6 Dec 2010 07:00
Interim Results
For the six months ended 30 September 2010
Tricorn Group plc (TCN:L) (the 'Group'), the AIM listed tube manipulation specialist to niche markets in the Energy, Transportation, Aerospace and Utilities markets worldwide, announces its unaudited interim results for the six months ended 30 September 2010.
Summary of results
Unaudited smonths | Unaudited | Audited | |
six months to | six months to | Year ended | |
30 September | 30 September | 31 March | |
2010 | 2009 | 2010 | |
£'000 | £'000 | £'000 | |
Sales revenue | 10,090 | 6,965 | 15,031 |
Operating profit* | 519 | 177 | 425 |
Profit before tax* | 449 | 105 | 288 |
Profit for the period | 244 | 44 | 149 |
Adjusted earnings per share - basic* | 1.06p | 0.26p | 0.79p |
Cash & equivalents | 1,314 | 901 | 1,296 |
Net debt | 551 | 1,049 | 841 |
Highlights
·; Sales up 44.9% on corresponding period last year
·; Operating profit* margin up 82.2% on prior full year
·; Net debt reduced by 34.5% from March 2010 to £551k
·; Continued recovery in Energy and Transportation businesses
*before intangible asset amortisation, shared based payment charge and interest rate swap valuation
Nick Paul CBE, Tricorn Chairman commented:
"We are emerging from the contraction experienced in our key markets as a leaner more resilient business and I am pleased to report an encouraging start to the financial year. Increasing customer confidence has inevitably led to an element of restocking through the first half but we anticipate underlying demand levels to remain firm through the balance of the year. The Board is confident that full year results will be ahead of market expectations."
Enquiries:
Tricorn Group plc | |
Mike Welburn, Chief Executive | Tel +44 (0)1684 569956 |
corporate@tricorn.uk.com | www.tricorn.uk.com |
Phil Lee, Group Finance Director | Tel +44 (0)1684 569956 |
corporate@tricorn.uk.com | www.tricorn.uk.com |
Arbuthnot Securities Limited | |
Tom Griffiths/Ed Groome | Tel + 44 (0)207 012 2000 |
Winningtons | |
Tom Cooper | Tel + 44 (0)797 122 1972 |
tom.cooper@winningtons.co.uk |
Notes to Editors:
Tricorn Group plc (TCN:L) is a value added manufacturer and specialist manipulator of pipe and tubing assemblies to niche markets worldwide in the Energy, Transportation, Aerospace & Utilities sectors.
Headquartered in Malvern, UK, Tricorn employs over 290 employees and operates through four brands: MTC; Redman Fittings; Maxpower; and RMDG Aerospace.
Chairman's and Chief Executive's statement
Performance for the half year ended 30 September 2010
Group sales revenue was 44.9% higher than a year ago and 25.1% higher than the second half of last year reflecting significantly improved market conditions. Key skills retained in the business ensured we were well positioned to respond to these higher levels of demand. The benefits from our business restructuring were reflected in an improved operating profit margin and operating profit (before intangible asset amortisation, share based payment charge and interest rate swap valuation) which was up £342k at £519k.
Inventory was held at similar levels to this period last year despite higher volumes and net debt was reduced by a further 34.5% to £551k. Capital expenditure in the period remained at very modest levels although this is planned to rise in the second half as we invest in plant and equipment.
Financial review
By maintaining its focus on costs throughout the first half the Group has been able to improve operational gearing and profitability.
Income statement
Turnover for the half year was up 44.9% at £10,090k (2009: £6,965k) and Group gross profit margins were maintained at 32% despite lower margins from the Aerospace segment. Administration and distribution costs at £2,695k represented 26.7% of turnover, compared to 29.8% last year demonstrating our commitment to controlling costs and improving operational gearing as volume returns. Resultant operating profit before amortisation of intangibles and share based charges was £519k (2009: £177k). This represented an increase in operating profit margin of 82.2% over the last financial year.
The interest charge of £72k is in line with last year, despite the lower net debt position, as a result of the cap and collar arrangement we have in place. The swap fair value adjustment charge for the half year was £3k (2009: £16k credit).
Unadjusted profit before tax was £351k (2009: £62k). Basic EPS was 0.76p (2009: 0.13p) and, after adjusting for one-off costs EPS stood at 1.06p (2009: 0.26p).
Cash flow
Net cash flow from operating activities was strong at £448k (2009: £1,098k), and represented 86% operating profit (before amortisation of intangibles, share based payment charge and swap fair value adjustment) to cash conversion.
Capital expenditure remained low in the first half at £37k, being 21% of depreciation. However, this is a phasing issue as project expenditure on plant and equipment will be incurred through the second half of the financial year.
The Group's term loan and borrowings through its invoice discounting facility continued to reduce, and the Group increased its cash and equivalents to £1,314k (2009: £901k).
Balance sheet
The balance sheet continues to strengthen with a further reduction in net debt to £551k (2009: £1,049k). Gearing at the end of September was 10.9% (2009: 22.2%).
Net working capital at the half year was in line with last year at £3,840k (2009: £3,855k). Despite increased customer demand, inventory levels at the half year were only £31k higher than 30 September 2009 at £3,266k.
Operations review
The Group operates four main business segments which are focussed on the Energy, Transportation, Aerospace and Utilities sectors. Encouraging progress within the Energy and Transportation businesses has more than offset a weaker Aerospace performance and there have been some early signs of improvement within the Utilities business.
Energy
Our Malvern Tubular Components business specialises in fabricated and manipulated tubular assemblies for large diesel engines and radiator sets used in power generation, mining and oil and gas applications. The impact of improved market conditions, increased account penetration and some element of restocking have generated strong sales growth through the period. Sales are up 65.7% and 48.3% on the corresponding period and the second half of last year respectively. Whilst we expect some softening as the restocking phase completes we are encouraged by the extent of the recovery.
Transportation
Maxpower Automotive is focused on nylon, rigid and hybrid tubular products for engines, braking systems and fuel sender sub-systems. Recovery within this sector started somewhat earlier with sales up 66.5% and 21.6% on the corresponding period and the second half of last year respectively. Our engineering activity has also increased with significant focus on the introduction of new products for our customers and in developing the next generation of fixtures that allow electronic verification of critical component characteristics. Volumes on new products should start to mature from mid 2011 onwards.
Aerospace
RMDG Aerospace supplies rigid pipe assemblies used in a variety of applications within the aerospace sector. Sales were 6.4% lower than the corresponding period last year partly reflecting some lower demand levels but also some constraints from within our supply base. This has increased input costs and lowered operating margins as a result. We are working hard to minimise these constraints as we go forward.
Utilities
Redman Fittings supplies major pipe manufacturers with a patented jointing solution for connecting multi layer polyethylene pipe systems. The multi layer pipes are being increasingly used within the water industry as an alternative to wrapped ductile iron in brown field site developments providing advantages in ease of use and overall cost. There are signs that demand is returning in this area with sales up 25% on the second half of last year and 55% from a year ago.
Outlook
We have been encouraged by the overall progress made through the first half and the extent of the recovery in market conditions. Increasing customer confidence has inevitably led to an element of restocking through the first half but we anticipate underlying demand levels to remain firm through the balance of the year. The Board is confident that full year results will be ahead of market expectations.
Nick Paul CBE Mike Welburn
Chairman Chief Executive
Consolidated interim statement of comprehensive income
Unaudited six months to 30 September 2010 | Unaudited six months to 30 September 2009 |
Audited year ended31 March2010 | |
| Note | £'000 | £'000 | £'000 |
Continuing operations
Revenue 3 | 10,090 | 6,965 | 15,031 |
Cost of sales | (6,876) | (4,711) | (10,193) |
------------------------- | ------------------------- | ------------------------- | |
Gross profit | 3,214 | 2,254 | 4,838 |
Distribution costs | (460) | (285) | (676) |
Administrative costs | (2,235) | (1,792) | (3,737) |
------------------------- | ------------------------- | ------------------------- | |
Operating profit before amortisation and share based payment charge | 519 | 177 | 425 |
Share based payment charge | (36) | - | - |
Amortisation | (59) | (59) | (118) |
--------------------- | ------------------------- | ------------------------- | |
Operating profit | 424 | 118 | 307 |
Finance income | 2 | 2 | 3 |
Finance costs | (72) | (74) | (140) |
Fair value (charge)/income of interest rate swap | (3) | 16 | 8 |
------------------------- | ------------------------- | ------------------------- | |
Profit before tax 3 | 351 | 62 | 178 |
Income tax expense | (107) | (18) | (29) |
------------------------- | ------------------------- | ------------------------- | |
Profit for the period | 244 | 44 | 149 |
Other comprehensive income | - | - | - |
Total comprehensive income for the period | 244 | 44 | 149 |
========================= | ========================= | ========================= |
Attributable to:
Equity holders of the parent | 244 | 44 | 149 |
========================= | ========================= | ========================= |
Earnings per share:
Basic earnings per share 4 | 0.76p | 0.13p | 0.45p |
========================= | ========================= | ========================= | |
Diluted earnings per share 4 | 0.76p | 0.13p | 0.45p |
========================= | ========================= | ========================= |
Consolidated interim statement of financial position
Unaudited 30 September 2010 | Unaudited 30 September 2009 | Audited31 March2010 | ||||
£'000 | £'000 | £'000 | ||||
ASSETS | ||||||
Non-current | ||||||
Goodwill | 591 | 591 | 591 | |||
Other intangible assets | 734 | 852 | 793 | |||
Plant and equipment | 985 | 1,213 | 1,126 | |||
------------------------- | ------------------------- | ------------------------- |
| |||
2,310 | 2,656 | 2,510 |
| |||
------------------------- | ------------------------- | ------------------------- |
| |||
| Current |
| |||||
Inventories | 3,266 | 3,235 | 3,107 |
| ||
Trade and other receivables | 4,719 | 3,120 | 3,839 |
| ||
Cash and cash equivalents | 1,314 | 901 | 1,296 |
| ||
------------------------- | ------------------------- | ------------------------- |
| |||
9,299 | 7,256 | 8,242 |
| |||
------------------------- | ------------------------- | ------------------------- |
| |||
------------------------- | ------------------------- | ------------------------- | |
Total assets 3 | 11,609 | 9,912 | 10,752 |
LIABILITIES | |||
Current | |||
Trade and other payables | (4,145) | (2,500) | (3,360) |
Financial liabilities at fair value through the income statement | (107) | (96) | (104) |
Borrowings | (1,619) | (1,381) | (1,734) |
Corporation tax | (171) | (343) | (88) |
------------------------- | ------------------------- | ------------------------- | |
(6,042) | (4,320) | (5,286) | |
------------------------- | ------------------------- | ------------------------- | |
Non-current | |||
Borrowings | (246) | (569) | (403) |
Deferred tax liabilities | (263) | (301) | (285) |
------------------------- | ------------------------- | ------------------------- | |
Total non-current liabilities | (509) | (870) | (688) |
------------------------- | ------------------------- | ------------------------- | |
Total liabilities | (6,551) | (5,190) | (5,974) |
------------------------- | ------------------------- | ------------------------- | |
Net assets | 5,058 | 4,722 | 4,778 |
========================= | ========================= | ========================= | |
EQUITY | |||
Equity attributable to equity holders of the parent | |||
Share capital | 3,302 | 3,302 | 3,302 |
Share premium account | 1,448 | 1,448 | 1,448 |
Merger reserve | 1,388 | 1,388 | 1,388 |
Share based payment reserve | 229 | 193 | 193 |
Investment in own shares | (49) | - | (49) |
Profit and loss account | (1,260) | (1,609) | (1,504) |
------------------------- | ------------------------- | ------------------------- | |
Total equity | 5,058 | 4,722 | 4,778 |
========================= | ========================= | ========================= |
Consolidated interim statement of changes in equity
Share capital | Share premium account | Merger reserve | Share based payment reserve | Investment in own shares | Profit and loss account | Total | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Balance at 31 March 2009 | 3,302 | 1,448 | 1,388 | 193 | - | (1,653) | 4,678 |
----------------------- | ------------------------- | ----------------------- | ------------------------- | ------------------------- | ------------------------- | ----------------------- | |
Profit for the period | - | - | - | - | - | 44 | 44 |
------------------------ | ------------------------- | ----------------------- | ------------------------- | ------------------------- | ------------------------- | ----------------------- | |
Total recognised income for the period | - | - |
- |
- |
- |
44 |
44 |
------------------------ | ------------------------- | ----------------------- | ------------------------- | ------------------------- | ------------------------- | ----------------------- | |
Balance at 30 September 2009 | 3,302 | 1,448 | 1,388 | 193 | - | (1,609) | 4,722 |
========================= | ========================= | ========================= | ========================= | ========================= | ========================= | ========================= | |
Transactions with owners | - | - | - | - | (49) | - | (49) |
Profit for the period | - | - | - | - | 105 | 105 | |
------------------------ | ------------------------- | ----------------------- | ------------------------- | ------------------------- | ------------------------- | ----------------------- | |
Total recognised income for the period | - | - |
- |
- |
(49) |
105 |
56 |
------------------------ | ------------------------- | ----------------------- | ------------------------- | ------------------------- | ------------------------- | ----------------------- | |
Balance at 31 March 2010 | 3,302 | 1,448 | 1,388 | 193 | (49) | (1,504) | 4,778 |
========================= | ========================= | ========================= | ========================= | ========================= | ========================= | ========================= | |
Profit for the period | - | - | - | - | - | 244 | 244 |
Share based payment charge | 36 | 36 | |||||
------------------------ | ------------------------- | ----------------------- | ------------------------- | ------------------------- | ------------------------- | ----------------------- | |
Total recognised income for the period | - | - |
- |
36 |
- |
244 |
280 |
------------------------ | ------------------------- | ----------------------- | ------------------------- | ------------------------- | ------------------------- | ----------------------- | |
Balance at 30 September 2010 | 3,302 | 1,448 | 1,388 | 229 | (49) | (1,260) | 5,058 |
========================= | ========================= | ========================= | ========================= | ========================= | ========================= | ========================= |
Consolidated interim statement of cash flows
Unaudited Six months to 30 September 2010 | Unaudited Six months to 30 September 2009 | Audited Year Ended31 March2010 | |
£'000 | £'000 | £'000 |
Cash flows from operating activities
Profit after taxation | 244 | 44 | 149 |
Adjustments for: | |||
Depreciation | 177 | 192 | 392 |
Net interest charge in the income statement | 73 | 56 | 129 |
Share based payment charge | 36 | - | - |
Amortisation charge | 59 | 59 | 118 |
Taxation expense recognised in the income statement | 107 | 18 |
29 |
(Increase) / decrease in trade and other receivables | (875) | 541 | (170) |
(Increase) / decrease in inventories | (159) | 582 | 710 |
Increase /( decrease) in trade and other payables | 786 | (394) | 463 |
------------------------- | ------------------------- | ------------------------- | |
Cash generated from operations | 448 | 1,098 | 1,820 |
Interest paid | (72) | (74) | (140) |
Income taxes (paid) / received | (46) | 15 | (267) |
------------------------- | ------------------------- | ------------------------- | |
Net cash from operating activities | 330 | 1,039 | 1,413 |
------------------------- | ------------------------- | ------------------------- |
Cash flows from investing activities
Issue of ordinary share capital | - | - | (49) |
Purchase of property, plant and equipment | (37) | (21) | (135) |
Interest received | 2 | 2 | 3 |
------------------------- | ------------------------- | ------------------------- | |
Net cash used in investing activities | (35) | (19) | (181) |
------------------------- | ------------------------- | ------------------------- |
Cash flows from financing activities
Repayment of short term borrowings | (85) | (601) | (232) |
Repayment of bank borrowings | (150) | (150) | (300) |
Payment of finance lease liabilities | (42) | (81) | (117) |
------------------------- | ------------------------- | ------------------------- | |
Net cash used in financing activities | (277) | (832) | (649) |
------------------------- | ------------------------- | ------------------------- |
Net increase in cash and cash equivalents | 18 | 188 | 583 |
Cash and cash equivalents at beginning of period | 1,296 | 713 | 713 |
------------------------- | ------------------------- | ------------------------- | |
Cash and cash equivalents at end of period | 1,314 | 901 | 1,296 |
========================= | ========================= | ========================= |
Notes to the consolidated interim financial statements
1 Nature of operations and general information
Tricorn Group plc and subsidiaries' (the 'Group') principal activities include the development and manufacturing of pipe solutions to a growing and increasingly international customer base.
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, United Kingdom. Tricorn Group plc's shares are listed on the Alternative Investment Market of the London Stock Exchange.
These consolidated interim financial statements have been approved for issue on 6 December 2010 by the Board of Directors. Amendments to the financial statements are not permitted after they have been approved.
The financial information set out in this interim report does not constitute statutory accounts as defined in Companies Act 2006. The Group's statutory financial statements for the year ended 31 March 2010 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 Basis of preparation
These unaudited interim consolidated financial statements are for the six months ended 30 September 2010. 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 2010, which have been prepared in accordance with International Financial Reporting Standards.
The principal accounting policies adopted to prepare the unaudited interim financial information are consistent with those adopted to prepare the Company's 2010 Annual Report.
3 Segment analysis
The Group operates four 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 off-highway, medical, and other such applications.
·; Aerospace: specialised rigid pipe assemblies for use the aerospace sector.
·; Utilities: the pipefittings sector produces innovative jointing systems for polyethylene pipes, typically within the utility industry.
The revenues and net result generated by each of the Group's business segments are summarised as follows:
6 months to 30 September 2010
Energy | Transportation | Aerospace | Utilities | Unallocated | Total | |||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |||
Revenue | 4,007 | 3,282 | 2,457 | 344 | - | 10,090 | ||
_______________________________________ | _______________________________________ | _______________________________________ | _______________________________________ | _______________________________________ | _______________________________________ | |||
Segmental profit/(loss) before tax | 293 | 236 | (169) | 39 | - | 399 |
| |
_______________________________________ | _______________________________________ | _______________________________________ | _______________________________________ | _______________________________________ | _______________________________________ |
| ||
Share based payment charge | (36) |
| ||||||
Amortisation | (59) |
| ||||||
Corporate recharges | 50 |
| ||||||
Swap valuation | (3) |
| ||||||
_______________________________________ |
| |||||||
Profit before tax | 351 |
| ||||||
========================= |
| |||||||
| ||||||||
Segmental total assets | 3,947 | 2,233 | 2,825 | 292 | 2,312 | 11,609 |
| |
========================= | ========================= | ========================= | ========================= | ========================= | ========================= |
| ||
6 months to 30 September 2009
Energy | Transportation | Aerospace | Utilities | Unallocated | Total | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Revenue | 2,147 | 1,971 | 2,625 | 222 | - | 6,965 |
_______________________________________ | _______________________________________ | _______________________________________ | _______________________________________ | _______________________________________ | _______________________________________ |
Segmental profit/ (loss) before tax | (37) | (24) | 103 | 34 | - | 76 |
_______________________________________ | _______________________________________ | _______________________________________ | _______________________________________ | _______________________________________ | _______________________________________ | |
Amortisation | (59) | |||||
Corporate recharges | 29 | |||||
Swap valuation | 16 | |||||
_____________________________________________ | ||||||
Profit before tax | 62 | |||||
========================= | ||||||
Segmental total assets | 2,934 | 1,770 | 2,883 | 173 | 2,152 | 9,912 |
========================= | ========================= | ========================= | ========================= | ========================= | ========================= |
Year to 31 March 2010
Energy | Transportation | Aerospace | Utilities | Unallocated | Total | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Revenue | 4,849 | 4,671 | 5,014 | 497 | - | 15,031 |
_______________________________________ | ________________________________________ | _________________________________________ | _______________________________________ | _______________________________________ | _______________________________________ |
Segmental profit before tax | 50 | 36 | 106 | 51 | - | 243 |
_______________________________________ | _______________________________________ | _______________________________________ | _______________________________________ | _______________________________________ | _______________________________________ | |
Amortisation | (118) | |||||
Corporate recharge | 45 | |||||
Swap valuation | 8 | |||||
_______________________________________ | ||||||
Profit before tax | 178 | |||||
========================= | ||||||
Segmental total assets | 3,304 | 1,988 | 3,040 | 243 | 2,177 | 10,752 |
========================= | ========================= | ========================= | ========================= | ========================= | ========================= |
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. No increase in the weighted average of dilutive shares has been included within the 30 September 2009 or 31 March 2010 diluted earnings per share as the price of all options at the period end were above the closing market price at the reporting period date.
Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below.
30 September 2010 | |||
Profit | Weighted average number of shares | Earnings per share | |
£'000 | Number '000 | Pence | |
Basic earnings per share | 244 | 32,145 | 0.76p |
Dilutive shares | - | 81 | - |
Diluted earnings per share | 244 | 32,226 | 0.76p |
30 September 2009 | |||
Profit | Weighted average number of shares |
Earnings per share | |
£'000 | Number '000 | Pence | |
Basic earnings per share | 44 | 33,020 | 0.13p |
Dilutive shares | - | - | - |
Diluted earnings per share | 44 | 33,020 | 0.13p |
31 March 2010 | |||
Profit | Weighted average number of shares |
Earnings per share | |
£'000 | Number '000 | Pence | |
Basic earnings per share | 149 | 32,979 | 0.45p |
Dilutive shares | - | - | - |
Diluted earnings per share | 149 | 32,979 | 0.45p |
The Directors consider that the following adjusted earnings per share calculation is a more appropriate reflection of the Group's performance.
30 September 2010 | |||
Profit | Weighted average number of shares | Earnings per share | |
£'000 | Number '000 | Pence | |
Basic earnings per share | 244 | 32,145 | 0.76p |
Shared based payment charge | 36 | ||
Amortisation | 59 | ||
Interest rate swap | 3 | ||
Adjusted earnings per share | 342 | 32,145 | 1.06p |
Dilutive shares | - | 81 | - |
Diluted earnings per share | 342 | 32,226 | 1.06p |
30 September 2009 | |||
Profit | Weighted average number of shares | Earnings per share | |
£'000 | Number '000 | Pence | |
Basic earnings per share | 44 | 33,020 | 0.13p |
Amortisation | 59 | - | - |
Interest rate swap gain | (16) |
|
|
Adjusted earnings per share | 87 | 33,020 | 0.26p |
Dilutive shares | - | - | - |
Diluted earnings per share | 87 | 33,020 | 0.26p |
31 March 2010 | |||
Profit | Weighted average number of shares | Earnings per share | |
£'000 | Number '000 | pence | |
Basic earnings per share | 149 | 32,979 | 0.45p |
Amortisation | 118 | ||
Interest rate collar gain | (8) |
|
|
Adjusted earnings per share | 259 | 32,979 | 0.79p |
Dilutive shares | - | - | - |
Diluted earnings per share | 259 | 32,979 | 0.79p |
5 Dividends
The Directors do not recommend the payment of a dividend (2009: nil).
Copies of this announcement are available on the Company's website, www.tricorn.uk.com.