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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Tricorn Group Plc | LSE:TCN | London | Ordinary Share | GB0009716340 | ORD 10P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 4.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
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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