TCN.L Regulatory News (TCN)

3 December 2012

Tricorn Group plc

Interim Results

For the six months ended 30 September 2012

Tricorn Group plc ('Tricorn' or the 'Group'), (TCN.L) the AIM quoted tube manipulation specialist, announces its unaudited interim results for the six months ended 30 September 2012.

Highlights

·; Expansion in China progressing to plan

·; Capital investment made in 2011 delivering further improvements

·; Developing pipeline of new opportunities

·; Improved operating profit margin* of 7.6% up 21% (2011: 6.3%)

·; Continued strengthening of balance sheet with cash and cash equivalents at 30 September 2012 of £3.085m up 50% (2011: £2.061m)

·; Interim dividend declared of 0.1p, an increase of 43% (2011: 0.07p)

·; Adjusted EPS of 2.07p, up 25% (2011: 1.66p)

Financial Summary

* All references to operating profit, operating profit margin, profit before tax and EPS are before intangible asset amortisation, share based payment charges, interest rate swap and foreign exchange derivative valuation.

Commenting on the results, Nick Paul CBE, Chairman of Tricorn said:

"We have delivered a strong set of half year results demonstrating continued improvements in operating margins, strong cash generation has led to a considerably strengthened balance sheet and we have made encouraging progress in establishing our manufacturing facility in China. This, alongside the pipeline of opportunities for new business positions us well for further growth.

"In the shorter term, the softening global markets seen through the second quarter look set to continue into the second half."

Enquires:

Notes to Editors:

Tricorn is a value added manufacturer and specialist manipulator of pipe and tubing assemblies to niche markets worldwide in the Energy & Utilities, Transportation and Aerospace sectors.

Headquartered in Malvern, UK, Tricorn employs around 300 employees and operates through four brands: MTC; Redman Fittings; Maxpower; and RMDG Aerospace.

Chairman's and Chief Executive's statement

Performance in the six months ended 30 September 2012

The Group has made good progress in the six months to 30 September 2012 when compared to the corresponding period in 2011. Operating profit margin is up 21%, cash and equivalents up 50% and adjusted earnings per share up 25%.

The plan to establish a manufacturing facility in China is on track and we expect to ship our first products from the facility later this month.

Overall there is an increasing pipeline of new opportunities from both existing and new customers being developed.

Based on the progress made and confidence in future prospects, the Board is declaring an interim dividend of 0.1p, an increase of 43% on last year, as part of its longer term progressive dividend policy.

Operational Review

The Group operates three main business segments focused on the Energy & Utilities, Transportation and Aerospace sectors.

Revenue for the period was £11.552m, down £0.868m from a year ago, as a result of softening markets being experienced by some of the divisions through the second quarter. However, all three divisions delivered increases to underlying operating profit margins as they remained focused on continuous improvement and started to realise some of the benefits from the ongoing programme of investment in facilities.

Earlier this year the Group announced its intention to establish a manufacturing facility in China as a key part of its strategic development in South-East Asia. The facility is a wholly-owned foreign enterprise (WOFE) and has now been granted its business licence. Installation of plant and equipment has progressed to plan and we expect to be in a position to make our first shipment of product later this month. Further manufacturing cells will be established through the balance of the current financial year with revenue planned to increase through the following year.

Energy & Utilities

Malvern Tubular Components specialises in fabricated and manipulated assemblies for large diesel engines and radiator sets used within the energy sector; principally power generation, mining and oil and gas applications.

The investment made last year in extending bending capabilities within the facility is allowing productivity gains to be made, increasing quality levels and enabling new opportunities to be progressed. Painting facilities have also recently been upgraded and we anticipate further operational improvements as a result.

Overall, the focus on continuous improvement delivered segmental profit before tax of £0.505m, up 14% on the previous year. Revenue at £5.213m was down 6% on the corresponding period in 2011 as customers reported some slowing in end markets.

Transportation

Maxpower Automotive is focused on nylon, rigid and hybrid tubular products for engines, braking systems and fuel sender sub-systems.

The China manufacturing facility is a subsidiary of this division and consequently the start up costs associated with our expansion there are included in the segmental reporting for this division.

Revenue at £3.483m was down £0.849m in comparison to the same period last year when demand driven by impending emissions legislation, as reported in our preliminary results announcement in June, had been particularly high. With weaker end markets through the second quarter, the business responded quickly to lower demand levels whilst maintaining its focus on operational improvements. As a result, despite lower revenue and after absorbing start up costs for the China facility, the division delivered segmental profit before tax of £0.258m, a reduction of only £0.105m on the previous year.

Aerospace

RMDG Aerospace supplies rigid pipe assemblies used in a variety of applications within the aerospace sector.

The division has performed well in the period with revenue up 11% to £2.856m and the prior year segmental loss of £0.045m moving to a profit before tax of £0.121m.

The business has built a strong reputation for responsiveness and quality excellence with its key customers and has secured new business on the back of this.

The move by a major customer to rationalise its supplier base, and the associated contract loss announced in November, was clearly disappointing. However, this does not preclude operating as a second tier supplier to this same customer. It is anticipated that customer specific inventory associated with the contract loss will be run out over the early part of 2013 and this will minimise the impact in the current financial year.

Given the ongoing demand within the sector and the healthy pipeline of opportunities that has been developed the division is working hard to replace this lost volume as quickly as possible.

Financial Review

The Group's results for the six months to 30 September 2012 demonstrated a further improvement in Group operating profit margins to 7.6% (2011: 6.3%) and an 18% improvement in profit before tax to £0.855m (2011: £0.722m). This improved profitability helped the Group to increase its net cash position to £1.130m (2011: £0.072m).

In line with its progressive dividend policy the Board has declared an interim dividend of 0.1p per share to shareholders on the register on 8 February 2013. The dividend will be paid on 22 February 2013.

Income Statement

Softer market conditions through the second quarter, particularly within the Transportation segment, resulted in a 7% reduction in revenue for the period of £11.552m. However, the Group continued to increase its gross profit margins on the back of improved operational performance across all business segments.

Alongside flat distribution costs, administration costs at £2.791m were up 3% on the comparable period in 2011 of £2.719m, after incurring start up costs associated with our new manufacturing facility in Wuxi, China. Resultant operating profit increased 12% to £0.882m (2011: £0.785m), with operating profit margins up to 7.6%. After deducting intangible asset amortisation, share based payment charges and charges relating to foreign exchange derivative contracts, operating profit was up 7% to £0.783m (2011: £0.731m).

Net finance charges were down 41% at £0.027m (2011: £0.046m) as a result of the settlement of the interest rate cap and collar arrangement in March 2012.

Unadjusted profit before tax for the half year at £0.591m was up 16% on the 2011 half year profit of £0.510m. Basic EPS was up 14% at 1.77p (2011: 1.55p) and, after adjusting for one-off costs, EPS was up 25% at 2.07p (2011: 1.66p).

Cash Flow

Cash generation for the Group in the six months to 30 September 2012 was strong with cash generated from operating activities up 175% to £0.884m compared to £0.321m for the six months to 30 September 2011.

Capital expenditure increased to £0.345m, although the second half of the financial year will see increased expenditure as the remaining investment associated with our manufacturing facility in Wuxi, China, is incurred.

Cash and equivalents increased to £3.085m at 30 September 2012, a 50% increase over the figure at 30 September 2011 of £2.061m, and a 25% increase on the 31 March 2012 year end position of £2.468m. The net cash position of the Group improved to £1.130m (2011: £0.072m).

Balance Sheet

The Group's continued programme of targeted capital investment saw total fixed assets increase to £2.848m, and with the increase in cash and equivalents total assets were £13.987m (2011: £13.543m).

With inventories flat year on year, a reduction in net debtors and creditors saw net working capital reduce to £4.259m (2011: £4.448m).

Outlook

Our strategy of alignment with major OEM's and expansion of manufacturing facilities in China provides a strong platform for further growth. Alongside this we continue to look for acquisitions that complement our existing businesses.

In the near term however we have seen some further softening in demand and now anticipate revenue in the second half to be around 10% lower than indicated at the time of our trading update on 3rd October 2012. Full year PBT excluding China start up costs is expected to be at similar levels to prior year.

Nick Paul CBE Mike Welburn

Chairman Chief Executive

Group statement of comprehensive income

For period ended 30 September 2012

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

Group statement of changes in equity

For period ended 30 September 2012

Group statement of financial position

At 30 September 2012

Group statement of cash flows

For period ended 30 September 2012

 Notes:

1 General information

Tricorn Group plc and subsidiaries' (the 'Group') principal activities comprise high precision tube manipulation, systems engineering and specialist fittings.

The Group's customer base includes major blue chip companies with world-wide activities in key market sectors, including Pipefittings, Power Generation, Aerospace, Off Highway, 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. The Group's shares are admitted to trading on the Alternative Investment Market of the London Stock Exchange.

These consolidated interim financial statements have been approved for issue on 3 December 2012 by the Board of Directors. Amendments to the financial statements are not permitted after they have been approved. Copies of this announcement are available on the Company's website, www.tricorn.uk.com.

The financial information set out in this interim report does not constitute statutory accounts as defined in the Companies Act 2006. The Group's statutory financial statements for the year ended 31 March 2012 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 Accounting policies

Basis of preparation

These unaudited interim consolidated financial statements are for the six months ended 30 September 2012. 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 2012, which have been prepared in accordance with International Financial Reporting Standards.

3 Segmental reporting

The Group operates three main business segments:

§ Energy & Utilities: manipulated tubular assemblies for use in power generation, oil and gas and marine sectors, and innovative jointing systems for use typically within the utility industry.

§ 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.

3 Segmental reporting (continued)

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

3 Segmental reporting (continued)

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.

4 Earnings per share (continued)

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

5 Dividends

As part of our progressive dividend policy, the Group will be paying an interim dividend of 0.1p per share to all shareholders who are on the register on 8 February 2013. The dividend will be paid on 22 February 2013.