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2019 ReportProof 3 21225 10.09.03 A n n u a l R e p o r t a n d A c c o u n t s 2003 Our Business We develop, manufacture and supply products and services for the environmental engineering market. Our Group of Companies Malvern Tubular Components Limited Manufactures and supplies metal tubular components, which are typically used in engines for independent electricity generation. Issquared Limited A specialist company focussed on tools for the pipeline integrity market in oil, gas and water. Redman Fittings Limited Markets and supplies the Redman pipe jointing system, which is an innovative method of joining polyethylene and other industrial plastic pipes. Contents 2 Chairman’s Statement 4 Directors, Secretary and Advisors 5 Report of the Directors 6 Corporate Governance 8 Report of the Independent Auditors 9 Principal Accounting Policies 11 Group Profit and Loss Account 12 Group Balance Sheet 13 Group Cash Flow Statement 14 Company Balance Sheet 15 Notes to the Financial Statements 1 Tricorn Group plc - Repor t & Accounts 2003 2 Chairman’s Statement The year ended 31 March 2003 has marked a increase in productivity to be obtained by the significant reshaping of the Tricorn Group against a year-end. Further improvements are planned for the difficult economic environment. Costs throughout the current year. In addition the transfer of component Group have been attacked with considerable success purchases to low cost countries yielded significant by the newly appointed senior management team savings in material costs. As a result of these changes who also took the decision to dispose of the small MTC returned to profit by the end of the year and Searchwell survey business. Good progress has been this trend is expected to continue. made in improving the operational efficiency of Malvern Tubular Components (“MTC”) and bringing Redman Fittings are now making deliveries of barrier the new Redman fitting to market. Issquared’s pipeline pipe fittings to two large multinational organisations. integrity management software (PipeHorizon) has Redman also secured a major OEM customer who has been well received with two systems already sold adopted the Redman fitting as the standard product and discussions underway with a significant number within its own assemblies. of potential customers. The new range of fittings developed for the wider The trading performance of the Group for the general mechanical fittings market received approval 12 months ending 31 March 2003 shows turnover of from WRc (the water industry test body) in £4.3m (2002: £4.9m) with a net loss of £1,499,000 January 2003 and has to date been accepted by (2002 loss: £590,000), representing a loss per share three major utilities. of 5.52p (2002 loss per share: 2.67p). The target market for Redman fittings is by its nature MTC, the tube manipulation specialist, experienced a extremely conservative and progress will be made step sharp drop in orders as the global engineering cycle by step rather than instantly. However, it is considered weakened. The overhead base of the company was that the Redman fitting has very attractive long term adjusted accordingly and the introduction of lean potential and since the year end the Redman sales manufacturing techniques enabled a significant activity has been strengthened. Tricorn Group plc - Repor t & Accounts 2003 3 Although the general economic environment remains subdued, MTC has been reshaped to function well in challenging conditions and will be exceptionally well placed when markets eventually improve. Progress also continues to be made in expanding both Redman and Issquared and the Board remain optimistic about the long term potential for the Group. Finally I would like to take the opportunity to thank our employees for their efforts over the past year and our customers, suppliers and shareholders for their continuing support. Costs throughout the Group have been attacked with considerable success. Issquared is responsible for the technologically innovative pipeline inspection system being developed Nicholas Paul for a consortium of water companies. This project Chairman suffered from delays and has experienced a significant cost overrun but is now nearing completion. 14 August 2003 Top priority for Issquared is the pipeline integrity management software (PipeHorizon). New safety legislation in the USA has driven significant activity in this market and a number of potential applications in USA and the Middle East are currently under discussion. Tricorn Group plc - Repor t & Accounts 2003 4 Directors, Secretary and Advisors Company registration number: 1999619 Spring Lane Malvern Link Malvern Worcestershire WR14 1DA Nicholas Campbell Paul (Chairman and Non-Executive Director) Steven William Cooper (Chief Executive) Roger Allsop (Director) Jeffrey Rubins (Non-Executive Director) Michael Greensmith Collins Stewart Limited 9th Floor 88 Wood Street London EC2V 7QR National Westminster Bank plc 30 Church Street Malvern Worcestershire WR14 2AD Halliwell Landau St James’ Court Brown Street Manchester M2 2JF Orme Dykes & Yates National Westminster Bank Chambers The Homend Ledbury Herefordshire HR8 1AB Grant Thornton Registered Auditors Chartered Accountants Enterprise House 115 Edmund Street Birmingham B3 2HJ Neville Registrars Limited Neville House 18 Laurel Lane Halesowen West Midlands B63 3DA Registered office: Directors: Secretary: Nominated Advisor and Broker: Bankers: Solicitors: Auditors: Registrars: Tricorn Group plc - Repor t & Accounts 2003 Report of the Directors 5 The Directors present their report together with the audited financial statements for the year ended 31 March 2003. Principal activity Tricorn Group plc is the parent company of a group of specialist engineering subsidiaries whose activities incorporate high precision tube manipulation, systems engineering, sensor technology and specialist fittings. Business review A review of the progress of the Group during the year, and its prospects for the future, are included in the Chairman’s report. There was a loss for the year after taxation amounting to £1,498,853 (2002: £589,857). The Directors do not recommend the payment of a dividend. Acquisition and disposal On 1 July 2002 the Group acquired the entire share capital of Integrated Statistical Solutions Limited (“ISS”), the data capture and analysis company to the utilities industry, for an initial consideration of £679,500 settled by the allotment of 1,890,000 new shares at 35p each, and £18,000 in cash. The agreed terms provided for the issue of up to a further 1,149,999 ordinary shares of 10p each conditional upon the future performance of the Group’s shares. On 28 February 2003 the Group sold the business and assets of Searchwell Limited. Directors The present membership of the Board is set out below. All served on the Board throughout the year, except for S W Cooper who was appointed on 10 December 2002. N Silverthorne and A M Cowan resigned as directors on 19 September 2002 and T J Ballard resigned on 22 January 2003. The interests of the Directors and their families in the shares of the Company as at 1 April 2002 and 31 March 2003 were as follows: N C Paul J Rubins (1,378,000 beneficial, 76,666 non beneficial) R Allsop (10,520,000 beneficial, 700,000 non beneficial) S W Cooper (appointed 10 December 2002) 100,000 1,454,666 11,220,000 – Share capital The Company issued 1,890,000 ordinary shares of 10p each valued at 35p per share on the acquisition of Integrated Statistical Solutions Limited. Substantial shareholdings Apart from the interests of Directors the only interests in excess of 3% of the issued share capital of the Company, which have been notified as at 31 July 2003 were as follows: Ordinary shares of 10p each 2003 2002 or date of appointment 100,000 1,454,666 11,220,000 – Rock Nominees Limited Gartmore Investment Management Plc Ordinary shares of 10p each 1,440,150 4,076,026 Percentage of capital 5.22% 14.77% Creditor payment policy It is the Group’s policy that payments to suppliers are made in accordance with those terms and conditions agreed between the Group companies and their suppliers, provided that all trading terms and conditions have been complied with. At 31 March 2003 the Group had an average of 54 days (2002: 70 days) purchases outstanding in third party trade creditors. select suitable accounting policies and then apply them consistently Directors’ responsibilities for the financial statements United Kingdom company law requires the Directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that period. In preparing those financial statements, the Directors are required to: – – make judgements and estimates that are reasonable and prudent – state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business. – The Directors are responsible for keeping proper accounting records, for safeguarding the assets of the Group and for taking reasonable steps for the prevention and detection of fraud and other irregularities. Auditors Grant Thornton offer themselves for reappointment as auditors in accordance with Section 385 of the Companies Act 1985. BY ORDER OF THE BOARD Roger Allsop Director 14 August 2003 Tricorn Group plc - Repor t & Accounts 2003 6 Corporate Governance The Group has, since admission to AIM in December 2001, applied principles of corporate governance commensurate with its size. Directors The Directors support the concept of an effective Board leading and controlling the Group. The Board is responsible for approving the Group’s policy and strategy. Management supply the Board with appropriate and timely information and the Directors are free to seek any further information they consider necessary. All Directors have access to advice from the Company Secretary and independent professional advice at the Group’s expense. It meets on a regular basis and has a schedule of matters specifically reserved to it for decision. The Board consists of two executive Directors, who hold the key operational positions in the Group and two non-executive Directors, who bring a breadth of experience and knowledge. This provides a balance whereby the Board’s decision making cannot be dominated by an individual. The Chairman of the Board is N C Paul and the other non-executive director is J Rubins. The Group’s business is run by S W Cooper and R Allsop, with S W Cooper having overall responsibility as the Chief Executive. Relations with shareholders The Group values the views of its shareholders and recognises their interest in the Group’s strategy and performance. The Annual General Meeting will be used to communicate with private investors and they are encouraged to participate. The Directors will be available to answer questions. Separate resolutions will be proposed on each issue so that they can be given proper consideration and there will be a resolution to approve the annual report and accounts. Internal control The Board is responsible for maintaining a strong system of internal control to safeguard shareholders’ investment and the Group’s assets and for reviewing its effectiveness. The system of internal control is designed to provide reasonable, but not absolute, assurance against material misstatement or loss. An audit committee has been established comprising the non-executive Directors, chaired by N C Paul, which will meet at least twice per annum and is responsible for ensuring that the financial performance of the Group is properly monitored and reported on as well as meeting the auditors and reviewing any reports from the auditors regarding accounts and internal control systems. The Board has considered the need for an internal audit function but has decided the size of the Group does not justify it at present. However, it will keep the decision under annual review. The key features of the Group’s system of internal control are as follows: – – – – the Group is headed by an effective Board, which leads and controls the Group; there is a clear division of responsibilities in running the Board and running the Group’s business; the Board includes a balance of executive and non-executive Directors; and the Board receives and reviews on a timely basis financial and operating information appropriate to be able to discharge its duties. Going concern After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the financial statements. Directors’ remuneration The Board recognises that Directors’ remuneration is of legitimate concern to the shareholders and is committed to following current best practice. The Group operates within a competitive environment, performance depends on the individual contributions of the Directors and employees and it believes in rewarding vision and innovation. Tricorn Group plc - Repor t & Accounts 2003 7 Policy on executive directors’ remuneration Detail of individual Directors’ remuneration is set out in note 2 to the financial statements. The policy of the Board is to provide executive remuneration packages designed to attract, motivate and retain Directors of the calibre necessary to maintain the Group’s position and to reward them for enhancing shareholder value and return. remuneration to do this, but to avoid paying more than is necessary and reflects the Directors’ responsibilities. A separate remuneration committee has been established comprising the non-executive Directors and is chaired by N C Paul. It aims to provide sufficient levels of Basic annual salary The Remuneration Committee reviews each Executive Director’s basic salary annually. remuneration the Board believes that the Group should offer levels of base pay reflecting individual responsibilities and commensurate with similar jobs in other business sectors. In deciding upon appropriate levels of Annual bonus payments, benefits and pension arrangements There are no bonus arrangements in place for the Directors. R Allsop benefits from the provision of a company car, private medical insurance and a non contributory pension scheme. N C Paul receives no benefits in kind. J Rubins receives no benefits in kind. S W Cooper benefits from the provision of a company car. Notice periods S W Cooper and R Allsop have service agreements with the Group which are terminable on not less than 12 months notice given by either party to the other at any time. N C Paul and J Rubins have letters of appointment with the Company which are terminable upon 6 months’ written notice being given by either party. Share option incentives The Company has adopted a number of individual unapproved share option agreements to motivate and retain key personnel of the Group. At 31 March 2003, the following options were held by the Directors: Unapproved share options N C Paul J Rubins R Allsop At beginning of period Number Granted in period Number 200,000 100,000 600,000 – – – At end of period Number 200,000 100,000 600,000 Exercise price £ 0.30 0.30 0.20 N C Paul’s and J Rubins’ options are exercisable between 1 January 2002 and 31 December 2009. R Allsop’s options were granted on 23 June 1998 and are exercisable between 2 and 7 years after that date. No performance conditions apply to the unapproved share options. The market price of the Company’s shares at 31 March 2003 was 5.5p and the range during the year was 5.5p to 38.5p. Tricorn Group plc - Repor t & Accounts 2003 8 Report of the Independent Auditors to the members of Tricorn Group plc We have audited the financial statements of Tricorn Group plc for the year ended 31 March 2003 which comprise the principal accounting policies, the group profit and loss account, the balance sheets, the group cash flow statement and notes 1 to 29. These financial statements have been prepared under the accounting policies set out therein. This report is made solely to the company’s members, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of the directors and auditors The Directors’ responsibilities for preparing the Annual Report and the financial statements in accordance with United Kingdom law and accounting standards are set out in the statement of Directors’ responsibilities. Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and United Kingdom auditing standards. We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies Act 1985. We also report to you if, in our opinion, the Directors’ report is not consistent with the financial statements, if the Company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding Directors’ remuneration and transactions with the Group is not disclosed. We read other information contained in the Annual Report, and consider whether it is consistent with the audited financial statements. This other information comprises only the Directors’ report, the Chairman’s statement and the corporate governance statement. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information. Basis of opinion We conducted our audit in accordance with United Kingdom auditing standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Group’s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. adequacy of the presentation of information in the financial statements. In forming our opinion we also evaluated the overall Opinion In our opinion the financial statements give a true and fair view of the state of the affairs of the Company and the Group as at 31 March 2003 and of the loss of the Group for the year then ended and have been properly prepared in accordance with the Companies Act 1985. GRANT THORNTON Registered Auditors Chartered Accountants Birmingham 14 August 2003 Tricorn Group plc - Repor t & Accounts 2003 Principal Accounting Policies 9 Basis of accounting The financial statements are prepared under the historical cost convention, using accounting policies consistent with the previous year, and in accordance with applicable accounting standards. Turnover Turnover is the total amount receivable by the Group for goods supplied and services provided, excluding VAT and trade discounts. Basis of consolidation The Group financial statements consolidate the financial statements of the Company and all its subsidiaries. Acquisitions of subsidiaries are dealt with by the acquisition method of accounting. Where subsidiary companies are disposed of during the period, the profit or loss attributable to shareholders includes the profits or losses to the date of disposal. The Company is entitled to the merger relief offered by section 131 of the Companies Act 1985 in respect of the consideration received in excess of the nominal value of equity shares issued in connection with acquisitions. Goodwill Positive goodwill arising on consolidation, representing the excess of the fair value of the consideration given over the fair values of the identifiable net assets acquired, is capitalised and amortised on a straight line basis over its useful economic life which is It is reviewed for impairment at the end of the first full financial year following the determined separately for each acquisition. acquisition and in other periods if events or changes in circumstances indicate that the carrying value may not be recoverable. As a matter of accounting policy, purchased goodwill first accounted for in accounting periods ending before 23 December 1998, the implementation date of Financial Reporting Standard No 10, was eliminated from the financial statements by immediate write-off on acquisition against reserves. Such goodwill will be charged or credited to the profit and loss account on the subsequent disposal of the business to which it relates. Tangible fixed assets Depreciation is provided on all tangible fixed assets other than freehold land, at rates calculated to write off the cost in annual instalments over the estimated useful lives of the assets. The rate of depreciation is as follows: Freehold buildings Plant and machinery Motor vehicles – – – 2% per annum 10% to 33.3% per annum 20% per annum Investments Investments are stated at cost less provision for any anticipated permanent diminution in value. Stocks and work in progress Stocks and work in progress are stated at the lower of cost and net realisable value. Cost represents materials, direct labour and appropriate production overheads. Net realisable value is based on estimated selling price less all further costs to completion and all relevant selling and distribution costs. Deferred taxation Deferred tax is recognised on all timing differences where the transactions or events that give the Group an obligation to pay more tax in the future, or a right to pay less tax in the future, have occurred by the balance sheet date. Deferred tax assets are recognised when it is more likely than not that they will be recovered. Deferred tax is measured using rates of tax that have been enacted or substantially enacted by the balance sheet date. Research and development Research and development expenditure is charged to the profit and loss account as incurred. Tricorn Group plc - Repor t & Accounts 2003 10 Principal Accounting Policies continued Pensions cost The defined contribution retirement benefits to employees are funded by contributions from the Group. Payments are made to insurance companies. These payments are charged against the profits of the period as paid. Leasing and hire purchase commitments Assets held under finance leases and hire purchase contracts, which are those where substantially all the risks and rewards of ownership of the asset have passed to the Group, are capitalised in the balance sheet and are depreciated over their useful lives. The interest element of the rental obligation is charged to the profit and loss account over the period of the lease and represents a constant proportion of the balance of capital repayments outstanding. Rentals paid under operating leases are charged to income on a straight line basis over the lease term. Foreign currencies Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date. All differences are taken to the profit and loss account. Financial instruments The Group has financial instruments to manage exposures to fluctuations in interest rates. Financial assets are recognised in the balance sheet at the lower of cost and net realisable value. Provision is made for diminution in value where appropriate. Interest payable/receivable is accrued and charged/credited to the profit and loss account in the year to which it relates. Tricorn Group plc - Repor t & Accounts 2003 Group Profit and Loss Account for the year ended 31 March 2003 11 Turnover Continuing operations Acquisition Cost of sales Gross profit Distribution costs Administrative expenses Operating loss Continuing operations Acquisition Interest payable and similar charges Loss on ordinary activities before taxation Tax on loss on ordinary activities Retained loss on ordinary activities after taxation Loss per ordinary share Note 2003 £ 2003 £ 2002 £ 2002 £ 1 2 2 2 5 1 6 19 7 3,881,550 434,723 –––––––––– 4,919,832 – –––––––––– 4,316,273 (3,090,962) –––––––––– 1,225,311 (91,447) (2,646,874) –––––––––– (1,476,241) (37,769) –––––––––– (527,550) – –––––––––– (1,513,010) (92,218) –––––––––– (1,605,228) 106,375 –––––––––– (1,498,853) –––––––––– (5.52p) –––––––––– 4,919,832 (3,168,882) –––––––––– 1,750,950 (141,904) (2,136,596) –––––––––– (527,550) (110,476) –––––––––– (638,026) 48,169 –––––––––– (589,857) –––––––––– (2.67p) –––––––––– There were no recognised gains or losses other than the loss for the financial year. The accompanying accounting policies and notes form an integral part of these financial statements. Tricorn Group plc - Repor t & Accounts 2003 12 Group Balance Sheet at 31 March 2003 Fixed assets Intangible assets Tangible assets Current assets Stocks Debtors Cash at bank and in hand Creditors: amounts falling due within one year Net current (liabilities)/assets Total assets less current liabilities Creditors: amounts falling due after more than one year Provisions for liabilities and charges Capital and reserves Called up share capital Share premium account Merger reserve Profit and loss account Shareholders’ funds - equity interests Note 2003 £ 2002 £ 8 9 11 12 13 14 17 18 19 19 19 20 682,971 119,999 1,916,239 –––––––––– 2,599,210 –––––––––– 622,196 1,207,695 90,104 –––––––––– 2,082,858 –––––––––– 2,202,857 –––––––––– 845,466 1,070,906 822,372 –––––––––– 1,919,995 2,738,744 (2,265,434) –––––––––– (345,439) –––––––––– 2,253,771 (679,025) – –––––––––– 1,574,746 –––––––––– 2,760,167 1,379,813 1,387,533 (3,952,767) –––––––––– 1,574,746 –––––––––– (1,877,620) –––––––––– 861,124 –––––––––– 3,063,981 (573,759) (56,700) –––––––––– 2,433,522 –––––––––– 2,571,167 1,401,236 915,033 (2,453,914) –––––––––– 2,433,522 –––––––––– The financial statements were approved by the Board of Directors on 14 August 2003. R Allsop Director S W Cooper Director The accompanying accounting policies and notes form an integral part of these financial statements. Tricorn Group plc - Repor t & Accounts 2003 Group Cash Flow Statement for the year ended 31 March 2003 13 Net cash outflow from operating activities 21a (791,917) (532,035) Note 2003 £ 2002 £ Returns on investments and servicing of finance Interest paid Finance lease interest paid Net cash outflow from returns on investments and servicing of finance Taxation Capital expenditure and financial investment Payments to acquire tangible fixed assets Receipts from sales of tangible fixed assets Net cash outflow from capital expenditure and financial investment Acquisition Purchase of subsidiary undertaking Net cash outflow before financing Financing Issue of ordinary share capital Share issue costs Receipt/(repayment) of loans Capital element of finance lease rentals Net cash inflow from financing (Decrease)/increase in cash (55,911) (87,635) (36,307) –––––––––– (92,218) –––––––––– (22,841) –––––––––– (110,476) –––––––––– 7,093 (18,659) (65,733) (176,676) 36,238 –––––––––– (29,495) –––––––––– 33,615 –––––––––– (143,061) –––––––––– (56,037) –––––––––– – –––––––––– (962,574) (804,231) – 1,606,500 (21,424) 216,877 (144,391) –––––––––– 51,062 –––––––––– (911,512) –––––––––– (339,431) (39,345) (120,395) –––––––––– 1,107,329 –––––––––– 303,098 –––––––––– 16 21b,21c The accompanying accounting policies and notes form an integral part of these financial statements. Tricorn Group plc - Repor t & Accounts 2003 14 Company Balance Sheet at 31 March 2003 Fixed assets Tangible assets Investments Current assets Debtors Cash at bank and in hand Creditors: amounts falling due within one year Net current assets Total assets less current liabilities Creditors: amounts falling due after more than one year Capital and reserves Called up share capital Share premium account Merger reserve Profit and loss account Shareholders’ funds - equity interests Note 2003 £ 2002 £ 9 10 12 13 14 18 19 19 19 1,118,329 3,724,270 –––––––––– 4,842,599 –––––––––– 2,686,585 – –––––––––– 2,686,585 (832,892) –––––––––– 1,853,693 –––––––––– 6,696,292 (574,975) –––––––––– 6,121,317 –––––––––– 2,760,167 1,379,813 1,592,500 388,837 –––––––––– 6,121,317 –––––––––– 1,144,270 3,006,733 –––––––––– 4,151,003 –––––––––– 1,795,838 805,326 –––––––––– 2,601,164 (570,069) –––––––––– 2,031,095 –––––––––– 6,182,098 (358,098) –––––––––– 5,824,000 –––––––––– 2,571,167 1,401,236 1,120,000 731,597 –––––––––– 5,824,000 –––––––––– The financial statements were approved by the Board of Directors on 14 August 2003. R Allsop Director S W Cooper Director The accompanying accounting policies and notes form an integral part of these financial statements. Tricorn Group plc - Repor t & Accounts 2003 Notes to the Financial Statements for the year ended 31 March 2003 1 Turnover and loss on ordinary activities before taxation The turnover is attributable to the principal activities and is all within the UK. The loss on ordinary activities before taxation is stated after charging/(crediting): Auditors’ remuneration – audit services – tax services Research and development costs Depreciation of tangible fixed assets: Owned assets Assets held under finance leases and hire purchase contracts Loss/(profit) on sale of tangible fixed assets Amortisation of goodwill Write off of investments Operating lease rentals – land and buildings – plant and equipment – motor vehicles 15 2003 £ 18,000 9,250 245,726 156,873 75,585 9,114 44,560 – 80,258 1,003 17,411 –––––––––– 2002 £ 18,000 7,750 196,432 168,533 62,413 (8,658) 15,000 145,000 93,141 2,154 9,309 –––––––––– Fees paid to the auditors of £nil (2002: £55,890) have been written off to the share premium account during the year. 2 Cost of sales and other operating expenses An analysis of the cost of sales and other operating costs between the acquisition of Integrated Statistical Solutions Limited and the continuing activities is as follows: Acquisition 2003 £ Continuing 2003 £ Total 2003 £ Cost of sales Distribution costs Administrative expenses 77,037 –––––––––– – 394,455 –––––––––– 394,455 –––––––––– 3,013,925 –––––––––– 91,447 2,252,419 –––––––––– 2,343,866 –––––––––– 3,090,962 –––––––––– 91,447 2,646,874 –––––––––– 2,738,321 –––––––––– 3 Directors’ emoluments N C Paul J Rubins R Allsop A M Cowan * N Silverthorne * T J Ballard * S W Cooper Basic £ 25,000 12,000 45,000 30,000 21,600 23,350 17,213 –––––––––– 174,163 –––––––––– 2003 Benefits in kind £ Pension £ Total £ – – 15,198 10,238 5,671 5,432 – –––––––––– 36,539 –––––––––– – – 4,500 – 1,665 1,500 –––––––––– 7,665 –––––––––– 25,000 12,000 64,698 40,238 28,936 30,282 17,213 –––––––––– 218,367 –––––––––– 2002 Benefits in kind £ – – 9,162 7,331 6,262 10,120 Pension £ – – – 4,200 3,024 3,000 Basic £ 12,500 9,333 64,500 60,000 43,201 43,000 Total £ 12,500 9,333 73,662 71,531 52,487 56,120 –––––––––– 232,534 –––––––––– –––––––––– 32,875 –––––––––– –––––––––– 10,224 –––––––––– –––––––––– 275,633 –––––––––– During the year the amount due to R Allsop of £45,000 (2002: £64,500) was paid to Malvair Properties Limited for his services as a director. * Remuneration to the dates of their resignation. Tricorn Group plc - Repor t & Accounts 2003 16 Notes to the Financial Statements continued 4 Staff costs Wages and salaries Social security costs Other pension costs The average weekly number of employees during the year was made up as follows: Production Sales, distribution and administration 5 Interest payable and similar charges Bank loans and overdrafts Interest on finance leases and hire purchase contracts Other interest charges 6 Tax on loss on ordinary activities (a) The taxation credit is made up as follows: Tax credit in respect of research and development expenditure Adjustment in respect of prior year - research and development tax credit Total current tax (note 6 b) Deferred taxation (note 17) 2003 £ 2002 £ 2,290,886 194,815 74,262 –––––––––– 2,559,963 –––––––––– 2,310,907 179,683 45,504 –––––––––– 2,536,094 –––––––––– 2003 Number 2002 Number 76 45 –––––––––– 121 –––––––––– 90 32 –––––––––– 122 –––––––––– 2003 £ 2002 £ 11,655 36,307 44,256 –––––––––– 92,218 –––––––––– 65,564 22,841 22,071 –––––––––– 110,476 –––––––––– 2003 £ 2002 £ (49,675) – –––––––––– (49,675) (56,700) –––––––––– (106,375) –––––––––– (24,065) (17,267) –––––––––– (41,332) (6,837) –––––––––– (48,169) –––––––––– Unrealised tax losses of approximately £2,000,000 (2002: £900,000) remain available to offset against future taxable trading profits. Tricorn Group plc - Repor t & Accounts 2003 17 6 Tax on loss on ordinary activities (continued) (b) The tax assessed for the period is lower than the standard rate of corporation tax in the UK (30 per cent). The differences are explained below: Loss on ordinary activities before tax 2003 £ 2002 £ (1,605,228) –––––––––– (638,026) –––––––––– Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 30% (2002: 30%) (481,568) (191,408) Effects of: Expenses not deductible for tax purposes Depreciation for year in excess of capital allowances Utilisation of tax losses Deferred tax asset not provided for Credit on research and development Current tax credit for year 26,724 63,302 – 391,542 (49,675) –––––––––– (49,675) –––––––––– 72,960 (6,780) 125,049 – (41,153) –––––––––– (41,332) –––––––––– 7 Loss per share The loss per share is based on the loss for the financial year divided by the weighted average number of equity shares ranking for dividend during the year being 27,140,820 shares (2002: 22,073,202 shares). The share options in issue are not dilutive 8 Intangible fixed assets Cost At 1 April 2002 Additions At 31 March 2003 Amortisation At 1 April 2002 Provided in the year At 31 March 2003 Net book amount at 31 March 2003 Net book amount at 31 March 2002 Goodwill £ 149,999 607,532 –––––––––– 757,531 –––––––––– 30,000 44,560 –––––––––– 74,560 –––––––––– 682,971 –––––––––– 119,999 –––––––––– Goodwill arising on the acquisitions of Redman Fittings Limited and Integrated Statistical Solutions Limited is being amortised evenly over the Directors’ estimate of its useful economic life of 10 years. Tricorn Group plc - Repor t & Accounts 2003 18 Notes to the Financial Statements continued 9 Tangible fixed assets Group Cost At 1 April 2002 Additions Acquisition of subsidiary undertaking Disposals At 31 March 2003 Depreciation At 1 April 2002 Acquisition of subsidiary undertaking Provided in the year Eliminated on disposals At 31 March 2003 Net book amount at 31 March 2003 Net book amount at 31 March 2002 Freehold land and buildings £ 1,198,571 – – – –––––––––– 1,198,571 –––––––––– 88,207 – 19,974 – –––––––––– 108,181 –––––––––– 1,090,390 –––––––––– 1,110,364 –––––––––– Plant and machinery £ 2,459,903 76,668 84,987 (81,814) –––––––––– 2,539,744 –––––––––– 1,645,756 72,784 170,944 (53,803) –––––––––– 1,835,681 –––––––––– 704,063 –––––––––– 814,147 –––––––––– Motor vehicles £ 256,528 22,320 – (68,765) –––––––––– 210,083 –––––––––– 98,181 – 41,540 (51,424) –––––––––– 88,297 –––––––––– 121,786 –––––––––– 158,347 –––––––––– Total £ 3,915,002 98,988 84,987 (150,579) –––––––––– 3,948,398 –––––––––– 1,832,144 72,784 232,458 (105,227) –––––––––– 2,032,159 –––––––––– 1,916,239 –––––––––– 2,082,858 –––––––––– The net book value of fixed assets includes £412,930 (2002: £399,652) in respect of assets held under finance leases and hire purchase contracts. The carrying value of freehold land not depreciated is £200,000. Company Cost At 1 April 2002 Additions Disposals At 31 March 2003 Depreciation At 1 April 2002 Provided in the year Eliminated on disposals At 31 March 2003 Net book amount at 31 March 2003 Net book amount at 31 March 2002 Freehold land and buildings £ 1,198,571 – – –––––––––– 1,198,571 –––––––––– 88,207 19,974 – –––––––––– 108,181 –––––––––– 1,090,390 –––––––––– 1,110,364 –––––––––– Plant and machinery £ 28,594 2,547 (19,352) –––––––––– 11,789 –––––––––– 8,971 2,922 (6,839) –––––––––– 5,054 –––––––––– 6,735 –––––––––– 19,623 –––––––––– Motor vehicles £ 27,740 22,320 (27,740) –––––––––– 22,320 –––––––––– 13,457 5,276 (17,617) –––––––––– 1,116 –––––––––– 21,204 –––––––––– 14,283 –––––––––– Total £ 1,254,905 24,687 (47,092) –––––––––– 1,232,680 –––––––––– 110,635 28,172 (24,456) –––––––––– 114,351 –––––––––– 1,118,329 –––––––––– 1,144,270 –––––––––– The net book value of motor vehicles includes £21,204 (2002: £14,283) in respect of vehicles held under hire purchase contracts. Tricorn Group plc - Repor t & Accounts 2003 10 Investments Group Cost At 1 April 2002 and 31 March 2003 Amounts written off At 1 April 2002 and at 31 March 2003 Net book amount at 31 March 2003 The Directors consider that there has been a permanent diminution in the value of the unlisted investment. Company Cost at 1 April 2002 Additions Cost at 31 March 2003 Amounts written off At 1 April 2002 Provided in the year At 31 March 2003 Net book amount at 31 March 2003 Net book amount at 31 March 2002 Unlisted investments £ Subsidiary undertakings £ 145,000 – –––––––––– 145,000 –––––––––– (145,000) – –––––––––– (145,000) –––––––––– – –––––––––– – –––––––––– 3,006,733 717,537 –––––––––– 3,724,270 –––––––––– – – –––––––––– – –––––––––– 3,724,270 –––––––––– 3,006,733 –––––––––– 19 Unlisted investments £ 164,500 –––––––––– 164,500 –––––––––– – –––––––––– Total £ 3,151,733 1,295,037 –––––––––– 3,869,270 –––––––––– (145,000) – –––––––––– (145,000) –––––––––– 3,724,270 –––––––––– 3,006,733 –––––––––– Details of the investments in which the Group or the Company holds 20% or more of the nominal value of the share capital at 31 March 2003 are as follows: Subsidiary undertaking Holding MTC Holdings Limited Ordinary shares Malvern Tubular Components Limited * Ordinary shares Searchwell Limited Redman Fittings Limited Issquared Limited Ordinary shares Ordinary shares Ordinary shares Integrated Statistical Solutions Limited Ordinary shares * held by a subsidiary undertaking Proportion of voting rights and shares held Nature of business 100% 100% 100% 100% 100% 100% Intermediate holding company Manufacturer of tubular components Dormant Sales and marketing company for specialist pipe fittings Systems engineering and pipeline project management Dormant Tricorn Group plc - Repor t & Accounts 2003 20 Notes to the Financial Statements continued 11 Stocks Group Raw materials Work in progress Finished goods 12 Debtors 2003 £ 2002 £ 251,064 185,139 185,993 –––––––––– 622,196 –––––––––– 357,018 146,207 342,241 –––––––––– 845,466 –––––––––– Trade debtors Taxation recoverable Amounts owed by subsidiary undertakings Other debtors Prepayments and accrued income Group Company 2003 £ 2002 £ 2003 £ 2002 £ 979,591 83,735 – 71,137 73,232 –––––––––– 1,207,695 –––––––––– 846,720 41,153 – 97,787 85,246 –––––––––– 1,070,906 –––––––––– – – 2,624,947 52,524 – –––––––––– 2,686,585 –––––––––– 90,312 – 1,620,092 59,412 26,022 –––––––––– 1,795,838 –––––––––– Included within amounts owed by subsidiary undertakings are amounts due after more than one year of £1,532,705 (2002: £1,442,829). 13 Creditors: amounts falling due within one year Bank loans (note 15) Bank overdrafts Trade creditors Obligations under finance leases and hire purchase contracts (note 16) Amounts owed to subsidiary undertakings Other taxes and social security Other creditors 2003 £ 50,000 889,452 466,107 123,347 – 245,300 491,228 –––––––––– 2,265,434 –––––––––– Group Company 2002 £ 50,000 710,208 470,195 122,872 – 235,998 288,347 –––––––––– 1,877,620 –––––––––– 2003 £ 50,000 631,925 53,277 8,611 – 5,458 83,621 –––––––––– 832,892 –––––––––– 2002 £ 50,000 – 85,012 2,820 248,020 7,373 176,844 –––––––––– 570,069 –––––––––– Bank loans and overdrafts are secured by a fixed and floating charge over the assets of the Group. £244,961 which is secured upon trade debtors. Included in bank overdrafts is Finance leases are secured on the particular assets to which they relate. Tricorn Group plc - Repor t & Accounts 2003 21 14 Creditors: amounts falling due after more than one year Bank loans (note 15) Other loans Obligations under finance leases and hire purchase contracts (note 16) 2003 £ 311,274 263,701 Group Company 2002 £ 358,098 – 2003 £ 311,274 263,701 2002 £ 358,098 – 104,050 –––––––––– 679,025 –––––––––– 215,661 –––––––––– 573,759 –––––––––– – –––––––––– 574,975 –––––––––– – –––––––––– 358,098 –––––––––– Other loans are unsecured and the directors have received confirmation they will be not be repayable within one year of the balance sheet date. Interest is payable at varying rates between 9 and 12% per annum. 15 Borrowings Bank loans are repayable as follows: Within one year After one and within two years After two and within five years After five years Less included in creditors: amounts falling due within one year Group Company 2003 £ 2002 £ 2003 £ 2002 £ 50,000 50,000 150,000 111,274 –––––––––– 361,274 (50,000) –––––––––– 311,274 –––––––––– 50,000 50,000 150,000 158,098 –––––––––– 408,098 (50,000) –––––––––– 358,098 –––––––––– 50,000 50,000 150,000 111,274 –––––––––– 361,274 (50,000) –––––––––– 311,274 –––––––––– 50,000 50,000 150,000 158,098 –––––––––– 408,098 (50,000) –––––––––– 358,098 –––––––––– All bank borrowings are secured by way of an unlimited debenture. The bank loans are repayable by instalments at interest rates of 2% above bank base rate. Tricorn Group plc - Repor t & Accounts 2003 22 Notes to the Financial Statements continued 16 Obligations under finance leases and hire purchase contracts The maturity of these amounts is as follows: Amounts payable: within one year within two to five years Less: finance charges allocated to future periods Finance leases are analysed as follows: Current obligations Non-current obligations Group Company 2003 £ 2002 £ 2003 £ 2002 £ 134,477 138,960 –––––––––– 273,437 (46,040) –––––––––– 227,397 –––––––––– 146,410 261,267 –––––––––– 407,677 (69,144) –––––––––– 338,533 –––––––––– 9,000 – –––––––––– 9,000 (389) –––––––––– 8,611 –––––––––– 3,200 – –––––––––– 3,200 (380) –––––––––– 2,820 –––––––––– Group Company 2003 £ 2002 £ 2003 £ 2002 £ 123,347 104,050 –––––––––– 227,397 –––––––––– 122,872 215,661 –––––––––– 338,533 –––––––––– 8,611 – –––––––––– 8,611 –––––––––– 2,820 – –––––––––– 2,820 –––––––––– Analysis of changes in finance leases and hire purchase contracts during the current and previous periods: At 1 April 2002 Inception of new contracts Capital element of rental payments At 31 March 2003 Group Company 2003 £ 2002 £ 2003 £ 2002 £ 338,533 33,255 (144,391) –––––––––– 227,397 –––––––––– 243,370 215,558 (120,395) –––––––––– 338,533 –––––––––– 2,820 22,320 (16,529) –––––––––– 8,611 –––––––––– 7,653 – (4,833) –––––––––– 2,820 –––––––––– Obligations under finance leases and hire purchase contracts are secured on the assets to which they relate. Tricorn Group plc - Repor t & Accounts 2003 17 Provisions for liabilities and charges Group At 1 April 2002 Credit for year (note 6) At 31 March 2003 23 Deferred taxation 2003 £ 2002 £ 56,700 (56,700) –––––––––– – –––––––––– 63,537 (6,837) –––––––––– 56,700 –––––––––– The amounts of deferred taxation provided and unprovided in the financial statements are: Accelerated capital allowances Other timing differences Less: Trading losses Provided 2003 £ 56,000 (52,000) –––––––––– 4,000 (4,000) –––––––––– – –––––––––– Unprovided 2003 £ – – –––––––––– – (600,000) –––––––––– (600,000) –––––––––– Provided 2002 £ 87,000 (1,200) –––––––––– 85,800 (29,100) –––––––––– 56,700 –––––––––– Unprovided 2002 £ – – –––––––––– – (270,000) –––––––––– (270,000) –––––––––– 18 Share capital Authorised 60,000,000 (2002: 60,000,000) ordinary shares of 10p each Allotted, called up and fully paid 27,601,670 (2002: 25,711,670) ordinary shares of 10p each 2003 £ 2002 £ 6,000,000 –––––––––– 6,000,000 –––––––––– 2,760,167 –––––––––– 2,571,167 –––––––––– The Company issued 1,890,000 ordinary shares of 10p each for a consideration of 35p per share on the acquisition of Integrated Statistical Solutions Limited on 1 July 2002. Advantage has been taken of merger relief offered by Section 131 of the Companies Act and the excess of the nominal value has been taken to the merger reserve. The Company has issued a number of unapproved share options to the directors, details of which are provided in the Corporate Governance Statement An EMI share option scheme was implemented on 19 April 2002. Share options over 870,000 shares have been issued under this scheme which may be exercised in three equal tranches after six months, eighteen months and twenty four months of the date of the grant. No performance conditions apply to the EMI options. No current directors have been issued with options under the EMI Share Options Scheme. Tricorn Group plc - Repor t & Accounts 2003 Share premium £ 1,401,236 – (21,423) – –––––––––– 1,379,813 –––––––––– 1,401,236 – (21,423) – –––––––––– 1,379,813 –––––––––– Merger reserve £ Profit and loss account £ 915,033 472,500 – – –––––––––– 1,387,533 –––––––––– 1,120,000 472,500 – – –––––––––– 1,592,500 –––––––––– (2,453,914) – – (1,498,853) –––––––––– (3,952,767) –––––––––– 731,597 – – (342,760) –––––––––– 388,837 –––––––––– 2003 £ 2002 £ (1,498,853) 640,077 –––––––––– (858,776) 2,433,522 –––––––––– 1,574,746 –––––––––– (589,857) 1,267,069 –––––––––– 677,212 1,756,310 –––––––––– 2,433,522 –––––––––– 24 Notes to the Financial Statements continued 19 Reserves Group At 1 April 2002 On issue of shares Share issue costs Loss for the year At 31 March 2003 Company At 1 April 2002 On issue of shares Share issue costs Loss for the year At 31 March 2003 20 Reconciliation of movements in shareholders’ funds Loss for the year Issue of shares Net (reduction)/increase in shareholders’ funds Shareholders’ funds at 31 March 2002 Shareholders’ funds at 31 March 2003 Tricorn Group plc - Repor t & Accounts 2003 25 2003 £ 2002 £ (1,513,010) 232,458 44,560 9,114 – 265,670 121,620 47,671 –––––––––– (791,917) –––––––––– (527,550) 230,946 15,000 (8,658) 145,000 (94,028) 72,840 (365,585) –––––––––– (532,035) –––––––––– 2003 £ 2002 £ (911,512) 303,098 144,391 (216,877) –––––––––– (983,998) (33,255) –––––––––– (1,017,253) (634,467) –––––––––– (1,651,720) –––––––––– Non-cash movements £ – – –––––––––– – – – (33,255) –––––––––– (33,255) –––––––––– 120,395 39,345 –––––––––– 462,838 (215,558) –––––––––– 247,280 (881,747) –––––––––– (634,467) –––––––––– At 31 March 2003 £ 90,104 (889,452) –––––––––– (799,348) (50,000) (574,975) (227,397) –––––––––– (1,651,720) –––––––––– 21 Notes to the statement of Group cash flows (a) Reconciliation of operating loss to net outflow from operating activities Operating loss Depreciation Amortisation Loss/(profit) on sale of tangible fixed assets Provision against fixed asset investment Decrease/(increase) in stocks Decrease in debtors Increase/(decrease) in creditors Net cash outflow from operating activities (b) Reconciliation of net cash flow to movement in net debt (Decrease)/increase in cash Cash used to repay capital element of finance lease and hire purchase payments Cash (inflow)/outflow from movement in loans New finance leases and hire purchase contracts Movement in net debt Net debt at 1 April 2002 Net debt at 31 March 2003 (c) Analysis of changes in net debt Cash at bank and in hand Overdraft Debt due within one year Debt due after one year Finance leases and hire purchase contracts At 31 March 2002 £ 822,372 (710,208) –––––––––– 112,164 (50,000) (358,098) (338,533) –––––––––– (634,467) –––––––––– Cash flow £ (732,268) (179,244) –––––––––– (911,512) – (216,877) 144,391 –––––––––– (983,998) –––––––––– (d) Major non-cash transactions During the year the Group entered into finance lease arrangements in respect of assets with a total capital value at the inception of the lease of £33,255 (2002: £215,558). Tricorn Group plc - Repor t & Accounts 2003 26 Notes to the Financial Statements continued 22 Financial instruments The Group uses financial instruments, comprising cash, short and long term borrowings, trade debtors and trade creditors, that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the Group’s operations. The main risks arising from the Group financial instruments are interest rate risk and liquidity risk. The Directors review and agree policies for managing each of these risks and they are summarised below. These policies have remained unchanged from previous years. The fair value of the Group’s financial instruments are considered equal to the book value. Short term debtors and creditors Short term debtors and creditors have been excluded from all the following disclosures, other than the currency risk disclosure. Interest rate risk The Group finances its operations through a mixture of bank loans and overdrafts and other loans. The Group’s exposure to interest rate fluctuations on its borrowings is managed by the use of floating facilities. The interest rate exposure of the financial liabilities of the Group as at 31 March was: 31 March 2003 31 March 2002 Floating £ 700,493 –––––––––– 408,098 –––––––––– Liquidity risk The Group seeks to manage financial risks, to ensure sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. Of the available overdraft facility £145,000 remained unutilised at 31 March 2003. Of the invoice discounting facility £350,000 remained unutilised at 31 March 2003. As per note 28, the Group has an unsecured loan of £200,000 from Malvair Properties Limited. Currency risk The Group operates substantially within the United Kingdom and consequently is not significantly exposed to currency risk. The Group does not hedge any transactions, and foreign exchange differences on retranslation of foreign currency assets and liabilities are taken to the profit and loss account of the Group. 23 Operating lease commitments Annual commitments under non-cancellable operating leases are as follows: Group Operating leases which expire: In one year In two to five years Land and buildings Other 2003 £ 2002 £ 2003 £ 2002 £ 67,883 5,500 –––––––––– 73,383 –––––––––– 29,000 52,884 –––––––––– 81,884 –––––––––– 1,920 16,494 –––––––––– 18,414 –––––––––– – 9,323 –––––––––– 9,323 –––––––––– 24 Pension commitments The Group operates a defined contribution pension scheme. Contributions are charged to the profit and loss account as they become payable in accordance with the rules of the scheme. Tricorn Group plc - Repor t & Accounts 2003 27 25 26 27 28 29 Capital commitments The Group had no capital commitments at 31 March 2003 (2002: £nil). Contingent liability The Company has given an unlimited guarantee against the bank borrowings of its subsidiaries. The borrowings of these companies at 31 March 2003 are included in the consolidated borrowings detailed in note 15. Results of the parent company As permitted by Section 230 of the Companies Act 1985, the profit and loss account of the parent company is not presented as part of these accounts. The parent company’s loss for the period amounted to £342,760 (2002: loss of £309,433). Related party transactions During the year the Group received a loan of £200,000 from Malvair Properties Limited, a company in which R Allsop has an interest. Interest of £7,915 has been accrued during the year and at 31 March 2003 the outstanding balance amounted to £207,915. Acquisitions On 1 July 2002 the Group acquired the entire share capital of Integrated Statistical Solutions Limited (“ISS”), a data capture and analysis company for the utilities industry, for an initial consideration of £679,500 settled by the allotment of 1,890,000 new shares at a market value of 35p each, and £18,000 in cash. The agreed terms provided for the issue of up to a further 1,149,999 ordinary shares of 10p each conditional upon the future price performance of the Group’s shares. payable. It has been assumed that no deferred consideration will be The loss before taxation of ISS for the year ended 30 June 2002 was £45,000. Advantage has been taken of section 131 of the Companies Act 1985 on merger relief in respect of the premium on the issue of shares to finance the acquisition, with the premium on the issue of the shares being taken to merger reserve. The assets and liabilities of ISS acquired were as follows: Fixed assets Current assets Stocks Debtors Total assets Creditors Total liabilities Net assets Purchased goodwill Satisfied by: Issue of shares Cash and costs Book and fair value £ 12,202 42,400 215,827 –––––––––– 270,429 –––––––––– 160,424 –––––––––– 160,424 –––––––––– 110,005 –––––––––– 607,532 –––––––––– 717,537 –––––––––– 661,500 56,037 –––––––––– 717,537 –––––––––– Tricorn Group plc - Repor t & Accounts 2003 28 Shareholders’ Notes Tricorn Group plc - Repor t & Accounts 2003 Tricorn Group plc Spring Lane Malvern Link Malvern Worcestershire WR14 1DA Tel 01684 569956 Fax 01684 892337
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