10 June 2015

Tricorn Group plc

Final Results

For the year ended 31 March 2015

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 2015.

Highlights

·    Return to profitability at operating profit level

·    Net debt reduced from previous year end

·    Significant improvement in operational performance of the USA business

·    Expanding international presence helped secure contract win circa £10m in December 2014

·    Sale of RMDG Aerospace business

·    Appointment of new non-executive chairman with over 30 years' experience in international engineering groups

Financial Summary

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

Comparative results for continuing operations have been restated to exclude the RMDG Aerospace and the Redman Fittings businesses as these were discontinued during the years ended 31 March 2015 and 31 March 2014 respectively.

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

"The Group has made encouraging progress, with the improvements made in the previous year within the Energy division being maintained and the impact of the recent operational changes in the USA starting to take effect in the latter part of the year. The major contract win by Maxpower Automotive announced in December 2014 and increasing second half revenues in the USA and China are positive indications of the Group's potential to deliver organic revenue growth and shareholder value over the medium term.

Whilst we anticipate our markets to remain challenging, the Board expects to make further progress through the current year."

Enquiries:

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 370 employees and has five manufacturing facilities in the UK, USA and China. It operates through three brands: Malvern Tubular Components, Maxpower Automotive and Franklin Tubular Products. 

Chairman's and Chief Executive's statement

Performance in the year ended 31 March 2015

Market conditions remained challenging through the year ended 31 March 2015 as anticipated in the interim results statement in December 2014. However, revenue from continuing operations was broadly flat at £21.186m when compared to the previous year (2014: restated £21.222m).

In the Transportation division, increased second half revenues in the USA and China businesses, generated mainly through new business growth, helped to offset lower UK demand. Encouragingly, revenue in the Energy division was ahead of the previous year.

The Energy division continued to perform well, which when coupled with an improved performance from the Transportation's USA business in the latter part of the year, helped the Group to deliver an operating profit of £0.176m, substantially ahead of the previous year (2014: restated operating loss £0.017m).  The loss before tax at £0.055m (2014: restated £0.193m) reflects a return to profit in the second half of the year.

Business Review

Following the sale of its Aerospace business, completed in August 2014, the Group operates two main business divisions focused on the transportation and energy sectors.  From the Group's five 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 these key locations, the Group is ideally positioned to support its customers' facilities as they seek to localise supply and technical support.

Transportation

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

Revenue for the year ended 31 March 2015 was £13.760m (2014: £14.289m) with increasing second half revenue in the USA and China helping to offset lower second half revenue in the UK. The USA based business, Franklin Tubular Products, started the year suffering from the impact of resourcing decisions made by customers when the business was in receivership prior to its acquisition. As a result, the USA business struggled in the six months to 30 September 2014 with lower volumes impacting on productivity and profitability.  Following changes to the senior USA management team, including the appointment of a new general manager at the end of September 2014, significant improvement in operational performance has already been achieved.  The USA business exited the year with improving margins, a lower cost base, increasing momentum and prepared for further growth. Revenue with new customers is developing well.

In December 2014, the Group announced that Maxpower Automotive UK, part of the Transportation division, had signed a 5 year Long Term Agreement with a major British construction equipment manufacturer.  The contract is expected to generate circa £10m of revenue for the Group over its duration, based on the current predicted volumes. The installation and commissioning of the new plant and equipment to support this new business is progressing to plan. The investment extends the site's capability into rigid hydraulic tube assemblies using knowhow acquired with the USA business providing additional opportunities for growth.  

Both the wholly owned and joint venture businesses in China continue to attract new business.

Losses within the Transportation business were substantially reduced in the latter part of the year, but overall the segment reported a loss for the year of £0.378m (2014: profit £0.021m).

Energy

The Energy division is focused on the design and manufacture of larger tubular assemblies and fabrications for diesel engines and radiator sets. The key markets served through its customers are power generation, mining, marine and oil and gas applications. All of these key markets offer significant long-term growth potential but as has been widely reported most have remained soft through the reported period. Despite these market conditions the business has generated year on year revenue growth of 7.1%, having successfully capitalised on new business opportunities and by responding quickly to increases in demand where its customers have won additional business on short lead times.

Energy revenue increased in the year ended 31 March 2015 to £7.426m (2014: restated £6.933m).

The business performed well operationally during the year generating further substantial improvements in productivity. This combined with the benefits of the restructuring undertaken in the previous year ensured that the business returned to profitability. Segmental profit before tax was £0.567m (2014: restated loss £0.027m)

People

The Board would like to take the opportunity to thank all of its employees for their continuing hard work and support and also to thank Nick Paul who retired from the Board at the end of the financial year after 14 years of service.

Outlook 

The Group has made encouraging progress, with the improvements made in the previous year within the Energy division being maintained and the impact of the recent operational changes in the USA starting to take effect in the latter part of the year. The major contract win by Maxpower Automotive announced in December 2014 and increasing second half revenues in the USA and China are positive indications of the Group's potential to deliver organic revenue growth and shareholder value over the medium term.

Whilst we anticipate our markets to remain challenging, the Board expects to make further progress through the current year.

Finance Director's Report

Finance Review

The Group continues to make significant progress in all of its operations.  After divesting its RMDG Aerospace business, the Group's focus is now on serving the energy and transportation markets.

The Group's profit and loss account for the prior year has been restated to show the Aerospace business as discontinued.

The underlying business delivered a loss before tax of £0.055m (2014 restated: LBT £0.193m). 

Income Statement

Revenue for the year was in line with the prior year at £21.186m (2014 restated: £21.222m), with gross margins also in line at 36.0% (2014 restated: 36.0%).

After deducting administration and distribution costs, the Group returned to operating profitability with underlying operating profit of £0.176m compared to the prior year restated underlying operating loss of £0.017m.

Net finance income for the year was £0.039m (2014 restated: net finance cost £0.134m) after the receipt of one-off income of £0.214m.  Finance costs of £0.175m are interest costs against the Group's short term borrowing and lease finance facilities.

The Group made an adjusted loss before tax for the year of £0.055m (2014 restated: LBT £0.193m), which after making a first half loss of £0.070m shows that the Group is making good progress as it delivered a small second half profit of £0.015m.  After deducting intangible asset amortisation, the share based payment charge and a small amount of restructuring, the loss before tax for the year was £0.036m (2014 restated: loss before tax £0.574m). 

Losses attributable to discontinued activities in the year related to the RMDG Aerospace business which as referred to above, the Group disposed of on 12 August 2014.  The Group made a net loss on disposal of the assets of £0.040m.  After writing down goodwill and intangible assets of £0.325m, taking into account the trading losses of the business to the date of disposal of £0.243m and deferred tax releases of £0.016m, discontinued business losses for the year were £0.592m (2014: discontinued losses £0.315m).

Basic LPS for the continuing businesses was (0.46)p (2014: restated LPS 1.64p) and after adjusting for one-off items, the underlying LPS was (0.50)p (2014: LPS 0.50p).

Cash Flow

The Group has continued to invest in its overseas facilities during the year, with the final injection of registered capital being made into the Chinese WFOE.  At 31 March 2015 the Group had reduced net debt to £3.127m (2014: £3.386m).  As at the year end, the Group's cash and cash equivalents were £0.694m (2014: £1.284m).  At the same date, gearing had reduced to 48.6% (2014: 49.5%).

During the year the Group sold its RMDG Aerospace business.  The sale included the trade, certain assets and liabilities of the business and generated gross proceeds of £1.137m, which is shown within Cash flows from investing activities. 

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

Non-current assets of the Group were £5.273m, which was a reduction of £0.888m on the prior year.  The reduction in tangible and intangible assets was predominantly as a result of the disposal of RMDG Aerospace, coupled with lower capital expenditure within the continuing operations.  The capital additions to depreciation ratio in the year was 0.46 (2014: 0.97).

On translation of its overseas assets and liabilities the Group made an exchange gain of £0.281m (2014:  loss £0.226m).  This is a non-cash movement which is not hedged and is treated as a movement in other comprehensive income.  As a result of this transaction, the translation reserve in shareholders funds now shows a £0.55m surplus  (2014: loss £0.226m).

Group income statement

For year ended 31 March 2015

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

Group statement of comprehensive income

For year ended 31 March 2015

Group statement of changes in equity

For year ended 31 March 2015