TCN.L Regulatory News (TCN)

11 June 2012

Preliminary Results

Tricorn Group plc ('Tricorn', the 'Company' or the 'Group'), (TCN.L) the AIM quoted tube manipulation specialist, today announces its audited preliminary results for the year ended 31 March 2012.

Highlights

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

Nick Paul CBE, Chairman of Tricorn commented:

"Tricorn has delivered a record set of results with revenue up 14%, operating profit margin up 31% and adjusted earnings per share up 47%.

In light of this performance and our continued confidence in the future prospects for the business we are pleased to recommend a proposed doubling of our full year dividend to 0.2p." 

Enquires:

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 & Utilities, Transportation, and Aerospace sectors.

With facilities in the UK and China, Tricorn employs over 300 employees and operates through four brands: MTC; Redman Fittings; Maxpower; and RMDG Aerospace.

Annual Report and Accounts

The 2012 final results announcement can be downloaded from the Company's website (www.tricorn.uk.com). Copies of the Annual Report and Accounts (as well as the notice of Annual General Meeting) will be sent to shareholders by 10 August 2012 for approval at the Annual General Meeting to be held on 4 September 2012 and copies will be available on the Company's website and from its registered office, Spring Lane, Malvern, Worcestershire, WR14 1DA.

Chairman's and Chief Executive's statement

Performance in the year ended 31 March 2012

We are pleased to report a record set of results with encouraging progress across all divisions. We have invested in our facilities, improved operational performance and continued to benefit from our exposure to global markets.

Revenue grew by 14%, operating profit margin increased by 31% and adjusted earnings per share increased 47% to 3.78p.

At the same time we have remained focused on strengthening the balance sheet with net cash at the year end of £0.586m. Cash and cash equivalents were up 53% to £2.468m at the year end and, as announced at the time of our interim results, the term loan, which was not due to be repaid until August 2012, was repaid in full in October 2011.

Based on the progress we have made and our confidence in future prospects, the Board is recommending the payment of a final dividend of 0.13p per share. A full year dividend of 0.2p represents a 100% increase over the previous year and reinforces our commitment to a longer term progressive dividend policy.

Operational Review

The Group operates three main business segments which are focused on the Energy & Utilities, Transportation and Aerospace sectors. The businesses serve a global blue chip OEM customer base, many of whom have major facilities in the UK and the rest of Europe. The final product is then shipped into world markets from these facilities which effectively extends the Group's global reach and reduces its dependence on the UK economy.

Revenue has increased by 14% over the previous year, with all divisions experiencing strong demand through the final quarter.

Operating profit margins are ahead of last year at both Group and divisional levels. Overall, the 1.7% year on year improvement in operating margin to 7.2% was comfortably within our underlying target range.

Whilst all of the divisions have made good progress during the year the performance of the Aerospace division has been particularly encouraging with a strong second half resulting in the business returning to profitability for the full year.

At the same time we remained focused on continuing to strengthen the balance sheet. Inventory was reduced by a further 5% despite the higher volumes as we continued to manage working capital closely.

Energy & Utilities

Malvern Tubular Components specialises in fabricated and manipulated tubular assemblies for large diesel engines and radiator sets used within the Energy sector, principally power generation, mining and oil and gas applications. This was combined earlier in the year with the Redman Fittings business which supplies major polyethylene pipe manufacturers with a patented pipe jointing system.

Revenue for the division was up 11% on the previous year and operating profit margin improved to 9.2%.

The business continues to grow its existing customer base by developing closer and more collaborative relationships. At the same time the investment in extending capabilities in bending and design is enabling new business to be won with new customers which bodes well for future growth. The engineering team has been strengthened to ensure that the business can continue to maximise the potential opportunities for revenue growth and deliver further operational improvements.

Transportation

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

Revenue increased 21% year on year with changes in emissions legislation and favourable market conditions driving demand. Product capabilities have also been extended both in terms of materials and systems and this is likely to yield significant revenue benefits in the midterm.

The focus on lean implementation has also progressed well and operating margins increased to 8.8% in the year.

Aerospace

RMDG Aerospace supplies rigid pipe assemblies used in a variety of applications within the Aerospace sector. Revenue was up 8% on the previous year with demand strengthening through the year.

The focus on supplier development and selection, underpinned by long term agreements, has ensured cost stability and the development of a reliable supply base for materials and goods. This has provided the platform for further operational improvements, with the business delivering significant improvements in operating margins and consequently returning to profit both in the second half and for the year as a whole.

With improvements continuing to be made, additional business being won and growing demand, the Board anticipates further improvements within the division over the next year.

Expansion in China

In early March 2012, the Company announced its intention to establish a manufacturing facility in China as a key part of its strategic development in South-East Asia. The Company has had a purchasing office in China for the last 8 years and, as a result a well developed network of sub-contractors and suppliers. The Company is therefore ideally placed to support its customers in localising their supply chain which in turn provides significant additional opportunities for the Group.

The process of registering the local company has been completed. The Company now has a facility and the installation of plant and equipment will commence shortly. Initial investment is estimated to be approximately £1.0m and the Company remains firmly on track to have the facility operational by the end of 2012 and earnings enhancing in the financial year ending 31 March 2014.

Financial Review

The Group has had a very productive year, delivering a 52% increase in profit before tax on record turnover of £24.706m. In addition, it has remained highly cash generative, returning to a cash positive position in a year during which it has repaid its term loan and invested £0.9m in new capital projects, as well as announcing its intention to invest an initial £1.0m in the forthcoming year in new manufacturing facilities in China.

In line with the Company's progressive dividend policy the Board is recommending the payment of a final dividend of 0.13p per share, giving a total dividend of 0.2p for the financial year ending 31 March 2012. The final dividend will be paid on 19 October 2012 to all shareholders on the register on 5 October 2012.

Income Statement

An improvement in top line growth across all of the Group's sectors enabled a 14% increase in revenue to £24.706m (2011: £21.764m), whilst continued improvements in operational performance saw gross margins improve to 33%.

With continued control over administration and distribution costs, operating profit was up 48% to £1.771m (2011: £1.198m) and operating profit margins improved 31% to 7.2% (2011: 5.5%). After deducting intangible asset amortisation, share based payment charges and credits relating to foreign exchange derivative contracts, operating profit was up 56% to £1.604m (2011: £1.026m).

Net finance charges for the year were £0.078m (2011: £0.099m). On 30 March 2012, the Group gave notice to settle its cap and collar arrangement with its bankers. As a result, the full year finance charge includes a credit relating to the reversal of the swap valuation of £0.071m (2011: £0.033m), as well as a final settlement charge of £0.026m.

Unadjusted profit before tax for the financial year was up 65% to £1.526m (2011: £0.927m). Basic EPS was up 63% at 3.49p (2011: 2.14p) and, after adjusting for one-off costs EPS was up 47% to 3.78p (2011: 2.57p).

Cash Flow

The Group's net cash flow from operating activities was £1.296m, an increase of 34% over last financial year's result of £0.968m. This came as a result of a strong profit to cash flow conversion, and despite higher taxation payments in the year.

The Group continued to make investments in capital projects during the year, with expenditure of £0.907m including items taken on finance leases. Improvements in operational efficiency are a key driver for all of the Group's capital expenditure.

In June 2011, to satisfy institutional demand, the Group sold 875,000 shares that it held in Treasury. This resulted in a cash inflow of £0.278m, net of fees, and helped to improve cash and equivalents to £2.468m at the year end, an increase of £0.856m (53%) over the previous year end balance of £1.612m.

As part of its ongoing review of its borrowing facilities and requirements the Group repaid its term loan facility, through a payment of £0.250m, on 20 October 2011. This facility had not been due for full repayment until August 2012.

As a result of the above activities the Group reported a net cash position of £0.586m at 31 March 2012. This compares to a net debt position of £0.061m at 31 March 2011.

Balance Sheet

At the year end, the total gross assets of the Group increased to £13.997m (2011: 12.022m), predominantly on the back of the increased expenditure on capital projects and the increase in cash and equivalents in the year.

Despite higher trading volumes the Group was able to drive a further reduction in inventory in the year of £0.158m to £2.929m (2011: £3.087). Total working capital at the year end saw a modest increase to £4.172m (2011: £3.891m).

People

We are deeply grateful for the energy, passion and skills of our people and we continue to invest in their development.

We have extended our National Vocational Qualification programme to further support the development of the business and this continues to provide a firm foundation for further operational improvement.

Michael Greensmith has announced his intention to step down from his role as Company Secretary at this year's AGM. We would like to thank him for his contribution to the business over many years. Phil Lee will take over the role of Company Secretary in addition to his current responsibilities as Group Finance Director.

Outlook 

Our alignment with major global OEM customers and our expansion of manufacturing to serve the expanding markets of South-East Asia positions us well for the future and we are very optimistic about mid-term growth opportunities.

Tricorn has a very sound basis for future growth. With our proven ability to deliver operational improvements we are confident of making further progress in the current year.

Nick Paul CBE Mike Welburn

Chairman Chief Executive

Group statement of comprehensive income

For year ended 31 March 2012

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

Group statement of changes in equity

For year ended 31 March 2012

Group statement of financial position

At 31 March 2012

Group statement of cash flows

For year ended 31 March 2012

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. Tricorn Group plc's shares are admitted to trading on the Alternative Investment Market of the London Stock Exchange.

The financial statements for the year ended 31 March 2012 (including the comparative for the year ended 31 March 2011) were approved by the Board of directors on 11 June 2012. Amendments to the financial statements are not permitted after they have been approved.

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006. The group statement of comprehensive income, the group statement of changes in equity, the group statement of financial position, the group statement of cash flows and the associated notes for the year ended 31 March 2012 have been extracted from the group's financial statements upon which the auditor's opinion is unqualified and does not include any statement under Section 498 of the Companies Act 2006. The statutory accounts for the year ended 31 March 2012 will be delivered to the Registrar of Companies following the Group's Annual General Meeting.

2 Accounting policies

Basis of preparation

These consolidated financial statements have been prepared under the required measurement bases specified under International Financial Reporting Standards (IFRS) and in accordance with applicable IFRS as adopted by the European Union and IFRS as issued by the International Accounting Standards Board.

3 Segmental reporting

The Group operates three main business segments:

·; Energy and 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 in the aerospace sector.

The Group previously presented four business segments with Energy and Utilities disclosed as separate segments. These two business streams have now been aggregated as they are both operationally managed and reported internally to the Chief Executive on a single basis. As such, the prior period comparative figures have been restated to aggregate Energy & Utilities into one reportable segment.

The Group's revenue from external customers and its geographic allocation of total assets may be summarised as follows:

4 Earnings per share

The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year

The calculation of diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares and the post tax effect of dividends and/or interest, on the assumed conversion of all dilutive options and other dilutive potential ordinary shares.

Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below.

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

5 Dividends

As part of its long term progressive dividend policy, the Board has recommended the payment of a final dividend of 0.13p per share, giving a total dividend for the year of 0.2p (2011: 0.1p) per share.