REG - Trifast PLC - Preliminary results - year ended 31 March 2016 <Origin Href="QuoteRef">TRFT.L</Origin> - Part 2
14/06/2016 07:05
- Part 2: For the preceding part double click ID:nRSN0641Ba
Financial expense 851 1,063 406 492
Loss/(gain) on sale of property, plant and equipment
and investments 15 (3) - -
Dividends received - - (8,532) (5,911)
Equity settled share based payment charge 1,687 741 1,224 520
Taxation charge/(credit) 2,852 3,455 (277) 432
Operating cash inflow/(outflow) before changes in working capital and provisions 17,782 15,432 (3,075) (4,772)
Change in trade and other receivables (1,360) (9,187) (3,914) (180)
Change in inventories (421) (1,679) - -
Change in trade and other payables (58) 2,080 (3,743) 437
Change in provisions (70) 121 - -
Cash generated from/(used in) operations 15,873 6,767 (10,732) (4,515)
Tax paid (3,080) (4,639) - -
Net cash from/(used in) operating activities 12,793 2,128 (10,732) (4,515)
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 16 25 - -
Interest received 91 97 32 30
Acquisition of subsidiary, net of cash acquired (7,684) (16,240) - (19,645)
Acquisition of property, plant and equipment and intangibles (2,339) (1,414) (2) (66)
Dividends received - - 8,532 5,911
Net cash (used in)/from investing activities (9,916) (17,532) 8,562 (13,770)
Cash flows from financing activities
Proceeds from the issue of share capital, net of acquisition 181 494 181 494
Proceeds from new loan 11,451 20,337 9,252 20,337
Repayment of borrowings (8,969) (3,347) (1,825) (974)
Payment of finance lease liabilities (31) 31 - -
Dividends paid 12 (2,440) (1,569) (2,440) (1,569)
Interest paid (895) (1,063) (419) (492)
Net cash (used in)/from financing activities (703) 14,883 4,749 17,796
Net change in cash and cash equivalents 2,174 (521) 2,579 (489)
Cash and cash equivalents at 1 April 9 15,014 15,504 (3,446) (2,957)
Effect of exchange rate fluctuations on cash held 393 31 - -
Cash and cash equivalents at 31 March 9 17,581 15,014 (867) (3,446)
Trifast plc
('Trifast', the 'Group' or 'Company')
Notes to the Preliminary statement
1. Preparation of the preliminary statement
The preliminary results announcement for the year ended 31 March 2016 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 13 June 2016.
2. Underlying profit before tax and separately disclosed items
Note 2016£000 2015£000
Underlying profit before tax 16,002 14,308
Separately disclosed items within administrative expenses
IFRS2 share based payment charge (1,687) (741)
Intangible amortisation (974) (551)
Net acquisition costs 14 (264) (750)
Costs on exercise of executive share options - (511)
Release of closure provision for TR Formac (Suzhou) Co. Ltd - 94
Profit before tax 13,077 11,849
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 assets acquired on business combinations are included
in the region to which they relate. This is an update on prior year when,
outside of Asia, they were previously included in 'common' segment assets. The
comparatives have been restated to reflect this. This is consistent with the
internal management reports that are reviewed by the Chief Operating Decision
Maker.
Geographical operating segments
The Group is comprised of the following main geographical operating segments:
- UK
- Europe: includes Norway, Sweden, Hungary, Ireland, Holland, Italy, Germany and Poland
- USA: includes USA and Mexico
- 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.
March 2016 UK^ £000 Europe £000 USA £000 Asia £000 Common costs ^£000 Total £000
Revenue
Revenue from external customers 64,156 54,030 4,602 38,582 - 161,370
Inter segment revenue 2,057 341 97 5,804 - 8,299
Total revenue 66,213 54,371 4,699 44,386 - 169,669
Underlying operating result 6,172 6,880 401 6,730 (3,390) 16,793
Net financing costs (278) (107) (2) (29) (375) (791)
Underlying segment result 5,894 6,773 399 6,701 (3,765) 16,002
Separately disclosed items (see note 2) (2,925)
Profit before tax 13,077
Specific disclosure items
Depreciation and amortisation 231 1,181 22 833 64 2,331
Assets and liabilities
Segment assets 36,525 63,568 3,164 50,295 4,481 158,033
Segment liabilities (15,792) (14,952) (385) (9,679) (33,475) (74,283)
^ Including the offset of the UK overdrafts from Common costs, as allowable
under financing agreements with HSBC.
March 2015 UK^£000 Europe £000 USA £000 Asia £000 Common Costs^ £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 tax 11,849
Specific disclosure items
Depreciation and amortisation 170 688 16 837 57 1,768
Assets and liabilities
Segment assets 39,642 45,407 2,267 50,222 4,254 141,792
Segment liabilities (19,684) (9,763) (413) (11,878) (28,374) (70,112)
^ Including the offset of the UK overdrafts from Common costs, as allowable
under financing agreements with HSBC.
There was no material difference in Europe and USA between the external
revenue based on location of the entities and the location of the customers.
Of the UK external revenue £10.4m (2015: £9.6m) was sold into the European
market. Of the Asian external revenue, £3.89m (2015: £3.59m) was sold into the
American market and £5.88m (2015: £5.92m) 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
2016£000 2015£000
Rental income received from freehold properties 139 155
Other income 178 197
317 352
5. Expenses and auditor's remuneration
Included in profit for the year are the following:
2016£000 2015£000
Depreciation 1,357 1,217
Amortisation of acquired intangibles 974 551
Operating lease expense 2,507 2,529
Loss/(gain) on disposal of fixed assets 15 (3)
Auditor's remuneration:
2016£000 2015£000
Audit of these financial statements 41 41
Audit of financial statements of subsidiaries pursuant to legislation 208 183
Taxation compliance services 15 44
Other assurance services 27 22
Other services relating to transaction services 60 309
6. Taxation
Recognised in the income statement 2016£000 2015£000
Current UK tax expense:
Current year 554 580
Adjustments for prior years 210 77
764 657
Current foreign tax expense:
Current year 3,052 3,223
Adjustments for prior years 19 56
3,071 3,279
Total current tax 3,835 3,936
Deferred tax expense:
Origination and reversal of temporary differences (196) (473)
Adjustments for prior years (787) (8)
Deferred tax income (983) (481)
Tax in income statement 2,852 3,455
Tax recognised directly in equity 2016 £000 2015 £000
Current tax recognised directly in equity - IFRS2 share based tax credit (70) (579)
Deferred tax recognised directly in equity - IFRS2 share based tax (credit)/charge (90) 450
Total tax recognised in equity (160) (129)
Reconciliation of effective tax rate ('ETR') and tax expense 2016 £000 ETR % 2015 £000 ETR %
Profit for the period 10,225 8,394
Tax from continuing operations 2,852 3,455
Profit before tax 13,077 11,849
Tax using the UK corporation tax rate of 20% (2015: 21%) 2,615 20 2,488 21
Tax suffered on dividends 204 2 171 1
Non-deductible expenses 223 2 236 2
Non-taxable receipts (123) (1) (184) (2)
IFRS2 share option charge/(credit) 112 1 (19) -
Deferred tax assets not recognised 72 - 289 3
Different tax rates on overseas earnings 256 2 347 3
Adjustments in respect of prior years (558) (4) 125 1
Tax rate change 51 - 2 -
Total tax in income statement 2,852 22 3,455 29
The UK Government has reduced the UK corporation tax rate to 19% with effect
from 1 April 2017 and 18% with effect from 1 April 2020. These reductions have
been reflected in the measurement of deferred tax balances.
The adjustments in respect of prior years mainly relate to the recognition of
a deferred tax asset in the US as it is now considered probable this asset
will be recoverable.
7. Inventories - Group
2016£000 2015£000
Raw materials and consumables 4,067 4,096
Work in progress 1,458 1,881
Finished goods and goods for resale 33,913 31,441
39,438 37,418
8. Trade and other receivables
Group Company
2016 £000 2015 £000 2016 £000 2015 £000
Trade receivables 41,931 37,876 - -
Non trade receivables and prepayments 1,455 1,988 41 51
Amounts owed by subsidiary undertakings - - 33,572 25,458
43,386 39,864 33,613 25,509
9. Cash and cash equivalents/bank overdrafts
Group Company
2016 £000 2015 £000 2016 £000 2015 £000
Cash and cash equivalents per Statement of financial position 17,614 15,453 1,406 1,292
Bank overdrafts per Statement of financial position (33) (439) (2,273) (4,738)
Cash and cash equivalents per Statements of cash flows 17,581 15,014 (867) (3,446)
10. Other interest-bearing loans and borrowings
This note provides information about the Group and Company's existing
interest-bearing loans and borrowings.
Initial loan value Rate Maturity Current Non-current
2016 £000 2015 £000 2016 £000 2015 £000
Group
Asset based lending LIBOR +1.89% to 2.25% 2016 3,144 8,605 - -
PSEP acquisition loan Fixed 3.14% 2016 1,170 1,484 - 1,113
Finance lease liabilities Various 2015-19 2 8 12 36
VIC unsecured loan EURIBOR + 1.95% 2020 476 - 1,665 -
Kuhlmann unsecured loan Base + 1.55% 2024 18 - 132 -
Group and Company
Facility A VIC acquisition loan EURIBOR +1.65% 2015-19 2,091 1,809 14,866 15,374
Facility B Revolving Credit Facility EURIBOR +1.65% 2019 10,000 - - -
Total Group 16,901 11,906 16,675 16,523
Total Company 12,091 1,809 14,866 15,374
11. Trade and other payables
Group Company
2016 £000 2015 £000 2016 £000 2015 £000
Trade payables 17,164 17,147 - -
Amounts payable to subsidiary undertakings - - 2,630 2,604
Contingent consideration 1,348 3,617 1,348 3,617
Non-trade payables and accrued expenses 13,149 12,354 1,623 2,160
Other taxes and social security 1,369 1,364 119 3
33,030 34,482 5,720 8,384
12. Dividends
During the year the following dividends were recognised and paid by the
Group:
2016£000 2015£000
Final paid 2015 - 1.50p (2014: 1.00p) per qualifying ordinary share 697 1,135
Interim paid 2015 - 0.60p (2014: 0.40p) per qualifying ordinary share 1,743 434
2,440 1,569
After the balance sheet date a final dividend of 2.00p per qualifying ordinary
share (2015: 1.50p) was proposed by the Directors and an interim dividend of
0.80p (2015: 0.60p) was paid in April 2016.
2016 £000 2015£000
Final proposed 2016 - 2.00p (2015: 1.50p) per qualifying ordinary share 2,335 1,743
Interim paid 2016 - 0.80p (2015: 0.60p) per qualifying ordinary share 934 697
3,269 2,440
Subject to Shareholder approval at the Annual General Meeting which is to be
held on 27 July 2016, the final dividend will be paid on 14 October 2016 to
members on the register at the close of business on 16 September 2016. The
ordinary shares will become
ex-dividend on 15 September 2016.
13. Earnings per share
Basic earnings per share
The calculation of basic earnings per share at 31 March 2016 was based on the
profit attributable to ordinary shareholders of £10.23m (2015: £8.39m) and a
weighted average number of ordinary shares outstanding during the year ended
31 March 2016 of 116,388,265 (2015: 113,540,187), calculated as follows:
Weighted average number of ordinary shares
2016 2015
Issued ordinary shares at 1 April 116,174,086 108,684,180
Effect of shares issued 214,179 4,856,007
Weighted average number of ordinary shares at 31 March 116,388,265 113,540,187
Diluted earnings per share
The calculation of diluted earnings per share at 31 March 2016 was based on
profit attributable to ordinary shareholders of £10.23m (2015: £8.39m) and a
weighted average number of ordinary shares outstanding during the year ended
31 March 2016 of 120,345,662 (2015: 118,768,522), calculated as follows:
Weighted average number of ordinary shares (diluted)
2016 2015
Weighted average number of ordinary shares at 31 March 116,388,265 113,540,187
Effect of share options on issue 3,957,397 5,228,335
Weighted average number of ordinary shares (diluted) at 31 March 120,345,662 118,768,522
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) 2016EPS 2015EPS
Earnings £000 Basic Diluted Earnings £000 Basic Diluted
Profit after tax for the financial year 10,225 8.78p 8.50p 8,394 7.39p 7.07p
Separately disclosed items:
IFRS2 share option 1,687 1.45p 1.40p 741 0.65p 0.62p
Intangible amortisation 974 0.84p 0.81p 551 0.49p 0.46p
Net acquisition costs 264 0.23p 0.22p 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^ (1,132) (0.97p) (0.94p) (541) (0.48p) (0.45p)
Underlying profit after tax 12,018 10.33p 9.99p 10,312 9.08p 8.68p
^ This includes adjusting for the recognition of the deferred tax asset in
TR Fastenings Inc. (see note 6).
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 Kuhlmann Befestigungselemente GmbH & Co. KG ('Kuhlmann')
On 1 October 2015, the Group acquired Kuhlmann for a total consideration of
E8.5m (£6.2m). The initial amount of E6.8m (£4.9m) was paid on completion in
cash and E0.04m (£0.03m) was satisfied by the allotment of 29,350 ordinary
shares in the Company. Consideration of E1.7m (1 October 2015: £1.2m, 31 March
2016: £1.3m) will be deferred for 12 months and is to serve as a retention
against which any potential warranty and indemnity claims will be offset. The
cash consideration was met from the Group's existing bank facilities.
The Group will be investing in Kuhlmann to further develop the opportunities
in the German market and expect the acquisition of Kuhlmann to be earnings
enhancing in the first full year of ownership.
Based in Verl, close to Bielefeld, Germany, Kuhlmann was founded in 1996 and
employs 18 staff. It is a well-respected highly efficient distributor of
industrial fastenings within the domestic German market. Its emphasis is on
delivering high quality products and services to its well-established
longstanding customer base in the principal sectors of machinery and plant
engineering, sheet metal processing and industrial. Kuhlmann's management team
and previous owners, Frank Niggebrügge, Eric Hütter and Peter Henning, will
continue to run the business with the support of the operational management
team and staff who will remain within the business.
For the year ended 31 December 2014, Kuhlmann reported revenue of E6.7m
(£5.4m) and profit before tax of E1.7m (£1.4m). Gross assets at the same date
were E1.4m (£1.1m).
In the six months since acquiring Kuhlmann to 31 March 2016, the subsidiary
contributed £0.5m to the consolidated underlying operating profit for the year
and £2.5m to the Group's revenue. If the acquisition had occurred on 1 April
2015, Group revenue would have increased by an estimated £2.4m and
consolidated operating profit would have been increased by an estimated £0.6m.
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 2015.
The acquisition had the following effects on the Group's assets and
liabilities.
Provisional fair value disclosed^ £000 Adjustments to provisional fair values£000 Recognised fair value £000
Property, plant and equipment 176 (2) 174
Intangible assets 3,651 - 3,651
Inventories 463 (6) 457
Trade and other receivables 420 3 423
Cash and cash equivalents 583 - 583
Trade and other payables (297) (18) (315)
Deferred tax liabilities (1,011) 1,011 -
Net identifiable assets and liabilities 3,985 988 4,973
Consideration paid:
Initial cash price paid 4,897 - 4,897
Equity instruments issued 31 - 31
Deferred consideration at fair value 1,232 - 1,232
Total consideration 6,160 - 6,160
Goodwill on acquisition 2,175 (988) 1,187
^ These amounts were disclosed in the Half Yearly Financial Report.
The fair value of trade receivables is £0.4m. The gross contractual cash flows
to be collected are £0.4m. The best estimate at acquisition date of the
contractual cash flows not to be collected is £nil.
The values previously disclosed in the Half Yearly Financial Report were
provisional and were given for information purposes only since the acquisition
was completed so close to 30 September 2015. An in-depth analysis has now been
completed and led to adjustments to provisional fair values as disclosed in
the table above. As part of this analysis it was identified that a tax
deduction can be obtained locally for amortisation relating to acquired
intangibles. Therefore, on acquisition there was no temporary difference
between the tax base and accounting net book value of these assets and hence
no deferred tax liability was recognised.
Intangible assets that arose on the acquisition include the following:
· £3.3m of customer relationships, with an amortisation period deemed to be
10 years
· £0.4m of other intangibles, with an amortisation period deemed to be
under 1 year
Goodwill is the excess of the purchase price over the fair value of the net
assets acquired. Locally a tax deduction is available for Goodwill which is
amortised over 15 years. It mostly represents potential synergies, e.g.
cross-selling opportunities between Kuhlmann and the Group, and Kuhlmann's
assembled workforce.
Effect of acquisition
The Group incurred costs of £0.26m in relation to the acquisition of Kuhlmann
which have been included in administrative expenses in the Group's
consolidated statement of comprehensive income and form part of separately
disclosed items, see note 2. The foreign exchange losses of £0.55m made on the
E1.7m deferred consideration and E6.8m external loan are part of the Group's
net investment hedging and therefore have been recognised in the exchange
reserve.
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 2016 or 2015 but is
derived from the 2016 Report and Accounts. The Report and Accounts for 2015
have been delivered to the Registrar of Companies and those for 2016 will be
delivered in due course. The external auditor has reported on the 2016 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. Shareholder 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 2016, together with the
Notice of Meeting will be posted to shareholders where requested and uploaded
to the National Storage Mechanism (http://www.morningstar.co.uk/uk/NSM) 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 27 July 2016 at Trifast House,
Bellbrook Park, Uckfield, East Sussex, TN22 1QW.
13 June 2016
This information is provided by RNS
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