Source - RNS
RNS Number : 3421H
Tricorn Group PLC
07 June 2017
 



 

 

 

 

 

 7 June 2017

Tricorn Group plc

Final Results

For the year ended 31 March 2017

 

 

Tricorn Group plc ('Tricorn' or the 'Group'), (TCN.L) the AIM quoted tube manipulation specialist, announces its audited final results for the year ended 31 March 2017.

 

Highlights

·    Profits significantly ahead of market expectations

·    Successfully completed consolidation of China operations

·    Over £10m ($12.9m) of business secured in a long term agreement and new contract wins in the USA

·    Investment in manufacturing footprint aligned to a growing customer base

·    Improved trading through final quarter

·    Positive cash flow from operating activities

 

Financial Summary




 


2017

2016

 


£'000

£'000

 




 

Revenue

18,519

18,016

 

Operating profit*

497

33

 

Profit/(loss) before tax*

230

(273)

 

Net cash from operating activities

614

1,222

 

Cash and equivalents

642

855

 

Net debt

(3,497)

(2,920)

 

Earnings/(loss) per share - basic*

0.72p

(0.19)p

 

 




 

* All references to operating profit, profit/(loss) before tax and earnings/(loss) per share are for continuing operations and before restructuring costs, intangible asset amortisation and share based payment charges.

 

 

Commenting on the results and the Group's prospects, Andrew Moss, Chairman of Tricorn, said:

 

"In a period in which market conditions have at times been challenging, we are pleased to report a significant improvement in our performance, with profits in the year to 31 March 2017 being significantly ahead of market expectations. During the year we successfully completed the consolidation of our manufacturing operations in China, which is now trading profitably.

The investment we have made in aligning our manufacturing footprint to the needs of our customers combined with our ongoing focus on operational performance is enabling us to win new business, grow market share and improve profitability.

We are encouraged by the improved trading in the final quarter of the year and expect to make further progress in the current year."

Enquiries:

 

Tricorn Group plc

Tel +44 (0)1684 569956

Mike Welburn, Chief Executive

www.tricorn.uk.com

Phil Lee, Group Finance Director

[email protected]



Stockdale Securities Limited

Tel + 44 (0)20 7601 6100

Tom Griffiths/Henry Willcocks


 

Notes to Editors:

Tricorn is a value added manufacturer and specialist manipulator of pipe and tubing assemblies to niche markets worldwide in the Energy and Transportation sectors. 

Headquartered in Malvern, UK, Tricorn employs around 300 employees and has four manufacturing facilities in the UK, USA and China. It operates through four brands: Malvern Tubular Components, Maxpower Automotive, Franklin Tubular Products and Minguang-Tricorn Tubular Products. 

 

Chairman's and Chief Executive's statement

Performance in the year ended 31 March 2017

Revenue for the year at £18.519m was 2.8% higher than the previous year (2016: £18.016m) reflecting the impact of new business growth and improved trading across the Group towards the end of the period. Second half revenue was 8% up on the first 6 months and 21.5% higher than the corresponding period last year.  From July 2016, the Group's businesses in China were consolidated into an enlarged joint venture, which in line with Group policy, is reported on a profit or loss only basis. A favourable US dollar translation impact more than offset the resulting reduction in reported revenue.

Underlying operating profit at £0.497m was significantly up from the previous year (2016: £0.033) and with the joint venture in China operating profitably, following the consolidation, the underlying profit before tax for the year at £0.230m was up £0.503m on the previous year (2016: loss £0.273m).

In the Transportation division, good progress continued to be made on several fronts. In the USA over £10m ($12.9m) of business was secured from both existing and new customers reflecting the strengthening customer relationships being developed in the region. In the UK revenue continued to grow as a result of new business and the product application base was expanded to include braking systems for electric vehicles.

The Energy division expanded its reach into the power generation sector and with customer end markets starting to improve saw a notable increase in demand through the latter part of the year.  

Business Review

The Group operates two main business divisions focused on the transportation and energy sectors.  From the Group's four manufacturing facilities, the businesses serve a global blue chip OEM customer base many of whom have major facilities in the UK, USA, and China as well as elsewhere in the world.

With manufacturing operations now established in each of these key locations, the Group is ideally positioned to support its customers' facilities as they continue to seek to localise supply and technical support.

Transportation

The Transportation division is focused on rigid, nylon and hybrid tubular products for engines, braking systems, transmission lubrication, fuel sender sub-systems and hydraulic actuation in a variety of on and off road applications including construction, trucks and agriculture.

 

External revenue for the year ended 31 March 2017 was £13.595m (2016: £12.538m) and underlying operating profit increased to £0.329m (2016: £0.043m).

In the USA Franklin Tubular Products continued to develop its relationships and secure market share with a growing customer base. Strong operational performance and early investment in innovative capabilities for the business has resulted in new contract wins and a long-term agreement with a combined estimated value of over £10m ($12.9m) for the supply of on-board heavy truck products as well as hydraulic fluid systems for off road machines.

In the UK, Maxpower Automotive benefited from the impact of new business growth following the prior year investment in rigid hydraulic tube manufacture. More recently the development of brake system products for electric vehicle applications provides further scope for expansion.  

In China, both the Group's wholly owned facility and joint venture were combined into an enlarged operation. This reduced operational gearing and concentrated resources into a single location in an enlarged joint venture in Nanjing. The business operated profitably over the latter part of the financial year and is now firmly established on a solid platform for growth.

Energy

The Energy division is focused on the design and manufacture of larger tubular assemblies and fabrications for diesel engines and power generator sets. The key markets served through its customers are power generation, mining, marine and oil and gas applications.

 

External revenue for the year at £4.924m was down on the previous year (2016: £5.478m), however, second half revenue was up 39.5% on the previous 6 months. This was a result of the impact of new business secured, principally in the power generation sector, and improving end markets for its existing customer base.  Underlying operating profit at £0.280m was substantially up on the previous year (2016: £0.098m) as the business benefited from restructuring in the prior year.

People

The Board would like to take the opportunity to thank all its employees for their hard work and support through the year.  Their commitment and dedication ensures that we continue to drive the business forward and deliver quality products to our customers.

 

Financial Review

The Group entered the financial year with a lower overhead base following the restructuring implemented in the previous financial year.  Costs were further reduced in July 2016 through the consolidation of the Group's operations in China.

As a result, and coupled with improving trading conditions, all of the Group's subsidiary businesses were profitable in the year and the China joint venture was profitable through the final quarter.  Financial results for the Group were much improved on the prior year with underlying operating profit for the year of £0.497m (2016: £0.033m) and after finance costs and the share of the full year loss from the joint venture, underlying profit before tax was £0.230m (2016 loss: £0.273m).

Income Statement

Revenue for the year, at £18.519m was up £0.503m on the prior year of £18.016m.  The improvement over the prior year reflected the impact of new business growth and the improved trading experienced towards the end of the financial year.  The impact of the strengthening US dollar during the year was largely offset by a reduction in revenues in China following the completion of the merger of the Group's China activities at the end of June 2016.  From that date and in line with Group policy the Group has reported its share of the profit or loss before tax whilst the revenue figure for the joint venture is not reported in the Group consolidated income statement.

Headline administration and distribution costs were down £0.211m over the previous financial year despite a stronger US dollar, which, on translation added £0.410m to these costs in the year.  Excluding the impact of the movement of the US dollar the Group has seen a £0.621m reduction in its distribution and administrative cost base over the previous financial year.  Underlying operating profit improved significantly to £0.497m when compared to the prior year's underlying operating profit of £0.033m.

Finance costs for the year were £0.218m (2016: £0.207m) and the Group delivered an underlying profit before tax for the year of £0.230m (2016: underlying loss before tax £0.273m).   

Total restructuring costs for the Group in the year were £0.303m (2016: 0.270m), of which £0.223m related to the consolidation of activities in China and of that figure £0.114m comprised non-cash asset write-downs.  After deducting restructuring costs, intangible asset amortisation and share based payment charges, the loss before tax for the year was £0.287m (2016: £0.552m). 

Basic loss per share (LPS) for continuing businesses was 0.81p (2016: LPS 1.64p) and after adjusting for one-off items, the underlying earnings per share was 0.72p (2016: LPS 0.19p).  The Board is not recommending the payment of a final dividend (2016: nil pence).

Cash Flow

The improved profit position of the Group and the management of working capital, as demand increased through the final quarter of the financial year, enabled it to generate net cash from operating activities of £0.614m (2016: £1.222m).  Capital expenditure for the year was £0.559m (2016: £0.629m).

At 31 March 2017, net debt was £3.497m (2016: £2.920m).  The stronger US dollar at the year end had a significant impact on the reported net debt figure, resulting in an increase in reported borrowings of £0.346m on translation at year end rates.  A large proportion of the US dollar debt is used for working capital purposes in the US and is secured against US assets.  Cash and cash equivalents were £0.642m (2016: £0.855m) and gearing was 57.9% (2016: 48.5%), which again was impacted by the stronger US dollar.

The Group uses short term borrowings to fund its operating activities, with selected capital additions and larger projects being financed by lease finance arrangements.  At the year end, the Group did not have any term debt in place.

Balance Sheet

Total assets of the Group as at 31 March 2017 were £13.788m, which was an increase of £1.425m on the prior year, with net working capital in the year also increasing to £3.890m (2016: £3.374m).

During the year, the Group assessed the useful lives of its plant and equipment.  As a result of this review, the Group increased the maximum life for this class of asset from 10 years to 15 years.  Assets were not revalued as a part of this exercise and the impact on the depreciation charge in the year was a reduction of £0.122m.

On translation of its overseas assets and liabilities, the Group made an exchange gain of £0.269m (2016: gain £0.052m).  This is a non-cash movement, which is not hedged and is treated as a movement in other comprehensive income.  As a result, the translation reserve in shareholders' funds now shows a £0.376m surplus (2016: surplus £0.107m).

Outlook 

In a period in which market conditions have at times been challenging, we are pleased to report a significant improvement in our performance, with profits in the year to 31 March 2017 being significantly ahead of market expectations. During the year we successfully completed the consolidation of our manufacturing operations in China, which is now trading profitably.

The investment we have made in aligning our manufacturing footprint to the needs of our customers combined with our ongoing focus on operational performance is enabling us to win new business, grow market share and improve profitability.

We are encouraged by the improved trading in the final quarter of the year and expect to make further progress in the current year.

 

 

 

 

Andrew Moss                                                  Mike Welburn

Chairman                                                         Chief Executive

 



Group income statement

For year ended 31 March 2017

 

All of the activities of the Group are classed as continuing.


Note

2017

£'000

2017

£'000

2017

£'000

 2016

£'000

 

2016

£'000

 

2016

£'000



Underlying

Non-underlying

Group

Underlying

Non-underlying

Group









Revenue

3

18,519

-

18,519

18,016

-

18,016

Cost of sales


(11,002)

-

(11,002)

(10,752)

-

(10,752)

Gross profit


7,517

-

7,517

7,264

-

7,264









Distribution costs


(793)

-

(793)

(969)

-

(969)









Administration costs








-           General administration costs


(6,227)

-

(6,227)

(6,262)

-

(6,262)

- Restructuring costs


-

(303)

(303)

-

(270)

(270)

-           Intangible asset     amortisation



-

(190)

(190)

-

(158)

(158)

-           Share based payment   charge



-

(24)

(24)

-

(59)

(59)

Total administration costs


(6,227)

(517)

(6,744)

(6,262)

(487)

(6,749)









Operating profit/(loss)

3

497

(517)

(20)

33

(487)

(454)









Share of loss from joint venture



(49)

-

(49)

(99)

-

(99)

Finance costs


(218)

-

(218)

(207)

-

(207)









Profit/(loss) before tax


230

(517)

(287)

(273)

(487)

(760)









Income tax credit


12

-

12

160

48

208

Profit/(loss) after tax from continuing operations

 

 


3

242

(517)

(275)

(113)

(439)

(552)






 



Attributable to:
Equity holders of the parent company


242

(517)

(275)

(113)

(439)

(552)









Continuing Operations Earnings per share:
Basic loss per share

 

 

 

4



(0.81)p



(1.64)p

Diluted loss per shares

 

4



(0.81)p



(1.64)p

 

 



 

Group statement of comprehensive income

For year ended 31 March 2017

 



2017

2016



£'000

£'000





Loss for the year


(275)

(552)

Other comprehensive income








Items that will subsequently be reclassified to profit or loss




Foreign exchange translation differences


269

52





Total comprehensive loss attributable to equity holders of the parent


(6)

(500)

 

 

 

 

 



Group statement of changes in equity

For year ended 31 March 2017

 


 

 

 

Share

 Capital

Share

premium

Merger reserve

Trans-lation reserve

 

Share

based

payment

 reserve

Profit

 and loss

account

Total


£'000

£'000

£'000

£'000

£'000

£'000

£'000









Balance at 1 April 2015

3,349

1,692

1,388

55

401

(455)

6,430









Share based payment charge

-

-

-

-

59

-

59

Write back of share based payment reserve

 

-

 

-

-

-

(160)

160

-

Issue of new shares

30

-

-

-

-

-

30


 

 

 

 

 

 

 









Total transactions with owners

30

-

 

-

-

(101)

160

89

Loss and total comprehensive expense

-

-

-

52

-

(552)

(500)









Balance at 31 March 2016

3,379

1,692

1,388

107

300

(847)

6,019









Share based payment charge

-

-

-

-

24

-

24

Write back of share based payment reserve

 

-

 

-

-

-

(15)

15

-


 

 

 

 

 

 

 









Total transactions with owners

-

-

-

-

9

15

24

Loss and Total Comprehensive expense

 

-

 

-

-

 

269

 

-

 

(275)

 

(6)

Balance at 31 March 2017

3,379

1,692

1,388

376

309

(1,107)

6,037

 


Group statement of financial position

At 31 March 2017

 


2017

2016


£'000

£'000








391

391


385

500


4,300

3,796


684

216


5,760

4,903





2,662

2,258


4,692

3,550


642

855


32

32


8,028

6,695





-

765





13,788

12,363











(3,464)

(2,434)


(4,013)

(3,677)


(32)

-


(7,509)

(6,111)





(126)

(98)


(116)

(135)


(242)

(233)


 

 





(7,751)

(6,344)





6,037

6,019








3,379

3,379


1,692

1,692


1,388

1,388


376

107


309

300


(1,107)

(847)


6,037

6,019

 


Group statement of cash flows

For year ended 31 March 2017

 

 

 



2017

2016

 



£'000

£'000

 





Cash flows from operating activities




Loss after taxation from continuing operations


(275)

(552)

Adjustment for: 




- Depreciation


513

704

- Non-cash restructuring


114

-

- Net finance costs in income statement


218

207

- Amortisation charge


190

158

- Share based payment charge


24

59

- Share of joint venture operating losses


49

99

- Taxation credit recognised in income statement


(12)

(208)

- (Increase)/Decrease in trade and other receivables


(984)

1,329

- Increase/(Decrease) in trade payables and other payables


1,003

(414)

- Increase in inventories


(25)

(19)





Cash generated by continuing operations


815

1,363

Interest paid


(226)

(207)

Income taxes paid


25

66





Net cash generated by operating activities


614

1,222





Cash flows from investing activities




Proceeds of assets sold on disposal of business


(157)

-

Purchase of plant and equipment


(559)

(629)

Purchase of intangible assets


(75)

(192)

Net cash used in investing activities


(791)

(821)





Cash flows from financing activities




Issue of ordinary share capital


-

30

Movement in short term borrowings


41

(201)

Payment of finance lease liabilities


(77)

(69)

Net cash used in financing activities


(36)

(240)





Net (decrease)/increase in cash and cash equivalents


(213)

161





Cash and cash equivalents at beginning of year


855

694





Cash and cash equivalents at end of year


642

855

 

 


1          General information

Tricorn Group plc and subsidiaries' (the 'Group') principal activities comprise high precision tube manipulation and systems engineering.


The Group's customer base includes major blue chip companies with world-wide activities in key market sectors, including Power Generation, Oil & Gas, Off Highway, Commercial Vehicles, Agriculture and Automotive.


Tricorn Group plc is the Group's ultimate parent company.  It is incorporated and domiciled in the United Kingdom.  The address of Tricorn Group plc's registered office, which is also its principal place of business, is Spring Lane, Malvern, Worcestershire, WR14 1DA.  Tricorn Group plc's shares are quoted on the Alternative Investment Market of the London Stock Exchange. 


The consolidated financial statements have been approved for issue by the Board of Directors on 6 June 2017.  Amendments to the financial statements are not permitted after they have been approved.

 

The financial information set out in this final results announcement does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006.  The group income statement, the group statement of comprehensive income, the group statement of changes in equity, the group statement of financial position, the group statement of cash flows and the associated notes for the year ended 31 March 2017 have been extracted from the Group's financial statements upon which the auditor's opinion is unqualified and does not include any statement under Section 498 of the Companies Act 2006.  The statutory accounts for the year ended 31 March 2017 will be delivered to the Registrar of Companies following the Group's Annual General Meeting.

 

 

2    Accounting policies

Basis of preparation

This financial information has been prepared under the required measurement bases specified under International Financial Reporting Standards (IFRS) and in accordance with applicable IFRS as adopted by the European Union and IFRS as issued by the International Accounting Standards Board.

The Group distinguishes between underlying and non-underlying items in its Consolidated Income Statement.  Non-underlying items are material items which arise from unusual non-recurring or non-trading events.  They are disclosed on the face of the Consolidated Income Statement where in the opinion of the Directors such disclosure is necessary in order to fairly present the results for the period.  Non-underlying items comprise exceptional costs of Group restructuring, intangible assets amortisation and share based payment charges.

3    Segmental reporting

The Group operates two main business segments:

§  Energy: manipulated tubular assemblies for use in power generation, oil and gas and marine sectors.

§  Transportation: ferrous, non-ferrous and nylon material tubular assemblies for use in on and off-highway applications.

 

 

 

3   Segmental reporting (continued)

The financial information detailed below is frequently reviewed by the Chief Operating Decision maker.

 

Year ended 31 March 2017

 

Energy

Transport-ation

Unallocated

Total


£'000

£'000

£'000

£'000

Revenue





- from external customers

4,924

13,595

-

18,519

- from other segments

157

40

(197)

-

Segment revenues

5,081

13,635

(197)

18,519

Underlying operating profit/(loss)*

280

329

(112)

497

Restructuring charges

(34)

(252)

(17)

(303)

Intangible asset amortisation

-

-

(190)

(190)

Share based payment charge

-

-

(24)

(24)

Operating profit/(loss)

246

77

(343)

(20)


 

 

 

 

Share of loss from joint venture

-

-

(49)

(49)

Net finance costs

(29)

(134)

(55)

(218)

Profit/(Loss) before tax

217

(57)

(447)

(287)






Other segment information:

Segmental assets

 

3,332

 

10,051

 

405

 

13,788

Capital expenditure

184

476

-

660

Depreciation

200

311

2

513






*- Before intangible asset amortisation, share based payment charges and restructuring costs

 



 

3     Segmental reporting (continued)

Year ended 31 March 2016

 

Energy

Transportation

Unallocated

 

Total


£'000

£'000

£'000

£'000






Revenue





- from external customers

5,478

12,538

-

18,016

- from other segments

329

191

(520)

-

Segment revenues

5,807

12,729

(520)

18,016

Underlying operating profit/(loss)*

98

43

(108)

33

Restructuring charges

(32)

(225)

(13)

(270)

Intangible asset amortisation

-

-

(158)

(158)

Share based payment charge

-

-

(59)

(59)

Operating profit/ (loss)

66

(182)

(338)

(454)


 

 

 

 

Share of loss from joint venture

-

-

(99)

(99)

Net finance costs

(35)

(125)

(47)

(207)

Profit/(loss) before tax

31

(307)

(484)

(760)






Other segment information:





Segmental assets

 

2,573

 

9,137

 

653

 

12,363

Capital expenditure

251

529

1

781

Depreciation

271

431

2

704

 

*- Before intangible asset amortisation, share based payment charges and restructuring costs.

 

The Group's revenue from external customers (by destination) and its geographic allocation of total assets may be summarised as follows:


Year ended

31 March 2017


Revenue

Non-current assets

Current Assets

Total Assets


£'000

£'000

£'000

£'000






United Kingdom

8,989

2,455

4,903

7,358

Europe

1,086

-

-

-

Rest of World

8,444

3,305

3,125

6,430


18,519

5,760

8,028

13,788

 



 


Year ended

31 March 2016


Revenue

Non-current assets

Current assets

Total Assets


£'000

£'000

£'000

£'000






United Kingdom

7,805

2,386

4,197

6,583

Europe

1,109

-

-

-

Rest of World

9,102

2,517

3,263

5,780


18,016

4,903

7,460

12,363

 

 

4    Earnings per share

The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year.

The calculation of diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares and the post tax effect of dividends and/or interest, on the assumed conversion of all dilutive options and other dilutive potential ordinary shares. 

Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below:


31 March 2017


 

Loss

Weighted average number of shares

Loss per share


£'000

Number '000

Pence





Basic loss per share

(275)

33,795

(0.81)

Dilutive shares

-

-

-

Diluted loss per share

(275)

33,795

(0.81)

 

 

 


31 March 2016


 

Loss

Weighted average

number of shares

Loss per

Share


£'000

Number '000

Pence





Basic loss per share

(552)

33,646

(1.64)

Dilutive shares


-


Diluted loss per share

(552)

33,646

(1.64)

 

 

 

 

 

 

 

 

4    Earnings per share (continued)

The directors consider that the following adjusted earnings per share calculation is a more appropriate reflection of the Group's performance.


 

31 March 2017





Loss

Weighted

average

number of

shares

 

 

 

Loss per share


£'000

Number '000

Pence





Basic loss per share

(275)

33,795

(0.81)

Restructuring costs

303



Amortisation of intangible asset

190



Share based payment charge

24



Adjusted earnings per share

242

33,795

0.72

Dilutive shares

-

-

-

Diluted adjusted earnings per share

242

33,795

0.72

 


 

31 March 2016





Loss

Weighted

average

number of

shares

 

 

 

Loss per share


£'000

Number '000

Pence





Basic loss per share

(552)

33,646

(1.64)

Restructuring costs

270



Amortisation of intangible asset

158



Share based payment charge

59



Adjusted loss per share

(65)

33,646

(0.19)

Dilutive shares

-

-

-

Diluted adjusted loss per share

(65)

33,646

(0.19)

 

There is no dilution to the basic or adjusted (loss)/earnings per share in 2017 or 2016 owing to a loss for the year being reported.

 

5    Dividend

The Board is not recommending the payment of a final dividend (2016: Nil pence).

6    Availability

Copies of this announcement will be available from the Company's registered office, Spring Lane, Malvern, Worcestershire, WR14 1DA, and on its website, www.tricorn.uk.com.


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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