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2019 ReportA n n u a l R e p o r t a n d A c c o u n t s 2004 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 1 2 Chairman’s Statement 4 Directors, Secretary and Advisors 5 Report of the Directors 6 Corporate Governance including Remuneration Report 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 Tricorn Group plc - Repor t & Accounts 2004 2 Chairman’s Statement In my report this time last year I indicated that there MTC the Group’s tube manipulation business saw had been a significant re-shaping of the Group and that fluctuating demand throughout the year but ended costs had been attacked with considerable success. strongly. As anticipated further productivity Our interim results confirmed that we were seeing the improvements were achieved as part of the continuous benefits of that action and our results to the end of improvement programme and additional savings were March 2004 show that trend continuing. In addition realised as the transfer of component purchases to we have significantly strengthened the Group’s financial low cost countries was extended to more products. position through the sale and leaseback of the Malvern MTC sales were 23% higher in 2004 than 2003 and Tubular Components (MTC) factory and the issue of reflect a general recovery in the market place and new shares in March 2004. The combined amount also some market share gains. raised from both actions totalled over £1.4 million. The continuing drive to lean manufacturing at MTC Redman continues to make good progress in the and resourcing of components from low cost countries UK and has also started to appoint sales distributors brought MTC firmly into profit for the year. Sales of on the continent of Europe. As reported previously the new Redman fitting doubled year on year, albeit the target market for Redman fittings is by its nature from a low base, and acceptance of the product is extremely conservative but demand is growing in growing steadily. Issquared has had protracted, but as line with expectations. With the broadening of the yet inconclusive, negotiations with a number of key application areas for the product and the identification customers for its pipeline integrity management of further potential markets the management remain software (PipeHorizon). convinced that the innovative Redman fittings range has very encouraging potential. The trading performance for the 12 months ending 31 March 2004 shows a turnover of £5.5 million The top priority for Issquared remains the pipeline (2003: £4.3m) up 28% with a much reduced net loss integrity management software (PipeHorizon). of £88,000 (2003 loss: £1,499,000) representing a loss Negotiations with potential USA customers per share of 0.31p (2003 loss per share: 5.52p). throughout the year were frustratingly slow but Tricorn Group plc - Repor t & Accounts 2004 3 the original consortium has expressed interest in developing a larger pipeline inspection vehicle. Issquared anticipate a decision later this calendar year. Looking to the future, with a strong order book and ongoing resourcing of materials from low cost countries, MTC is well positioned to make further progress. Redman continues to grow in line with expectations and Issquared has considerable potential to capitalise on the interest in PipeHorizon. Overall therefore the Group is well placed to take advantage of the generally improving economic climate and the initiatives already underway. The Group is well placed to take advantage of the generally improving economic climate and the initiatives already underway. are expected to reach a crucial stage in the new financial year. Safety legislation in the USA is Finally this has been another very demanding year becoming increasingly onerous and is generating for all our employees as we strive to improve our significant interest in PipeHorizon from pipeline performance. Many thanks to them, our customers, operators as they look to find cost effective methods suppliers and shareholders for their continuing support. for compliance. At the interim stage we indicated that the project to develop a new pipeline inspection system for a Nick Paul consortium of water companies had been successfully Chairman completed and handed over to our customers. Since then one of the water companies included in 30 June 2004 Tricorn Group plc - Repor t & Accounts 2004 4 Directors, Secretary and Advisors Company registration number: 1999619 Registered office: Directors: Secretary: Nominated Adviser and Broker: Bankers: Solicitors: Auditors: Registrars: Tricorn Group plc - Repor t & Accounts 2004 Spring Lane Malvern Link Malvern Worcestershire WR14 1DA Nicholas Campbell Paul (Chairman and Non-Executive Director) Steven William Cooper (Chief Executive) Michael Ian Welburn (Director) Roger Allsop (Non-Executive Director) Jeffrey Rubins F.C.A.(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 Report of the Directors 5 The Directors present their report together with the audited financial statements for the year ended 31 March 2004. 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 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 Statement. There was a loss for the year after taxation amounting to £87,533 (2003: £1,498,853). The Directors do not recommend the payment of a dividend. Directors The present membership of the Board is set out below. All served on the Board throughout the year, except for M I Welburn who was appointed on 10 March 2004. The interests of the Directors and their families in the shares of the Company as at 1 April 2003 and 31 March 2004 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 M I Welburn (appointed 10 March 2004) Details of directors’ share options are provided in the report on corporate governance. 100,000 1,454,666 11,220,000 – – Ordinary shares of 10p each 2004 2003 or date of appointment 100,000 1,454,666 11,220,000 – – Share capital The Company issued 3,398,330 ordinary shares of 10p on 8 March 2004, at the par value of 10p per share to be utilised for working capital. 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 7 June 2004 were as follows: Gartmore Investment Management Plc Rock Nominees Limited Ordinary shares of 10p each 5,117,692 1,440,150 Percentage of capital 16.51% 4.65% 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 2004 the Group had an average of 62 days (2003: 54 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. 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. In preparing – 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 On 1 July 2004 the Grant Thornton partnership will transfer its business to a limited liability partnership, Grant Thornton UK LLP, and the directors have agreed to extend the audit appointment to Grant Thornton UK LLP with effect from 1 July 2004 in accordance with Section 26(5) of the Companies Act 1989. Grant Thornton UK LLP offer themselves for reappointment as auditors in accordance with Section 385 of the Companies Act 1985. BY ORDER OF THE BOARD Roger Allsop Director 30 June 2004 Tricorn Group plc - Repor t & Accounts 2004 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 Company’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 three 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 directors are R Allsop and J Rubins. The Group’s business is run by S W Cooper and M I Welburn 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 systems 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. International Financial Reporting Standards ("IFRS") The Board recognises that there is a requirement to prepare its financial statements under IFRS for the financial year ending 31 March 2006. The Board intends to keep this matter under review and monitor its impact in the period to the transition date. 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. 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 Tricorn Group plc - Repor t & Accounts 2004 7 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 private medical insurance. S W Cooper and M I Welburn benefit from the provision of company cars. M I Welburn benefits from the provision of private medical insurance and participates in a contributory pension scheme. N C Paul receives no benefits in kind. J Rubins receives no benefits in kind. Notice periods S W Cooper, M I Welburn 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 2004, 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 these unapproved share options. During the year the Board approved the following share options for S W Cooper and M I Welburn, although the options have not yet been implemented. S W Cooper’s EMI share options are to be exercisable in tranches. The first option over 500,000 ordinary 10p shares is to be exercisable before 16 October 2010 at a price of 10p per share. The second option over 250,000 shares is to be exercisable at their par value of 10p once the mid-market price has been maintained at 20p per share for ten consecutive working days. The third option over 250,000 shares is to be exercisable at their par value of 10p once the mid-market price has been maintained at 30p per share for ten consecutive working days. All share disposals are to be limited to one third of the option in any given year without prior Board approval. M I Welburn is to have two separate EMI share options. The first option is to be over 500,000 ordinary shares which are exercisable after 12 months continuous employment and will remain in force for seven years. The second option over 250,000 shares is to be exercisable at their par value of 10p once the mid-market price has been maintained at 20p per share for ten consecutive working days. All share disposals will be limited to one third of the option in any given year without prior Board approval. The market price of the Company’s shares at 31 March 2004 was 10p and the range during the year was 4p to 14p. Tricorn Group plc - Repor t & Accounts 2004 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 2004 which comprise the principal accounting policies, the group profit and loss account, the balance sheets, the group cash flow statement and notes 1 to 27. 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 Report of the Directors. 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 2004 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 30 June 2004 Tricorn Group plc - Repor t & Accounts 2004 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. 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 impairment write down. 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 2004 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 to the profit and loss account as incurred. 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 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 2004 Group Profit and Loss Account for the year ended 31 March 2004 Turnover Cost of sales Gross profit Distribution costs Administrative expenses Operating loss Profit on disposal of freehold property 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 There were no recognised gains or losses other than the loss for the financial year. 11 Note 2004 £ 2003 £ 1 5,550,755 4,316,273 (3,090,618) (3,090,962) –––––––––– –––––––––– 2,460,137 1,225,311 (57,364) (91,447) (2,451,159) (2,646,874) –––––––––– –––––––––– (48,386) (1,513,010) 76,050 – (121,510) (92,218) –––––––––– –––––––––– (93,846) (1,605,228) 6,313 106,375 –––––––––– –––––––––– (87,533) (1,498,853) –––––––––– –––––––––– (0.31p) (5.52p) –––––––––– –––––––––– 4 1 5 18 6 The accompanying accounting policies and notes form an integral part of these financial statements. Tricorn Group plc - Repor t & Accounts 2004 12 Group Balance Sheet at 31 March 2004 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 assets/(liabilities) 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 2004 £ 2003 £ 7 8 10 11 12 13 17 18 18 18 19 607,218 682,971 669,596 –––––––––– 1,276,814 –––––––––– 671,807 1,318,632 476,829 –––––––––– 1,916,239 –––––––––– 2,599,210 –––––––––– 622,196 1,207,695 90,104 –––––––––– 2,467,268 1,919,995 (1,880,955) –––––––––– 586,313 –––––––––– (2,265,434) –––––––––– (345,439) –––––––––– 1,863,127 2,253,771 (44,658) –––––––––– 1,818,469 –––––––––– 3,100,000 1,371,236 1,387,533 (4,040,300) –––––––––– 1,818,469 –––––––––– (679,025) –––––––––– 1,574,746 –––––––––– 2,760,167 1,379,813 1,387,533 (3,952,767) –––––––––– 1,574,746 –––––––––– The financial statements were approved by the Board of Directors on 30 June 2004. R Allsop Director M I Welburn Director The accompanying accounting policies and notes form an integral part of these financial statements. Tricorn Group plc - Repor t & Accounts 2004 Group Cash Flow Statement for the year ended 31 March 2004 Net cash outflow from operating activities Returns on investments and servicing of finance Interest paid Finance lease and hire purchase 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 inflow/(outflow) from capital expenditure and financial investment Acquisition Purchase of subsidiary undertaking Net cash inflow/(outflow) before financing Financing Issue of ordinary share capital Share issue costs (Repayment)/receipt of loans Capital element of finance lease rentals Net cash (outflow)/inflow from financing Increase/(decrease) in cash 13 Note 20a 2004 £ 2003 £ (254,824) (791,917) (81,114) (55,911) (40,396) –––––––––– (121,510) –––––––––– (36,307) –––––––––– (92,218) –––––––––– 13,558 7,093 (53,753) (65,733) 1,170,609 –––––––––– 1,116,856 –––––––––– 36,238 –––––––––– (29,495) –––––––––– – –––––––––– (56,037) –––––––––– 754,080 (962,574) 339,833 (8,577) (384,975) (129,151) –––––––––– (182,870) –––––––––– 571,210 –––––––––– – (21,424) 216,877 (144,391) –––––––––– 51,062 –––––––––– (911,512) –––––––––– 15 20b,20c The accompanying accounting policies and notes form an integral part of these financial statements. Tricorn Group plc - Repor t & Accounts 2004 14 Company Balance Sheet at 31 March 2004 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 8 9 2004 £ 2003 £ 21,306 1,118,329 2,552,024 –––––––––– 2,573,330 –––––––––– 3,724,270 –––––––––– 4,842,599 –––––––––– 11 2,102,327 2,686,585 12 13 17 18 18 18 200,000 –––––––––– – –––––––––– 2,302,327 2,686,585 (445,359) –––––––––– 1,856,968 –––––––––– (832,892) –––––––––– 1,853,693 –––––––––– 4,430,298 6,696,292 (1,945) –––––––––– 4,428,353 –––––––––– 3,100,000 1,371,236 1,592,500 (1,635,383) –––––––––– 4,428,353 –––––––––– (574,975) –––––––––– 6,121,317 –––––––––– 2,760,167 1,379,813 1,592,500 388,837 –––––––––– 6,121,317 –––––––––– The financial statements were approved by the Board of Directors on 30 June 2004. R Allsop Director M I Welburn Director The accompanying accounting policies and notes form an integral part of these financial statements. Tricorn Group plc - Repor t & Accounts 2004 Notes to the Financial Statements for the year ended 31 March 2004 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 (Profit)/loss on sale of tangible fixed assets Amortisation of goodwill Operating lease rentals – land and buildings – plant and equipment – motor vehicles 15 2004 £ 19,500 10,000 195,872 129,528 69,125 (53,206) 75,753 92,095 3,471 28,433 –––––––––– 2003 £ 18,000 9,250 245,726 156,873 75,585 9,114 44,560 80,258 1,003 17,411 –––––––––– 2 Directors’ emoluments N C Paul J Rubins R Allsop S W Cooper M I Welburn+ A M Cowan* N Silverthorne* T J Ballard* Basic £ 15,000 12,436 26,250 60,000 4,315 – – – –––––––––– 118,001 –––––––––– 2004 Benefits in kind £ Pension £ Total £ Basic £ 2003 Benefits in kind £ Pension £ Total £ – – 1,271 9,934 372 – – – –––––––––– 11,577 –––––––––– – – – – 302 – – – –––––––––– 302 –––––––––– 15,000 12,436 27,521 69,934 4,989 – – – –––––––––– 129,880 –––––––––– 25,000 12,000 45,000 17,213 – 30,000 21,600 23,350 –––––––––– 174,163 –––––––––– – – 15,198 – – 10,238 5,671 5,432 –––––––––– 36,539 –––––––––– – – 4,500 – – – 1,665 1,500 –––––––––– 7,665 –––––––––– 25,000 12,000 64,698 17,213 – 40,238 28,936 30,282 –––––––––– 218,367 –––––––––– During the year the amount due to R Allsop of £Nil (2003: £45,000) was paid to Malvair Properties Limited for his services as a director. * Remuneration to the dates of their resignation. + Remuneration from the date of his appointment. 3 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 2004 £ 2,281,991 216,894 47,521 –––––––––– 2,546,406 –––––––––– 2004 Number 80 38 –––––––––– 118 –––––––––– 2003 £ 2,290,886 194,815 74,262 –––––––––– 2,559,963 –––––––––– 2003 Number 76 45 –––––––––– 121 –––––––––– Tricorn Group plc - Repor t & Accounts 2004 16 Notes to the Financial Statements continued 4 Interest payable and similar charges Bank loans and overdrafts Interest on finance leases and hire purchase contracts Other interest charges 5 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 5 b) Deferred taxation (note 16) 2004 £ 58,305 40,396 22,809 –––––––––– 121,510 –––––––––– 2003 £ 11,655 36,307 44,256 –––––––––– 92,218 –––––––––– 2004 £ (24,771) 18,458 –––––––––– (6,313) – –––––––––– (6,313) –––––––––– 2003 £ (49,675) – –––––––––– (49,675) (56,700) –––––––––– (106,375) –––––––––– Unrealised tax losses of approximately £1,350,000 (2003: £1,618,000) remain available to offset against future taxable trading profits. (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 2004 £ 2003 £ (93,846) –––––––––– (1,605,228) –––––––––– Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 30% (2003: 30%) (28,153) (481,568) Effects of: Expenses not deductible for tax purposes Depreciation for year in excess of capital allowances Deferred tax asset not provided for Credit on research and development Utilisation of tax losses Adjustment in respect of prior year Current tax charge/(credit) for year Tricorn Group plc - Repor t & Accounts 2004 39,098 53,445 – (24,771) (64,390) 18,458 –––––––––– (6,313) –––––––––– 26,724 63,302 391,542 (49,675) – – –––––––––– (49,675) –––––––––– 17 6 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 27,815,811 shares (2003: 27,140,820 shares). The share options in issue are not dilutive. 7 Intangible fixed assets Cost At 1 April 2003 and 31 March 2004 Amortisation At 1 April 2003 Provided in the year At 31 March 2004 Net book amount at 31 March 2004 Net book amount at 31 March 2003 Goodwill £ 757,531 –––––––––– 74,560 75,753 –––––––––– 150,313 –––––––––– 607,218 –––––––––– 682,971 –––––––––– 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. 8 Tangible fixed assets Group Cost At 1 April 2003 Additions Disposals At 31 March 2004 Depreciation At 1 April 2003 Provided in the year Eliminated on disposals At 31 March 2004 Net book amount at 31 March 2004 Net book amount at 31 March 2003 Freehold land and buildings £ 1,198,571 – (1,198,571) –––––––––– – –––––––––– 108,181 16,640 (124,821) –––––––––– – –––––––––– – –––––––––– 1,090,390 –––––––––– Plant and machinery £ 2,539,744 53,913 – –––––––––– 2,593,657 –––––––––– 1,835,681 153,381 – –––––––––– 1,989,062 –––––––––– 604,595 –––––––––– 704,063 –––––––––– Motor vehicles £ 210,083 15,500 (84,253) –––––––––– 141,330 –––––––––– 88,297 28,632 (40,600) –––––––––– 76,329 –––––––––– 65,001 –––––––––– 121,786 –––––––––– Total £ 3,948,398 69,413 (1,282,824) –––––––––– 2,734,987 –––––––––– 2,032,159 198,653 (165,421) –––––––––– 2,065,391 –––––––––– 669,596 –––––––––– 1,916,239 –––––––––– The net book value of fixed assets includes £320,293 (2003: £412,930) in respect of assets held under finance leases and hire purchase contracts. The carrying value of freehold land not depreciated is £Nil (2003: £200,000). Tricorn Group plc - Repor t & Accounts 2004 18 Notes to the Financial Statements continued 8 Tangible fixed assets (continued) Company Cost At 1 April 2003 Additions Disposals At 31 March 2004 Depreciation At 1 April 2003 Provided in the year Eliminated on disposals At 31 March 2004 Net book amount at 31 March 2004 Net book amount at 31 March 2003 Freehold land and buildings £ 1,198,571 – (1,198,571) –––––––––– – –––––––––– 108,181 16,640 (124,821) –––––––––– – –––––––––– – –––––––––– 1,090,390 –––––––––– Plant and machinery £ 11,789 778 – –––––––––– 12,567 –––––––––– 5,054 2,947 – –––––––––– 8,001 –––––––––– 4,566 –––––––––– 6,735 –––––––––– Motor vehicles £ 22,320 – – –––––––––– 22,320 –––––––––– 1,116 4,464 – –––––––––– 5,580 –––––––––– 16,740 –––––––––– 21,204 –––––––––– Total £ 1,232,680 778 (1,198,571) –––––––––– 34,887 –––––––––– 114,351 24,051 (124,821) –––––––––– 13,581 –––––––––– 21,306 –––––––––– 1,118,329 –––––––––– The net book value of motor vehicles includes £16,740 (2003: £21,204) in respect of vehicles held under hire purchase contracts. 9 Investments Group Cost At 1 April 2003 and 31 March 2004 Amounts written off At 1 April 2003 and at 31 March 2004 Net book amount at 31 March 2004 Net book amount at 31 March 2003 Unlisted investments £ 164,500 –––––––––– 164,500 –––––––––– – –––––––––– – –––––––––– The Directors consider that there has been a permanent diminution in the value of the unlisted investment. Company Cost at 1 April 2003 and at 31 March 2004 Amounts written off At 1 April 2003 Written off during the year At 31 March 2004 Net book amount at 31 March 2004 Net book amount at 31 March 2003 Tricorn Group plc - Repor t & Accounts 2004 Unlisted investments £ Subsidiary undertakings £ Total £ 145,000 –––––––––– 3,724,270 –––––––––– 3,869,270 –––––––––– 145,000 – –––––––––– – –––––––––– – –––––––––– – –––––––––– – 1,172,246 –––––––––– 1,172,246 –––––––––– 2,552,024 –––––––––– 3,724,270 –––––––––– 145,000 1,172,246 –––––––––– 1,317,246 –––––––––– 2,552,024 –––––––––– 3,724,270 –––––––––– 19 9 Investments (continued) 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 2004 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 10 Stocks Group Raw materials Work in progress Finished goods 11 Debtors 2004 £ 284,986 143,373 243,448 –––––––––– 671,807 –––––––––– 2003 £ 251,064 185,139 185,993 –––––––––– 622,196 –––––––––– Trade debtors Taxation recoverable Amounts owed by subsidiary undertakings Other debtors Prepayments and accrued income Group Company 2004 £ 1,069,874 76,490 – 28,838 143,430 –––––––––– 1,318,632 –––––––––– 2003 £ 979,591 83,735 – 71,137 73,232 –––––––––– 1,207,695 –––––––––– 2004 £ – – 2,058,909 7,515 35,903 –––––––––– 2,102,327 –––––––––– 2003 £ – – 2,624,947 52,524 9,114 –––––––––– 2,686,585 –––––––––– Included within amounts owed by subsidiary undertakings are amounts due after more than one year of £1,486,929 (2003: £1,532,705). Tricorn Group plc - Repor t & Accounts 2004 20 Notes to the Financial Statements continued 12 Creditors: amounts falling due within one year Bank loans (note 14) Bank overdrafts Other loans Trade creditors Obligations under finance leases and hire purchase contracts (note 15) Amounts owed to subsidiary undertakings Other taxes and social security Other creditors Group Company 2004 £ – 704,967 240,000 471,280 69,248 – 151,615 243,845 –––––––––– 1,880,955 –––––––––– 2003 £ 50,000 889,452 – 466,107 123,347 – 245,300 491,228 –––––––––– 2,265,434 –––––––––– 2004 £ – 3,240 240,000 67,735 3,333 103,363 3,510 24,178 –––––––––– 445,359 –––––––––– 2003 £ 50,000 631,925 – 53,277 8,611 – 5,458 83,621 –––––––––– 832,892 –––––––––– Bank loans and overdrafts are secured by a fixed and floating charge over the assets of the Group. £451,715 which is secured upon trade debtors. Included in bank overdrafts is Other loans are unsecured and are repayable on demand. Interest is payable at varying rates between 9 and 12% per annum. Finance leases are secured on the particular assets to which they relate. 13 Creditors: amounts falling due after more than one year Bank loans (note 14) Other loans Obligations under finance leases and hire purchase contracts (note 15) 14 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 2004 £ – – 2003 £ 311,274 263,701 2004 £ – – 2003 £ 311,274 263,701 44,658 –––––––––– 44,658 –––––––––– 104,050 –––––––––– 679,025 –––––––––– 1,945 –––––––––– 1,945 –––––––––– – –––––––––– 574,975 –––––––––– Group Company 2004 £ – – – – –––––––––– – – –––––––––– – –––––––––– 2003 £ 50,000 50,000 150,000 111,274 –––––––––– 361,274 (50,000) –––––––––– 311,274 –––––––––– 2004 £ – – – – –––––––––– – – –––––––––– – –––––––––– 2003 £ 50,000 50,000 150,000 111,274 –––––––––– 361,274 (50,000) –––––––––– 311,274 –––––––––– All bank borrowings are secured by way of an unlimited debenture. The bank loans were repaid during the year following the sale of the freehold property. Interest rates were charged at 2% above bank base rate. Tricorn Group plc - Repor t & Accounts 2004 21 15 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 2004 £ 84,062 55,158 –––––––––– 139,220 (25,314) –––––––––– 113,906 –––––––––– 2003 £ 134,477 138,960 –––––––––– 273,437 (46,040) –––––––––– 227,397 –––––––––– 2004 £ 3,893 2,274 –––––––––– 6,167 (889) –––––––––– 5,278 –––––––––– 2003 £ 9,000 – –––––––––– 9,000 (389) –––––––––– 8,611 –––––––––– 2004 £ 69,248 44,658 –––––––––– 113,906 –––––––––– Group Company 2003 £ 123,347 104,050 –––––––––– 227,397 –––––––––– 2004 £ 3,333 1,945 –––––––––– 5,278 –––––––––– 2003 £ 8,611 – –––––––––– 8,611 –––––––––– Analysis of changes in finance leases and hire purchase contracts during the current and previous periods: At 1 April 2003 Inception of new contracts Capital element of rental payments At 31 March 2004 Group Company 2004 £ 227,397 15,660 (129,151) –––––––––– 113,906 –––––––––– 2003 £ 338,533 33,255 (144,391) –––––––––– 227,397 –––––––––– 2004 £ 8,611 – (3,333) –––––––––– 5,278 –––––––––– 2003 £ 2,820 22,320 (16,529) –––––––––– 8,611 –––––––––– Obligations under finance leases and hire purchase contracts are secured on the assets to which they relate. Tricorn Group plc - Repor t & Accounts 2004 22 Notes to the Financial Statements continued 16 Provisions for liabilities and charges Group At 1 April 2003 Credit for year (note 5) At 31 March 2004 Deferred taxation 2004 £ 2003 £ – – –––––––––– – –––––––––– 56,700 (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 2004 £ 9,951 (9,951) –––––––––– – – –––––––––– – –––––––––– Unprovided 2004 £ – – –––––––––– – (236,216) –––––––––– (236,216) –––––––––– Provided 2003 £ 175,507 (127,694) –––––––––– 47,813 (47,813) –––––––––– – –––––––––– Unprovided 2003 £ – – –––––––––– – (241,610) –––––––––– (241,610) –––––––––– 17 Share capital Authorised 60,000,000 (2003: 60,000,000) ordinary shares of 10p each Allotted, called up and fully paid 31,000,000 (2003: 27,601,670) ordinary shares of 10p each 2004 £ 2003 £ 6,000,000 –––––––––– 6,000,000 –––––––––– 3,100,000 –––––––––– 2,760,167 –––––––––– The Company issued 3,398,330 ordinary shares of 10p at a nominal value of £339,833 on 8 March 2004, each for a consideration of 10p per share to be utilised for working capital. The Company has approved, but not yet implemented, 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 635,000 shares (remaining after lapses) have been issued under this scheme which may be exercised in three equal tranches after six months, eighteen months and twenty four months from 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 2004 23 Share premium £ 1,379,813 (8,577) – –––––––––– 1,371,236 –––––––––– 1,379,813 (8,577) – –––––––––– 1,371,236 –––––––––– Merger reserve £ Profit and loss account £ 1,387,533 – – –––––––––– 1,387,533 –––––––––– 1,592,500 – – –––––––––– 1,592,500 –––––––––– (3,952,767) – (87,533) –––––––––– (4,040,300) –––––––––– 388,837 – (2,024,220) –––––––––– (1,635,383) –––––––––– 18 Reserves Group At 1 April 2003 Share issue costs Loss for the year At 31 March 2004 Company At 1 April 2003 Share issue costs Loss for the year At 31 March 2004 The merger reserve arose on the acquisition of Integrated Statistical Solutions Limited, which now trades as Issquared Limited. 19 Reconciliation of movements in shareholders’ funds Loss for the year Issue of shares (net of issue costs) Net increase/(reduction) in shareholders’ funds Shareholders’ funds at 31 March 2003 Shareholders’ funds at 31 March 2004 2004 £ (87,533) 331,256 –––––––––– 243,723 1,574,746 –––––––––– 1,818,469 –––––––––– 2003 £ (1,498,853) 640,077 –––––––––– (858,776) 2,433,522 –––––––––– 1,574,746 –––––––––– Tricorn Group plc - Repor t & Accounts 2004 24 Notes to the Financial Statements continued 20 Notes to the statement of Group cash flows (a) Reconciliation of operating loss to net outflow from operating activities Operating loss Depreciation Amortisation Loss on sale of tangible fixed assets (Increase)/decrease in stocks (Increase)/decrease in debtors (Decrease)/increase in creditors Net cash outflow from operating activities (b) Reconciliation of net cash flow to movement in net debt Increase/(decrease) in cash Cash used to repay capital element of finance lease and hire purchase payments Cash outflow/(inflow) from movement in loans New finance leases and hire purchase contracts Movement in net debt Net debt at 1 April 2003 Net debt at 31 March 2004 (c) Analysis of changes in net debt Cash at bank and in hand Overdraft Debt Finance leases and hire purchase contracts At 31 March 2003 £ 90,104 (889,452) –––––––––– (799,348) (624,975) (227,397) –––––––––– (1,651,720) –––––––––– Cash flow £ 386,725 184,485 –––––––––– 571,210 384,975 129,151 –––––––––– 1,085,336 –––––––––– 2004 £ (48,386) 198,653 75,753 22,844 (49,611) (118,182) (335,895) –––––––––– (254,824) –––––––––– 2003 £ (1,513,010) 232,458 44,560 9,114 265,670 121,620 47,671 –––––––––– (791,917) –––––––––– 2004 £ 2003 £ 571,210 (911,512) 129,151 384,975 –––––––––– 1,085,336 (15,660) –––––––––– 1,069,676 (1,651,720) –––––––––– (582,044) –––––––––– Non-cash movements £ – – –––––––––– – – (15,660) –––––––––– (15,660) –––––––––– 144,391 (216,877) –––––––––– (983,998) (33,255) –––––––––– (1,017,253) (634,467) –––––––––– (1,651,720) –––––––––– At 31 March 2004 £ 476,829 (704,967) –––––––––– (228,138) (240,000) (113,906) –––––––––– (582,044) –––––––––– (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 £15,660 (2003: £33,255). Tricorn Group plc - Repor t & Accounts 2004 25 21 Financial instruments The Group uses financial instruments, comprising cash, short and long term borrowings, finance leases, hire purchase contracts, 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 principally uses variable rate finance facilities given the current low level of interest rates in the UK. The interest rate exposure of the financial liabilities of the Group as at 31 March was: 31 March 2004 31 March 2003 Variable £ 704,967 –––––––––– 1,250,726 –––––––––– Fixed £ 353,906 –––––––––– 467,397 –––––––––– The weighted average fixed rates on the loans for the year amounted to 9.1%. 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 overdraft facility of £150,000, £145,000 has not been utilised at 31 March 2004. This is due for renewal by 30 June 2004. Of the invoice discounting facility of £1,050,000, £598,285 remained unutilised at 31 March 2004. There is no fixed expiry period, but this is kept under review by the provider. As per note 27, the Group has an unsecured loan of £190,000 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. Tricorn Group plc - Repor t & Accounts 2004 26 Notes to the Financial Statements continued 22 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 After more than five years Land and buildings Other 2004 £ 2003 £ 2004 £ 2003 £ 31,915 30,000 125,000 –––––––––– 186,915 –––––––––– 67,883 5,500 – –––––––––– 73,383 –––––––––– 1,744 38,459 – –––––––––– 40,203 –––––––––– 1,920 16,494 – –––––––––– 18,414 –––––––––– 23 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. 24 Capital commitments The Group had no capital commitments at 31 March 2004 or 31 March 2003. 25 Contingent liability The Company has given an unlimited guarantee against the bank borrowings of its subsidiaries. The borrowings of these companies at 31 March 2004 are included in the consolidated borrowings detailed in notes 12 and 13. 26 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 £2,024,220 (2003: £342,760). 27 Related party transactions The Group has a loan of £190,000 (2003: £200,000) from Malvair Properties Limited, a company which R Allsop controls. Interest of £16,597 (2003: £7,915) has been accrued during the year and at 31 March 2004 the outstanding balance amounted to £197,427 (2003: £207,915). Tricorn Group plc - Repor t & Accounts 2004 Shareholders’ Notes 27 Tricorn Group plc - Repor t & Accounts 2004 28 Shareholders’ Notes Tricorn Group plc - Repor t & Accounts 2004 Tricorn Group plc Spring Lane Malvern Link Malvern Worcestershire WR14 1DA Tel 01684 569956 Fax 01684 892337
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