TIDMTCN
RNS Number : 4463J
Tricorn Group PLC
05 December 2018
5 December 2018
Tricorn Group plc
("Tricorn" or the "Group")
Interim Results
For the six months ended 30 September 2018
Tricorn Group plc (AIM: TCN.L) the AIM listed tube manipulation
specialist, announces its unaudited interim results for the six
months ended 30 September 2018.
Highlights (comparable six months ended 30 September 2017)
-- Earnings per share increased 52% to 1.52p
-- Profit up 49.5% to GBP0.553m
-- Gross margin up 0.5%
-- Improved profitability of the Transportation division
-- Continued growth in profits from the China Joint Venture
Financial Summary
Unaudited Unaudited
six months to six months to Year ended
30 September 30 September 31 March
2018 2017 2018
GBP'000 GBP'000 GBP'000
Revenue 11,415 11,427 22,180
EBITDA* 944 744 1,575
Profit before tax* 553 370 827
Cashflow generated by operations 320 332 1,532
Cash & cash equivalents 643 887 692
Net (Debt) (3,288) (3,470) (2,982)
Earnings per share - basic* 1.52p 1.00p 2.65p
- -
-------------- -----------
*All references to EBITDA, operating profit, profit before tax
and EPS are before intangible asset amortisation, share based
payment charges and foreign exchange derivative valuation.
Andrew Moss, Chairman of Tricorn, commented:
"The Group has made good progress over the past six months with
a focus on margins which contributed to a significant increase in
profit before tax and a 52% increase in earnings per share compared
to the first half of last year.
This reflects the benefits of an efficient operational base
spanning three key geographic regions, a global customer base and
new business opportunities across both divisions, which are being
implemented. The pipeline of new business opportunities remains
encouraging.
Over the past two years, we have seen significant growth in our
end markets. However, towards the end of the period, we witnessed
signs of this growth slowing. Against this background, and after
considering the impact of new business wins, the Board anticipates
Group revenues in the second half to be similar to the first and
full year underlying profit before tax to be in line with market
expectations."
Enquires:
Tricorn Group plc Tel +44 (0)1684 569956
Mike Welburn, Chief Executive www.tricorn.uk.com
Phil Lee, Group Finance Director corporate@tricorn.uk.com
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 operates through four brands: MTC, Maxpower, Franklin
Tubular Products and Minguang-Tricorn Tubular Products.
Chairman's and Chief Executive's statement
Performance in the six months ended 30 September 2018
Revenue for the Group at GBP11.415m was in line with the six
months ended 30 September 2017 (the "Corresponding Period") (2017:
GBP11.427m) and 6.2% ahead of the previous six months. Growth in
the Transportation division offset the reduction in the Energy
division where demand from the power generation rental sector was,
as anticipated, lower than the Corresponding Period.
The improved profitability of the Transportation division and
the further progress of our joint venture in China enabled the
Group to deliver a significant improvement in profit before tax
which at GBP0.553m (2017: GBP0.370m) was 49.5% ahead of the
Corresponding Period.
Operational Review
The Group operates two main business divisions focused on the
Transportation and Energy sectors and has four manufacturing
facilities in the UK, USA and China. These locations make it
ideally positioned to support its blue chip OEM customer base, many
of whom are seeking to localise supply and technical support for
their facilities in these key regions.
Transportation
The Transportation division is focused on rigid, nylon and
hybrid tubular products for engines, hydraulic actuation,
transmission lubrication and fuel sender sub-systems. Its customer
base serves both the on and off road markets, including
construction, truck and agriculture.
In the UK, Maxpower Automotive made excellent progress with the
operation benefitting from ongoing investment. The rigid hydraulic
tube business continued to grow and investment in a new in-house
cutting cell towards the end of the period yielded further
productivity gains. The business secured in the prior year with the
London Electric Vehicle Company for brake pipe assemblies
transitioned to the production phase towards the end of the
period.
In the USA, Franklin Tubular Products increased profitability
further and continued to expand its customer base. Market
conditions remained favourable but the lower unemployment rates
have provided some challenges in recruiting and retaining skilled
employees as the business grows.
Overall externally reported segmental revenue was GBP8.495m
(2017: GBP8.097m), up 4.9% compared to the Corresponding Period.
Segmental profit before tax was up 149.3% at GBP0.389m (2017:
GBP0.156m).
Energy
The Energy division specialises in the design and manufacture of
larger tubular assemblies and fabrications for engine, cooling and
generator set applications. Its customer base serves the power
generation, oil and gas, mining and marine applications
markets.
Malvern Tubular Components continued to make good progress in
developing new business opportunities and in maintaining
productivity through a period of lower demand. Revenue at GBP2.920m
(2017: GBP3.330m) was, as anticipated, lower than the Corresponding
Period due to the reduction in demand from the power generation
rental sector. Segmental profit was GBP0.187m (2017:
GBP0.278m).
Joint Venture
Our Chinese joint venture, Minguang-Tricorn Tubular Products
performed well, benefiting from a strong operational performance
and favourable market conditions. The Group's share of profit
before tax at GBP0.150m (2017: GBP0.099m) was substantially up on
the Corresponding Period last year.
Financial Review
The Group has made good progress through the first six months of
the financial year, with revenue increasing over the second half of
the last financial year and underlying profitability increasing
over both the first and second halves of the previous financial
year.
The success that the Group has enjoyed in winning contracts with
new and existing customers has required additional investment in
the first half of the financial year and the short-term increase in
net debt, from the year end position, will be offset by the longer
term benefits that those contracts bring.
Income Statement
Revenue for the first half of the financial year at GBP11.415m
was in line with the Corresponding Period (2017: GBP11.427m), with
the Group benefitting from an increase in revenue from the power
generation rental sector through the first half of last year.
Against the preceding six months, revenue was up 6.2% (2017:
GBP10.753m).
The Group was able to improve gross margins to 38.5% in the
first half of the financial year, compared to 38.0% in the
Corresponding Period. Coupled with a reduction in administration
and distribution costs of 1.7%, the Group demonstrated its
discipline on costs control despite external upward pressures. This
resulted in an improved EBITDA of GBP0.944m (2017: GBP0.744m).
The Group's joint venture in China continued to perform well
operationally and delivered a share of profit before tax for the
Group in the first half of the financial year of GBP0.150m (2017:
GBP0.099m). After finance charges the Group delivered a significant
improvement in underlying profit before tax of GBP0.553m (2017:
GBP0.370m), up 49.5% over the Corresponding Period.
After deducting intangible asset amortisation and share based
payment charges, headline profit before tax was up 85.9% at
GBP0.476m (2017: GBP0.256m).
The underlying earnings per share were 1.52p (2017: 1.00p) and
after deducting non-underlying items the basic earnings per share
were 1.29p (2017: 0.66p).
Cash Flow
The first half of the financial year traditionally sees the
Groups cashflow performance deliver below its full year target for
cash generated by operations to EBITDA of 1:1, with a number of
annual payments falling in this first six months period. In
addition, in the year to date the Group has supported a number of
new customer contracts which have resulted in additional first half
cash expenditure, but will benefit the Group over the life of those
contracts. Specific areas of spend included the funding of tooling
and the holding of finished goods. As a result the Group's net cash
generated from operations of GBP0.320m (2017: GBP0.332m) was
broadly in line with the Corresponding Period.
The Group's investment in capital expenditure in the first half
was in excess of depreciation and higher than the Corresponding
Period at GBP0.327m (2017: GBP0.281m). Intangible asset expenditure
of GBP0.076m was also incurred in the first half of the financial
year which related to costs associated with new product
introduction.
Net debt was down at the half year end at GBP3.288m compared to
the Corresponding Period of GBP3.470m, but up on the previous full
year position of GBP2.982m. Gearing was down on the corresponding
period to 48.3% (2017: 57.5%), but up marginally on the March 2018
year end position of 47.6%.
Balance Sheet
Total assets at 30 September 2018 were GBP14.884m, up GBP0.682m
on 30 September 2017. As well as an increase in fixed assets and
inventories, the improved trading position of the Group's Chinese
joint venture saw the value of the investment increase to
GBP1.066m.
Net working capital at 30 September 2018 was GBP4.012m, which
was GBP0.040m lower than at 30 September 2017 and GBP0.537m higher
than at 31 March 2018.
Outlook
The Group has made good progress over the past six months with a
focus on margins which contributed to a significant increase in
profit before tax and a 52% increase in earnings per share compared
to the first half of last year.
This reflects the benefits of an efficient operational base
spanning three key geographic regions, a global customer base and
new business opportunities across both divisions, which are being
implemented. The pipeline of new business opportunities remains
encouraging.
Over the past two years, we have seen significant growth in our
end markets. However, towards the end of the period, we witnessed
signs of this growth slowing. Against this background, and after
considering the impact of new business wins, the Board anticipates
Group revenues in the second half to be similar to the first and
full year underlying profit before tax to be in line with market
expectations.
Andrew Moss Mike Welburn
Chairman Chief Executive
Group statement of comprehensive income
For period ended 30 September 2018
Note Unaudited Unaudited
Unaudited Unaudited six six
six months six months months to months to Audited
to 30 to 30 30 30 year ended
September September September September 31 March
2018 2018 2018 2017 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Underlying Non-Underlying Group
Revenue 3 11,415 - 11,415 11,427 22,180
Cost of sales (7,016) - (7,016) (7,087) (13,685)
------------ -------------- ----------- --------- ----------
Gross profit 4,399 - 4,399 4,340 8,495
Distribution costs (510) - (510) (520) (1,005)
Administration costs
* General administration costs (3,374) - (3,374) (3,432) (6,646)
* Restructuring costs - - - - -
* Intangible asset amortisation - (59) (59) (108) (175)
* Share based payment charge - (18) (18) (6) (40)
* Fair value change relating to forward exchange
contracts - - - - (6)
------------------------------------------------------- ---- ------------ -------------- ----------- --------- ----------
Total administration costs (3,374) (77) (3,451) (3,546) (6,867)
Operating profit/(loss) 515 (77) 438 274 623
------------ -------------- ----------- --------- ----------
Share of profit/(loss) from joint venture 150 - 150 99 209
Finance costs (112) - (112) (117) (226)
Profit/(loss) before tax 3 553 (77) 476 256 606
Income tax expense (41) - (41) (33) 70
Profit/(Loss) for the year and total comprehensive
income/(expense) 512 (77) 435 223 676
============ ============== =========== ========= ==========
Attributable to:
Equity holders of the parent company 512 (77) 435 223 676
============ ============== =========== ========= ==========
Continuing Operations
Earnings per share:
Basic earnings per share 4 1.29p 0.66p 2.00p
Diluted earnings per share 4 1.16p 0.61p 1.86p
Group statement of changes in equity
For period ended 30 September 2018
Share
based
Share Share Merger Translation payment Retained
capital premium reserve Reserve Reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April 2017 3,379 1,692 1,388 376 309 (1,107) 6,037
(audited)
Share based payment
charge - - - - 6 - 6
----------------------------------------- ------------------------------------------- ------------------------------------------- ----------------------------------------------- ------------------------------------------ ------------------------------------------- -------------------------------------
Total transactions with
owners - - - - 6 - 6
Foreign exchange loss
on translation of
Reserves - - - (232) - - (232)
Total comprehensive
expense - - - - - 223 223
----------------------------------------- ------------------------------------------- ------------------------------------------- ----------------------------------------------- ------------------------------------------ ------------------------------------------- -------------------------------------
Balance at 30 September
2017 3,379 1,692 1,388 144 315 (884) 6,034
(unaudited)
Share based payment
charge - - - - 34 - 34
----------------------------------------- ------------------------------------------- ------------------------------------------- ----------------------------------------------- ------------------------------------------ ------------------------------------------- -------------------------------------
Total transactions with
owners - - - - 34 - 34
Foreign exchange gain
on translation of
Reserves - - - (255) - - (255)
Total comprehensive
expense - - - - - 453 453
----------------------------------------- ------------------------------------------- ------------------------------------------- ------------------------------------------------ ------------------------------------------ ------------------------------------------- -------------------------------------
Balance at 31 March
2018 3,379 1,692 1,388 (111) 349 (431) 6,266
(audited)
Share based payment
charge - - - - 18 - 18
----------------------------------------- ------------------------------------------- ------------------------------------------- ----------------------------------------------- ------------------------------------------ ------------------------------------------- -------------------------------------
Total transactions with
owners - - - - 18 - 18
Foreign exchange loss
on translation of
Reserves - - - 88 - - 88
Total comprehensive
income - - - - - 435 435
----------------------------------------- ------------------------------------------- ------------------------------------------- --------------------------------------------- ------------------------------------------ ------------------------------------------- -------------------------------------
Balance at 30 September
2018 3,379 1,692 1,388 (23) 367 4 6,807
(unaudited)
========================= ========================= =========================== ========================= ============================ ========================= =====================
Group statement of financial position
At 30 September 2018
Unaudited Unaudited Audited
30 September 30 September 31 March
2018 2017 2018
GBP'000 GBP'000 GBP'000
Assets
Non current
Goodwill 391 391 391
Intangible assets 228 279 210
Investment in Joint Venture 1,066 782 917
Property, plant and equipment 4,504 4,149 4,325
------------ ------------ ---------
6,189 5,601 5,843
Current
Inventories 2,981 2,630 2,867
Trade and other receivables 5,071 5,052 4,957
Cash and cash equivalents 643 887 692
Corporation tax - 32
------------ ------------ ---------
8,695 8,601 8,516
Total assets 14,884 14,202 14,359
============ ============ =========
Liabilities
Current
Trade and other payables (4,040) (3,630) (4,349)
Borrowings (3,815) (4,234) (3,522)
Fair value of foreign exchange contracts - - (6)
Corporation tax (80) (65) (39)
(7,935) (7,929) (7,916)
Non-current
Borrowings (117) (123) (152)
Deferred tax (25) (116) (25)
------------ ------------ ---------
(142) (239) (177)
Total liabilities (8,077) (8,168) (8.093)
Net assets 6,807 6,034 6,266
============ ============ =========
Equity
Share capital 3,379 3,379 3,379
Share premium account 1,692 1,692 1,692
Merger reserve 1,388 1,388 1,388
Translation reserve (23) 144 (111)
Share based payment reserve 367 315 349
Retained earnings 4 (884) (431)
Total equity 6,807 6,034 6,266
============ ============ =========
Group statement of cash flows
For period ended 30 September 2018
Unaudited Unaudited Audited
six months six months year ended
to to
30 September 30 September 31 March
2018 2017 2018
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit after taxation 435 256 676
Adjustment for:
Depreciation 278 257 522
Net finance costs in statement of comprehensive
income 112 117 226
Amortisation charge 59 108 175
Share based payment charge 18 6 40
Share of joint venture operating profit (150) (99) (209)
Charge relating to foreign exchange derivative
contracts - - 6
Taxation expense/(credit) recognised
in statement of comprehensive income 41 - (70)
Increase in trade and other receivables (77) (453) (443)
(Decrease)/Increase in trade payables
and other payables (347) 193 950
(Increase in inventories (49) (53) (341)
------------ ------------ ----------
Cash generated by operations 320 332 1,532
Interest paid (137) (146) (220)
Income taxes received - - 9
Net cash generated by operating activities 183 186 1,321
============ ============ ==========
Cash flows from investing activities
Purchase of plant and equipment (327) (281) (696)
Purchase of intangible assets (76) - -
Net cash used by investing activities (403) (281) (696)
============ ============ ==========
Cash flows from financing activities
Repayment of overseas short term borrowing - - (439)
Movement in short term borrowings 213 399 (60)
Payment of finance lease liabilities (42) (59) (76)
------------ ------------ ----------
Net cash generated by/(absorbed by) financing
activities 171 340 (575)
Net (decrease)/increase in cash and cash
equivalents (49) 245 50
Cash and cash equivalents at beginning
of period 692 642 642
------------ ------------ ----------
Cash and cash equivalents at end of period 643 887 692
============ ============ ==========
1 General information
Tricorn Group plc and subsidiaries' (the 'Group') principal
activities comprise high precision tube manipulation, systems
engineering and specialist fittings.
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. The Group's shares are admitted to trading on the Alternative
Investment Market of the London Stock Exchange.
These consolidated interim financial statements have been
approved for issue on 5 December 2018 by the Board of Directors.
Amendments to the financial statements are not permitted after they
have been approved. Copies of this announcement are available on
the Company's website, www.tricorn.uk.com.
The financial information set out in this interim report does
not constitute statutory accounts as defined in the Companies Act
2006. The Group's statutory financial statements for the year ended
31 March 2018 have been filed with the Registrar of Companies. The
auditor's report on those financial statements was unqualified and
did not contain a statement under Section 498(2) or (3) of the
Companies Act 2006.
2 Accounting policies
Basis of preparation
These unaudited interim consolidated financial statements are
for the six months ended 30 September 2018. They have been prepared
in accordance with IAS 34 "Interim Financial Reporting" as adopted
by the European Union. They do not include all of the information
required for full annual financial statements, and should be read
in conjunction with the consolidated financial statements of the
Group for the year ended 31 March 2018, which have been prepared in
accordance with International Financial Reporting Standards.
The same accounting policies and methods of computation are
followed in the interim financial statements as compared with the
most recent annual financial statements.
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.
6 months to 30 September 2018 (unaudited)
Energy Transportation Corporate Joint Venture Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 2,920 8,495 - 11,415
Segmental profit/(loss) before tax 187 389 (173) 150 553
Intangible asset amortisation (59)
Share based payment charge (18)
________
Profit before tax 476
Segmental total assets 3,287 9,766 1,831 - 14,884
6 months to 30 September 2017 (unaudited)
Energy Transportation Corporate Joint Venture Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 3,330 8,097 - - 11,427
Segmental profit/(loss) before tax 278 156 (163) 99 370
Intangible asset amortisation (108)
Share based payment charge (6)
_________
Profit before tax 256
Segmental total assets 3,142 10,296 764 - 14,202
3 Segmental reporting (continued)
Year ended 31 March 2018
Energy Transportation Corporate Joint Venture Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 6,279 15,901 - - 22,180
Segmental profit/(loss) before tax 567 410 (359) 209 827
Fair value charge relating to forward exchange
contracts (6)
Intangibles amortisation (175)
Share based payment charge (40)
_________
Profit before tax 606
Segmental total assets 3,249 9,508 1,602 - 14,359
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.
Six months ended 30 September 2018
Weighted average
Profit number of shares Earnings per
share
GBP'000 Number '000 Pence
Basic earnings per share 435 33,795 1.29p
-------- ----------------- --------------
Dilutive shares 3,721
Diluted earnings per share 435 37,516 1.16p
-------- ----------------- --------------
Six months ended 30 September 2017
Weighted average
Profit number of shares Earnings per
share
GBP'000 Number '000 Pence
Basic earnings per share 223 33,795 0.66p
-------- ----------------- --------------
Dilutive shares 2,815
Diluted earnings per share 223 36,610 0.61p
-------- ----------------- --------------
4 Earnings/(Loss) per share (continued)
31 March 2017
Weighted average
Profit number of shares Earnings per
share
GBP'000 Number '000 Pence
Basic earnings per share 676 33,795 2.00p
-------- ----------------- --------------
Dilutive shares 2,546
Diluted earnings per share 676 36,341 1.86p
-------- ----------------- --------------
The directors consider that the following adjusted earnings per
share calculation is a more appropriate reflection of the Group's
performance.
Six months ended 30 September 2018
Profit Weighted average Earnings per
number of shares share
GBP'000 Number '000 Pence
Basic earnings per share 435 33,795 1.29p
-------- ------------------ -------------
Intangible asset amortisation 59
Share based payment charge 18
Adjusted earnings per share 512 33,795 1.52p
-------- ------------------ -------------
Dilutive shares 3,721
Diluted adjusted earnings
per share 512 37,516 1.36p
-------- ------------------ -------------
Six months ended 30 September 2017
Weighted average
Profit number of shares Earnings per
share
GBP'000 Number '000 Pence
Basic earnings per share 223 33,795 0.66p
-------- ----------------- --------------
Intangible asset amortisation 108
Share based payment charge 6
Adjusted earnings per share 337 33,795 1.00p
-------- ----------------- --------------
Dilutive shares 2,815
Diluted adjusted earnings per
share 337 36,610 0.92p
-------- ----------------- --------------
31 March 2018
Weighted average
Profit number of shares Earnings per
share
GBP'000 Number '000 Pence
Basic earnings per share 676 33,795 2.00p
-------- ----------------- --------------
Fair value of foreign exchange
contracts 6
Intangible asset amortisation 175
Share based payment charge 40
Adjusted earnings per share 897 33,795 2.65p
-------- ----------------- --------------
Dilutive shares 2,546
Diluted adjusted earnings per
share 897 36,341 2.47p
-------- ----------------- --------------
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END
IR UGGQCPUPRGMC
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