TIDMTCN
RNS Number : 0360U
Tricorn Group PLC
31 March 2021
31 March 2021
Tricorn Group plc
Unaudited Preliminary Results
for the 18 month period ended 30 September 2020
Tricorn Group plc ('Tricorn', 'Company' or the 'Group'), (AIM:
TCN.L) the tube manipulation specialist, announces its unaudited
preliminary results for the 18 month period ended 30 September
2020.
Summary
-- Change of accounting reference date to 30 September,
resulting in an 18 month reporting period
-- Results significantly impacted by COVID-19 pandemic
-- All Group facilities operational from April 2020 after a short period of closure
-- Completed the investment in a painting line in the USA
-- Successfully completed a Placing and Open Offer of new
ordinary shares at 10p per share raising GBP1.34m (net of costs),
strengthening the balance sheet and providing working capital
headroom
-- Secured Government funding in the UK and the USA for GBP1.0m and $0.7m respectively
-- Took advantage of the furlough schemes in the UK and the USA
-- Appointment of new Group Finance Director triggered a
performance review and right sizing of the Group's balance
sheet
-- Governance and controls significantly enhanced
-- Organisational changes at senior level have reduced costs and
created a platform to drive forward the enhanced strategy
-- Customer demand improving and margins normalising to expected levels
-- Good liquidity and capacity within the Group's financing facilities to support growth
-- Cash and cash equivalents of GBP0.7m at 30 September 2020.
The Group's cash and cash equivalents as at 30 March 2021 were
approximately GBP1.1m
Financial Overview
Unaudited Audited
18 months 12 months
2020 2019
GBP'000 GBP'000
Revenue 25,371 22,763
EBITDA (5,233) 1,836
Adjusted EBITDA (4,976) 1,872
(Loss)/profit before taxation (7,657) 950
Adjusted (loss)/profit before taxation (6,936) 1,088
Cash generated by operations (1,877) 1,189
Cash and equivalents 665 493
Net debt** (4,851) (3,114)
Final dividend - 0.2p
Basic earnings per share (18.81p) 2.62p
Adjusted earnings per share * (17.04p) 3.02p
* References to adjusted EBITDA, (loss)/profit before taxation
and adjusted earnings per share are before intangible asset
amortisation, goodwill impairment, Rabun Gap start-up costs and
share based payment charges
** Before hire purchase agreements and finance lease liabilities
of GBP3.2m (mainly arising from the adoption of IFRS16 liabilities
of GBP2.9m).
Commenting on the results and the Group's prospects, Andrew
Moss, Chairman of Tricorn, said:
"Since February 2020, as a result of the global pandemic,
Tricorn has experienced an extended period of challenging markets
and turbulent trading. We have made significant changes to our
senior executive team, who are focused on improving our operations
and implementing new commercial strategies. Customer demand is
steadily improving which is a welcome sign that the Company is
returning to pre-pandemic levels of production activity.
We anticipate that the impact of COVID-19 and the shipping
delays of imported material will continue to put pressure on labour
costs and associated labour productivity in the near term, but with
a re-energised leadership team, a credible balance sheet and
funding arrangements that support future growth, Tricorn is well
positioned to manage these headwinds and further improve its
operational performance with its customers."
The Group's audited final results for the 18 month period ended
30 September 2020 are expected to be published in June 2021.
Enquiries:
Tricorn Group plc www.tricorn.uk.com
Andrew Moss, Chairman Tel +44 (0)7768 306 701
Michael Stock, Chief Executive and Group Finance Director Tel +44 (0)7894 784 106
Shore Capital Tel +44 (0)20 7408 4080
Tom Griffiths/David Coaten/Henry Willcocks
Notes to Editors:
Tricorn is a value added manufacturer and specialist manipulator
of pipe and tubing assemblies to niche markets worldwide in the
Energy and Transportation sectors.
Headquartered in Malvern, UK, Tricorn employs approximately 240
employees and has five manufacturing facilities in the UK, USA and
China.
This announcement contains inside information for the purposes
of article 7 of the Market Abuse Regulation (EU) 596/2014 as
amended by regulation 11 of the Market Abuse (Amendment) (EU Exit)
Regulations 2019/310. With publication of this announcement this
information is now considered to be in the public domain.
Chairman's statement
Performance in the 18 month period ended 30 September 2020
As a result of the impact of COVID-19, the Group changed its
accounting reference date from 31 March to 30 September and this
report therefore relates to the 18 month period commencing on 1
April 2019 and ending on 30 September 2020 (the "Period").
The first six months of the Period commenced with encouraging
trading conditions but, by the end of this six month segment, UK
markets were slowing. In the USA, whilst volumes were holding up,
margins were under pressure from tariffs imposed on imported goods
from China. The Group successfully completed its investment in a
painting facility in the USA providing the capability to bring
in-house painting processes previously out-sourced. This has
provided both manufacturing cost savings and lead time reductions
and is welcomed by our customers.
Trading during the second six-month period was initially in-line
with the outlook presented with our interim results for the six
months ended 30 September 2019, namely that UK markets were at a
low ebb and US markets were weakening. We took measures to reduce
our cost base to reflect lower levels of activity, but remained
optimistic about the opportunities for the Group. On 5 February
2020, we successfully completed a placing and open offer of new
ordinary shares raising net of costs, GBP1.34m. The planned use for
these funds was to: strengthen the balance sheet; provide working
capital headroom to enable growth opportunities to be pursued
across the Group; and fund capital expenditure on a new
manufacturing capability in the USA.
During February 2020, the first impact of COVID-19 was
experienced by our joint venture business in China. Many businesses
in China, including our own, were prevented by the Chinese
Government from re-opening after the Spring Festival. However, our
facility remained closed for only two weeks with local management
successfully working with Government officials to put in-place
COVID-19 secure measures to protect the work force. The joint
venture has traded strongly since then with no further COVID-19
related disruption to activities.
We now realise that the unprecedented impact of COVID-19 on the
global economy and our daily lives was first evidenced by the
issues in China and associated supply chain disruption at our major
customers in the early part of March 2020. For Tricorn, this meant
short notice changes in demand schedules, both decreases and
increases, with consequent adverse impacts on labour utilisation
and working capital.
Both Tricorn's UK facilities were temporarily closed on 25 March
2020 amidst safety concerns for employees and following serious
disruption to supply chains and numerous customer closures. The
Group's USA facilities closed a few days later with similar
concerns and challenges. Most of the Group's UK and US employees
were furloughed from the end of March 2020, with the remaining key
staff focused on ensuring that the Group's facilities were in full
compliance with the latest Government guidelines to allow an early
and safe restart once supply chains and customer demand were
re-established.
As we entered the third six month period in April 2020, we were
focused on preparing for the re-opening of our manufacturing
facilities whilst implementing measures to protect all our
employees in accordance with best practice. The Group's UK and US
facilities reopened and have remained open, from 20 April 2020
onwards, albeit with reduced staffing levels and employees
continuing to work from home wherever possible.
We also put in place a number of measures to protect our cash
position. These included utilising the UK Job Retention Scheme and
the USA furlough scheme. We obtained a $0.7m loan under the USA
Payroll Protection Program, which post-Period end we were informed
has been forgiven. The Group also obtained an additional GBP1.0m of
funding through the UK Government's Coronavirus Business
Interruption Loan Scheme ("CBILS") facility from its existing bank,
HSBC and more recently, in March 2021, secured an additional
GBP0.5m from the CBILS Invoice Discount Top Up Facility with HSBC
which is backed by a UK Government guarantee.
On 16 June 2020, the Company announced the appointment of
Michael Stock as Group Finance Director, replacing Philip Lee who
had been with the Group for 11 years. Michael Stock joined the
Group on 3 August 2020 and, following a review of the capabilities
of the finance team, determined the need to hire a new, stronger
and more experienced team. Under his leadership, this new team
conducted an internal review of the performance of the Group and
various matters came to light in the preparation of the Group's
financial statements for the Period. These were announced on 16
November 2020 with further updates being made in December 2020 and
January 2021. Further details on these matters are provided in the
Chief Executive and Group Finance Director's Report below.
Revenue and loss before taxation were significantly impacted by
the events and issues of the past 18 months that are described
above. Revenue of GBP25.4m for the Period compares to GBP22.8m for
the 12 months ended 31 March 2019. Loss before taxation was GBP7.7m
(2019: profit GBP1.0m).
People
On 11 January 2021, the Company announced that Mike Welburn,
after 13 years as Chief Executive, was stepping down from the Board
with immediate effect and that Michael Stock, would take on the
combined role of Chief Executive and Group Finance Director. In
addition, David Leakey, who joined the Group as Sales Director in
2011, was appointed Group Sales and Operations Director with
immediate effect.
The Board would like to take the opportunity to thank all our
employees for their hard work and support throughout this difficult
period. Their commitment and dedication ensure that we continue to
drive the business forward and deliver quality products to our
customers.
Outlook
Since February 2020, as a result of the global pandemic, Tricorn
has experienced an extended period of challenging markets and
turbulent trading. We have made significant changes to our senior
executive team, who are focused on improving our operations to
strengthen our commercial opportunities for growth. Customer demand
is steadily improving which is a welcome sign that the Company is
returning to pre-pandemic levels of production activity.
We anticipate that the impact of COVID-19 and the shipping
delays of imported material will continue to put pressure on labour
costs and associated labour productivity in the near term, but with
a re-energised leadership team, a credible balance sheet and
funding arrangements that support future growth, Tricorn is well
positioned to manage these headwinds and further improve its
operational performance to its customers.
Andrew Moss
Chairman
31 March 2021
Chief Executive and Group Finance Director's statement
Operational Review
The Group has five manufacturing facilities across the UK, USA
and China. These locations make Tricorn ideally positioned to
support its blue-chip OEM customer base, many of whom are seeking
to localise supply and technical support for their facilities in
these key regions. At the start of the Period, the Group
consolidated its brands with Franklin Tubular Products Inc and the
more recently announced expansion at Rabun Gap together operating
as Tricorn USA with Malvern Tubular Components Limited and Maxpower
Automotive Limited trading under the common identity of Tricorn UK.
The joint venture in China remains as Minguang-Tricorn Tubular
Products Nanjing Limited. Reporting is now on a geographic segment
basis.
Tricorn UK
The Group has two manufacturing facilities in the UK, located in
West Bromwich and Malvern. The Malvern facility specialises in the
design and manufacture of larger tubular assemblies and
fabrications for engine, cooling and generator set applications.
Its customer base serves the power generation, oil and gas, mining
and marine application markets. The West Bromwich site is focused
on rigid, nylon and hybrid tubular products for engines, hydraulic
actuation, transmission lubrication and fuel sender sub-systems.
Key end markets are on- and off-road applications, including
construction, trucks and agriculture.
Demand through February 2020 had started to slow in the UK with
further softening thereafter as some customers experienced supply
shortages from China. However, the situation deteriorated rapidly
through March 2020. As set out above, both Tricorn UK facilities
were temporarily closed on 25 March 2020 amidst safety concerns for
employees and following serious disruption to supply chains and
numerous customer closures. The facilities were reopened from 20
April 2020 onwards and have remained open since. Markets gradually
started to improve towards the end of the Period albeit with some
ongoing supply chain concerns.
Revenue for the 18 month trading period of GBP15.3m was 8.5% up
on the corresponding 12 month period (March 2019: GBP14.1m).
Segmental loss before taxation was GBP4.3m (March 2019: profit
GBP0.9m).
Tricorn USA
In the USA, in May 2019, the Group had extended its capabilities
with the purchase of a custom built powder coat and wet spray
painting line located in leased premises at Rabun Gap, Georgia, a
short distance from its manufacturing facilities at Franklin, North
Carolina. This facility has allowed previously sub-contracted
processes to be brought in-house as well as providing for further
expansion of manufacturing facilities when market conditions
improve.
Market demand slowed in the Period when compared to the previous
period with this reduction escalating through March 2020 due to the
impact of COVID--19. Revenue for the Period of GBP10.3m was up
18.4% on the 12 month period ended 31 March 2019 (March 2019:
GBP8.7m). Segmental loss before taxation in the Period was GBP2.3m
(March 2019: profit GBP46,000).
Joint Venture - China
Our Chinese joint venture, Minguang-Tricorn Tubular Products
Nanjing Limited, performed broadly in line with expectations and
enabled dividend payments to the Group in the period of
GBP0.3m.
Financial Review
Income statement
As highlighted in the Chairman's statement, this 18 month
trading period has been significantly impacted by the effects of
COVID-19 from which the Group is now emerging, and also from an
internal review of the performance of the Group following my
appointment and the subsequent hiring of a new, stronger and more
experienced finance team.
Overall, consolidated revenue for the Period of GBP25.4m
compares to GBP22.8m for the 12 months ended 31 March 2019. The
loss before taxation was GBP7.7m (March 2019: profit GBP1.0m).
Given the change of accounting reference date and the extended 18
month reporting period to 30 September 2020 as compared to the 12
month reporting period to 31 March 2019, and the significant impact
of COVID-19 on the trading period, this review analyses the 18
month period in 6-month segments consistent with the Chairman's
statement.
Trading for the 6 months ended 30 September 2019 showed revenue
of GBP10.6m (2018: GBP11.4m) and a profit before taxation of
GBP0.2m (2018: GBP0.5m). It was reported at this time that revenues
in the UK were beginning to slow and that US margins were under
pressure from import tariffs. Trading for the next 6 months to 31
March 2020 showed the impact of this slowdown and margin pressure
and Group revenue for this period was GBP8.5m (a 19.8% decline from
the previous 6 months) (2019: GBP11.3m) returning a loss before
taxation of GBP0.8m (2019: profit GBP0.5m).
As noted above, February and March 2020 signalled the
significant impact of COVID-19 on our business and this has largely
defined the results in the 6 months ended 30 September 2020 with
Group revenue of GBP6.3m (a further 25.9% decline from the previous
6 months) (2019: GBP10.6m) and a loss before taxation of GBP7.1m
(2019: profit before tax GBP0.2m).
The loss before taxation of GBP7.1m in the 6 months to 30
September 2020 was significantly impacted by an internal review of
the financial governance of the Group conducted following my
engagement in August 2020 and the identification of a balance sheet
risk of GBP4.6m which was announced on 16 November 2020. This has
since been investigated and written off in full together with other
more normal adjustments of approximately GBP0.5m, associated with a
robust period-end close process in readiness for the audit of the
Period.
Given the nature of the historic accounting records and
prevailing control environment at the time, it has not been
possible to accurately allocate the adjustment of GBP4.6m to
specific time segments and it might be that some of these
adjustments relate to accounting periods prior to the 18 months
ended 30 September 2020. The Board does not consider it a cost
effective or an economic use of resources to perform this
reallocation exercise and therefore the adjustments have been
reflected in the Period.
Approximately GBP1.1m of the GBP4.6m write-off related to the
Group's US operation. This included a write-off of capitalised
development costs of GBP0.3m and a write-down of net inventory of
GBP0.5m both predominantly relating to a contract loss since the
onset of COVID-19, and a more prudent view on debtor recovery of
GBP0.3m.
In the UK, approximately GBP2.5m of the GBP4.6m was written off.
This included a stock write down of GBP0.7m, an internal audit of
fixed assets resulting in a write off of approximately GBP0.6m,
recognition of a historic understatement of liabilities of GBP1.0m
and a more prudent view on debtor recovery of GBP0.2m.
In addition to the GBP3.6m identified above as specific to the
US and UK operations, it was also reported in the announcement of
16 November 2020 that there existed an intercompany imbalance of
approximately GBP1.0m. This too has been subsequently investigated
and has been written off in the results for the 18 month period to
30 September 2020.
Gross margins in the Period were down 8.3% at 30.1% (March 2019:
38.4%), impacted by approximately GBP2.0m of adjustment following
the internal performance review referred to above. This equates to
7.9% of revenue in the period to 30 September 2020 or 8.8% of
revenue for the 12 months to 31 March 2019.
Distribution costs at GBP1.1m (March 2019: GBP1.0m) represent
4.4% of revenue (March 2019: 4.5%).
The Group's administration costs for the Period increased to
GBP13.8m (March 2019: GBP6.8m) and includes an adjustment of
approximately GBP3.0m following the internal performance review and
non-underlying charges of GBP0.7m (March 2019: GBP0.1m). Adjusting
for this GBP3.7m, administration costs as a percentage of revenue
represent 39.8% (March 2019: 29.4%). The increase of 10.4% is
predominantly attributable to the significant decline in volume and
the lack of contribution from this lost revenue to the fixed costs
of the business.
The Group's Chinese joint venture, Minguang-Tricorn Tubular
Products Nanjing Limited, showed profitability over the Period,
with the Group's share of profit being GBP0.1m (March 2019:
GBP0.3m).
EBITDA for the Period was a loss of GBP5.2m (March 2019: profit
GBP1.8m). Finance costs for the Period were GBP0.5m (March 2019:
GBP0.2m), of which GBP0.2m is attributable to the adoption of
IFRS16. The Group delivered a loss before taxation for the Period
of GBP7.7m (March 2019: profit GBP1.0m).
After adjusting for intangible asset amortisation, goodwill
impairment, Rabun Gap start-up costs and share based payment
charges, the adjusted loss before taxation for the Period was
GBP6.9m (March 2019: profit GBP1.1m).
Basic earnings per share (EPS) was (18.81p) (March 2019: 2.62p)
and after adjusting for non-underlying items, the underlying EPS*
was (17.04p) (March 2019: 3.02p).
The Board is not recommending the payment of a dividend for the
Period ended 30 September 2020 (March 2019: 0.2p).
Balance Sheet
Total assets of the Group as at 30 September 2020 were GBP14.2m,
a reduction of GBP0.8m on the previous period end (March 2019:
GBP15.0m). The decrease is represented by a write-off of assets of
approximately GBP3.0m following the internal performance review,
net of an increase in fixed assets of approximately GBP2.9m
following the adoption of IFRS16 and a goodwill impairment charge
of GBP0.4m which relates to the acquisition of Maxpower Automotive
Limited in 2007. The balance of GBP0.3m is predominantly
attributable to the lower volume of business in the latter trading
months leading up to 30 September 2020 which has resulted in lower
levels of operating working capital.
* References to adjusted EBITDA, (loss)/profit before taxation
and adjusted earnings per share are before intangible asset
amortisation, goodwill impairment, Rabun Gap start-up costs and
share based payment charges
Total liabilities of the Group as at 30 September 2020 had
increased by GBP4.8m to GBP12.5m (March 2019: GBP7.7m)
predominantly due to the recognition of GBP2.9m of lease
commitments following the adoption of IFRS16 and an increase in
borrowings of approximately GBP1.7m (excluding hire purchase and
finance lease liabilities).
On translation of its overseas assets and liabilities, the Group
made an exchange gain of GBP0.5m (March 2019: GBP0.1m gain). This
is a non-cash movement and is treated as a movement in other
comprehensive income. As a result, the translation reserve in
shareholders' funds now shows a GBP0.5m surplus (March 2019:
GBP14,000 surplus).
C ash Flow
The Group's cashflow from operations in the Period was an
outflow of GBP1.9m (March 2019: inflow GBP1.2m). This was
predominantly due to the impact of COVID-19 on the trading
activities for the Period, as the write-off associated with the
internal performance review was primarily non-cash in nature.
After interest payments and net tax receipts, cash outflow from
operating activities during the Period was GBP2.2m (March 2019:
inflow GBP0.9m). This excludes cashflows from operating leases
following the adoption of IFRS16 of GBP0.7m which forms part of the
payment of finance lease liabilities in the Group statement of
cashflows of GBP0.9m (March 2019: GBP84,000).
During the Period, the net cash outflow from investing
activities was GBP0.3m (March 2019: GBP1.0m). Expenditure on the
purchase of plant and machinery was GBP0.3m (March 2019: GBP0.7m).
In the year ended 31 March 2019, the Group had expenditure of
GBP0.3m on intangible assets whereas this was GBPnil in the 18
months to 30 September 2020.
Total operational cash outflow including investing activities
was GBP2.5m (March 2019: GBP0.1m) and was financed by a mixture of
net proceeds from the February 2020 Placing and Open Offer of
GBP1.34m (net of costs) and availability of COVID-19 related
facilities in the UK and the USA of approximately GBP1.6m.
As a result of the Group's operating activities in the Period,
net debt** increased over the prior year by GBP1.8m to GBP4.9m
(March 2019: GBP3.1m). Cash and cash equivalents at 30 September
2020 were GBP0.7m (31 March 2019: GBP0.5m). The Group's cash and
cash equivalents as at 30 March 2021 were approximately
GBP1.1m.
Michael Stock
Chief Executive and Group Finance Director
31 March 2021
** Before hire purchase agreements and finance lease liabilities
of GBP3.2m (mainly arising from the adoption of IFRS16 liabilities
of GBP2.9m).
Group income statement
For the 18 month period ended 30 September 2020
Unaudited Audited
18 month 18 month 18 month Year Year Year
period period period ended ended ended
ended ended ended 31 31 31
30 September 30 September 30 September March March March
2020 2020 2020 2019 2019 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Underlying Non-underlying Group Underlying Non-underlying Group
Revenue 25,371 - 25,371 22,763 - 22,763
Cost of sales (17,723) - (17,723) (14,025) - (14,025)
------------- -------------- ------------- ------------ -------------- ----------
Gross profit 7,648 7,648 8,738 - 8,738
Distribution costs (1,117) - (1,117) (1,022) - (1,022)
Administration costs
- General administration
costs (13,094) - (13,094) (6,701) - (6,701)
- Goodwill impairment - (391) (391)
- Intangible asset
amortisation - (73) (73) - (102) (102)
- Rabun Gap start-up
costs - (115) (115) - - -
- Share based payment
charge - (142) (142) - (36) (36)
------------- -------------- ------------- ------------ -------------- ----------
Total administration
costs (13,094) (721) (13,815) (6,701) (138) (6,839)
Operating (loss)/profit (6,563) (721) (7,284) 1,015 (138) 877
------------- -------------- ------------- ------------ -------------- ----------
Share of profit
from joint venture 124 - 124 282 - 282
Finance costs (497) - (497) (209) - (209)
------------- -------------- ------------- ------------ -------------- ----------
(Loss)/profit before
tax (6,936) (721) (7,657) 1,088 (138) 950
Income tax credit/(charge) 12 - 12 (66) - (66)
------------- -------------- ------------- ------------ -------------- ----------
(Loss)/profit after
tax from continuing
operations (6,924) (721) (7,645) 1,022 (138) 884
Attributable to:
Equity holders
of the parent company (6,924) (721) (7,645) 1,022 (138) 884
============= ============== ============= ============ ============== ==========
Earnings per share:
Basic earnings
per share (18.81p) 2.62p
Diluted earnings
per share (18.81p) 2.39p
All of the activities of the Group are classed as
continuing.
Group statement of comprehensive income
For the 18 month period ended 30 September 2020
Unaudited Audited
18 month
period Year
ended ended 31
30 September March
2020 2019
GBP'000 GBP'000
(Loss)/profit for the period/year (7,645) 884
Other comprehensive income
Items that will subsequently be reclassified
to profit or loss
Foreign exchange translation differences 548 125
Total comprehensive income attributable
to equity holders of the parent (7,097) 1,009
============= ===========
Group statement of changes in equity
For the 18 month period ended 30 September 2020
Share
based Profit
Share Share Merger Trans-lation payment and loss
Capital premium reserve reserve reserve account Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April
2018 audited 3,379 1,692 1,388 (111) 349 (431) 6,266
Share based payment
charge - - - - 36 - 36
Total transactions
with owners - - - - 36 - 36
Profit and total
comprehensive income - - - 125 - 884 1,009
--------- -------- -------- ------------ --------- --------- ---------
Balance at 31 March
2019 audited 3,379 1,692 1,388 14 385 453 7,311
Share based payment
charge - - - - 142 - 142
Share option lapse - - - - (202) 202 -
Issue of new shares 1,542 - - - - - 1,542
Cost of issue of
new shares - - - - - (151) (151)
Dividends paid - - - - - (69) (69)
Total transactions
with owners 1,542 - - - (60) (18) 1,464
Results in the period - - - - - (7,645) (7,645)
Foreign exchange
translation differences - - - 519 - 29 548
Balance at 30 September
2020 unaudited 4,921 1,692 1,388 533 325 (7,181) 1,678
========= ======== ======== ============ ========= ========= =========
Group statement of financial position
At 30 September 2020
Unaudited Audited
31 March
30 September 2020 2019
GBP'000 GBP'000
Assets
Non-current
Goodwill - 391
Intangible assets 51 401
Property, plant and equipment 6,846 4,668
Investment in joint venture 1,104 1,191
----------------- ---------
8,001 6,651
Current
Inventories 1,828 3,040
Trade and other receivables 3,698 4,854
Cash and cash equivalents 665 493
Corporation tax - 6
----------------- ---------
6,191 8,393
Total assets 14,192 15,044
================= =========
Liabilities
Current
Trade and other payables (3,753) (3,854)
Borrowings (4,987) (3,675)
Corporation tax (60) (70)
(8,800) (7,599)
Non-current
Borrowings (3,696) (109)
Deferred tax (18) (25)
----------------- ---------
(3,714) (134)
Total liabilities (12,514) (7,733)
Net assets 1,678 7,311
================= =========
Equity attributable to owners of the parent
Share capital 4,921 3,379
Share premium account 1,692 1,692
Merger reserve 1,388 1,388
Translation reserve 533 14
Share based payment reserve 325 385
Profit and loss account (7,181) 453
Total equity 1,678 7,311
================= =========
Group statement of cash flows
For the 18 month period ended 30 September 2020
Unaudited Audited
Year
ended 31
March
18 month period ended 30 September 2020 2019
GBP'000 GBP'000
Cash flows from operating activities
(Loss)/profit after taxation from continuing operations (7,645) 884
Adjustment for:
- Depreciation 1,463 575
- Goodwill impairment 391 -
- Write off of intangibles 286 -
- Loss on fixed asset disposals 389 -
- Net finance costs in income statement 497 209
- Amortisation charge 73 102
- Share based payment charge 142 36
- Share of joint venture operating profit (124) (282)
- Taxation (credit)/charge recognised in income statement (12) 66
- Decrease in trade and other receivables 1,156 128
- Decrease in trade payables and other payables (101) (462)
- Decrease/(increase) in inventories 1,212 (173)
- FX movement 396 106
----------------------------------------- -----------
Cash generated by operations (1,877) 1,189
Interest paid (295) (246)
Income taxes received - -
Net cash generated by operating activities (2,172) 943
========================================= ===========
Cash flows from investing activities
Purchase of plant and equipment (311) (723)
Proceeds from plant and equipment sales 12 -
Additions in intangible assets - (278)
Net cash used in investing activities (299) (1,001)
========================================= ===========
Cash flows from financing activities
Issue of ordinary share capital 1,542 -
Costs of issue of ordinary share capital (151) -
Dividends received from investments 303 -
Dividends paid (69) -
Bank borrowings 1,000 -
Proceeds from overseas short term borrowing 627 304
Proceeds/(repayment) of UK short term borrowings 262 (361)
Payment of finance lease liabilities (871) (84)
----------------------------------------- -----------
Net cash used in financing activities 2,643 (141)
Net increase/(decrease) in cash and cash equivalents 172 (199)
Cash and cash equivalents at beginning of period/year 493 692
----------------------------------------- -----------
Cash and cash equivalents at end of period/year 665 493
========================================= ===========
1. General information
Tricorn Group plc and subsidiaries (the 'Group') principal
activities comprise high precision tube manipulation and systems
engineering.
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 Link, Malvern,
Worcestershire, WR14 1DA. Tricorn Group plc's shares are quoted on
the Alternative Investment Market of the London Stock Exchange.
The unaudited financial information set out in this preliminary
results announcement does not constitute statutory accounts as
defined in Section 435 of the Companies Act 2006. The Group income
statement, 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 18 month period ended 30 September 2020 are
unaudited. The comparative figures for the year ended 31 March 2019
have been extracted from the Group's audited financial statements
for that year. Statutory accounts for the year ended 31 March 2019
have been delivered to the Registrar of Companies. The auditor's
report on the accounts for the year ended 31 March 2019 did not
draw attention to any matters by way of emphasis and did not
contain a statement under section 498(2) or 498(3) of the Companies
Act 2006. The Group's audited final results for the 18 month period
ended 30 September 2020 are expected to be published in June
2021.
2. Accounting policies
Basis of preparation
This financial information has been prepared under the required
measurement bases specified under International Accounting
Standards in conformity with the requirements of the Companies Act
2006.
The Group distinguishes between underlying and non-underlying
items in its Consolidated Income Statement. Non-underlying items
are material items which arise from unusual non-recurring or
non-trading events. They are disclosed on the face of the
Consolidated Income Statement where in the opinion of the Directors
such disclosure is necessary in order to fairly present the results
for the period. Non-underlying items comprise exceptional costs of
Group restructuring, intangible assets amortisation and share based
payment charges.
Adoption of new standards
The Group has adopted IFRS 16 Leases under the modified
retrospective approach and has introduced a single, on-balance
sheet accounting model for lessees, eliminating the distinction
between operating and finance leases. As a result, the Group has
recognised GBP3.2m of right-of-use assets and corresponding lease
liabilities on the date of initial application (1 April 2019).
These are included within property, plant and equipment and loans
and borrowings respectively in the consolidated statement of
financial position. Details of the impact on the reported numbers
are given in note 5. There are no other material changes in
accounting policies from those adopted in the previous statutory
financial statements.
Going concern
The Board has considered reasonable base case forecasts, taking
into account the impact of COVID-19 and Brexit and the current
level of trading activity for the next 3-5 years in conjunction
with its existing banking facilities and have concluded that is
appropriate to prepare the financial information on a going concern
basis.
In making their assessment, the Directors have assumed that
banking facilities will continue to be made available on similar
terms to the Group's existing facilities. Whilst some of the
existing facilities with HSBC (both in the USA and the UK) continue
to be repayable on demand, as has been the case historically,
discussions are ongoing to formalise these arrangements. Relations
with HSBC are good and discussions are active and positive. In
light of the current engagement with the Group's bankers and the
level of security available, the Directors are satisfied that it is
reasonable to assume that facilities will continue to be available
to the Group.
3. Segmental reporting
The Group has carried out a review of its organisational
structure and concluded that segmental results will now be reported
on a geographic basis as follows:-
-- UK - Comprising all UK based trading divisions
-- US - Comprising all North America based trading divisions
-- The joint venture in China will continue to be reported
separately
Unaudited 18 month period ended
30 September 2020 UK US China Unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
- from external customers 15,041 10,330 - - 25,371
- from other segments 222 2 - (224) -
Segment revenues 15,263 10,332 - (224) 25,371
Underlying operating loss* (4,013) (2,053) - (497) (6,563)
Goodwill impairment - - - (391) (391)
Intangible asset amortisation (25) - - (48) (73)
Rabun Gap start-up costs - (115) - - (115)
Share based payment charge - - - (142) (142)
Operating loss (4,038) (2,168) - (1,078) (7,284)
Share of profit from joint venture - - 124 - 124
Net finance costs (271) (172) - (54) (497)
-------- -------- -------- ------------ --------
Loss before tax (4,309) (2,340) 124 (1,132) (7,657)
-------- -------- -------- ------------ --------
Other segment information:
Segmental assets (current) 5,112 2,304 - (1,225) 6,191
Segmental assets (non-current) 5,453 2,509 - 39 8,001
Total Assets 10,565 4,813 - (1,186) 14,192
Capital expenditure 294 444 - 52 790
Depreciation 907 543 - 13 1,463
*- Before intangible asset amortisation and share based payment charges
The Group's revenue from external customers (by destination) may
be summarised as follows:
Unaudited
18 month period
ended 30 September
2020
GBP'000
United Kingdom 11,890
Europe 877
Americas 11,648
Rest of World 956
-------------------
25,371
===================
Audited
Year ended 31 March 2019 UK US China Unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000
Revenue
- from external customers 14,022 8,741 - - 22,763
- from other segments 59 - - (59) -
Segment revenues 14,081 8,741 - (59) 22,763
Underlying operating profit/(loss)* 1,035 155 - (175) 1,015
Intangible asset amortisation (56) - - (46) (102)
Share based payment charge - - - (36) (36)
Operating profit/(loss) 979 155 - (257) 877
Share of profit from joint venture - - 282 - 282
Net finance costs (76) (109) - (24) (209)
-------- -------- ------ ------------ --------
Profit/(loss) before tax 903 46 282 (281) 950
-------- -------- ------ ------------ --------
Other segment information:
Segmental assets (current) 10,272 3,198 - (5,077) 8,393
Segmental assets (non-current) 4,288 2,973 - (610) 6,651
Total Assets 14,560 6,171 - (5,687) 15,044
Capital expenditure 457 291 - - 748
Depreciation 360 215 - - 575
*- Before intangible asset amortisation and share based payment charges
The Group's revenue from external customers (by destination) and
its geographic allocation of total assets may be summarised as
follows:
Audited
Year ended
31 March 2019
GBP'000
United Kingdom 10,877
Europe 750
North America 10,620
Rest of World 516
--------------
22,763
==============
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 taxation 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:
Unaudited 30 September 2020
Weighted average
number of Earnings per
Profit shares share
GBP'000 Number '000 Pence
Basic earnings per share (7,645) 40,640 (18.81)
--------- ------------------- -------------
Dilutive shares -
Diluted earnings per share (7,645) 40,640 (18.81)
--------- ------------------- -------------
Audited 31 March 2019
Weighted average
number of Earnings per
Profit shares share
GBP'000 Number '000 Pence
Basic earnings per share 884 33,795 2.62
-------- ----------------- -------------
Dilutive shares 3,248
Diluted earnings per share 884 37,043 2.39
-------- ----------------- -------------
The Directors consider that the following adjusted earnings per
share calculation is a more appropriate reflection of the Group's
performance.
Unaudited 30 September 2020
Weighted average
number of Earnings per
Profit shares share
GBP'000 Number '000 Pence
Basic earnings per share (7,645) 40,640 (18.81)
-------- ----------------- -------------
Goodwill impairment 391
Amortisation of intangible asset 73
Rabun Gap start-up costs 115
Share based payment charge 142
Adjusted earnings per share (6,924) 40,640 (17.04)
-------- ----------------- -------------
Dilutive shares -
Diluted adjusted earnings per
share (6,924) 40,640 (17.04)
-------- ----------------- -------------
Audited 31 March 2019
Weighted average
number of Earnings per
Profit shares share
GBP'000 Number '000 Pence
Basic earnings per share 884 33,795 2.62
-------- ----------------- -------------
Amortisation of intangible asset 102
Share based payment charge 36
Adjusted earnings per share 1,022 33,795 3.02
-------- ----------------- -------------
Dilutive shares 3,248
Diluted adjusted earnings per
share 1,022 37,043 2.76
-------- ----------------- -------------
5. Impact of transition to IFRS 16 Leases
The impact of the transition to IFRS 16 to the Group's primary
financial statements was as follows:
Unaudited impact on the Group income
statement for the 18 month period
ended 30 September 2020
Amounts without
As reported IFRS 16 adjustments adoption
GBP'000 GBP'000 GBP'000
------------------------------------- ----------- ------------------------ ---------------------------
Operating loss (7,284) (102) (7,386)
------------------------------------- ----------- ------------------------ ---------------------------
Share of profit from joint ventures 124 - 124
Finance costs (497) 172 (325)
------------------------------------- ----------- ------------------------ ---------------------------
(Loss)/profit before tax (7,657) 70 (7,587)
Income tax credit 12 - 12
------------------------------------- ----------- ------------------------ ---------------------------
(Loss)/profit after tax from
continuing operations (7,645) 70 (7,575)
===================================== =========== ======================== ===========================
Unaudited impact on the Group statement
of financial position as at 30 September
2020
Amounts without
As reported IFRS 16 adjustments adoption
GBP'000 GBP'000 GBP'000
Non-current assets
------------------------------------------ ----------- ----------------------- --------------------------
Property, plant and equipment 6,846 (2,859) 3,987
------------------------------------------ ----------- ----------------------- --------------------------
Change in total assets (2,859)
------------------------------------------ ----------- ----------------------- --------------------------
Borrowings
------------------------------------------ ----------- ----------------------- --------------------------
Current borrowings (4,987) 304 (4,683)
Non-current borrowings (3,696) 2,625 (1,071)
------------------------------------------ ----------- ----------------------- --------------------------
Change in total liabilities 2,929
------------------------------------------ ----------- ----------------------- --------------------------
Change in total equity 70
------------------------------------------ ----------- ----------------------- --------------------------
Impact on the Group statement
of cash flows for the 18 month
period ended Amounts without
30 September 2020 As reported IFRS 16 adjustments adoption
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
--------------------------------------- ----------- ------------------- ---------------
(Loss)/profit after taxation
from continuing operations (7,645) 70 (7,575)
Adjustment for:
- Depreciation 1,463 (596) 867
- Net finance costs in income
statement 497 (172) 325
--------------------------------------- ----------- ------------------- ---------------
Change in cash generated by operations (698)
Cash flows from financing activities
--------------------------------------- ----------- ------------------- ---------------
Payment of finance lease liabilities (871) 698 (173)
--------------------------------------- ----------- ------------------- ---------------
Net cash used in financing activities 698
======================================= =========== =================== ===============
Net increase in cash and cash
equivalents 172 - 172
Cash and cash equivalents at
beginning of period/year 493 - 493
Cash and cash equivalents at
end of period/year 665 - 665
======================================= =========== =================== ===============
6. Dividend
The Board is not recommending the payment of a dividend for the
18 month period ended 30 September 2020 (March 2019: 0.2p).
7. Availability
Copies of this announcement are available from the Company's
registered office, Spring Lane, Malvern Link, Malvern,
Worcestershire, WR14 1DA, and on its website,
www.tricorn.uk.com.
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END
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