Preliminary Results- year ended 31 March 2013

GROUP OPERATIONAL BUSINESS REVIEW

By Executive Chairman, Malcolm Diamond and Jim Barker, Chief Executive

Introduction

Trifast's relentless focus on profit growth and cash generation has been reflected in a strong trading performance; resulting in all KPIs being met at the end of the financial year:

All this has been achieved on a lower percentage cost base and within a global 'mixed' market sector backdrop but more importantly by the TR teams focus on the objectives set before them last year; their hard work and commitment has delivered what we are reporting to shareholders - on behalf of all stakeholders, we congratulate our colleagues around the globe.

The key financials are covered in the Group Finance Director's Report, so we will focus on what we have achieved operationally over the year.

Business Overview

The 2012/13 financial year has seen many operational developments and we summarise the key ones below:

Ø Organic performance of the business

·      Asia

Despite the loss of two previously long-held major component supply European transfer contracts to competing domestic Chinese assemblers, TR Asia has managed to improve overall profitability with a combination of new business wins, the integration of PowerSteel and Electro-Plating Works Sdn. Bhd ("PSEP") and healthier demand from existing customers.

·      Europe /Automotive

The decision taken in 2010 to focus our sales engineering resources on Tier 1 automotive assemblers has proved to be timely for two reasons: the product lifecycle - once designed and approved, (it can take between 12-18 months for the specifying, quoting and testing period prior to production start-up) lasts between five to six years, thus providing a stable and lengthy forward revenue stream; also with the edge having come off peak demand for global electronics products in the past four years, our growth has been sustained by diversifying our customer target sector beyond electronics and domestic appliances.  This strategy is no better reflected than by TR Europe with its new automotive contract wins during the year.

·      United Kingdom

TR UK has gained by far the most benefit from the Management team's determined focus on 'self-help'. Operational efficiency gains have taken nearly three years to fully yield the material profit gains through lowering both fixed and variable costs and consolidating and re-negotiating terms with key suppliers.

The new TR Direct next day delivery of standard products has also made an important contribution to this year's substantial profit growth.

·      Ireland

Both our Southern and Northern Ireland operations have enjoyed steady growth in a tough environment, with no sign of their renewed momentum diminishing as we look forward.

·      USA

TR's recently restructured US location is performing well; with the additional global multinational customers secured last year we have recently enlarged our US warehouse facilities with a further unit in Houston.

Although the US operation is currently the smallest contributor to Group revenue, TR Inc. is strategic to our future plans.  A high proportion of our globally sited multinationals are headquartered in the USA, where many of the product designers and engineers are based and who all expect to receive fastener specification advice locally 'on the spot'.  Once TR is nominated on any component drawing, then buyers in Europe and Asia will be able to source exactly to specification as originally designated by their HQ.

Ø Competitive advantage

Customers continue to benchmark TR against global fastener competitors and maintain their conclusion that we are uniquely positioned to fully satisfy their increasing demands by being able to combine 'low cost/zero-defect philosophy' production via our six Asian based factories.  This combines with delivery logistics to over 50 countries along with design/application engineers directly employed by TR purely to resolve assembly challenges for our customers, many of whom, despite being large multinationals, do not carry the overhead of fastener engineers on their payroll.

This 'one - stop shop' capability of TR is further bolstered by its range of TR Branded speciality fasteners for sheet metal and plastics, plus its launch post year end of a comprehensive new range of plastic fasteners, PCB spacers and cable management components.

Although each of TR's 23 location business teams operate to their own P&L targets, the TR attitude of co-operation and cross skilling results in a 'one family' approach with regard to data and inventory sharing together with mutual and enjoined objectives in relation to competitive sourcing and customer quotations. This 'think local - operate global' gives TR the benefit of being swift to market whilst having the resources of an international player.

Ø Expansion and new territories

Whilst the continent of India is an exciting area for expansion, we have been cautious in our adoption of new business and the associated investment that is required; however, in the past year we have taken on additional sales engineers to expand our capabilities at our two business offices there, as we serve our mainly US-owned multinational customers that are now firmly established.

TR Sweden has been one of our successful European teams in gaining new automotive business - despite their earlier loss of the Saab closure as a going concern.  This growth has enabled them to secure larger new offices in Stockholm in order to provide adequate scope for further expansion of their business.

Our Automotive team has opened up business for the first time with Russia, and new customers for our TR Branded sheet metal fasteners have emerged in South Korea, again a first for our sales team.

Ø New licences and products

Important new global manufacturing licences have been granted to TR by Phillips Screw Co. and Acument.  These licences dramatically extend our range of fastener drive and clinch applications and these will appeal to those requiring more sophisticated engineered applications such as weight reduction and high torque demands.  The product licence additions add considerable 'kudos' to our engineering/design capabilities in the eyes of many of our existing customers, whilst attracting new applications from both existing and potential customers.

TR's ever growing plastics portfolio is now one of the most extensive on the market, with more products being added throughout 2013 in response to customer demand.  TR's plastics range meets all industry standards and legislation and initially, our focus is on automotive and PCB hardware applications.  We are confident that all these developments open up new sectors and opportunities for TR as well as for the customer streamlining production processes; where a fastener is needed to be versatile light and strong, plastic is often the optimal

solution.  An example of this is our working relationship with a UK specialist high performance sports car manufacturer - as we all know, the automotive sector is constantly looking to be more economic and environmentally friendly without compromising quality and performance.

Ø Investing for the future

Investment during the year in sophisticated automation is enabling TR to adopt 'zero-defect philosophy' within product quality out of our Singapore and Malaysian factories - with Taiwan targeted for 2014.  This is becoming an absolute requirement for high volume assembly customers who use automation or robotics for inserting fasteners, where a wrong dimension on a screw can bring a production line to a complete halt for anything up to an hour.

Our Taiwanese business is multi-site with two factories, one warehouse and a separate sales office.  Post year-end, a cost model has been commissioned to establish a new site with an all-purpose new building to accommodate all the business functions under one roof. Any such move would deliver the double benefit of improved efficiency and more production capacity.  We look forward to updating Shareholders on progress in due course.

Authorisation has been given for TR Sweden to upgrade its computer system in order to facilitate real time electronic data interchange with our automotive customers.  The new upgrade is based on the same basic architecture as their existing software, and will be conducted by the same provider - thus minimising delays and disruption.  This new IT system will serve as a teaching/training module for other TR business teams in order to test thoroughly prior to any subsequent upgrades on other TR Europe sites.

Management & People - 'Training & adding new skills'

Last year, as part of our operational restructuring we introduced a 'people, performance & responsibilities' programme across the Company and at all levels.  As a direct result of what we term, TR's 'value assessment' model (aligned to strategy and objectives) we are utilising skills and knowledge more effectively which, in turn, is further shaping TR's on-going Senior Executive development and succession planning programmes.  The first three well-deserved appointments to the TR Operating Board have been announced recently - these are in recognition of hard work and skills 'developed and channelled' effectively under the Senior Executive programme - suffice to say, all three candidates possess leadership qualities and specialisms that will drive TR business units to the next level.

Through this initiative also, we have been able to more effectively deploy resources within existing systems and structure; this streamlining and realignment of responsibilities within the business is already having an impact and formed part of 'self-help' objectives set as part of the Board's strategy plan put in place at the start of 2012.

The Apprenticeship scheme, first introduced in 2011 is going from strength to strength - we have been successful in attracting enthusiastic young school leavers keen to join TR, and we expect to gain greatly from their contribution in the future: the roll-out of the scheme across the UK businesses is also starting to gain momentum.

At Board level, we have seen change too: Seamus Murphy, having successfully completed his key strategic projects (set within the lead team's first three-year plan initiated in 2009) stepped down from the Main Board at the end of January 2013 and has since left the business.  Seamus joined us in 2005 following the acquisition of Serco Ryan; the Directors acknowledge his input and service, we wish him and his family well in the future.

Post the year end, Scott Mac Meekin joined the business as an Independent Non-Executive Director.  Scott brings a wealth of experience gained over a 20-year career within the US and Asian fastener industry; his additional skills complement both the current Executive and Non-Executive Directors' skills base and provide extra impetus to our expansion aspirations.

Finally, we would like to acknowledge every colleague from around the world, all of them have made a difference and worked hard together to achieve another year of solid growth; without their dedication stakeholders would not be sharing in this year's trading achievement.  Jim and I together with our fellow Board colleagues look forward to working with everyone over the coming year, to continue in the success.

Celebrating 40 years

On 1 June 2013, Trifast celebrated its 40^th Anniversary since being founded as TR Fastenings Ltd in 1973.  TR has over the years played a major part in the transformation of how high volume/variety small lower value assembly components are delivered, creating 'just in time' & 'supply chain' management logistics programmes to its customer base initially from one office in Sussex, and then driven by multinational customer demands, going on to establish an international footprint now serving over 50 countries, delivering over 150 million components worldwide each day by a highly motivated network of TR business teams.  Nearly 30% of the Group's revenue now derives from TR's own Asian manufacturing base.

A number of those that joined the business at its humble beginnings remain with us to this day including both of us - new "young blood" has since joined us along the way and together, we have all experienced and seen many developments and challenges over the years.  However, through our desire to 'Innovate and Serve,' TR today is recognised as a driving force within the industry, at the cutting edge of fastener technology through its investment in the research & development, new products and services combined with the TR culture.

Objectives, strategy and opportunities

As Trifast Directors, we are particularly pleased with the jump in profitability between March 2012 and March 2013.  We remain committed to the pursuit of shareholder value, and as part of this, see lots of reasons that point to further 'bottom-line' growth for the foreseeable future.

This will be achieved by, as always, a combination of activities.  There will be no end to our continual pursuit of operational efficiency improvements, even though, as each year passes there will naturally be an element of diminishing materiality in the size of profit gains.  This is why we are now financially in a position to consider prudent new investments in automation, faster more analytical computer systems and additional sales engineers for both automotive and electronics sectors on a global basis.

As stakeholders know, the global market for fasteners and related components for assembly is vast, and in terms of penetration, TR's revenue is barely measurable; however, even though the market remains fragmented there is an opportunity for smaller more flexible players like ourselves to be "strategic consolidators".

Existing shareholders are aware that as a team we are cautious in our approach to acquisitions, with our demand for low debt/high margin/loyal on-going local management and cash generative businesses in a highly fragmented market, where TR's business model of combining low cost manufacturing with global logistics distribution supported by design and application engineering is relatively unique. Consequently, our networking is constantly in search mode being sustained by our knowledge that, like PSEP the business acquired December 2011 (which today is fully and happily integrated into TR) target companies that meet these criteria certainly do exist.

Meanwhile, our highly effective sales and marketing teams continue to open up new revenue opportunities - both geographically and with additional products and customer sectors as they strive to meet our ever ambitious revenue and profit targets.

Trading Outlook

The Board remain very optimistic that the phrase a 'World of Opportunity' initiated last year is gathering momentum as the Group's structure and focus  enables further organic growth, and when combined with new business and niche expansion opportunities, TR's operational teams feel confident in their ability to deliver strong results through 2013/14, and into the future.

We look forward to updating you on our progress throughout the coming year.

Date: 25 June 2013