Malvern pipe manufacturer Tricorn looks for suitors after challenging 18 months

Tricorn

AIM-listed in 2001 Tricorn Group plc which develops and manufactures pipes, has put itself up for sale, saying that “it would be in the best interests of stakeholders as a whole to pursue a sale of the Company’s trading operations and/or subsidiaries in order to secure the best possible outcome for creditors, suppliers, customers, and staff.” Its shares on the London Stock Exchange have today been suspended.

The company, which has manufacturing facilities in the USA and the UK, employs around 240 people and has an additional joint venture facility in China.

In July, as the company announced a strategic review, Tricorn Chairman Andrew Moss, 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 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.

“While the Group is currently operating within its borrowing facilities, these facilities alone will not provide the Group with the necessary cash to make the required investment to deliver the strategy and return the Group to profitable cash generation.”

He went on: “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. The Group made a solid start to the year with revenue for the first six months of 2021 in line with the same period in the previous year and increasing 33 per cent on the previous six month period ending 30 September 2020, although margins continue to see some pressure from price increases and labour productivity.”

Since that time, the Company and its advisers have engaged in discussions with various parties. Indicative offers have been received from certain parties for the acquisition of the trading operations and/or subsidiaries of the Company on a going concern basis, and discussions are ongoing with further parties.

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 offroad applications, including construction, trucks and agriculture.

Demand through February 2020 had started to slow in the UK with further softening as some customers experienced supply shortages from China. However, the situation deteriorated rapidly through March 2020. 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.

Revenue for the 18 month trading period of £15.3 million was 8.5 per cent up on the corresponding 12 month period (31 March 2019: £14.1m).

Overall, consolidated revenue for the period of £25.4 million compares to £22.8 million for the 12 months ended 31 March 2019. The loss before taxation was £7.7 million (31 March 2019: profit £1.0 million). 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.