TCN.L Regulatory News (TCN)

 6 June 2018

Tricorn Group plc

Final Results

For the year ended 31 March 2018

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 2018.

Highlights

· Revenue increased 19.8% to £22.180m

· Profits up 260% to £0.827m

· Excellent progress across both divisions and our Chinese joint venture

· Long term agreement secured with London Electric Vehicle Company

· Cash generated by operations of £1.532m, up £0.717m on previous year

Financial Summary

* All references to EBITDA, profit before tax and earnings per share are before restructuring costs, intangible asset amortisation, share based payment charges and fair value charges relating to foreign exchange contracts.

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

"The Group has made excellent progress in the execution of its strategy which is delivering revenue growth and a substantial improvement in profitability. Our strong cash generation has enabled us to reduce our net debt whilst continuing to invest in the business. These investments in developing our capabilities and increasing our capacity have enabled us to win new business, grow market share and take full advantage of buoyant end markets. With momentum building across the businesses, the Board expects the Group to make further significant progress in 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 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 2018

Revenue for the year at £22.180m was 19.8% higher than the previous year (2017: £18.519m) with the Group benefitting from buoyant end markets and new business wins. Excellent progress has been made across both of the Group's divisions with all businesses delivering increased revenue and substantial improvements in profitability over the previous year. The performances of the Group's USA business and its joint venture in China have been particularly encouraging.

Underlying profit before tax at £0.827m was significantly up from the previous year (2017: £0.230m).

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 firmly established in each of these key locations and performing well, 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 2018 was £15.901m (2017: £13.595m) and underlying profit increased by 110% to £0.410m (2017: £0.195m).

In the USA, Franklin Tubular Products continued to make excellent progress on all fronts. Operational performance was strong and new product introduction activity was at record levels. In the final quarter alone, 65 part numbers were introduced representing around £1.4m of annualised revenue. In the year, we also made further investment in our cleaning capabilities and are now able to supply "super clean" parts. New business is being won as a result.

In the UK, Maxpower Automotive grew its rigid hydraulic tube business substantially and capacity was increased with the addition of further TIG welding stations. In the earlier part of the financial year, the business was successful in securing a long term agreement with the London Electric Vehicle Company for the supply of brake pipe assemblies on the recently launched TX eCity electric taxi. The project entered the production phase towards the end of the financial year and is expected to generate around £5m of revenue for the Group over the length of the contract.

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 £6.279m was well ahead of the previous year (2017: £4.924m), with the business benefitting from revenue in the power generation rental sector through the early part of the year. It was also successful in securing new business for cooling set support frames. Underlying profit at £0.567m was substantially up on the previous year (2017: £0.251m).

China

Our Chinese joint venture, Minguang-Tricorn Tubular Products, performed well, benefiting from the consolidation of our activities in China in the previous year and improved market conditions. Relationships with customers continued to build and the business was successful on a number of new project wins. The Group's share of profit before tax at £0.209m was substantially improved (2017: loss £0.049m).

Financial Review

The restructuring activities over the last couple of years, combined with the global investment in our capability, have transformed and strengthened the Group. The business in the USA continues to grow and the merging of our facilities in China has resulted in that part of the Group now being profitable.

With improved trading conditions, all of the Group's subsidiary businesses were profitable in the year. Financial results for the Group were much improved with underlying EBITDA for the year at £1.575m (2017: £0.961m) and underlying profit before tax at £0.827m (2017: £0.230m).

Income Statement

Revenue for the year, at £22.180m, increased by 19.8% over the previous year of £18.519m. This was driven by a combination of the impact of new business growth and the improved market demand from key customers. In line with Group policy when reporting the results for its joint venture in China, 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.

Gross margins were at 38.3%, after incurring a level of new business introduction costs. Distribution costs at £1.005m were up £0.212m over the prior year, with the increase largely volume related. The Group also saw Administration costs increase by 6.7% over the prior year to £6.646m. However, despite these cost increases, operational gearing reduced to 29.9% (2017: 33.6%).

The Group's Chinese joint venture, Minguang-Tricorn Tubular Products, delivered its first full year profit following its merger in July 2016. The Group's share of profit for the year was £0.209m (2017 loss: £0.049m).

EBITDA for the year was £1.575m (2017: 0.961m). Finance costs for the year were £0.226m (2017: £0.218m) and the Group delivered an underlying profit before tax for the year of £0.827m (2017: £0.230m).

After deducting intangible asset amortisation, share based payment charges and fair value charges relating to foreign exchange contracts, the profit before tax for the year was £0.606m (2017 loss: £0.287m).

Basic earnings per share (EPS) was 2.00p (2017 LPS: 0.81p) and after adjusting for one-off items, the underlying EPS was 2.65p (2017: 0.72p). The Board is not recommending the payment of a final dividend (2017: nil).

Cash Flow

The Group's cashflow from operations improved significantly in the year to £1.532m (2017: £0.815m), reflecting the profit performance and management of working capital. For the year the Group achieved a cash generated by operations to EBITDA ratio of 0.97:1 (2017: 0.85:1), only marginally short of its ongoing 1:1 target. After interest payments and net tax receipts, cash generated by operating activities was £1.321m (2017: £0.614m). Capital expenditure, net of finance leases, was £0.696m (2017: £0.559m).

During the year, the Group repaid borrowings in China of £0.439m, initially used to fund its joint venture. This repayment was funded from the Group's cash resources.

At 31 March 2018, net debt was £2.982m (2017: £3.497m), cash and cash equivalents were £0.692m (2017: £0.642m) and gearing was 47.6% (2017: 57.9%).

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 and had no covenants on its borrowings.

Balance Sheet

Total assets of the Group as at 31 March 2018 were £14.359m, which was £0.571m higher than the prior year, driven mainly by the increase in the value of the Group's investment in its joint venture in China and higher levels of debtors given the increased sales volume. Net working capital for the Group decreased in the year to £3.475m (2017: £3.890m).

On translation of its overseas assets and liabilities, the Group made an exchange loss of £0.487m (2017: gain £0.269m). 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 £0.111m deficit (2017: surplus £0.376m).

People

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

Outlook 

The Group has made excellent progress in the execution of its strategy which is delivering revenue growth and a substantial improvement in profitability. Our strong cash generation has enabled us to reduce our net debt whilst continuing to invest in the business. These investments in developing our capabilities and increasing our capacity have enabled us to win new business, grow market share and take full advantage of buoyant end markets. With momentum building across the businesses, the Board expects the Group to make further significant progress in the current year.

Andrew Moss Mike Welburn

Chairman Chief Executive

Group income statement

For year ended 31 March 2018

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

Group statement of comprehensive income

For year ended 31 March 2018

Group statement of changes in equity

For year ended 31 March 2018 

Group statement of financial position

At 31 March 2018

Group statement of cash flows

For year ended 31 March 2018

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 5 June 2018. 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 2018 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 2018 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.

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

*- 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:

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:

The diluted loss per share for 2017 is the same as the basic loss per share as the Group was loss making in 2017 and, therefore, share options were anti-dilutive.

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

5 Dividend

The Board is not recommending the payment of a final dividend (2017: nil).

6 Availability

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