com, in due course.
Further copies of the Preliminary statement and the Report and Accounts will
be available on request by writing to: The Company Secretary, Trifast plc,
Trifast House, Bellbrook Park, Uckfield, East Sussex, TN22 1QW, Email:
corporate.enquiries@trifast.com.
17 Annual General Meeting
The Annual General Meeting will be held on 16 September 2015 at Trifast House,
Bellbrook Park, Uckfield, East Sussex, TN22 1QW.
Editors' note:
LSE Premium Listing: Ticker: TRI
Group website: www.trifast.com
About us:Trifast's trading business TR Fastenings is a leading international
manufacturer and distributor of industrial fastenings to the assembly
industries, with operations in Europe, the Americas and Asia.
For more information, please visit www.trfastenings.com
LinkedIn: www.linkedin.com/company/tr-fastenings
Twitter: www.twitter.com/trfastenings
Facebook: www.facebook.com/trfastenings
Forward-looking statementsThis announcement contains certain forward looking statements. These reflect the knowledge and information available to the Company during the preparation and up to the publication of this document. By their very nature, these statements depend upon circumstances and relate to events that may occur in the future thereby involving a degree of uncertainty. Therefore, nothing in this document should be construed as a profit forecast by the Company.
This information is provided by RNS
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