Global manufacturing base helps boost annual performance for Tricorn
WEST Bromwich-based engineering group Tricorn said a global manufacturing base has helped to bolster the company and grow business.
The AIM quoted tube manipulation specialist said the financial year ended March 31, 2013 had seen the group complete on some transformational transactions designed to enhance capabilities and provide it with a strong global platform for growth.
Commenting on the results, Nick Paul, chairman of Tricorn, added: “We now have five manufacturing facilities on three continents providing a strong platform for substantial growth. The recommended full year dividend is a 50% increase on the prior year and reflects the board’s confidence in the group’s future prospects.”
Tricorn said the financial performance and management of the last few years has enabled the group to fund growth opportunities directly from its balance sheet, with the acquisition of the former Whitley Products Inc being funded from the group’s own cash resources.
The underlying business was said to have performed strongly, delivering an underlying pre-tax profit of £1.614m (2012: £1.622m) on turnover down 12% to £21.850m, as well as remaining highly cash generative at an operating level.
In line with the company’s progressive dividend policy, the board has recommended the payment of a final dividend of 0.2p per share, giving a total dividend of 0.3p for the financial year ended March 31. The final dividend will be paid on October 18 to all shareholders on the register on October 4.
It said the reason for the decline in revenue was down to a softening of markets during the second half. Revenue declined 12% to £21.850m (2012: £24.706m); although continued improvements in operational performance saw gross margins improve to 36%.
After deducting administration and distribution costs, underlying operating profit margins improved 6% to 7.6% (2012: 7.2%). The Whitley deal resulted in a net cost to profit of £0.219m.
The group’s net cash flow from operating activities was £0.539m (2012: £1.296m) after incurring acquisition-related costs and China start-up costs in the year. It said underlying trading continued to generate a strong profit to cashflow conversion.
Cash outflows from investing activities were £2.956m (2012: £0.451m), and the company said this represented a significant commitment to the future growth of the business.
Capital expenditure in the year represented £0.978m of this total amount, and included expenditure relating to the start up of the China manufacturing facility.
The majority of the remainder was a consideration of £1.984m for the Whitley acquisition, which is now trading as Franklin Tubular Products Inc in the US.
With the acquisition of the Franklin operations, working capital at the year-end increased to £5.310m. Excluding Franklin, working capital was at £4.192m (2012: £4.172m).
In January 2013, the group moved its banking to HSBC, securing arrangements for invoice discounting and working capital facilities. The group said the new relationship had enabled the group to benefit from a single banking source for all of its business activities as well as giving it access to RMB bank accounts and trading, which the group said was crucial to its future operational requirements.
In outlook, the group said it had “made significant progress in the year in developing a global manufacturing platform aligned to its major OEM customers. With facilities now established in both China and the USA, the group is well positioned for substantial growth”.
