TCN.L Regulatory News (TCN)

13 Dec 2007 07:00

Tricorn Group PLC13 December 2007 Interim results Tricorn Group plc, the AIM listed developer and manufacturer of pipe solutions,is pleased to present its interim figures for the period ended 30th September2007. Summary of Results 6 months to 6 months to Year to 30 September 30 September 31 March 2007 2006 2007 £'000 £'000 £'000 Sales revenue 8,797 5,000 11,147Operating profit* 768 476 1,044Profit before tax* 651 431 926Adjusted earnings per share - basic* 1.64p 0.95p 2.20p *(before intangible asset amortisation, share based payments and restructuringcosts) Highlights • Record results • Operating profit* up 61.3% to £768k (2006 £476k) • Strong underlying sales growth • Earning per share* up 72.6% at 1.64p (2006:0.95p) • Continue to examine further expansion opportunities Enquiries: Tricorn Group plcMike Welburn, Chief Executive Tel +44(0) 1684 569956mikewelburn@tricorn.uk.com www.tricorn.uk.com Chairman's statement The six months ended 30th September 2007 have again seen record results for theGroup as we continue to execute our strategy of expanding organically and byacquisition. Group operating profit before amortisation, share based paymentsand restructuring, grew by 61.3% to £768k (2006: £476k). Adjusted earnings pershare were up 72.6% at 1.64p (2006: 0.95p). Malvern Tubular Components saw a modest growth in turnover and continues toperform in line with expectations. Redman Fittings has seen a significant increase in orders for its innovativefittings. Capacity has been increased and operational management has beenstrengthened to meet these higher levels of demand. The business is now making asignificant contribution to Group profits. At RMDG Aerospace, the team has been successful in securing new business basedupon the improvements in operational performance and the order book remainsstrong. Finalising lower cost sources of components has taken longer thanoriginally anticipated but this will accelerate through the second half. We acquired Maxpower Automotive in June this year and good progress has beenmade to date. The order book has strengthened and initial samples of lower costmaterials are now starting to be approved. We remain on track to deliver thebenefits from this activity in 2008/9. The outlook for the Group is very positive. Our key markets remain strong, ourdrive to reduce costs is ongoing and we continue to look for acquisitionopportunities that fit the business model we have refined. Nick Paul, Chairman, 13 December 2007 Condensed consolidated interim income statement 6 months to 6 months to Year to 30 30 31 September September March 2007 2006 2007 Note £'000 £'000 £'000 Revenue 4 8,797 5,000 11,147Cost of sales (5,640) (3,014) (6,787) ---------- ---------- ----------Gross profit 3,157 1,986 4,360Distribution costs (355) (218) (451)Administrative costs (2,034) (1,292) (2,865) ---------- ---------- ----------Operating profit before amortisation, share based remuneration and restructuring costs 768 476 1,044 Amortisation (36) (6) (19)Share based remuneration (26) (24) (52)Restructuring costs - - (120) ---------- ---------- ----------Operating profit 706 446 853 Finance income 3 9 11Finance costs (120) (54) (129) ---------- ---------- ----------Profit before tax 589 401 735Income tax expense (143) (136) (235) ---------- ---------- ----------Profit for the period 4 446 265 500 ========== ========== ==========Attributable to: Equity holders of the parent 446 265 500 ========== ========== ==========Earnings per share: Basic earnings per share 9 1.44p 0.85p 1.61p ========== ========== ==========Diluted earnings per share 9 1.27p 0.79p 1.47p ========== ========== ========== Condensed consolidated interim balance sheet 30 September 30 September 31 March 2007 2006 2007 Note £'000 £'000 £'000 ASSETS Non-current Plant and equipment 5 1,432 798 839Goodwill 627 228 200Other intangible assets 6 1,087 374 361 ---------- ---------- ---------- 3,146 1,400 1,400 ---------- ---------- ----------Current 7 Inventories 3,215 2,089 2,359Trade and other receivables 4,516 3,000 3,446Cash and cash equivalents 181 99 35 ---------- ---------- ---------- 7,912 5,188 5,840 ---------- ---------- ---------- ---------- ---------- ----------Total assets 11,058 6,588 7,240 LIABILITIES Current Trade and other payables (3,408) (1,708) (1,964)Borrowings 8 (1,880) (1,604) (1,798)Current tax payable (420) (116) (135)Accruals (521) (579) (442) ---------- ---------- ---------- (6,229) (4,007) (4,339) ---------- ---------- ----------Non-current Borrowings 8 (1,247) (83) (70)Deferred tax liabilities (428) (79) (149) ---------- ---------- ----------Total non-current liabilities (1,675) (162) (219) ---------- ---------- ----------Total liabilities (7,904) (4,169) (4,558) ---------- ---------- ----------Net assets 3,154 2,419 2,682 ========== ========== ==========EQUITY Equity attributable to equity holders of the parent Share capital 3,102 3,102 3,102Share premium account 1,371 1,371 1,371Share based payment reserve 78 24 52Profit and loss account (2,785) (3,466) (3,231)Merger reserve 1,388 1,388 1,388 ---------- ---------- ----------Total equity 3,154 2,419 2,682 ========== ========== ========== Condensed consolidated interim statement of changes in equity Share Share Merger Profit and Share Total capital premium reserve loss based account account payment reserve £'000 £'000 £'000 £'000 £'000 £'000 Balance at 31 March 2006 3,102 1,371 1,388 (3,731) - 2,130 -------- -------- -------- -------- -------- -------- Share based remuneration - - - - 24 24 Profit for the period - - - 265 - 265 -------- -------- -------- -------- -------- -------- Total recognised income and expense for the period - - - 265 24 289 -------- -------- -------- -------- -------- -------- Balance at 30 September 2006 3,102 1,371 1,388 (3,466) 24 2,419 ======== ======== ======== ======== ======== ======== Share based remuneration - - - - 28 28 Profit for the period - - - 235 - 235 -------- -------- -------- -------- -------- -------- Total recognised income and expense for the period - - - 235 28 263 -------- -------- -------- -------- -------- -------- Balance at 31 March 2007 3,102 1,371 1,388 (3,231) 52 2,682 ======== ======== ======== ======== ======== ======== Share based remuneration - - - - 26 26 Profit for the period - - - 446 - 446 -------- -------- -------- -------- -------- -------- Total recognised income and expense for the period - - - 446 26 472 -------- -------- -------- -------- -------- -------- Balance at 30 September 2007 3,102 1,371 1,388 (2,785) 78 3,154 ======== ======== ======== ======== ======== ======== Condensed consolidated interim cash flow statement 6 months to 6 months to Year to 31 30 September 30 September March 2007 2007 2006 Restated RestatedCash flows from operating activities £'000 £'000 £'000 Profit after taxation 446 265 500 Adjustments for: - - - Depreciation 158 98 207 Interest charge in profit and loss account 117 45 118 Profit on sale of fixed assets (2) - (17) Amortisation charge 36 6 19 Share based remuneration charge 26 24 52 Taxation expense recognised in profit and loss 143 136 235 Decrease/(increase) in trade and other receivables 93 57 (134) (Increase)/decrease in inventories (353) (254) (553) Increase in trade payables, other payables and accruals 292 36 82 ---------- ---------- ---------- Cash generated from operations 956 413 509 Interest paid (120) (54) (129) Income taxes paid - - (11) ---------- ---------- ---------- Net cash from operating activities 836 359 369 ---------- ---------- ---------- Cash flows from investing activities Acquisition of subsidiaries net of cash acquired (1,512) (2,016) (2,016) Cash/(overdraft) acquired from acquisition 28 (485) (485) Purchase of property, plant and equipment (75) (2) (254) Proceeds from sale of equipment 2 74 32 Interest received 3 9 11 ---------- ---------- ---------- Net cash used in investing activities (1,554) (2,420) (2,712) ---------- ---------- ---------- Cash flows from financing activities (Repayment)/receipt of short term borrowings (517) 1,186 1,389 Proceeds from long term borrowings 1,500 - - Payment of finance lease liabilities (119) (25) (10) ---------- ---------- ---------- Net cash used in financing activities 864 1,161 1,379 ---------- ---------- ---------- Net increase/(decrease) in cash and cash equivalents 146 (900) (964) Cash and cash equivalents at beginning of period 35 999 999 ---------- ---------- ---------- Cash and cash equivalents at end of period 181 99 35 ========== ========== ========== Notes to the condensed consolidated interim financial statements 1 Nature of operations and general information Tricorn Group plc and subsidiaries' ('the Group') principal activities includethe development and manufacturing of pipe solutions to a growing andincreasingly international customer base. The Group's customer base includes major blue chip companies with world-wideactivities in key market sectors, including Pipefittings, Power Generation,Aerospace, Off Highway, and Automotive. The products supplied to the last foursectors share common means of production and are classified as 'TubeManipulation'. Refer to note 4 for further information about Tricorn Group'soperating segments. Tricorn Group plc is the Group's ultimate parent company. It is incorporatedand domiciled in the United Kingdom. The address of Tricorn Group plc'sregistered office, which is also its principal place of business, is SpringLane, Malvern, Worcestershire, United Kingdom. Tricorn Group plc's shares arelisted on the Alternative Investment Market of the London Stock Exchange. These consolidated condensed interim financial statements have been approved forissue by the Board of Directors on 13 December 2007. Under the securityregulations act of the EU, amendments to the financial statements are notpermitted after they have been approved. The financial information set out in this interim report does not constitutestatutory accounts as defined in Section 240 of the Companies Act 1985. TheGroup's statutory financial statements for the year ended 31 March 2007,prepared under UK GAAP, have been filed with the Registrar of Companies. Theauditor's report on those financial statements was unqualified and did notcontain a statements under Section 237(2) of the Companies Act 1985. 2 Basis of preparation These interim condensed consolidated financial statements are for the six monthsended 30 September 2007. They have been prepared in accordance with IAS 34"Interim Financial Reporting" and the requirements of IFRS 1 "First-timeAdoption of International Financial Reporting Standards" relevant to interimreports, because they are part of the period covered by the Group's first IFRSfinancial statements for the year ended 31 March 2008. They do not include allof the information required for full annual financial statements, and should beread in conjunction with the consolidated financial statements of the Group forthe year ended 31 March 2007. These financial statements have been prepared under the historical costconvention. These condensed consolidated interim financial statements (the interim financialstatements) have been prepared in accordance with the accounting policies setout below which are based on the recognition and measurement principles of IFRSin issue as adopted by the European Union (EU) and are effective at 31 March2008 or are expected to be adopted and effective at 31 March 2008, our firstannual reporting date at which we are required to use IFRS accounting standardsadopted by the EU. Tricorn Group plc's consolidated financial statements were prepared inaccordance with United Kingdom Accounting Standards (United Kingdom GenerallyAccepted Accounting Practice) until 31 March 2007. The date of transition toIFRS was 1 April 2006. The comparative figures in respect of 2006 have beenrestated to reflect changes in accounting policies as a result of adoption ofIFRS. The disclosures required by IFRS 1 concerning the transition from UK GAAPto IFRS are given in the reconciliation schedules, presented and explained innote 11. The group has taken advantage of certain exemptions available under IFRS 1First-time adoption of International Financial Reporting Standards. Theexemptions used are explained under the respective accounting policy. Theaccounting policies have been applied consistently throughout the Group for thepurposes of preparation of these condensed consolidated interim financialstatements. 3 Accounting policies Basis of consolidation The Group financial statements consolidate those of the company and all of itssubsidiary undertaking(s) drawn up to 30 September 2007. Subsidiaries areentities over which the Group has the power to control the financial andoperating policies so as to obtain benefits from its activities. The Groupobtains and exercises control through voting rights. Unrealised gains on transactions between the Group and its subsidiaries areeliminated. Unrealised losses are also eliminated unless the transactionprovides evidence of an impairment of the asset transferred. Amounts reportedin the financial statements of subsidiaries have been adjusted where necessaryto ensure consistency with the accounting policies adopted by the Group. Acquisitions of subsidiaries are dealt with by the purchase method. The purchasemethod involves the recognition at fair value of all identifiable assets andliabilities, including contingent liabilities of the subsidiary, at theacquisition date, regardless of whether or not they were recorded in thefinancial statements of the subsidiary prior to acquisition. On initialrecognition, the assets and liabilities of the subsidiary are included in theconsolidated balance sheet at their fair values, which are also used as thebases for subsequent measurement in accordance with the Group accountingpolicies. Goodwill is stated after separating out identifiable intangibleassets. Goodwill represents the excess of acquisition cost over the fair valueof the group's share of the identifiable net assets of the acquired subsidiaryat the date of acquisition. Business combinations completed prior to date of transition to IFRS The group has elected not to apply IFRS 3 Business Combinations retrospectivelyto business combinations prior to 31 March 2006. Accordingly the classification of the combination acquisition remains unchangedfrom that used under UK GAAP. Assets and liabilities are recognised at date oftransition if they would be recognised under IFRS, and are measured using theirUK GAAP carrying amount immediately post-acquisition as deemed cost under IFRS,unless IFRS requires fair value measurement. Deferred tax and minority interestare adjusted for the impact of any consequential adjustments after takingadvantage of the transitional provisions. Goodwill Goodwill arising on consolidation represents the excess of the cost ofacquisition over the Group's interest in the fair value of the identifiableassets and liabilities of a subsidiary at the date of acquisition. Goodwill isinitially recognised as an asset at cost and is subsequently measured at costless any accumulated impairment losses. Goodwill which is recognised as anasset is reviewed for impairment at least annually. Any impairment isrecognised immediately in the income statement and is not subsequently reversed. Assets acquired as part of a business combination In accordance with IFRS 3 Business Combinations, an intangible asset acquired ina business combination is deemed to have a cost to the group of its fair valueat the acquisition date. The fair value of the intangible asset reflects marketexpectations about the probability that the future economic benefits embodied inthe asset will flow to the group. Where an intangible asset might be separable,but only together with a related tangible or intangible asset, the group ofassets is recognised as a single asset separately from goodwill where theindividual fair values of the assets in the group are not reliably measurable.Where the individual fair value of the complementary assets are reliablymeasurable, the group recognises them as a single asset provided the individualassets have similar useful lives. Intangible assets Intangible assets are amortised over the following periods: - Brand name 15 years- Customer relationships 5 years Impairment testing of goodwill, other intangible assets and plant and equipment For the purposes of assessing impairment, assets are grouped at the lowestlevels for which there are separately identifiable cash flows (cash-generatingunits). As a result, some assets are tested individually for impairment andsome are tested at cash-generating unit level. Goodwill is allocated to thosecash-generating units that are expected to benefit from synergies of the relatedbusiness combination and represent the lowest level within the Group at whichmanagement monitors the related cash flows. Goodwill, other individual assets or cash-generating units that includegoodwill, other intangible assets with an indefinite useful life, and thoseintangible assets not yet available for use are tested for impairment at leastannually. All other individual assets or cash-generating units are tested forimpairment whenever events or changes in circumstances indicate that thecarrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's orcash-generating unit's carrying amount exceeds its recoverable amount. Therecoverable amount is the higher of fair value, reflecting market conditionsless costs to sell, and value in use based on an internal discounted cash flowevaluation. Impairment losses recognised for cash-generating units, to whichgoodwill has been allocated, are credited initially to the carrying amount ofgoodwill. Any remaining impairment loss is charged pro rata to the other assetsin the cash generating unit. With the exception of goodwill, all assets aresubsequently reassessed for indications that an impairment loss previouslyrecognised may no longer exist. Revenue Revenue is measured by reference to the fair value of consideration received orreceivable by the Group for goods supplied, excluding VAT and trade discounts.Revenue is recognised upon the transfer of risk to the customer. Revenue from the sale of goods is recognised when all the following conditionshave been satisfied: • the Group has transferred to the buyer the significant risks and rewards of ownership of the goods which is generally when goods are despatched • the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold which is generally when goods are despatched • the amount of revenue can be measured reliably • it is probable that the economic benefits associated with the transaction will flow to the Group, and • the costs incurred or to be incurred in respect of the transaction can be measured reliably. Research costs Expenditure on research is recognised as an expense in the period in which it isincurred. Plant and equipment Plant and equipment is stated at cost net of depreciation and any provision forimpairment. Depreciation is calculated to write down the cost less estimatedresidual value of all plant and equipment by equal annual instalments over theirestimated useful economic lives. The periods generally applicable are: - Plant and machinery 3 to 10 years- Motor vehicles 5 years Leased assets In accordance with IAS 17, the economic ownership of a leased asset istransferred to the lessee if the lessee bears substantially all the risks andrewards related to the ownership of the leased asset. The related asset isrecognised at the time of inception of the lease at the fair value of the leasedasset or, if lower, the present value of the minimum lease payments plusincidental payments, if any, to be borne by the lessee. A corresponding amountis recognised as a finance leasing liability. The interest element of leasing payments represents a constant proportion of thecapital balance outstanding and is charged to the income statement over theperiod of the lease. All other leases are regarded as operating leases and the payments made underthem are charged to the income statement on a straight line basis over the leaseterm. Lease incentives are spread over the term of the lease. Inventories Inventories are stated at the lower of cost and net realisable value. Costs ofordinarily interchangeable items are assigned using the first in, first out costformula. Cost includes materials, direct labour and an attributable proportionof manufacturing overheads based on normal levels of activity. Taxation Current tax is the tax currently payable based on taxable profit for the period. Deferred income taxes are calculated using the liability method on temporarydifferences. Deferred tax is generally provided on the difference between thecarrying amounts of assets and liabilities and their tax bases. However,deferred tax is not provided on the initial recognition of goodwill, nor on theinitial recognition of an asset or liability unless the related transaction is abusiness combination or affects tax or accounting profit. Deferred tax ontemporary differences associated with shares in subsidiaries is not provided ifreversal of these temporary differences can be controlled by the Group and it isprobable that reversal will not occur in the foreseeable future. In addition,tax losses available to be carried forward as well as other income tax creditsto the Group are assessed for recognition as deferred tax assets. Deferred tax liabilities are provided in full, with no discounting. Deferredtax assets are recognised to the extent that it is probable that the underlyingdeductible temporary differences will be able to be offset against futuretaxable income. Current and deferred tax assets and liabilities are calculatedat tax rates that are expected to apply to their respective period ofrealisation, provided they are enacted or substantively enacted at the balancesheet date. Changes in deferred tax assets or liabilities are recognised as a component oftax expense in the income statement, except where they relate to items that arecharged or credited directly to equity in which case the related deferred tax isalso charged or credited directly to equity. Financial assets Financial assets include cash and trade and other receivables. All financial assets are recognised when the Group becomes a party to thecontractual provisions of the instrument. Financial assets are recognised atfair value plus transaction costs. Trade and other receivables are provided against when there is objectiveevidence that the Group will not be able to collect all amounts due to it inaccordance with the original terms of those receivables. The amount of thewrite-down is determined as the difference between the asset's carrying amountand the present value of estimated future cash flows. Financial liabilities The Group's financial liabilities include trade and other payables, bankborrowings, invoice discounting facilities and finance lease liabilities. Financial liabilities are obligations to pay cash or other financial assets andare recognised when the Group becomes a party to the contractual provisions ofthe instrument. All financial liabilities are recorded initially at fair value,net of direct issue costs, and are subsequently recorded at amortised cost usingthe effective interest method, with interest-related charges recognised as anexpense in finance cost in the income statement. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, togetherwith other short-term, highly liquid investments that are readily convertibleinto known amounts of cash and which are subject to an insignificant risk ofchanges in value. Equity Equity comprises the following: • "Share capital" represents the nominal value of equity shares • "Share premium" represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue • "Merger reserve" represents the excess of the nominal value of shares issued at the acquisition of Integrated Statistical Solutions Limited, a business now conducted by Redman Fittings Limited • "Share based payment reserve" represents equity-settled share-based employee remuneration until such share options are exercised. Foreign currencies Transactions in foreign currencies are translated at the exchange rate ruling atthe date of the transaction. Monetary assets and liabilities in foreigncurrencies are translated at the rates of exchange ruling at the balance sheetdate. Exchange differences are dealt with through the income statement. Employee benefits Defined Contribution Pension Scheme: the pension costs charged against profitsare the contributions payable to the scheme in respect of the accounting period. Share-based payment Equity settled share-based payment All share-based payment arrangements are recognised in the consolidatedfinancial statements. The Group operates equity-settled share-based remunerationplans for remuneration of its employees. All goods and services received in exchange for the grant of any share-basedpayment are measured at their fair values. Where employees are rewarded usingshare-based payments, the fair values of employees' services are determinedindirectly by reference to the fair value of the instrument granted to theemployee. This fair value is appraised at the grant date and excludes the impactof non-market vesting conditions (for example, profitability and sales growthtargets). All equity-settled share-based payments are ultimately recognised as an expensein the income statement with a corresponding credit to "other reserve". If vesting periods or other non-market vesting conditions apply, the expense isallocated over the vesting period, based on the best available estimate of thenumber of share options expected to vest. Estimates are subsequently revisedif there is any indication that the number of share options expected to vestdiffers from previous estimates. Any cumulative adjustment prior to vesting isrecognised in the current period. No adjustment is made to any expenserecognised in prior periods if share options ultimately exercised are differentto that estimated on vesting. Upon exercise of share options the proceeds received net of attributabletransaction costs are credited to share capital, and where appropriate sharepremium. 4 Segment analysis The group operates two main business segments: • Tube manipulation: the activities undertaken by Tube Manipulation comprise the supply of steel, plastic, titanium, and hybrid tube fabrications and fittings for, amongst others areas, diesel engine, generator set, jet engine and niche automotive applications • Pipefittings: 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 segmentsare summarised as follows: 6 months to 30 September 2007 Tube Pipefittings Total manipulation £'000 £'000 £'000 Revenue 7,661 1,136 8,797Profit after tax 226 220 446 ============ ============ ============6 months to 30 September 2006 Tube Pipefittings Total manipulation £'000 £'000 £'000Revenue 4,774 226 5,000Profit after tax 157 108 265 ============ ============ ============Year to 31 March 2007 Tube Pipefittings Total manipulation £'000 £'000 £'000 Revenue 10,566 581 11,147Profit after tax 204 296 500 ============ ============ ============ 5 Plant and equipment The following tables shows the significant additions and disposals of property,plant and equipment. Plant and equipment Motor vehicles Total £'000 £'000 £'000 Carrying amount at 1 April 2006 534 9 543Acquisitions 238 26 264Additions 98 - 98Disposals (9) - (9)Depreciation (92) (6) (98) ---------- ---------- ----------Carrying amount at 30 769 29 798September 2006Additions 145 11 156Disposals - (6) (6)Depreciation (103) (6) (109) ---------- ---------- ----------Carrying amount at 31 March 811 28 839 2007Acquisitions 676 - 676Additions 73 2 75Disposals - - -Depreciation (154) (4) (158) ---------- ---------- ----------Carrying amount at 30September 2007 1,406 26 1,432 ========== ========== ========== 6 Intangible assets The following tables shows the significant additions and disposals to intangibleassets. Brand Customer Total names relationships £'000 £'000 £'000Carrying amount at 1 April - - -2006Acquisitions 380 - 380Amortisation (6) - (6) ---------- ---------- ----------Carrying amount at 30 374 - 374September 2006Amortisation (13) - (13) ---------- ---------- ----------Carrying amount at 31 March 361 - 361 2007 Acquisitions (note 10) 450 312 762Amortisation (20) (16) (36) ---------- ---------- ----------Carrying amount at 30 791 296 1,087September 2007 ========== ========== ========== During the period the Group acquired Maxpower Automotive Limited for £1,712,000(including professional fees). Details of this acquisition are given in note10. 7 Inventories 30 September 30 September 31 March 2007 2006 2007 Raw materials 1,372 694 834Work in progress 1,359 1,046 1,137Finished goods 484 349 388 ----------- ----------- ----------- 3,215 2,089 2,359 =========== =========== =========== 8 Borrowings 30 September 30 September 31 March 2007 2006 2007Current borrowingsBank borrowings 300 - -Invoice discounting facility 1,487 1,560 1,763Finance leasing liability 93 44 35 ----------- ----------- ----------- 1,880 1,604 1,798 =========== =========== ===========Non current borrowingsBank borrowings 1,125 - -Finance leasing liability 122 83 70 ----------- ----------- ----------- 1,247 83 70 =========== =========== =========== The Group obtained a £1,500,000 bank borrowing in the period. Interest ischarged at 2.25% above base rate. The borrowings are recorded at fair value inthe balance sheet with interest charged at an effective rate over the life ofthe borrowings. The bank borrowings are secured against the asset of the Group. The invoice discounting facility is secured against the trade receivable towhich it relates. Interest is charged at base rate plus 1.6%. 9 Earnings per share The calculation of the basic earnings per share is based on the earningsattributable to ordinary shareholders divided by the weighted average number ofshares in issue during the year. Shares held in employee share trusts aretreated as cancelled for the purposes of this calculation. The calculation of diluted earnings per share is based on the basic earnings pershare, adjusted to allow for the issue of shares and the post tax effect ofdividends and/or interest, on the assumed conversion of all dilutive options andother dilutive potential ordinary shares. Reconciliations of the earnings and weighted average number of shares used inthe calculations are set out below. 30 September 2007 Profit Weighted average Earnings per share number of shares £'000 Number '000 pence Basic earnings per share 446 31,020 1.44pDilutive shares - 4,060 -Diluted earnings per share 446 35,080 1.27p 30 September 2006 Weighted average number of shares Profit Earnings per share £'000 Number '000 pence Basic earnings per share 265 31,020 0.85pDilutive shares - 2,353 -Diluted earnings per share 265 33,373 0.79p 31 March 2007 Weighted average number of shares Profit Earnings per share £'000 Number '000 pence Basic earnings per share 500 31,020 1.61pDilutive shares - 2,885 -Diluted earnings per share 500 33,905 1.47p The share options issued in 2007 and 2006 are dilutive. The Directors consider that the following adjusted earnings per sharecalculation is a more appropriate reflection of the group performance. 30 September 2007 Profit Weighted average Earnings per share number of shares £'000 Number '000 pence Basic earnings per share 446 31,020 1.44pAmortisation 36 - -Restructuring costs - - -Share based payments 26 - -Adjusted earnings per share 508 31,020 1.64pDilutive shares - 4,060 -Diluted earnings per share 508 35,080 1.45p 30 September 2006 Profit Weighted average Earnings per share number of shares £'000 Number '000 pence Basic earnings per share 265 31,020 0.85pAmortisation 6 - -Restructuring costs - - -Share based payments 24 - -Adjusted earnings per share 295 31,020 0.95pDilutive shares - 2,353 -Diluted earnings per share 295 33,373 0.88p 31 March 2007 Profit Weighted average Earnings per share number of shares £'000 Number '000 pence Basic earnings per share 500 31,020 1.61pAmortisation 19 - -Restructuring costs 120 - -Share based payments 52 - -Adjusted earnings per share 691 31,020 2.20pDilutive shares - 2,885 -Diluted earnings per share 691 33,905 2.04p 10 Business combination On 26 June 2007 Tricorn Group plc acquired 100% of the issued share capital ofMaxpower Automotive Limited, a company incorporated in the United Kingdom. Thetotal cost of acquisition includes the components stated below. £'000 Cash 1,350Contingent consideration 200Professional fees 162 ------------------------- 1,712 ========================= The contingent consideration is payable one year from the date of acquisitionbased on the Maxpower Automotive Limited achieving earning above an agreedfigure. The allocation of the purchase price to the assets and liabilities of MaxpowerAutomotive Limited was only provisionally completed at 30 September 2007. Thedirectors require more time to determine the value of certain assets andliabilities The amounts provisionally recognised for each class of theacquiree's assets, liabilities and contingent liabilities recognised at theacquisition date are as follows: Carrying amount Adjustments Provisional under IFRS fair value £'000 £'000 £'000 Intangible assets 762 - 762Plant and equipment 676 - 676Inventories 503 - 503Trade and other receivables 1,163 - 1,163Cash and cash equivalents 28 - 28 --------------- --------------- --------------- Total assets 3,132 3,132 Deferred tax liabilities (301) - (301)Current portion of long term borrowings (154) - (154)Trade and other payables (1,029) - (1,029)Current tax liability (122) - (122)Short term borrowings (241) - (241) --------------- --------------- --------------- Total liabilities (1,847) - (1,847) --------------- --------------- --------------- Net assets 1,285 - 1,285 =============== ===============Fair value of purchase consideration 1,712 --------------Goodwill 427 ============== The goodwill that arose on the combination can be attributed to the synergiesexpected to be derived from the combination and the value of the workforce ofMaxpower Automotive Limited which cannot be recognised as an intangible assetunder IAS 38 "Intangible Assets". Since the acquisition Maxpower Automotive Limited has contributed £52,000 to theGroup profit for the period to 30 September 2007. Had the acquisition occurredon 1 April 2007 the revenue for Group for the period to 30 September 2007 wouldhave been £12,842,000 and the profit for the Group for the period would havebeen £487,000. 11 Transition to international financial reporting standards The transition from previous UK GAAP to IFRS has been made in accordance withIFRS 1, First-time Adoption of International Financial Reporting Standards. TheGroup's financial statements for the six months ended 30 September 2007 and thecomparatives presented for the periods ended 30 September 2006 and 31 March 2007comply with all presentation recognition and measurement requirements of IFRSapplicable for accounting periods commencing on or after 1 April 2007. The following reconciliations and explanatory notes thereto describe the effectsof the transition for the transitional date to IFRS, 1 April 2006, for thefinancial periods ended 30 September 2006 and 31 March 2007. All explanationsshould be read in conjunction with the IFRS accounting policies of the Group. The reconciliation of the Group's equity reported under previous GAAP to itsequity under IFRS as at 1 April 2006, 30 September 2006 and at 31 March 2007may be summarised as follows: 1 April 30 September 31 March 2006 2006 2007 £'000 £'000 £'000 UK GAAP equity shareholders' funds 2,130 2,441 2,766Reversal of goodwill amortisation on RMDG Aerospace Limited - 18 45Reversal of goodwill amortisation on acquisition prior to the transition to IFRS - 8 15Amortisation of intangible assets - (6) (19)Release of deferred tax recognised on fair value adjustments - (44) (131)Release of deferred tax recognised on intangibles 2 6IFRS equity shareholders' funds 2,130 2,419 2,682 Total adjustment to equity - (22) (84) There are no adjustments to the balance sheet as at 1 April 2006 for transitionto IFRS. The re-measurement of balance sheet items as at 30 September 2006 andat 31 March 2007 may be summarized as follows: Reconciliation as at 30 September 2006 Effect of IFRS UK GAAP transition £'000 £'000 £'000 Goodwill 599 (371) 228Other intangible assets - 374 374Deferred tax provision (54) (25) (79)Profit and loss account (3,444) (22) (3,466) Reconciliation as at 31 March 2007 Effect of IFRS UK GAAP transition £'000 £'000 £'000 Goodwill 537 (337) 200Other intangible assets - 361 361Deferred tax (41) (108) (149)Profit and loss account (3,147) (84) (3,231) Profit and loss reported under UK GAAP for the periods ended 30 September 2006and 31 March 2007 is reconciled to IFRS as follows: Reconciliation for the period ended 30 September 2006 Effect of IFRS UK GAAP transition £'000 £'000 £'000 Revenue 5,000 - 5,000Cost of sales (3,014) - (3,014)Gross profit 1,986 - 1,986Administrative expenses (1,534) - (1,534)Amortisation of intangibles (26) 20 (6)Operating result 426 20 446Finance costs (45) - (45)Result for the period before taxation 381 20 401Tax charge (94) (42) (136)Net result for the period 287 (22) 265 Reconciliation for the year ended 31 March 2007 Effect of IFRS UK GAAP transition £'000 £'000 £'000 Revenue 11,147 - 11,147Cost of sales (6,787) - (6,787)Gross profit 4,360 - 4,360Administrative expenses (3,488) - (3,488)Amortisation of goodwill (60) 41 (19)Operating result 812 41 853Finance costs (118) - (118)Result for the period before taxation 694 41 735Tax charge (110) (125) (235)Net result for the year 584 (84) 500 The Group has modified its former balance sheet and income statement structureon transition to IFRS. The main changes may be summarised as follows: a) The Group acquired RMDG Aerospace Limited (formerly Robert MortonHoldings Limited) on 12 June 2006. Application of IFRS 3 to this businesscombination resulted in identification of an intangible asset, being theCompany's brand name. Under IFRS this has been recognised separately in thebalance sheet at it's fair value at the date of the combination and amortisationover a 15 year period. Under UK GAAP this intangible assets was subsumed withingoodwill. The result of this adjustment is to decrease goodwill and increaseintangible assets as £380,000 at the date of the combination. At 30 September2006 and 31 March 2007 the value of intangible assets, before amortisation, wasincreased by £380,000 and £380,000 respectively. The value of goodwill, beforeamortisation, at 30 September 2006 and 31 March 2007 was reduced by £380,000 and£380,000 respectively. This adjustment also resulted in the recognition of a deferred tax liability onthe difference between the tax base of the intangible asset and the accountingbase at the company's corporation tax rate of 30%. A deferred tax provision of£114,000 was recognised on acquisition with a corresponding increase togoodwill. The deferred tax provision at 30 September 2006 and 31 March 2007 wereincreased by £114,000 from the UK GAAP figures. The brand names valued at £380,000 are amortised over 15 years, the directorsestimate of their useful life. This has resulted in £6,000 and £19,000amortisation being charged in the period from 1 April 2006 to 30 September 2006and the year ended 31 March 2007 respectively. Deferred taxation has beenreleased of £2,000 and £6,000 over the same periods so as to release the creditfor deferred taxation set up on acquisition of the brand. b) Goodwill recognised by the Group on acquisition of RMDG AerospaceLimited under UK GAAP was amortised over a period of 10 years. Under IFRSgoodwill is not amortised, but tested annually for impairment. The goodwillamortisation charge recognised in accordance with UK GAAP in the year to 31March 2007 of £45,000 (6 months to 30 September 2006 £18,000) was written back. c) Goodwill amortisation charged of £15,000 in the year to 31 March 2007(6 months to 30 September 2006 £8,000) was written back for acquisitions priorto 1 April 2006. d) Under FRS 19 deferred tax was recognised only on timing differences; incontrast IAS 12 "Income Taxes" requires the recognition of deferred tax on alltemporary differences. Certain fair value adjustments were made to theacquisition balance sheet of RMDG Aerospace Limited on acquisition of £436,000.Deferred tax was not recognised on these temporary timing differences under UKGAAP. The recognition of deferred tax on these temporary timing differencesleads to a deferred tax asset of £131,000 in the acquisition balance sheet ofRMDG Aerospace Limited and a reduction in goodwill at that date. The deferredtax asset was released through the period to 31 March 2007, with a release of£44,000 in the 6 months to 30 September 2006 and £131,000 in the year to 31March 2007 resulting in a tax charge in those periods which did not exist underUK GAAP. Explanation of material adjustments to the cash flow statement Application of IFRS has resulted in reclassification of certain items in thecash flow statement as follows: (i) under UK GAAP, payments to acquire property, plant and equipment wereclassified as part of 'Capital expenditure and financial investment'. UnderIFRS, payments to acquire property, plant and equipment have been classified aspart of 'Investing activities'. (ii) income taxes of received during 2006 are classified as operating cash flowsunder IFRS, but were included in a separate category of tax cash flows underprevious GAAP. (iii) under UK GAAP, movements on treasury deposits were reported separatelyunder the management of liquid resources within the cash flow statement. UnderIFRS, treasury deposits form part of cash and cash equivalents and as such nomovements on these items are reported. There are no other material differences between the cash flow statementpresented under IFRS and the cash flow statement presented under UK GAAP. This information is provided by RNS The company news service from the London Stock Exchange