Tough day on the markets as investors react badly to engineering firm’s loss
A WEST Midlands engineering group endured a tough day on the markets after announcing a wider pre-tax loss for its first half.
Malvern-based tube manipulation specialist Tricorn Group tried to put a gloss on the announcement by saying it had seen revenue grow more than 12% in its first half, despite weak markets.
However, investors reacted badly to the pre-tax loss of £249,000 incurred for the six months to September 30, 2016, which compared to a £47,000 loss in the prior year.
Revenue for the first half of the year stood at £8.9m, up 12.3% on the six months to March 31, 2016 but down 11.8% on the corresponding period in the prior year (2015: £10.096m).
It said the impact of the strengthening US dollar added £0.246m to the first half revenue when compared to the previous period. However, this was more than offset by the completion of the merger of the group’s China activities at the end of June 2016.
After reacting to the reduced revenue levels seen through the second half of the last financial year, the group benefitted from a lower cost base through the first half of this financial year. This resulted in an adjusted operating profit of £0.187m (2015: £0.183m) and an operating loss of £0.150m for the six months to March 31, 2016.
In the first half, the group incurred restructuring charges of £0.198m. The majority of these related to the merger of the group’s activities in China, with £0.114m specifically relating to asset impairments associated with the closure of activities in Wuxi.
After restructuring costs, intangible asset amortisation, share based payment charges and credits relating to foreign exchange derivative contracts the group made an operating loss of £0.066m (2015: operating profit of £0.098m).
The loss from joint ventures was £0.076m (2015: £0.039m). Finance charges for the half year were £0.107m (2015: £0.106m). The resultant adjusted pre-tax profit tax was £0.004m (2015: £0.038m).
Group chairman Andrew Moss had earlier tried to stress the positive.
“The group has made good progress through the first half of the year when compared to the previous period and the board is encouraged by the new business won. Our USA and UK businesses have generated increased revenue through increased market share, enabling both of our divisions to improve profitability,” he said.
“In line with our previously announced plans, we consolidated our activities in China providing a solid platform for future profitable growth.
“We anticipate that full year results will be in line with market expectations.”
