2 December 2014

Tricorn Group plc

Interim Results

For the six months ended 30 September 2014

"Global manufacturing platform for accelerated growth"

Tricorn Group plc ('Tricorn' or the 'Group'), (TCN.L) the AIM quoted tube manipulation specialist, announces its unaudited interim results for the six months ended 30 September 2014.

Highlights

·    Uniquely positioned with global manufacturing platform

·    Revenue up 7.9% on 6 months ended 31 March 2014

·    Further growth in China

·    Disposal of aerospace business for £1.064m in cash enabling Group to focus on its core markets

·    Net debt reduced by 12.5% from year end position

·    Cash and cash equivalents at £1.028m

·    After the period end, appointment of Non-Exec Chairman with over 30 years' experience in international engineering groups specialising in aviation, automotive and power electronics products, and advanced composite materials

Financial Summary - Restated for continuing operations

All references to operating loss/profit, operating margin, loss/profit before tax and EPS are before China start up costs, restructuring costs, intangible asset amortisation, share based payment charges and foreign exchange derivative valuation.

Comparative results for continuing operations have been restated to exclude the RMDG Aerospace and the Redman Fittings businesses as these were discontinued during the periods ended 30 September 2014 and 30 September 2013 respectively.

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

"This is my first set of result as Chairman.  I am delighted to have joined the Group at a time when it is well advanced in its strategy to build a global presence in support of its international customer base. I look forward to working with the executive management team and delivering on the potential for growing shareholder value as we build upon the foundations already established.

"The strategic investments in the USA and China position the Group uniquely in its target sectors.  This provides us with the platform for accelerated growth with our existing customer base as additional new business is secured and market conditions improve.  Business in China continues to expand whilst in the USA the new management team has made an encouraging start in creating a solid platform from which the business can develop.

"Market conditions are expected to remain challenging for the balance of the current year with revenue slightly lower than the first half but improved on the comparative period last year. Adjusted LBT is expected to be slightly higher than the first half of the year."

Enquires:

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 380 employees and operates through three brands: MTC, Maxpower and Franklin Tubular Products. 

Chairman's and Chief Executive's statement

Performance in the six months ended 30 September 2014

Markets remained challenging during the period, however the Group made encouraging progress across many fronts.  Revenue for continuing operations was 7.9% higher than in the six months ended 31 March 2014 (the "previous period") and 6.5% lower than in the corresponding period last year. The UK businesses have performed well against a back drop of growing but volatile demand and in China revenues continue to grow. In the USA revenue was broadly flat on the previous period, albeit at a lower level than that seen in the first half of last year. Good progress has been made in addressing the operational issues in the USA business that have held back the overall performance of the Group in the period.

Adjusted LBT for continuing operations for the first half was £0.070m, a substantial improvement on the adjusted LBT of £0.528m for the previous period.

The strategic investments made in the USA and China position the Group uniquely in its target sectors and provide the platform for accelerated growth as markets improve and additional new business is secured.

Operational Review

The disposal of the Aerospace business was completed in the period for £1.064m in cash, allowing the Group to focus on its core businesses in the Energy and Transportation sectors where it has both scale and global reach.

Energy

The Energy business  benefitted from the restructuring implemented last year and delivered an improved operational performance. This has enabled it to respond well to increases in demand where its customers had won additional business on short lead times. Revenue was 11.2% higher than in the previous period and the business  moved from a segmental loss of £0.221m in the second half of last year to a segmental profit of £0.281m in the period ended 30 September 2014.

Transportation 

The UK Transportation business has also benefitted from higher levels of revenue as a result of new business wins and higher demand.

In China, the wholly owned manufacturing facility continued to see revenue growth and has been extremely busy managing the in load of further new work. The joint venture has continued to integrate well into the Group and has supplied product to Tricorn's facilities in both China and the UK.

In the USA, revenue was broadly flat on the previous period but substantially lower than the corresponding period last year, which had benefitted from the short term higher demand prior to the impact of resourcing decisions already made by customers when, prior to its acquisition, the business was in receivership.

Operational performance of the USA business has been disappointing and fell short of expected levels. This has necessitated changes to the senior management team at the facility, including the appointment of a new General Manager in September.  The new team has already made an encouraging start in creating a solid platform from which the business can develop.

Overall Transportation sales were up 6.1% on the previous period but the segmental loss increased from £0.179m to £0.310m.

Financial Review

The first half of the year has seen an improved financial performance when compared to the previous period.  The UK businesses have performed well given the backdrop of volatile demand; China continues to grow, whilst the USA business has fallen short of expectations.

In August 2014 the Group sold its Aerospace business, RMDG Aerospace.  The Group is now focused on its core activities in the Energy and Transportation sectors.  

In the period, the Group's continuing operations made an adjusted loss of £0.070m (2013 restated: profit of £0.335m).  The result shows a considerable improvement on the restated and adjusted loss of £0.528m in the previous period.

Income Statement

Revenue for continuing operations for the first half of the financial year was £10.630m, an increase of 7.9% over the restated previous period, driven mainly by improved performance from the UK businesses, but was 6.5% lower than the same period last year (2013 restated: £11.366m).

Gross margins for the Group were in line with the prior year.

The Group's continuing operations returned to an adjusted operating profit of £0.011m in the first half.  This demonstrates an improved operational performance when compared to the previous period, which returned a restated adjusted operating loss of £0.426m.

Finance costs, which relate to short-term borrowing and lease finance commitments, for the first half were £0.081m (2013: £0.034m).  The resultant continuing operations' adjusted loss before tax was £0.070m (2013 restated profit: £0.335m).

Basic loss per share was (1.18)p (2013: (0.95)p) and after adjusting for one-off costs, the adjusted loss per share was (0.21)p (2013:  EPS 0.61p).

Cash Flow

At 30 September 2014 Group net debt had reduced to £2.963m (30 September 2013: £3.641m).  This represented a reduction of £0.678m against the comparable date last year and £0.423m against the 31 March 2014 closing position.  At 30 September 2014 cash and cash equivalents were £1.028m (30 September 2013: £0.862m) and gearing was 45.4%, down from 48.3% at 30 September 2013 and 49.5% at 31 March 2014. 

In August 2014, the Group sold its Aerospace business, RMDG Aerospace, receiving gross cash proceeds on completion of £1.064m. 

During the year, the Group completed its investment in the registered capital of its Chinese wholly owned subsidiary with an injection of £0.230m.  This is being used to fund working capital in the business.

The Group continues to use short term borrowing facilities and finance lease arrangements to support its cash flow requirements.  The Group does not have long-term debt finance in place.

Balance Sheet

Total assets at 30 September 2014 of £14.187m were down £1.681m on the equivalent date last year and down £1.640m against 31 March 2014.  The majority of the reduction related to the disposal of the RMDG Aerospace business and associated goodwill.  In addition, Group capital expenditure at £0.127m was 42% of depreciation, this compares to 131% and 97% for the six months to 30 September 2013 and the full year to 31 March 2014 respectively.

Net working capital at 30 September 2014 was £4.169m, which was £741k lower than the 30 September 2013 balance of £4.910m and broadly in line with 31 March 2014.

Outlook

The strategic investments in the USA and China position the Group uniquely in its target sectors.  This provides us with the platform for accelerated growth with our existing customer base as additional new business is secured and market conditions improve. Business in China continues to expand whilst in the USA the new management team has made an encouraging start in creating a solid platform from which the business can develop.

Market conditions are expected to remain challenging for the balance of the current year with revenue slightly lower than the first half but improved on the comparative period last year. Adjusted LBT is expected to be slightly higher than the first half of the year.

Andrew Moss                                                                                    Mike Welburn

Chairman                                                                                        Chief Executive

Group statement of comprehensive income

For period ended 30 September 2014