TCN.L Regulatory News (TCN)

3 December 2013

Tricorn Group plc

Interim Results

For the six months ended 30 September 2013

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 2013.

Highlights

· Revenue up 15%

· Substantial investment in enhanced capability

· New customers secured in USA

· Requests for quotations at record levels

· Increasing momentum in China

· Aerospace restructuring completed

· Interim dividend increased by 30%

· Sale of Redman Fittings business (post period end)

Financial Summary

* All references to operating profit, operating profit margin, profit before tax and EPS are before acquisition related costs, China start up costs, restructuring costs, intangible asset amortisation, share based payment charges and foreign exchange derivative valuation.

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

"With operations now established in the USA and China, the Group has significantly enhanced its capabilities from a year ago. We have a clear focus of meeting our customers' needs for tube assemblies wherever they operate worldwide and we have made some excellent progress towards achieving this goal.

In the near term, the UK businesses are seeing slightly softer than anticipated market conditions, but we are well positioned to benefit as economies improve and we remain confident in our future prospects."

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 400 employees and operates through four brands: MTC; Maxpower; RMDG Aerospace and Franklin Tubular Products.

Chairman's and Chief Executive's statement

Performance in the six months ended 30 September 2013

First half revenue for the Group was £13.272m a 15% increase on the corresponding period last year. Revenue from our USA acquisition and modest but increasing revenue from the China facility, more than offset lower revenues from the UK businesses.

Our US acquisition progressed to plan as we moved to establish a stable platform from which to grow and the level of new business secured has been encouraging. Revenue in China from our wholly owned facility is increasing and we successfully completed the formation of our joint venture which is already making good progress. In the UK we completed the restructuring of our aerospace business and announced last month the sale of the Redman Fittings business ensuring that the Group is fully focused on its core activities.

With UK markets a little softer than expected, half year PBT at £0.204m is slightly below management expectations.

We remain confident in our future prospects and the Board has declared an interim dividend of 0.13p (2012: 0.1p), representing a 30% increase on the corresponding period last year.

Operational Review

The Group operates three main business segments and following the sale of the Redman Fittings business is focused on the Energy, Transportation and Aerospace sectors.

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.

With customers reporting weaker demand in the mining and power generation sectors, the business has seen revenue at £3.793m broadly in line with the previous 6 months and £1.420m down on the corresponding period last year.

Against this back drop the business performed well to deliver a segment profit of £0.176m (2012: £0.505m). 

Transportation

Following the developments over the last 18 months, this segment is now the largest within the Group and has operations in the UK, USA and China. Key markets are off highway (agricultural, construction) and on-highway (truck, automotive).

First half revenues were £7.788m (2012:£3.483m) and segmental operating profit £0.198m (2012:£0.258m). The lower revenue from the UK operation was offset by our now substantial revenues from the USA operation which, as expected, operated at around break even at the PBT level.

Maxpower Automotive, the UK business has performed in line with expectations.

Revenue in China from Maxpower (Wuxi) continues to grow as both the number of products and the customer base is broadened. Our joint venture, Minguang-Tricorn Tubular Products, announced in July, became operational in September and has extended our capability into the larger tube diameters. The first shipments from the facility have now been made.

In the USA, at Franklin Tubular Products, we have invested in extending capabilities and have been encouraged by new business secured from new customers, largely as a result of product and process innovation. This should generate around $4m revenue annually at full production volumes. As expected there was some reduction in existing business through the period, at least in part, as customers followed through on commitments made to alternative suppliers.

Aerospace

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

The business was restructured through the period in response to the anticipated lower revenue levels. Revenue was £1.691m (2012: £2.856m). The business has maintained its reputation for responsiveness and quality excellence and this is being rewarded with new business wins which will start to impact through the final quarter. It is anticipated that manning levels will increase through the second half of the year.

Financial Review

The Group's results for the six months to 30 September 2013 show revenue up 15% at £13.272m (2012: £11.552m), adjusted profit before tax at £0.204m (2012: £0.855m) and an increase in total assets to £15.868m (2012: 13.987m) demonstrating a continued focus by the Group on investing for future growth.

In line with its progressive dividend policy, the Board has declared an interim dividend of 0.13p per share to shareholders on the register on 7 February 2014. The dividend will be paid on 21 February 2014.

Income Statement

Revenue has benefitted from the inclusion of the recently acquired US business and was £13.272m at the half year. Gross margins within the Group were broadly in line with the corresponding period last year at 35.0% (2012: 36.2%).

Operating profit for the six months was £0.247m (2012: £0.882m) with profit before tax at £0.204m (2012: £0.855m) and EPS at 0.61p (2012: 2.07p).

Cash Flow

At the end of September 2013 net debt was at £3.641m, following a cash outflow in the first six months of the financial year of £1.733m. Much of the outflow represents investment in the Group's capability and infrastructure with key developments being £0.413m investment for a 51% share of our new China joint venture, £0.289m investment in our China subsidiary, £0.542m capital expenditure, £0.167m US product development, £0.159m business transfer costs in the US and £0.314m on restructuring costs.

Availability on the Group's short term facilities remains strong with headroom at c£1.5m.

Balance Sheet

The investments referred to above resulted in the Group's total assets increasing to £15.868m compared to £13.987m at 30 September 2012.

Net working capital increased to £4.910m (2012: £4.259m), predominantly on the back of higher working capital following the US acquisition.

Outlook

As we continue to develop our global platform we are encouraged by the opportunities for growth. Requests for quotations are at record levels driven largely by our strategic investments in overseas facilities.

In the near term however, after some early positive signs in the second half, we have seen demand levels soften again for our UK businesses. As a result we now anticipate second half revenues and PBT to be in line with those reported in the first half.

Nick Paul CBE Mike Welburn

Chairman Chief Executive

Group statement of comprehensive income

For period ended 30 September 2013

Group statement of changes in equity

For period ended 30 September 2013

Group statement of financial position

At 30 September 2013

Group statement of cash flows

For period ended 30 September 2013

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 2013 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 2013 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 2013. 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 2013, which have been prepared in accordance with International Financial Reporting Standards.

Following the acquisition of the trade and assets of Whitley Products Inc, adjustments were required to the book values of the assets and liabilities of the businesses acquired, in order to present the net assets at fair values in accordance with Group accounting policies. Due to the proximity of the acquisition to the year end, the Directors performed an initial assessment of the fair values and have subsequently updated these valuations to reflect the information now available. In line with IFRS requirements the comparative information in the interim statements for the year ended 31 March 2013 has, therefore, been restated.

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 (Loss)/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. There is no dilution to the basic loss per share for the period ended 30 September 2013 owing to a loss for the period being reported.

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 0.13p per share to all shareholders who are on the register on 7 February 2014. The dividend will be paid on 21 February 2014.