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2019 ReportTRICORN GROUP PLC ANNUAL REPORT ANd ACCOUNTs 2012 THE fUTURE Of GLOb AL TUbULAR sOLUTIONs 21489-04 27/07/2012 PROOF 10 TrIcorn Group plc ANNUAL REPORT ANd ACCOUNTs 2012 Tricorn Group plc is the holding company for a group of companies that develop and manufacture pipe solutions to a growing and increasingly international customer base. Strategy ➤ To acquire and grow engineering based businesses that are supplying blue chip OEM customers who in turn are focused on attractive end markets. ➤ The key elements of this approach are to Drive for operational excellence, ensuring products and services are globally competitive and that class leading quality and delivery performance is achieved. Improve margins by the implementation of lean manufacturing, investing in employee development, the resourcing of materials to low cost countries and the utilisation of Group resources. Growth. Organically by increasing share within its customers and developing new customers. Inorganically through selective acquisitions where Tricorn’s management expertise can generate sufficient added value. ContentS our market 04 Chairman’s and Chief Executive’s Statement 08 Board of Directors 09 Report of the Directors 13 Corporate Governance including Remuneration Report 16 Report of the Independent Auditors 18 Group Statement of Comprehensive Income 19 Group Statement of Changes in Equity 20 Group Statement of Financial Position 21 Group Statement of Cash Flows 22 Notes to the Financial Statements 49 Company Statutory Financial Statements (prepared under UK GAAP) enerGy & uTIlITIes fabricated tubular assemblies for diesel engines and radiator sets used in power generation, mining, oil and gas TransporTaTIon Nylon, rigid and hybrid pipe assemblies for engines, brake systems, fuel sender sub-systems used in both on and off highway applications aerospace Rigid pipe assemblies for civil and military aerospace applications HiStoriCal Summary ➤ december 2001 — Listed on AIM ➤ June 2005 ➤ June 2006 ➤ June 2007 ➤ March 2012 — Announced investment in China manufacturing facility — Acquired Maxpower Automotive Limited — China team based in Nanjing established — Acquired RMdG Aerospace Limited Our products are used in some of the most demanding applications. HigHligHtS ➤ Revenue increased by 14% ➤ 48% improvement in operating profit* ➤ EPs increased by 47% to 3.78p ➤ Well positioned to capitalise on south-East Asia markets ➤ Aerospace returned to profit ➤ balance sheet continues to strengthen Summary (£’000) 2012 2011 24,706 21,764 sales revenue 1,198 Operating profit* 5.5% Operating profit margin* 1,066 Profit before tax* 1,612 Cash & equivalents -61 Net funds/(debt) 2.57p Adjusted EPs* 0.1p dividend 1,771 7.2% 1,622 2,468 586 3.78p 0.2p * Before intangible asset amortisation, share-based payment charges, interest rate swap and foreign exchange derivative valuations. 25,000 20,000 15,000 10,000 5,000 25,000 20,000 15,000 10,000 5,000 8.0% 6.0% 8.0% revenue (£’000) 6.0% 25,000 25,000 20,000 20,000 4.0% 15,000 15,000 10,000 10,000 0 0 2009/10 2010/11 2009/10 2011/12 2010/11 2011/12 5,000 5,000 2.0% 0.0% 4.0% 2.0% 0.0% 2009/10 2010/11 2009/10 2011/12 2010/11 2011/12 0 0 2009/10 2009/10 2010/11 2010/11 2011/12 2011/12 operating profit margin (%) 8.0% 8.0% 6.0% 6.0% 4.0% 4.0% 2.0% 2.0% 0.0% 0.0% 2009/10 2009/10 2010/11 2010/11 2011/12 2011/12 net debt/CaSH (£’000) adjuSted earningS per SHare (penCe) 1,000 1,000 500 0 -500 500 0 -500 -1,000 -1,000 2009/10 2010/11 2009/10 2011/12 2010/11 2011/12 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 1,000 1,000 500 500 0 0 -500 -500 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2009/10 2010/11 2009/10 2011/12 2010/11 2011/12 -1,000 -1,000 2009/10 2009/10 2010/11 2010/11 2011/12 2011/12 4.0 4.0 3.5 3.5 3.0 3.0 2.5 2.5 2.0 2.0 1.5 1.5 1.0 1.0 0.5 0.5 0.0 0.0 revenue by SeCtor 2011/12 — % 43% 35% 22% ENERGY & UTILITIES TRANSPORTATION AEROSPACE 2009/10 2009/10 2010/11 2010/11 2011/12 2011/12 0101 www.tricorn.uk.comOUR GovernanceOUR BUSIneSSOUR fInancIalS21489-04 27/07/2012 Proof 10 group OVERVIEW Tricorn companies continue to meet the demands of innovation and capability that make complex customer requirements possible. “We manufacture bespoke pipe systems that deliver quality, performance and innovation. This in turn generates long term confidence in our business and cost benefits for our customers.” The following example shows where our engineering teams have taken the challenge to raise the capability of pipe system solutions. CaSe Study delivering tHe impoSSible — multi bend one pieCe Solution tHe opportunity Our customers make engines that are designed to be compact, cost efficient and meet tough new emissions legislation. Winning new business on their latest Tier 1V Engine models would be critical to future growth. Tricorn were able to offer a unique engineered solution where others could not. tHe CHallenge To manufacture a complex pipe system containing multiple bends, angles and end forms without the use of welded joints. This is impossible to produce using conventional machinery. our Solution Our combined engineering teams designed and manufactured a unique method of end forming once the bending process had been complete. The result was a single piece solution. outCome Our customer gained from the security of a quality and performance enhanced product. Our company gained from a long term business stream on the most recent engine model for a global market. 02 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 triCorn'S global preSenCe triCorn turnover Tricorn supplies its products to a blue chip customer base. Although many of our products are supplied into the UK, we have significant exposure to global markets through our customers. As a result approximately 85% of our product is ultimately destined for markets outside the UK. our turnover by deStination iS aS followS However, a more repreSentative piCture of our turnover by tHe final deStination of our produCtS would be UK — 73% EUROPE —17% REST OF WORLD — 10% REST OF WORLD — 70% EUROPE —15% UK — 15% UK 1 Head Office, Malvern 2 Malvern Tubular Components, Malvern 3 Redman fittings, Malvern 4 Maxpower Automotive, West bromwich 5 RMdG Aerospace, swadlincote, derbyshire CHINA 6 Maxpower Automotive Components Manufacturing, Wuxi, China 7 Tricorn representative Office, Nanjing, China 5 4 1 2 3 “approximately 85% of our product is ultimately destined for markets outside the UK.” 2,3 4 5 6 7 6 03 www.tricorn.uk.comOUR GovernanceOUR BUSIneSSOUR fInancIalS21489-04 27/07/2012 Proof 10 CHairman’S ANd CHIEf EXECUTIVE’s sTATEMENT fOR THE YEAR ENdEd 31 MARCH 2012 “Tricorn has delivered a record set of results with revenue up 14%, operating profit margin up 31% and adjusted earnings per share up 47%. In light of this performance and our continued confidence in the future prospects for the business we are pleased to recommend a proposed doubling of our full year dividend to 0.2p.” Nick Paul CbE, Non-executive Chairman performanCe in tHe year We are pleased to report a record set of results with encouraging progress across all divisions. We have invested in our facilities, improved operational performance and continued to benefit from our exposure to global markets. Revenue grew by 14%, operating profit margin* increased by 31% and adjusted earnings per share* increased 47% to 3.78p. operational review The Group operates three main business segments which are focused on the Energy & Utilities, Transportation and Aerospace sectors. The businesses serve a global blue chip OEM customer base, many of whom have major facilities in the UK and the rest of Europe. The final product is then shipped into world markets from these facilities which effectively extends the Group’s global reach and reduces its dependency on the UK economy. At the same time we have remained focused on strengthening the balance sheet with net cash at the year end of £0.586m. Cash and cash equivalents were up 53% to £2.468m at the year end and, as announced at the time of our interim results, the term loan, which was not due to be repaid until August 2012, was repaid in full in October 2011. Revenue has increased by 14% over the previous year with all divisions experiencing strong demand through the final quarter. Operating profit margins are ahead of last year at both Group and divisional levels. Overall, the 1.7% year on year improvement in operating margin to 7.2% was comfortably within our underlying target range. based on the progress we have made and our confidence in future prospects, the board is recommending the payment of a final dividend of 0.13p per share. A full year dividend of 0.2p represents a 100% increase over the previous year and reinforces our commitment to a longer term progressive dividend policy. Whilst all of the divisions have made good progress during the year the performance of the Aerospace division has been particularly encouraging with a strong second half resulting in the business returning to profitability for the full year. At the same time we remained focused on continuing to strengthen the balance sheet. Inventory was reduced by a further 5% despite the higher volumes as we continued to closely manage working capital. We pride ourselves in meeting customer requirements for high variety, small batch production * before intangible asset amortisation, share-based charges, interest rate swap and foreign exchange derivative valuation. 04 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 energy & utilitieS Malvern Tubular Components specialises in fabricated and manipulated tubular assemblies for large diesel engines and radiator sets used within the Energy sector, principally power generation, mining and oil and gas applications. This was combined earlier in the year with the Redman fittings business which supplies major polyethylene pipe manufacturers with a patented pipe jointing system. 12,000 12,000 10,000 10,000 8,000 8,000 Turnover £’000 Turnover £’000 Profit Before Tax £’000 Profit Before Tax £’000 1,000 1,000 800 800 600 600 Revenue for the division was up 11% on the previous year and operating profit margin improved to 9.2%. The business continues to grow its existing customer base by developing closer and more collaborative relationships. At the same time the investment in extending capabilities in bending and design is enabling new business to be won with new customers which bodes well for future growth. The engineering team has been strengthened to ensure that the business can continue to maximise the potential opportunities for revenue growth and deliver further operational improvements. tranSportation Maxpower Automotive is focused on nylon, rigid and hybrid tubular products for engines, braking systems and fuel sender sub-systems. 6,000 6,000 Turnover £’000 Turnover £’000 Profit Before Tax £’000 Profit Before Tax £’000 12,000 4,000 12,000 4,000 10,000 2,000 10,000 2,000 8,000 8,000 0 0 12,000 12,000 6,000 10,000 6,000 10,000 4,000 8,000 10,000 2,000 6,000 4,000 8,000 10,000 2,000 6,000 8,000 0 0 8,000 4,000 4,000 6,000 2,000 6,000 2,000 4,000 0 0 4,000 10,000 10,000 2,000 8,000 2,000 8,000 400 1,000 400 1,000 200 800 200 800 Turnover £’000 Turnover £’000 Profit Before Tax £’000 Profit Before Tax £’000 0 600 1,000 1,000 0 600 2010/11 2010/11 2011/12 2011/12 2010/11 2010/11 2011/12 2011/12 Turnover £’000 Turnover £’000 800 400 400 800 Profit Before Tax £’000 Profit Before Tax £’000 2010/11 2010/11 2011/12 2011/12 800 600 200 200 600 800 700 400 0 600 700 400 0 600 2010/11 2010/11 2011/12 2011/12 Turnover £’000 Turnover £’000 500 200 400 500 200 Profit Before Tax £’000 400 Profit Before Tax £’000 2010/11 2010/11 2011/12 2011/12 0 0 800 800 300 300 200 700 700 200 2010/11 2010/11 2011/12 2011/12 Turnover £’000 Turnover £’000 600 100 600 100 Profit Before Tax £’000 Profit Before Tax £’000 Revenue increased 21% year on year with changes in emissions legislation and favourable market conditions driving demand. Product capabilities have also been extended both in terms of materials and systems and this is likely to yield significant revenue benefits in the mid term. The focus on lean implementation has also progressed well and operating margins increased to 8.8% in the year. aeroSpaCe RMdG Aerospace supplies rigid pipe assemblies used in a variety of applications within the Aerospace sector. Revenue was up 8% on the previous year with demand strengthening through the year. The focus on supplier development and selection, underpinned by long term agreements, has ensured cost stability and the development of a reliable supply base for materials and goods. This has provided the platform for further operational improvements, with the business delivering significant improvements in operating margins and consequently returning to profit in the second half and for the year as a whole. With improvements continuing to be made, additional business being won and growing demand, the board anticipates further improvements within the division over the next year. 0 0 6,000 10,000 10,000 6,000 2010/11 2010/11 2010/11 2010/11 2011/12 2011/12 2011/12 2011/12 500 0 800 500 0 800 400 700 400 700 2010/11 2010/11 2011/12 2011/12 8,000 4,000 4,000 8,000 Turnover £’000 Turnover £’000 300 600 300 Profit Before Tax £’000 600 Profit Before Tax £’000 6,000 6,000 2,000 2,000 6,000 6,000 5,000 5,000 0 4,000 4,000 0 2010/11 4,000 2,000 4,000 2,000 3,000 3,000 2010/11 2010/11 2010/11 2011/12 2011/12 2011/12 2011/12 0 0 6,000 6,000 2,000 2,000 2010/11 2010/11 2010/11 2010/11 2011/12 2011/12 2011/12 2011/12 5,000 1,000 5,000 1,000 200 500 50 100 400 0 0 300 -50 200 500 50 100 400 0 0 300 -50 200 -100 200 -100 2010/11 2010/11 2011/12 2011/12 0 50 -200 0 50 -200 0 -250 0 -250 2010/11 2010/11 2011/12 2011/12 Turnover £’000 Turnover £’000 Profit Before Tax £’000 Profit Before Tax £’000 100 -150 100 -150 Turnover £’000 Turnover £’000 -50 -300 Profit Before Tax £’000 Profit Before Tax £’000 -50 -300 4,000 4,000 0 0 6,000 6,000 2010/11 3,000 5,000 3,000 5,000 2010/11 2010/11 2010/11 2011/12 2011/12 2011/12 2011/12 2,000 4,000 2,000 4,000 1,000 3,000 1,000 3,000 0 0 2,000 2,000 2010/11 2010/11 2010/11 2010/11 2011/12 2011/12 2011/12 2011/12 1,000 1,000 0 0 2010/11 2010/11 2010/11 2010/11 2011/12 2011/12 2011/12 2011/12 -100 -350 50 -100 -350 50 -150 -150 0 0 -200 -50 -200 -50 -250 -100 -250 -100 -300 -150 -300 -150 -350 -200 -350 -200 -250 -250 -300 -300 -350 -350 2010/11 2010/11 2011/12 2011/12 2010/11 2010/11 2011/12 2011/12 2010/11 2010/11 2011/12 2011/12 05 www.tricorn.uk.comOUR GovernanceOUR BUSIneSSOUR fInancIalS21489-04 27/07/2012 Proof 10 CHairman'S ANd CHIEf EXECUTIVE’s sTATEMENT continued fOR THE YEAR ENdEd 31 MARCH 2012 “An improvement in top line growth across all of the Group’s sectors enabled a 14% increase in revenue to £24.706m (2011: 21.764m), whilst continued improvements in operational performance saw gross margins improve to 33%.” expanSion in CHina In early March 2012, the Company announced its intention to establish a manufacturing facility in China as a key part of its strategic development in south-East Asia. The Company has had a purchasing office in China for the last seven years and, as a result, a well-developed network of subcontractors and suppliers. The Company is therefore ideally placed to support its customers in localising their supply chain which in turn provides significant additional opportunities for the Group. The process of registering the local company has been completed. The Company now has a facility and the installation of plant and equipment will commence shortly. Initial investment is estimated to be approximately £1.0m and the Company remains firmly on track to have the facility operational by the end of 2012 and earnings enhancing in the financial year ending 31 March 2014. finanCial review The Group has had a very productive year, delivering a 52% increase in profit before tax* on record turnover of £24.706m. In addition, it has remained highly cash generative, returning to a cash positive position in a year during which it has repaid its term loan and invested £0.9m in new capital projects, as well as announcing its intention to invest an initial £1.0m in the forthcoming year in new manufacturing facilities in China. In line with the Company’s progressive dividend policy the board is recommending the payment of a final dividend of 0.13p per share, giving a total dividend of 0.2p for the financial year ended 31 March 2012. The final dividend will be paid on 19 October 2012 to all shareholders on the register on 5 October 2012. £2.468m Cash & Equivalent up 53% 0.2p per share Payment to shareholders doubled inCome Statement An improvement in top line growth across all of the Group’s sectors enabled a 14% increase in revenue to £24.706m (2011: £21.764m), whilst continued improvements in operational performance saw gross margins improve to 33%. With continued control over administration and distribution costs, operating profit* was up 48% to £1.771m (2011: £1.198m) and operating profit margins improved 31% to 7.2% (2011: 5.5%). After deducting intangible asset amortisation, share-based payment charges and credits relating to foreign exchange derivative contracts, operating profit was up 56% to £1.604m (2011: £1.026m). Net finance charges for the year were £0.078m (2011: £0.099m). On 30 March 2012, the Group gave notice to settle its cap and collar arrangement with its bankers. As a result the full year finance charge includes a credit relating to the reversal of the swap valuation of £0.071m (2011: £0.033m), as well as a final settlement charge of £0.026m. Unadjusted profit before tax for the financial year was up 65% to £1.526m (2011: £0.927m). basic EPs was up 63% at 3.49p (2011: 2.14p) and, after adjusting for one-off costs EPs* was up 47% to 3.78p (2011: 2.57p). £24.706m sales revenue up 14% 7.2% Operating margins up 31% * before intangible asset amortisation, share-based charges, interest rate swap and foreign exchange derivative valuation. Investment in our tube manipulation capabilities positions us well for future growth 06 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 CaSH flow The Group’s net cash flow from operating activities was £1.296m, an increase of 34% over last financial year’s result of £0.968m. This came as a result of a strong profit to cash flow conversion, and despite higher taxation payments in the year. The Group continued to make investments in capital projects during the year, with expenditure of £0.907m including items taken on finance leases. Improvements in operational efficiency are a key driver for all of the Group’s capital expenditure. In June 2011, to satisfy institutional demand, the Group sold 875,000 shares that it held in Treasury. This resulted in a cash inflow of £0.278m, net of fees, and helped to improve cash and equivalents to £2.468m at the year end, an increase of £0.856m (53%) over the previous year end balance of £1.612m. As part of its ongoing review of its borrowings facilities and requirements the Group repaid its term loan facility, through a payment of £0.250m, on 20 October 2011. This facility had not been due for full repayment until August 2012. As a result of the above activities the Group reported a net cash position of £0.586m at 31 March 2012. This compares to a net debt position of £0.061m at 31 March 2011. balanCe SHeet At the year end, the total gross assets of the Group increased to £13.997m (2011: 12.022m), predominantly on the back of the increased expenditure on capital projects and the increase in cash and equivalents in the year. despite higher trading volumes, the Group was able to drive a further reduction in inventory in the year of £0.158m to £2.929m (2011: £3.087). Total working capital at the year end saw a modest increase to £4.172m (2011: £3.891m). The Group continues to develop its global presence outlook Our alignment with major global OEM customers and our expansion of manufacturing to serve the expanding markets of south-East Asia positions us well for the future and we are very optimistic about mid term growth opportunities. Tricorn has a very sound basis for future growth. With our proven ability to deliver operational improvements we are confident of making further progress in the current year. nick paul cBe Chairman 11 June 2012 people We are deeply grateful for the energy, passion and skills of our people and we continue to invest in their development. Mike Welburn Chief Executive 11 June 2012 We have extended our National Vocational Qualification programme to further support the development of the business and this continues to provide a firm foundation for further operational improvement. Michael Greensmith has announced his intention to step down from his role as Company secretary at this year’s AGM. We would like to thank him for his contribution to the business over many years. Phil Lee will take over the role of Company secretary in addition to his current responsibilities as Group finance director. 07 www.tricorn.uk.comOUR GovernanceOUR BUSIneSSOUR fInancIalS21489-04 27/07/2012 Proof 10 board Of dIRECTORs fOR THE YEAR ENdEd 31 MARCH 2012 ExEcutivE DirEctors mike welburn chief executive officer Joined Tricorn in April 2003, appointed to the board in March 2004 and as Chief Executive in November 2007. He had previously been with IMI plc for 18 years where he had held a number of senior roles within the fluid Power division. This included responsibility for European Operations and Global OEM strategy. pHil lee Group Finance Director Joined Tricorn in January 2009 and appointed to the board in february 2009. He had previously been at Rolls-Royce plc for nine years working in a number of roles including finance director of distributed Generation systems (part of the Rolls-Royce Energy business). Prior to Rolls-Royce he had been with National Grid Plc. david leakey Group sales Director Joined Tricorn and appointed to the board in June 2011. He had previously spent 27 years working at Norgren Ltd, the Motion and fluid Controls division of IMI Plc. He has most recently held the role of Global sales director in the Energy sector, with responsibility for the global business development of the company’s products into the oil and gas markets. david has also held the position of sales director in Norgren’s Life sciences and Automotive sectors. NoN-ExEcutivE DirEctors niCk paul Cbe non-executive chairman Appointed to the board as non-executive Chairman in October 2001. Chairman of the Nominations Committee and member of the Remuneration and Audit Committees. He has a wealth of international business experience and had previously been deputy Chief Executive of IMI plc. He has also been Chairman of the Regional development Agency, Advantage West Midlands, and Chairman of Midlands Expressway Limited. In the past he has been Chairman of the West Midlands CbI and non-executive director of John Laing Homes plc and sig plc. He is currently Chairman of severn Valley Railway (Holdings) plc. roger allSop non-executive Director Chief Executive of Tricorn up to 2002 after which he became a non-executive director. Chairman of the Audit and Remuneration Committees and a member of the Nomination Committee. He was previously managing director of Westwood dawes plc and non-executive director of Netcall plc. CommitteeS audit committee Roger Allsop – Chairman Nick Paul Michael Greensmith – secretary 08 nomination committee Nick Paul – Chairman Roger Allsop Michael Greensmith – secretary remuneration committee Roger Allsop – Chairman Nick Paul Michael Greensmith – secretary Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 report Of THE dIRECTORs fOR THE YEAR ENdEd 31 MARCH 2012 The directors present their annual report together with the audited financial statements for the Group for the year ended 31 March 2012. 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 and Chief Executive’s statement. There was a profit for the year after taxation amounting to £1.156m (2011: £0.687m). As part of a longer term progressive dividend policy, the board has recommended the payment of a final dividend of 0.13p per share, giving a full year dividend of 0.2p per share. prinCipal riSkS and unCertaintieS The management of the business and the nature of the Group’s strategy are subject to a number of risks. The directors are of the opinion that a thorough risk management process is adopted which involves the formal review of all the risks identified below. Where possible, processes are in place to monitor and mitigate such risks. The directors have set out below the principal risks facing the business. EcoNomic climatE The Group is exposed to global markets through both its customer base and the market sectors that its serves. As a result there is constant monitoring of the economic environment by the board to ensure that the Group responds to economic changes appropriately in order to ensure that the risk of any impact is mitigated. supply chaiN At an operational and strategic level the Group ensures that it develops close relationships with its customers and its suppliers. by doing this it is in a position to understand the changing nature of sourcing and supply chain strategy quickly and respond accordingly to any risks that this might pose to the Group. compEtitioN The Group ensures that it is constantly monitoring its competitive environment in order to respond to competitive pressures as well as taking advantage of any opportunities that are presented to it. Regular reviews of market intelligence ensure that the Group manages its competition risk. opEratioNal A focus on operational improvement ensures that the Group’s products remain reliable and of the highest quality. Recruiting, retaining, developing and motivating staff also continue to be a key priority for the Group. With operational performance being such a high priority for the Group, risks are identified and managed on a regular basis. ENviroNmENtal The Group reviews the risk that its activities place on the environment through the promotion of green initiatives wherever possible. 09 www.tricorn.uk.com21489-04 27/07/2012 PROOF 10our GOVERNANCEour bUsINEssour fINANCIALs report Of THE dIRECTORs continued fOR THE YEAR ENdEd 31 MARCH 2012 finanCial riSkS and management The Group’s principal financial instruments comprise an invoice discounting facility, hire purchase and finance lease contracts, cash and short term deposits. The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has various other financial instruments such as trade receivables and trade payables, which arise directly from its operations. The main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk, commodity price risk, foreign currency risk, and credit risk. The board reviews and agrees policies for managing each of these risks and they are summarised below. iNtErEst ratE risk The policy of the Group is to manage its interest cost using a mix of fixed and variable rate debt. The Group’s exposure to interest rate fluctuations on its borrowings is currently managed by the use of floating facilities. The Group finances specific large plant acquisitions via hire purchase or finance lease contracts. The interest rate risk on positive cash balances is not considered to be significant. liquiDity risk The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank deposits, bank loans, overdrafts, invoice discounting and finance lease and hire purchase contracts. Money on deposit is held on treasury reserve, partly to finance working capital and also to help finance future acquisitions. commoDity pricE risk The exposure of the Group to the price of steel is high; therefore, selling prices are monitored regularly to reduce the impact of such risk and opportunities to reduce material costs are explored constantly. The Group has partly responded to this risk by sourcing materials in low cost countries. The Group also looks to recharge any increased cost of commodities to customers. ForEigN currENcy risk Certain purchases and sales are made in foreign currencies. In order to minimise the impact of currency movements the Group utilises short term forward currency contracts. such cover is determined by written policies set by the board. foreign exchange differences on retranslation of foreign currency assets and liabilities are taken to the Group statement of comprehensive income. crEDit risk The Group trades with only recognised, creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit vetting procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant. otHer non-finanCial riSkS The Group supplies products to a large number of customers and works with a number of key suppliers. successful management of this process is key to delivering the results of the Group. This is also underpinned by retention and training of our staff to ensure that our knowledge and skills are maintained. direCtorS The present membership of the board is set out below. N C Paul CbE R Allsop M I Welburn P Lee d E Leakey (appointed 3 June 2011) N silverthorne resigned as a director of the Company on 31 May 2011. SHare Capital details of the Company’s share capital are given in note 25 to the financial statements. The Group’s policy for managing capital and financing to support the activities of the Group is detailed in note 22 to the financial statements. 10 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 SubStantial SHareHoldingS The only interests in excess of 3% of the issued share capital of the Company, which have been notified as at 22 May 2012, were as follows: R Allsop Hargreave Hale Limited J M finn & Co Limited Rock Nominees Limited (account 501198) Quilter Nominees Limited Ordinary shares of 10 pence each Number Percentage of capital % 11,220,000 7,397,386 1,797,834 1,370,150 1,025,000 33.60 22.15 5.38 4.10 3.07 HealtH and Safety The Group recognises its responsibility to ensure that its employees work in as safe a working environment as possible. Checks are also implemented to ensure its customers comply with Health and safety legislation. payment to SupplierS It is the Group’s policy to agree appropriate terms and conditions for its transactions with suppliers by means ranging from standard terms and conditions to individually negotiated contracts and to pay suppliers according to agreed terms and conditions, provided that the supplier meets those terms and conditions. The Group does not have a standard or code which deals specifically with the payment of suppliers. Group trade payables at the year end amount to 54 days of average supplies (2011: 61 days). The Company trade payables are 48 days (2011: 55 days). direCtorS’ reSponSibilitieS for tHe group finanCial StatementS The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare Group financial statements in accordance with International financial Reporting standards as adopted by the European Union (IfRs). Under company law the directors must not approve the Group financial statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the Group for that period. In preparing these Group financial statements, the directors are required to: select suitable accounting policies and then apply them consistently – – make judgements and estimates that are reasonable and prudent – state whether applicable IfRs 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. – 11 www.tricorn.uk.com21489-04 27/07/2012 PROOF 10our GOVERNANCEour bUsINEssour fINANCIALs report Of THE dIRECTORs continued fOR THE YEAR ENdEd 31 MARCH 2012 The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the Group financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors confirm that: ● so far as each director is aware, there is no relevant audit information of which the Group’s auditors are unaware; and ● the directors have taken all steps that they ought to have taken, as directors in order to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. auditorS Grant Thornton UK LLP offer themselves for reappointment as auditors in accordance with section 489 of the Companies Act 2006. ON bEHALf Of THE bOARd M I Welburn director 11 June 2012 12 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 Corporate GOVERNANCE fOR THE YEAR ENdEd 31 MARCH 2012 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. It meets on a regular basis and has a schedule of matters specifically reserved to it for decision. 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. The board consists of three 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 CbE and the other non-executive director is R Allsop. The board approves the strategic decisions of the Group. The Group’s business is run on a day to day basis by M I Welburn, P Lee and d E Leakey with M I Welburn 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 which is chaired by R Allsop. The committee meets 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 the financial statements 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. board StruCture The key features of the Group’s system of governance are as follows: – the Group is headed by an effective board, which leads and controls it; – there is a clear division of responsibilities in running the board and running the Group’s business; – the board comprises a reasonable balance between 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. 13 www.tricorn.uk.com21489-04 27/07/2012 PROOF 10our GOVERNANCEour bUsINEssour fINANCIALs Corporate GOVERNANCE continued fOR THE YEAR ENdEd 31 MARCH 2012 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. detailed cash flow forecasts have been prepared which highlight that the Group has sufficient cash headroom to support its activities. The key assumptions in these forecasts have been sensitised and no issues arise which lead to any concern regarding the operations or financing of the Group. for this reason, the directors 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 the Group believes in rewarding vision and innovation. poliCy on exeCutive direCtorS’ remuneration detail of individual directors’ remuneration is set out in note 5 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. It aims to provide sufficient levels of 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 which is chaired by R Allsop. baSiC annual Salary The Remuneration Committee reviews each executive director’s basic salary annually. In deciding upon appropriate levels of remuneration the board believes that the Group should offer levels of base pay reflecting individual responsibilities and which are commensurate with similar jobs in other business sectors. annual bonuS paymentS, benefitS and penSion arrangementS M I Welburn, P Lee and d E Leakey participate in a performance related bonus arrangement through Tricorn Group plc. M I Welburn, P Lee and d E Leakey benefit from the provision of private medical insurance, the provision of company cars or car allowance and are eligible to participate in a contributory pension scheme. R Allsop and N C Paul CbE receive no bonus, pension or benefits in kind. notiCe periodS M I Welburn has a service agreement with the Company which is terminable on not less than 12 months' written notice given by either party to the other at any time. P Lee has a service agreement with the Company which is terminable on not less than six months' written notice given by either party to the other at any time. d E Leakey has a service agreement with the Company which is terminable on not less than three months' written notice given by either party to the other at any time. N C Paul CbE and R Allsop have letters of appointment with the Company which are terminable upon six months’ written notice being given by either party. 14 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 SHare option inCentiveS The Company has adopted a number of individual unapproved and enterprise management incentive scheme share option agreements to motivate and retain key personnel of the Group. At 31 March 2012 the following options were held by the directors: At beginning of period Number 300,000 361,844 1,000,000 — 200,000 150,000 500,000 921,000 1,263,156 Lapsed during the year Number — — — — — — — — — unapproved share options N C Paul CbE M I Welburn M I Welburn d E Leakey enterprise management scheme (eMI) options N silverthorne N silverthorne P Lee P Lee M I Welburn Granted during the year Number — — — 500,000 Exercised during the year Number at end of year number Exercise price £ — — 300,000 361,844 — 1,000,000 — 500,000 — — — — — (200,000) (150,000) — — — — 500,000 921,000 — 1,263,156 0.10 0.10 0.10 0.30 0.10 0.20 0.10 0.10 0.10 unapproved SHare optionS N C Paul’s option, which was granted on 16 september 2010, has vested and will remain in force for ten years. M I Welburn’s unapproved share option was granted on 16 september 2010, over 361,844 shares. This scheme has vested and is in force for ten years with an exercise price of 10p per share. The unapproved options over 1,000,000 shares for M I Welburn were granted under the Group’s LTIP and vest in tranches of 200,000 shares once the share price has achieved the trigger points of 20p, 25p, 30p, 35p and 40p for ten consecutive days. d E Leakey was granted an unapproved option over 500,000 shares at 30p on 6 June 2011. The option is exercisable after three months' continuous employment. This option is in force for ten years and does not have performance conditions attached to it. emi optionS M I Welburn’s EMI share option for 1,263,156 shares was granted on 5 August 2010. This scheme has vested and is in force for ten years with an exercise price of 10p per share. P Lee was granted an EMI option over 500,000 shares at 10p on 31 March 2009. The first 250,000 are exercisable after three months' continuous employment. The second 250,000 are exercisable after a further 12 months' continuous employment. This option is in force for ten years and does not have performance conditions attached to it. In addition, a further 921,000 shares were granted on 5 August 2010, 736,800 of which have vested at 31 March 2012. These options vest in tranches of 184,200 shares once the share price has achieved the trigger points of 20p, 25p, 30p, 35p and 40p for ten consecutive days. The exercise periods for share options were set by the Remuneration Committee in order to incentivise and retain key executives. 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 2012 was 33.75p (31 March 2011: 18.50p) and the range during the year was 23.00p to 38.25p (2011: 6.70p to 21.70p). 15 www.tricorn.uk.com21489-04 27/07/2012 PROOF 10our GOVERNANCEour bUsINEssour fINANCIALs report Of THE INdEPENdENT AUdITORs TO THE MEMbERs Of TRICORN GROUP PLC We have audited the Group financial statements of Tricorn Group plc for the year ended 31 March 2012 which comprise the Group statement of comprehensive income, the Group statement of changes in equity, the Group statement of financial position, the Group statement of cash flows and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International financial Reporting standards (IfRss) as adopted by the European Union. This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. 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 auditor’s 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 direCtorS and auditorS As explained more fully in the directors’ Responsibilities statement set out on pages 11 and 12, the directors are responsible for the preparation of the Group financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the Group financial statements in accordance with applicable law and International standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices board’s (APb’s) Ethical standards for Auditors. SCope of tHe audit of tHe finanCial StatementS A description of the scope of an audit of financial statements is provided on the APb’s website at www.frc.org.uk/apb/scope/private.cfm. opinion on finanCial StatementS In our opinion the Group financial statements: ● give a true and fair view of the state of the Group’s affairs as at 31 March 2012 and of its profit for the year then ended; ● have been properly prepared in accordance with IfRs as adopted by the European Union; and ● have been prepared in accordance with the requirements of the Companies Act 2006. Separate opinion in relation to ifrS As explained in note 2 to the Group financial statements, the Group in addition to complying with its legal obligation to comply with IfRss as adopted by the European Union, has also complied with IfRss as issued by the International Accounting standards board (IAsb). In our opinion the Group financial statements comply with IfRss as issued by the IAsb. opinion on otHer matter preSCribed by tHe CompanieS aCt 2006 In our opinion the information given in the Report of the directors for the financial year for which the Group financial statements are prepared is consistent with the Group financial statements. matterS on wHiCH we are reQuired to report by exCeption We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: ● certain disclosures of directors’ remuneration specified by law are not made; or ● we have not received all the information and explanations we require for our audit. otHer matter We have reported separately on the parent company financial statements of Tricorn Group plc for the year ended 31 March 2012. David Munton senior statutory Auditor for and on behalf of Grant Thornton UK LLP statutory Auditor, Chartered Accountants birmingham 11 June 2012 16 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 Tricorn Group plc Group Consolidated Financial Statements For the year ended 31 March 2012 Company number 1999619 contents 18 Group statement of Comprehensive Income 19 Group statement of Changes in Equity 20 Group statement of financial Position 21 Group statement of Cash flows 17 www.tricorn.uk.com21489-04 27/07/2012 PROOF 10OUR GovernanceOUR BUSIneSSOUR fInancIalS group sTATEMENT Of COMPREHENsIVE INCOME fOR THE YEAR ENdEd 31 MARCH 2012 notes 3 3 12 8 8 9 3 10 10 2012 £’000 24,706 (16,485) 8,221 (1,017) (5,433) 2011 £’000 21,764 (14,845) 6,919 (925) (4,796) 1,771 1,198 (118) (54) 5 4 (82) 1,526 (117) (44) (11) 1,026 5 (104) 927 (370) (240) 1,156 1,156 3.49p 3.39p 687 687 2.14p 2.12p 3/4 1,604 revenue Cost of sales Gross profit distribution costs Administration costs operating profit before intangible asset amortisation, fair value adjustments for foreign exchange contracts and share-based payment charges Intangible asset amortisation share-based payment charge fair value change relating to forward exchange contracts operating profit finance income finance costs profit before tax Income tax expense profit for the year and total comprehensive income attributable to: Equity holders of the parent company earnings per share: basic earnings per share diluted earnings per share All of the activities of the Group are classed as continuing. The accompanying notes form an integral part of these financial statements. 18 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 group sTATEMENT Of CHANGEs IN EQUITY fOR THE YEAR ENdEd 31 MARCH 2012 share- based payment reserve £’000 Investment in own shares £’000 profit and loss account £’000 share capital £’000 3,302 2 — Balance at 1 april 2010 Transactions with owners Profit and Total Comprehensive income Balance at 31 March 2011 3,304 Issue of new shares sale of Treasury shares share-based payment charge share-based payment reserve transfer dividends paid Total transactions with owners Profit and Total Comprehensive income 35 — — — — 35 — share premium £’000 Merger reserve £’000 1,448 1,388 — — 1,448 15 229 — — — 244 — — — 1,388 — — — — — — — Balance at 31 March 2012 3,339 1,692 1,388 227 The accompanying notes form an integral part of these financial statements. 193 44 — 237 — — 54 (64) — (10) — (49) — — (49) — 49 — — — 49 — — Total £’000 4,778 46 687 (1,504) — 687 (817) 5,511 — — — 64 (56) 8 50 278 54 — (56) 326 1,156 1,156 347 6,993 19 www.tricorn.uk.com21489-04 27/07/2012 PROOF 10OUR GovernanceOUR BUSIneSSOUR fInancIalS group sTATEMENT Of fINANCIAL POsITION AT 31 MARCH 2012 assets non-current Goodwill Intangible assets Property, plant and equipment current Inventories Trade and other receivables Cash and cash equivalents Total assets liabilities current Trade and other payables financial liabilities at fair value through profit or loss borrowings Corporation tax non-current borrowings deferred tax Total liabilities net assets equity share capital share premium account Merger reserve share-based payment reserve Investment in own shares Profit and loss account Total equity The financial statements were approved by the board of directors on 11 June 2012. M I Welburn director Company number: 1999619 The accompanying notes form an integral part of these financial statements. 20 notes 2012 £’000 2011 £’000 11 12 13 15 16 17 19 24 20 20 18 25 591 558 1,628 2,777 2,929 5,823 2,468 11,220 13,997 (4,580) (7) (1,514) (310) (6,411) (368) (225) (593) (7,004) 6,993 3,339 1,692 1,388 227 – 347 6,993 591 676 1,040 2,307 3,087 5,016 1,612 9,715 12,022 (4,212) (82) (1,578) (312) (6,184) (95) (232) (327) (6,511) 5,511 3,304 1,448 1,388 237 (49) (817) 5,511 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 group sTATEMENT Of CAsH fLOWs fOR THE YEAR ENdEd 31 MARCH 2012 cash flows from operating activities Profit after taxation Adjustment for: depreciation Net finance costs in statement of comprehensive income Amortisation charge share-based payment charge (Gain)/charge relating to foreign exchange derivative contract Taxation expense recognised in statement of comprehensive income Increase in trade and other receivables Increase in trade payables and other payables decrease in inventories Cash generated from operations Interest paid Income taxes paid net cash from operating activities cash flows from investing activities Purchase of plant and equipment Proceeds from sale of plant and equipment Interest received net cash used in investing activities cash flows from financing activities Proceeds from sale of Treasury shares Issue of ordinary share capital dividend paid Movement in short term borrowings Repayment of bank borrowings Payment of finance lease liabilities net cash used in financing activities net increase in cash and cash equivalents cash and cash equivalents at beginning of year cash and cash equivalents at end of year The accompanying notes form an integral part of these financial statements. 2012 £’000 1,156 301 78 118 54 (5) 370 (807) 381 158 1,804 (130) (378) 1,296 2011 £’000 687 326 99 117 44 11 240 (1,169) 799 20 1,174 (137) (69) 968 (465) (187) 10 4 — 5 (451) (182) 278 50 (56) 195 (400) (56) 11 856 1,612 2,468 — 2 — (119) (300) (53) (470) 316 1,296 1,612 21 www.tricorn.uk.com21489-04 27/07/2012 PROOF 10OUR GovernanceOUR BUSIneSSOUR fInancIalS noteS TO THE fINANCIAL sTATEMENTs fOR THE YEAR ENdEd 31 MARCH 2012 1 general information Tricorn Group plc and subsidiaries’ (the ‘Group’) principal activities comprise high precision tube manipulation, systems engineering and specialist fittings. The Group’s customer base includes major blue chip companies with world wide activities in key market sectors, including Pipefittings, Power Generation, Aerospace, Off Highway, and Automotive. Tricorn Group plc is the Group’s ultimate parent company. It is incorporated and domiciled in the United Kingdom. The address of the registered office, which is also its principal place of business, is spring Lane, Malvern, Worcestershire, WR14 1dA. It’s shares are listed on the Alternative Investment Market of the London stock Exchange. These consolidated financial statements have been approved for issue by the board of directors on 11 June 2012. Amendments to the financial statements are not permitted after they have been approved. 2 aCCounting poliCieS Basis of preparation These consolidated financial statements have been prepared under the required measurement bases specified under International financial Reporting standards (IfRs) and in accordance with applicable IfRs as adopted by the European Union and IfRs as issued by the International Accounting standards board. 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. detailed cash flow forecasts have been prepared which highlight that the Group has sufficient cash headroom to support its activities. The key assumptions in these forecasts have been sensitised and no issues arise which lead to any concern regarding the operations or financing of the Group. for this reason, the directors continue to adopt the going concern basis in preparing the financial statements. overall considerations The significant accounting policies that have been used in the preparation of these consolidated financial statements are summarised below. The consolidated financial statements have been prepared using the measurement bases specified by IfRs for each type of asset, liability, income and expense. The measurement bases are more fully described in the accounting policies below. The accounting estimates and assumptions are consistent with the Group’s latest approved budget forecast where applicable. Judgements are based on the information available at each reporting date. All estimates are based on the best information available to management. 22 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 2 aCCounting poliCieS continued standards and interpretations not yet applied by the Group The following new standards and Interpretations, which are yet to become mandatory, have not been applied in the Group’s financial statements. standard or Interpretation IfRs 9 IAs 24 IfRs 12 IfRs 13 IAs 27 (revised) financial Instruments Consolidated financial statements disclosure of Interests in Other Entities fair Value Measurements separate financial statements effective for reporting periods starting on or after 1 January 2015 1 January 2013 1 January 2013 1 January 2013 1 January 2013 significant accounting estimates and judgements Certain estimates and judgements need to be made by the directors of the Group which affect the results and position of the Group as reported in the financial statements. Estimates and judgements are required at the reporting date regarding certain assets/liabilities that are recorded at fair value which require a number of estimates and assumptions to be made. The major areas for estimation within the financial statements are as follows: ● ● ● performance of impairment reviews to assess the carrying value of goodwill (see note 11); valuation of interest rate collar (see note 24) (terminated in March 2012); estimates of inventory recoverability. Management review ageing of inventory, movement levels throughout the year and forecast future usage levels to set an adequate inventory provision to cover obsolete inventory lines. There are no major areas for judgements within the financial statements which are not covered by the accounting policies detailed below. consolidation and investments in subsidiaries subsidiaries are all entities over which the Group has the power to control the financial and operating policies. The Group obtains and exercises control through voting rights. The consolidated financial statements of the Group incorporate the financial statements of the parent company as well as those entities controlled by the Group by full consolidation. Acquired subsidiaries are subject to application of the purchase method. This involves the revaluation at fair value of all identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the acquisition date, regardless of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition. On initial recognition, the assets and liabilities of the subsidiary are included in the Group statement of financial position at their revalued amounts, which are also used as the basis for subsequent measurement in accordance with the Group accounting policies. Goodwill represents the excess of acquisition cost over the fair value of the Group’s share of the identifiable net assets of the acquired subsidiary at the date of acquisition. Intra-group balances and transactions, and any unrealised gains or losses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. 23 www.tricorn.uk.com21489-04 27/07/2012 PROOF 10OUR GovernanceOUR BUSIneSSOUR fInancIalS noteS TO THE fINANCIAL sTATEMENTs continued 2 aCCounting poliCieS continued Business combinations completed prior to date of transition to IFrs The Group has elected not to apply IfRs 3 business Combinations retrospectively to business combinations prior to the date of transition to IfRs, 1 April 2006. Accordingly the classification of the combination (acquisition, reverse acquisition or merger) remains unchanged from that used under UK GAAP. Assets and liabilities are recognised at date of transition if they would be recognised under IfRs, and are measured using their UK GAAP carrying amount immediately post-acquisition as deemed cost under IfRs, unless IfRs requires fair value measurement. deferred tax is adjusted for the impact of any consequential adjustments after taking advantage of the transitional provisions. revenue recognition Revenue is measured by reference to the fair value of consideration received or receivable by the Group for goods supplied and services provided, excluding VAT and trade discounts. Revenue is recognised upon the performance of services or transfer of risk to the customer. The Group recognises revenue when persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; the sale price fixed and determinable; and collectability is reasonably assured. Amounts received are recognised immediately as revenue where there are no substantial risks, there are no ongoing performance obligations and amounts received are not refundable. Amounts are deferred over an appropriate period where these conditions are not met. Inventories Inventories are stated at the lower of cost and net realisable value. Costs of ordinarily interchangeable items are assigned using the first in, first out cost formula. Cost of work in progress and finished goods includes materials, direct labour and an attributable proportion of manufacturing overheads based on normal levels of activity. Provisions are made against inventories where there is evidence that the carrying amount has fallen below recoverable amount. Goodwill Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition. Goodwill which is recognised as an asset is reviewed for impairment at least annually. Any impairment is recognised immediately through profit or loss and is not subsequently reversed. Impairment The Group’s goodwill, intangible assets and property, plant and equipment are subject to impairment testing. for the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Goodwill is allocated to those cash-generating units that are expected to benefit from synergies of the related business combination and represent the lowest level within the Group at which management controls the related cash flows. Goodwill with an indefinite useful life is tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell and value in use, based on an internal discounted cash flow evaluation. Impairment losses recognised for cash-generating units, to which goodwill has been allocated, are credited initially to the carrying amount of goodwill. Any remaining impairment loss is charged pro rata to the other assets in the cash-generating unit. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. If the impairment is subsequently reversed, the carrying amount, except in the case of goodwill, is increased to the revised estimate of its recoverable amount, limited to the carrying value that would have been determined had no impairment been recognised previously. Impairment losses in respect of goodwill are not subsequently reversed. 24 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 2 aCCounting poliCieS continued Intangible assets acquired as part of a business combination In accordance with IfRs 3 business Combinations, an intangible asset acquired in a business combination is deemed to have a cost to the Group of its fair value at the acquisition date. The fair value of the intangible asset reflects market expectations about the probability that the future economic benefits embodied in the asset will flow to the Group. Where an intangible asset might be separable, but only together with a related tangible or intangible asset, the Group of assets is recognised as a single asset separately from goodwill where the individual fair values of the assets in the Group are not reliably measurable. Where the individual fair value of the complementary assets are reliably measurable, the Group recognises them as a single asset provided the individual assets have similar useful lives. Intangible amortisation Intangible assets are amortised over the following periods: brand names Customer contracts 15 years 5 years Foreign currencies These financial statements are presented in UK sterling which is the functional currency of the parent and the presentational currency of the Group. Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the reporting date. Exchange differences are dealt with through profit or loss. property, plant and equipment Property, plant and equipment are carried at acquisition cost less subsequent depreciation and impairment losses. depreciation is charged on these assets, after adjusting for their residual values, on a straight-line basis over the estimated useful economic life of each asset. The useful lives of property, plant and equipment can be summarised as follows: Plant and equipment Motor vehicles 3 to 10 years 5 years leases The economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards related to the ownership of the leased asset and is then disclosed and accounted for as a finance lease asset. The related asset is recognised at the time of inception of the lease at the fair value of the leased asset or, if lower, the present value of the lease payments plus incidental payments, if any, to be borne by the lessee. A corresponding amount is recognised as a finance leasing liability, irrespective of whether some of these lease payments are payable upfront at the date of inception of the lease. subsequent accounting for assets held under hire purchase and finance lease agreements, i.e. depreciation methods and useful lives, correspond to those applied to comparable acquired assets. The corresponding hire purchase and finance leasing liability is reduced by lease payments less finance charges, which are expensed to finance costs. finance charges represent a constant periodic rate of interest on the outstanding balance of the hire purchase and finance lease liability. All other leases are treated as operating leases. Payments on operating lease agreements are recognised as an expense on a straight-line basis. Associated costs, such as maintenance and insurance, are expensed as incurred. The Group does not act as a lessor. 25 www.tricorn.uk.com21489-04 27/07/2012 PROOF 10OUR GovernanceOUR BUSIneSSOUR fInancIalS noteS TO THE fINANCIAL sTATEMENTs continued 2 aCCounting poliCieS continued Taxation Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting period, that are unpaid at the reporting date. They are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate, based on the taxable profit for the year. deferred income taxes are calculated using the liability method on temporary differences. This involves the comparison of the carrying amounts of assets and liabilities in the consolidated financial statements with their respective tax bases. However, in accordance with the rules set out in IAs 12, no deferred taxes are recognised in conjunction with the initial recognition of goodwill on acquisitions. This applies also to temporary differences associated with shares in subsidiaries if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future. In addition, tax losses available to be carried forward as well as other income tax credits available to the Group are assessed for recognition as deferred tax assets. deferred tax liabilities are always provided for in full. deferred tax assets are recognised to the extent that it is probable that they will be able to be offset against future taxable income. deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the reporting date. Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the statement of comprehensive income. Only changes in deferred tax assets or liabilities that relate to a change in value of assets or liabilities that is charged directly to equity are charged or credited directly to other comprehensive income. employee benefits Defined contribution pension scheme Pensions to employees are provided through contributions to individual personal pension plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions to an independent entity. The Group has no legal or constructive obligations to pay further contributions after payment of the fixed contribution. The contributions recognised in respect of personal pension plans are expensed as they fall due. Liabilities and assets may be recognised if underpayment or prepayment has occurred and are included in current liabilities or current assets as they are normally of a short term nature. other employee benefits short term employee benefits, including holiday entitlement, are included in other employee obligations at the undiscounted amount that the Group expects to pay as a result of the unused entitlement. Financial assets The Group’s financial assets include cash, cash equivalents and trade and other receivables. All financial assets are recognised when the entity becomes party to the contractual provisions of an instrument. All financial assets are initially recognised at fair value, plus transaction costs, and are subsequently measured at amortised cost using the effective interest rate. Interest and other cash flows resulting from holding financial assets are recognised in profit or loss when received, regardless of how the related carrying amount of financial assets is measured. Trade receivables are provided against when objective evidence is received that the Group will not be able to collect all amounts due to it in accordance with the original terms of the receivables. The amount of the write-down is determined as the difference between the asset’s carrying amount and the present value of estimated future cash flows. 26 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 2 aCCounting poliCieS continued cash and cash equivalents Cash and cash equivalents include cash at bank and in hand and overdrafts as well as short term highly liquid investments such as bank deposits. equity share capital is determined using the nominal value of shares that have been issued. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. When the Company purchases its own shares, the consideration is deductible from equity attributable to the Company’s equity holders until the shares are either cancelled or reissued. When this happens, any consideration received is included in equity attributable to equity holders. Treasury shares are held at cost. The share premium account represents premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits. The merger reserve represents the difference between the issue price and the nominal value of shares issued as consideration for the acquisition of a subsidiary undertaking when the Company has taken advantage of merger relief. All current and prior period results are taken to the profit and loss account as disclosed in the statement of comprehensive income. share-based employee remuneration All share-based payment arrangements are recognised in the consolidated financial statements. The Group operates equity-settled share-based remuneration plans for the remuneration of its employees. All employee services received in exchange for the grant of any share-based remuneration are measured at their fair values. These are indirectly determined by reference to the fair value of the share options awarded. Their value is appraised at the grant date and excludes the impact of any non-market vesting conditions (for example, profitability and sales growth targets). All share-based remuneration is ultimately recognised as an expense in the profit or loss with a corresponding credit to the share- based payment reserve, net of deferred tax where applicable. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised, if there is any indication that the number of share options expected to vest differs from previous estimates. No adjustment is made to the expense recognised in prior periods if fewer share options ultimately are exercised than originally estimated. Upon exercise of share options, the proceeds received net of any directly attributable transaction costs up to the nominal value of the shares issued are allocated to share capital with any excess being recorded as share premium. Financial liabilities The Group’s financial liabilities include trade and other payables, bank borrowings, invoice discounting facilities and finance lease and hire purchase agreements. financial liabilities are recognised when the Group becomes a party to the contractual agreements of the instrument. All interest related charges are recognised as an expense in “finance cost” in the statement of comprehensive income. financial liabilities are initially recognised at fair value and subsequently measured at amortised costs using the effective interest rate. A financial liability is derecognised only when the obligation is extinguished, that is, when the obligation is discharged or cancelled or expires. 27 www.tricorn.uk.com21489-04 27/07/2012 PROOF 10OUR GovernanceOUR BUSIneSSOUR fInancIalS noteS TO THE fINANCIAL sTATEMENTs continued 2 aCCounting poliCieS continued provisions for liabilities Provisions are recognised when present obligations will probably lead to an outflow of economic resources from the Group and they can be reliably estimated. A present obligation arises from the presence of a legal or constructive commitment that has resulted from past events. Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at reporting date and all future estimated cash flows are discounted to arrive at the present value of the provision. Borrowings borrowings are recognised initially at fair value, net of transaction costs incurred. They are subsequently stated at amortised cost; any difference between proceeds (net of transaction costs) and the redemption value is recognised in the statement of comprehensive income over the period of the borrowings using the effective rate of interest method. borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Derivative contracts All derivatives are recognised at fair value through profit or loss. The value of the derivative is reassessed at fair value at each reporting date. research costs Expenditure on research (or the research phase of an internal project) is recognised as an expense in the period in which it is incurred. 28 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 3 Segmental reporting The Group operates three main operating segments: ● ● ● Energy and Utilities: manipulated tubular assemblies for use in power generation, oil and gas and marine sectors, and innovative jointing systems for use typically within the utility industry. Transportation: ferrous, non-ferrous and nylon material tubular assemblies for use in off-highway, medical, and other such applications. Aerospace: specialised rigid pipe assemblies for use in the aerospace sector. The Group previously presented four business segments with Energy and Utilities disclosed as separate segments. These two business streams have now been aggregated as they are both operationally managed and reported internally to the Chief Executive on a single basis. As such, the prior period comparative figures have been restated to aggregate Energy and Utilities into one reportable segment. The financial information detailed below is frequently reviewed by the Chief Operating decision Maker. year ended 31 March 2012 revenue — from external customers — from other segments segment revenues operating profit/(loss) pre intangible asset amortisation, foreign exchange contracts and share-based payment charges Intangible asset amortisation share-based payment charge fair value gain relating to forward exchange contracts operating profit/(loss) Net finance costs profit/(loss) before tax segmental assets other segment information: Capital expenditure depreciation energy & utilities £’000 10,691 — 10,691 Transportation £’000 aerospace £’000 unallocated £’000 8,681 — 8,681 5,334 — 5,334 — — — Total £’000 24,706 — 24,706 987 767 — — — 987 (64) 923 4,637 462 141 — — — 767 (4) 763 3,309 146 105 51 — — — 51 (26) 25 3,177 297 54 (34) 1,771 (118) (54) 5 (201) 16 (185) 2,874 2 1 (118) (54) 5 1,604 (78) 1,526 13,997 907 301 29 www.tricorn.uk.com21489-04 27/07/2012 PROOF 10OUR GovernanceOUR BUSIneSSOUR fInancIalS noteS TO THE fINANCIAL sTATEMENTs continued 3 Segmental reporting continued Year ended 31 March 2011 Revenue — from external customers — from other segments segment revenues Operating profit/(loss) pre intangible asset amortisation, foreign exchange contracts and share-based payment charges Intangible asset amortisation share-based payment charge fair value gain relating to forward exchange contracts Operating profit/(loss) Net finance costs Profit/(loss) before tax segmental assets Other segment information: Capital expenditure depreciation Energy & Utilities £’000 Transportation £’000 Aerospace £’000 Unallocated £’000 9,674 — 9,674 868 — — — 868 (60) 808 4,469 177 142 7,155 — 7,155 4,935 — 4,935 604 (283) — — — 604 (6) 598 2,532 50 126 — — — (283) (24) (307) 2,628 13 57 — — — 9 (117) (44) (11) (163) (9) (172) 2,393 — 1 Total £’000 21,764 — 21,764 1,198 (117) (44) (11) 1,026 (99) 927 12,022 240 326 The Group’s revenue from external customers (by destination) and its geographic allocation of total assets may be summarised as follows: United Kingdom Europe Rest of World No single customer accounts for more than 10% of revenue. year ended 31 March 2012 Year ended 31 March 2011 revenue £’000 18,076 4,122 2,508 24,706 assets £’000 13,997 — — 13,997 Revenue £’000 15,733 3,732 2,299 21,764 Assets £’000 12,022 — — 12,022 30 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 4 profit before taxation The profit on ordinary activities before taxation is stated after charging: auditors’ remuneration: Audit of parent and Group consolidation Audit of Group subsidiaries Non-audit services: Corporate taxation operating lease charges: Land and buildings Plant and equipment Motor vehicles Depreciation and amortisation: Intangible assets Loss on disposal of tangible fixed assets Property, plant and equipment – owned Property, plant and equipment – leased 5 direCtorS’ emolumentS 2012 £’000 2011 £’000 13 29 13 426 39 87 118 8 269 32 13 28 13 419 36 73 117 — 254 72 2012 2011 2012 2011 Basic £’000 Bonus £’000 Benefits in kind £’000 Total £’000 basic £’000 bonus £’000 benefits in kind £’000 Total £’000 pension £’000 Pension £’000 n c paul cBe r allsop M I Welburn* p lee* D e leakey* n silverthorne 30 15 120 90 73 9 — — 60 45 30 — 337 135 — — 22 14 11 1 48 30 15 202 149 114 10 520 25 10 120 90 — 57 302 — — 36 27 — — 63 — 18 14 — 5 37 25 10 174 131 — 62 402 — — 8 6 — — 14 — — 8 6 — 4 18 * The Executive directors are classified as the key management personnel of the Group as defined in IAs 24 Related Party disclosures. N sliverthorne resigned as a director of the Company on 31 May 2011 and as such only his emoluments up to this date are disclosed as director's emoluments. d E Leakey was appointed as a director of the Company on 3 June 2011 and as such his emoluments as a director are disclosed from that date. Employer's National Insurance Contributions made relating to directors' emoluments were £51k (2011: £32k). 31 www.tricorn.uk.com21489-04 27/07/2012 PROOF 10OUR GovernanceOUR BUSIneSSOUR fInancIalS noteS TO THE fINANCIAL sTATEMENTs continued 5 direCtorS’ emolumentS continued share-based payment charge by director (note 6) M I Welburn* p lee* n c paul cBe 2012 £’000 18 15 19 52 2011 £’000 21 5 18 44 * The Executive directors are classified as the key management personnel of the Group as defined in IAs 24 Related Party disclosures. 6 employee CoStS The average number of persons (including directors) employed by the Group during the year was: Production sales, distribution and administration staff costs during the year were as follows: Wages and salaries social security costs Other pension costs share based payment charge 2012 number 2011 Number 279 48 327 2012 £’000 6,884 626 163 54 7,727 247 44 291 2011 £’000 6,377 518 158 44 7,097 32 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 7 SHare-baSed employee remuneration There are two share based remuneration schemes in operation: ● ● Approved Enterprise Management Incentive (EMI) scheme Unapproved share options. delete p? At 31 March 2011 No. of shares Granted in year No. of shares Exercised in year No. of shares Lapsed in year No. of shares at 31 March 2012 no. of shares Life remaining on options at 31 March 2012 Months Exercise price Pence enterprise Management Incentive (eMI) scheme Exercise date: April 2002 – April 2012 december 2004 – July 2012 March 2009 – March 2019 december 2009 – december 2019 August 2010 – August 2020 160,000 200,000 500,000 100,000 2,184,156 3,144,156 — (150,000) — (200,000) — — — — — — — (350,000) — — — — 10,000 — 500,000 100,000 — 2,184,156 — 2,794,156 10 — 10 10 10 The weighted average exercise price of the EMI scheme at 31 March 2012 was 10p (2011: 10.51p). 2,609,956 options were available for exercise at 31 March 2012 (2011: 2,223,156). unapproved share options Exercise date: september 2010 – september 2015 1,000,000 september 2010 – september 2020 661,844 — — June 2011 – June 2021 december 2011 – december 2021 — 500,000 — 200,000 1,661,844 700,000 — — — — — Total share options 4,806,000 700,000 (350,000) — 1,000,000 — — — 661,844 500,000 200,000 — 2,361,844 — 5,156,000 10 10 30 25 1 — 84 93 101 42 102 111 114 The weighted average exercise price of the unapproved share options at 31 March 2012 was 15.5p (2011: 10.0p). 2,161,844 options were available for exercise at 31 March 2012 (2011: 661,844). The approved and unapproved option schemes have been valued in the year by management using the black–scholes valuation model. Key inputs into the model are expected share price volatility of 60%, expected life of option of between 3 and 5 years and the expected risk free interest rates of 2.33%. 1,000,000 of the unapproved options and 921,000 of the approved EMI options issued have performance criteria. These options vest in five equal tranches once the share price has achieved the trigger points of 20p, 25p, 30p, 35p and 40p for ten consecutive trading days. 33 www.tricorn.uk.com21489-04 27/07/2012 PROOF 10OUR GovernanceOUR BUSIneSSOUR fInancIalS noteS TO THE fINANCIAL sTATEMENTs continued 8 finanCe inCome and expenSe bank interest receivable Finance income Invoice discounting interest fair value charge for interest rate collar (note 24) Charge for closure of interest rate collar Effective interest charge on borrowings Interest on hire purchase agreements and finance leases Finance expense 9 taxation on profit on ordinary aCtivitieS The tax is based on the profit for the year and represents: UK corporation tax Adjustments in respect of prior years Current tax charge for the year deferred taxation (note 18) Tax on profit on ordinary activities 2012 £’000 4 4 53 (71) 25 68 7 82 2012 £’000 402 (25) 377 (7) 370 2011 £’000 5 5 47 (33) 82 8 104 2011 £’000 293 — 293 (53) 240 The tax assessed is different to the standard rate of corporation tax in the UK of 26% (2011: 28%). The difference is explained as follows: Profit on ordinary activities before tax Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 26% (2011: 28%) Effect of: Expenses not deductible for tax purposes Capital allowances in excess of depreciation Adjustments in respect of prior years 2012 £’000 1,526 396 (11) 17 (25) 377 2011 £’000 927 260 20 13 — 293 At 31 March 2012 the Group had tax losses of £210,000 (2011: £207,000) to offset against future profits within the United Kingdom. 34 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 10 earningS per SHare The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. The calculation of diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares and the post tax effect of dividends and/or interest, on the assumed conversion of all dilutive options and other dilutive potential ordinary shares. Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below. Basic earnings per share dilutive shares Diluted earnings per share basic earnings per share dilutive shares diluted earnings per share 31 March 2012 Weighted average number of shares number ’000 33,164 951 34,115 profit £’000 1,156 1,156 31 March 2011 Weighted average number of shares Number ’000 32,146 297 32,443 Profit £’000 687 687 earnings per share pence 3.49 3.39 Earnings per share Pence 2.14 2.12 The directors consider that the following adjusted earnings per share calculation is a more appropriate reflection of the Group performance. 35 www.tricorn.uk.com21489-04 27/07/2012 PROOF 10OUR GovernanceOUR BUSIneSSOUR fInancIalS noteS TO THE fINANCIAL sTATEMENTs continued 10 earningS per SHare continued Basic earnings per share Amortisation of intangible asset Interest rate collar gain share-based payment charge Charge relating to foreign exchange contract adjusted earnings per share dilutive shares Diluted adjusted earnings per share basic earnings per share Amortisation of intangible asset Interest rate collar gain share-based payment charge Charge relating to foreign exchange contract Adjusted earnings per share dilutive shares diluted adjusted earnings per share 31 March 2012 Weighted average number of shares number ’000 earnings per share pence 33,164 3.49 33,164 951 34,115 3.78 3.67 31 March 2011 Weighted average number of shares Number ’000 Earnings per share Pence 32,146 2.14 32,146 297 32,443 2.57 2.54 profit £’000 1,156 118 (71) 54 (5) 1,252 1,252 Profit £’000 687 117 (33) 44 11 826 826 36 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 11 goodwill cost At 31 March 2010, 31 March 2011 and 31 March 2012 Impairment At 31 March 2010, 31 March 2011 and 31 March 2012 net book value At 31 March 2010 At 31 March 2011 at 31 March 2012 Goodwill above relates to the following cash-generating units: Redman fittings Limited RMdG Aerospace Limited Maxpower Automotive Limited Total £’000 591 — 591 591 591 Original cost £’000 60 140 391 591 date of acquisition June 1999 June 2006 June 2007 Goodwill arising on consolidation represents the excess of the fair value of the consideration given over the fair value of the identifiable net assets acquired. The Group tests annually for impairment, or more frequently if there are indicators that goodwill might be impaired. The recoverable amounts of the cash-generating units (CGUs) are determined from value in use calculations, covering a detailed five year forecast and applying a discount rate of 2.6% which equates to the Group’s weighted average cost of capital. Management’s key assumptions are based on their past experience and future expectations of the market over the longer term. The key assumptions for the value in use calculations are those regarding discount rates, growth rates and expected changes to selling prices and direct costs. Apart from the considerations described in determining the value in use of the cash-generating unit above, the Group’s management do not believe that reasonably possible changes in the assumptions underlying the value in use calculation would have an impact on the carrying value of goodwill. After applying sensitivity analysis in respect of the results and future cash flows, in particular for presumed growth rates and discount rates, management believe that no impairment is required. Management is not aware of any other changes that would necessitate changes to their key estimates. 37 www.tricorn.uk.com21489-04 27/07/2012 PROOF 10OUR GovernanceOUR BUSIneSSOUR fInancIalS noteS TO THE fINANCIAL sTATEMENTs continued 12 intangible aSSetS cost At 1 April 2010 At 1 April 2011 and 31 March 2012 amortisation At 1 April 2010 Charge for the year At 1 April 2011 Charge for the year At 31 March 2012 net book value At 31 March 2010 At 31 March 2011 at 31 March 2012 brand names £’000 830 830 (178) (55) (233) (56) (289) 652 597 541 Customer contracts £’000 312 312 (171) (62) (233) (62) (295) 141 79 17 Total £’000 1,142 1,142 (349) (117) (466) (118) (584) 793 676 558 All intangible asset amortisation is included in the Group statement of comprehensive income under amortisation of intangibles as detailed on the face of the Group statement of comprehensive income. 38 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 13 property, plant and eQuipment cost At 1 April 2010 Additions At 1 April 2011 Additions At 31 March 2012 Depreciation At 1 April 2010 Charge for the year At 1 April 2011 Charge for the year disposals At 31 March 2012 net book value At 31 March 2010 At 31 March 2011 at 31 March 2012 Plant and equipment £'000 Motor vehicles £'000 4,622 240 4,862 907 5,769 3,496 326 3,822 301 18 4,141 1,126 1,040 1,628 43 — 43 — 43 43 — 43 — — 43 — — — Total £’000 4,665 240 4,905 907 5,812 3,539 326 3,865 301 18 4,184 1,126 1,040 1,628 The net book value of property, plant and equipment includes £413,000 (2011: £342,000) in respect of assets held under finance leases and hire purchase contracts. 39 www.tricorn.uk.com21489-04 27/07/2012 PROOF 10OUR GovernanceOUR BUSIneSSOUR fInancIalS noteS TO THE fINANCIAL sTATEMENTs continued 14 prinCipal SubSidiarieS At 31 March 2012 the principal subsidiaries of the Group were as follows: Name of subsidiary undertaking Country of incorporation description of shares held % of nominal value of shares held Malvern Tubular Components Limited United Kingdom Ordinary 100 Redman fittings Limited United Kingdom Ordinary 100 RMdG Aerospace Limited United Kingdom Ordinary 100 Maxpower Automotive Limited United Kingdom Ordinary 100 Principal business activity Manufacturer of tubular components sales and marketing company for specialist pipe fittings Manufacturer of aerospace fittings Manufacturer of highway and automotive tubular and pipe components Robert Morton dG Limited* United Kingdom Ordinary 100 dormant * Held by a subsidiary undertaking. Issquared Limited, searchwell Limited, Integrated statistical solutions Limited and MTC Holdings Limited which were all dormant companies as at 31 March 2011, were dissolved during the current year. 15 inventorieS Raw materials Work in progress finished goods 2012 £’000 1,565 898 466 2,929 2011 £’000 1,560 989 538 3,087 In the year to 31 March 2012, a total of £10,713,000 of inventory (2011: £9,779,000) was included in the statement of comprehensive income as an expense. 40 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 16 trade and otHer reCeivableS Trade receivables Impairment of trade receivables Other receivables Prepayments and accrued income Total 2012 £’000 5,420 (9) 5,411 78 334 5,823 2011 £’000 4,560 (11) 4,549 259 208 5,016 At 31 March 2012, some of the unimpaired trade receivables are past their due date but all are considered recoverable. The age of financial assets past due date but not impaired is as follows: Not more than one month Not more than two months Not more than three months 2012 £’000 2,267 787 109 3,163 2011 £’000 1,500 502 246 2,248 Trade and other receivables are usually due within 30–75 days and do not bear any effective interest rate. All trade receivables are subject to credit risk exposure. However, the Group does not identify specific concentrations of credit risk with regard to trade and other receivables as the amounts recognised represent a large number of receivables from various customers. The fair value of these short term financial assets is not individually determined as the carrying amount is a reasonable approximation of fair value. 17 CaSH and CaSH eQuivalentS Cash and cash equivalents 2012 £’000 2,468 2011 £’000 1,612 Cash and cash equivalents consist of cash on hand and balances with banks only. At the year end £770,000 (2011: £522,000) of cash on hand and balances with banks were held by the subsidiary undertakings; however, this balance is available for use by the Group. 41 www.tricorn.uk.com21489-04 27/07/2012 PROOF 10OUR GovernanceOUR BUSIneSSOUR fInancIalS noteS TO THE fINANCIAL sTATEMENTs continued 18 deferred taxation Intangible assets Plant and equipment Trade and other payables The movement in the deferred taxation account during the year was: balance brought forward Group statement of comprehensive income movement arising during the year balance carried forward assets liabilities 2011 £’000 — — — — 2012 £’000 (134) (91) — (225) assets liabilities 2011 £’000 4 (4) — 2012 £’000 (232) 7 (225) 2011 £’000 (175) (56) — (232) 2011 £’000 (289) 57 (232) 2012 £’000 — — — — 2012 £’000 — — — As at 31 March 2012 the Group has unprovided deferred tax assets as follows: Trading losses This deferred tax asset is not recognised due to uncertainty over its recoverability. unprovided 2012 £’000 Unprovided 2011 £’000 (50) (54) 42 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 19 trade and otHer payableS Trade and other payables Other taxation and social security Accruals 2012 £’000 2,696 497 1,387 4,580 2011 £’000 2,533 776 903 4,212 due to the short term duration of trade and other payables the carrying value in the statement of financial position represents the fair value of the liabilities. 20 borrowingS current borrowings bank borrowings Invoice discounting facility Hire purchase agreements and finance lease liabilities (note 21) non-current borrowings bank borrowings Hire purchase agreements and finance lease liabilities (note 21) 2012 £’000 — 1,464 50 1,514 — 368 368 The future contractual payments, including interest, for bank borrowings and the invoice discounting facility are as follows: In one year or less or on demand: bank loan Invoice discounting facility In more than one year but not more than two years: bank loan 2012 £’000 — 1,464 — 1,464 2011 £’000 292 1,269 17 1,578 94 1 95 2011 £’000 365 1,269 116 1,750 Bank loan The Group obtained a £1,400,000 bank loan in 2007, repayable over five years. On 30 september 2011 the Group gave notice to its bankers to repay this facility early. The facility was fully repaid on 14 October 2011. Invoice discounting facility The invoice discounting facility is secured against the trade receivables to which it relates. Interest is paid at 2.15% over bank base rate per annum. 43 www.tricorn.uk.com21489-04 27/07/2012 PROOF 10OUR GovernanceOUR BUSIneSSOUR fInancIalS noteS TO THE fINANCIAL sTATEMENTs continued 21 Hire purCHaSe agreementS and finanCe leaSe liabilitieS The commitments under hire purchase agreements and finance lease liabilities are as follows: 31 March 2012 Payments discounting 31 March 2011 Payments discounting Within 1 year Within 1–2 years Within 2–5 years Total 71 (21) 50 18 (1) 17 123 (16) 107 1 — 1 278 (17) 261 — — — 472 (54) 418 19 (1) 18 The hire purchase agreements and finance lease liabilities are secured against the assets to which they relate. 44 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 22 finanCial inStrumentS financial instruments used by the Group comprise cash and short term deposits, invoice discounting and hire purchase agreements and finance leases. The Group has items such as trade receivables and trade payables that arise directly from its operations. Trade and other receivables and trade and other payables The Group manages its trade receivables to ensure that credit risk is minimised by avoiding concentration with any one customer. All trade receivables have set credit terms which are monitored. The invoice discounting facility provides immediate funds on approved trade receivables. The Group works to ensure that it receives acceptable trading terms from its suppliers. liquidity risk The objective of the Group is to maintain a balance between continuity of funding and flexibility through the use of deposits, bank loans, invoice discounting and finance lease and hire purchase contracts. Money on deposit is held on treasury reserve, partly to finance working capital and also to help finance future acquisitions. Interest rate risk The policy of the Group is to manage its interest cost using a mix of fixed and variable rate debt. The Group's exposure to interest rate fluctuations on its borrowings is managed by the use of both fixed and floating facilities. The Group finances specific large plant acquisitions via hire purchase or finance lease contracts. The Group pays interest on: ● ● invoice discounting at 2.15% over base rate finance leases at 2.0% to 2.5% over base rate If the Group's interest rates were to rise/fall by 10% then the interest charge within the financial statements would increase/ decrease by £nil (2011: £nil), equity and reserves would reduce/increase by the same amount, and the charge would be £82,000 (2011: £104,000). Foreign currency risk The Group transacts certain purchases and sales in foreign currencies. At 31 March 2012 there were three (2011: four) foreign currency forward contracts in force. foreign exchange differences on retranslation of foreign currency assets and liabilities are taken to the statement of comprehensive income of the Group. If the Us dollar and Euro were to fall/rise by 10% on the closing rate and average annual rate at 31 March 2012 then Group profits would rise/fall by £176,000 at 31 March 2012 (2011: £177,000) and equity and reserves would increase/reduce by the same amount. commodity price risk The Group’s exposure to the price of steel is high, therefore selling prices are monitored regularly to reduce the impact of such risk and opportunities to reduce material costs are explored constantly. The Group has partly responded to this risk by sourcing materials in low cost countries. In addition, any increases in the cost of steel would be passed onto customers. If steel prices were to fall/rise by 10% on the closing year end price, and the Group was unable to pass the increase onto customers, then Group profits would rise/fall by £357,000 at 31 March 2012 (2011: £296,000) and equity and reserves would increase/reduce by the same amount. Financial assets and liabilities The IAs 39 categories of financial assets included in the statement of financial position and the headings in which they are included are as follows: 45 www.tricorn.uk.com21489-04 27/07/2012 PROOF 10OUR GovernanceOUR BUSIneSSOUR fInancIalS noteS TO THE fINANCIAL sTATEMENTs continued 22 finanCial inStrumentS continued Non-financial asset Loans and other receivables Total assets The financial assets are included in the statement of financial position in the following headings: current assets Trade and other receivables Cash and cash equivalents 2012 £’000 334 7,957 8,291 2012 £’000 5,823 2,468 8,291 2011 £’000 208 6,420 6,628 2011 £’000 5,016 1,612 6,628 The IAs 39 categories of financial liabilities included in the statement of financial position and the headings in which they are included are as follows: Non-financial liability financial liabilities at fair value through profit and loss financial liabilities measured at amortised cost Total liabilities The financial liabilities are included in the statement of financial position in the following headings: current liabilities Trade and other payables financial liabilities at fair value through profit and loss borrowings non-current liabilities borrowings 2012 £’000 497 7 5,965 6,469 2012 £’000 4,580 7 1,514 368 6,469 2011 £’000 776 82 5,109 5,967 2011 £’000 4,212 82 1,578 95 5,967 46 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 22 finanCial inStrumentS continued Fair value hierarchy The following table presents financial assets and liabilities measured at fair value in the statement of financial position in accordance with the fair value hierarchy prescribed by IfRs 7 financial Instruments disclosures. This hierarchy groups financial assets and liabilities into three levels based on the significance of inputs used in measuring the fair value of the financial assets and liabilities. The fair value hierarchy has the following levels: Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities. Level 2: inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair value measurement. The financial liabilities measured at fair value in the statement of financial position are grouped into the fair value hierarchy as follows: foreign exchange derivative contracts level 1 2012 £’000 — level 2 2012 £’000 7 level 3 2012 £’000 — Total 2012 £’000 7 23 Capital management poliCieS proCedureS The Group's capital management objectives are: ● ● ● to ensure that the Group can continue as a going concern: to ensure the Group has adequate resources to support the strategy of the Group; and to provide a return to the Group’s shareholders. The Group’s capital equals total equity less cash and cash equivalents. The Group’s financing includes total equity plus borrowings. The borrowings have been taken out to provide working capital for the Group. 24 derivativeS Interest rate swap foreign exchange contracts 2012 £’000 — 7 7 2011 £’000 71 11 82 In february 2008, the Group entered into an interest rate collar agreement with its bankers against its bank loan. Under the agreement, the interest payable by the Group under the loan could not exceed 6.0% or drop below 4.4%. On 30 March 2012 the Group gave notice to cancel this agreement, for which an early cancellation charge of £25,500 has been included within the accounts. At the year end the Group had three (2011: four) forward currency exchange contracts in place. These contracts have been valued at fair value at the year end of £7k (2011: £11k). 47 www.tricorn.uk.com21489-04 27/07/2012 PROOF 10OUR GovernanceOUR BUSIneSSOUR fInancIalS 25 SHare Capital Allotted and issued 2012 £’000 2011 £’000 33,395,000 (2011: 33,045,000) ordinary shares of 10 pence each 3,339 3,304 All 10 pence ordinary shares carry the same voting rights and rights to discretionary dividends. On 11 March 2010 the Group purchased 875,000 of its own ordinary shares on the open market into treasury at a price of 5.5 pence per ordinary share. These shares were sold to satisfy institutional demand on 9 June 2011 for 32 pence per share. 26 Contingent liabilitieS There were no contingent liabilities at 31 March 2012 or 31 March 2011. 27 Capital CommitmentS At 31 March 2012 the Group had capital commitments of £nil (31 March 2011: £524k). 28 leaSing CommitmentS The Group’s aggregate minimum operating lease payments for the remaining lives of the leases are as follows: In one year or less One to five years Greater than five years 2012 land and buildings £’000 425 1,620 944 2,989 2011 Land and buildings £’000 418 1,453 411 2,282 2012 2011 other £’000 122 195 14 331 Other £’000 112 108 — 220 29 tranSaCtionS witH related partieS There are no transactions with related parties other than key management as disclosed in note 5 to the Group financial statements. 48 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 Tricorn Group plc Company Statutory Financial Statements Under UK GAAP For the year ended 31 March 2012 Company number 1999619 contents 50 Company statement of directors’ Responsibilities 51 Report of the Independent Auditors 52 Company balance sheet 53 Notes to the financial statements 49 www.tricorn.uk.com21489-04 27/07/2012 PROOF 10OUR GovernanceOUR BUSIneSSOUR fInancIalS Company sTATEMENT Of dIRECTORs’ REsPONsIbILITIEs The directors are responsible for preparing the directors’ report and the Company only financial statements (“financial statements”) in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting standards and applicable laws). Under company law, the directors must not approve the financial statements unless they are satisfied that they give and true and fair view of the state of affairs and the profit or loss of the Company for that period. In preparing these financial statements, the directors are required to: select suitable accounting policies and then apply them consistently; – – make judgements and estimates that are reasonable and prudent; – state whether applicable UK 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 Company will continue in business. – The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose, with reasonable accuracy, at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors confirm that: – – so far as each director is aware, there is no relevant audit information of which the Company’s auditors are unaware; and the directors have taken all steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. 50 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 report Of THE INdEPENdENT AUdITORs TO THE MEMbERs Of TRICORN GROUP PLC We have audited the parent company financial statements of Tricorn Group plc for the year ended 31 March 2012 which comprise the parent company balance sheet and notes 1 to 16. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting standards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. 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 auditor’s 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 direCtorS and auditorS As explained more fully in the directors’ Responsibilities statement set out on page 50, the directors are responsible for the preparation of the parent company financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the the parent company financial statements in accordance with applicable law and International standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices board’s (APb’s) Ethical standards for Auditors. SCope of tHe audit of tHe finanCial StatementS A description of the scope of an audit of financial statements is provided on the APb's website at www.frc.org.uk/apb/scope/private.cfm. opinion on finanCial StatementS In our opinion the parent company financial statements: ● give a true and fair view of the state of the Company’s affairs as at 31 March 2012; ● have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and ● have been prepared in accordance with the requirements of the Companies Act 2006. opinion on otHer matter preSCribed by tHe CompanieS aCt 2006 In our opinion the information given in the Report of the directors for the financial year for which the financial statements are prepared is consistent with the parent company financial statements. matterS on wHiCH we are reQuired to report by exCeption We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: ● adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or ● the parent company financial statements are not in agreement with the accounting records and returns; or ● certain disclosures of directors’ remuneration specified by law are not made; or ● we have not received all the information and explanations we require for our audit. otHer matter We have reported separately on the Group financial statements of Tricorn Group plc for the year ended 31 March 2012. David Munton senior statutory Auditor for and on behalf of Grant Thornton UK LLP statutory Auditor, Chartered Accountants birmingham 11 June 2012 51 www.tricorn.uk.com21489-04 27/07/2012 PROOF 10OUR GovernanceOUR BUSIneSSOUR fInancIalS Company bALANCE sHEET AT 31 MARCH 2012 Fixed assets Tangible assets Investments current assets debtors: amounts due within one year 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 net assets capital and reserves Called up share capital share premium account share-based payment reserve Merger reserve Investment in own shares Profit and loss account equity shareholders’ funds The financial statements were approved by the board of directors on 11 June 2012. M I Welburn director Company number: 1999619 notes 7 8 9 10 11 12 12 12 12 12 2012 £’000 3 6,196 6,199 7,292 1,698 8,990 2011 £’000 2 6,196 6,198 4,280 1,090 5,370 (7,980) (4,449) 1,010 7,209 — 7,209 3,339 1,692 227 1,592 — 359 7,209 921 7,119 (94) 7,025 3,304 1,448 237 1,592 (49) 493 7,025 52 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 noteS TO THE fINANCIAL sTATEMENTs fOR THE YEAR ENdEd 31 MARCH 2012 1 baSiS of preparation The separate financial statements of the Company have been prepared under the historical cost convention and in accordance with UK accounting standards. The principal activity of the Company is that of a holding company which has remained unchanged from the previous year. 2 aCCounting poliCieS Investments Investments held by the Company are included at cost less amounts written off. Where the consideration for the acquisition of a subsidiary undertaking includes shares in the Company to which the provisions of section 612 of the Companies Act 2006 apply, cost represents the nominal value of shares issued together with the fair value of any additional consideration given and costs. Financial instruments financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the entity after deducting all of its financial liabilities. Where the contractual obligations of financial instruments (including share capital) are equivalent to a similar debt instrument, those financial instruments are classed as financial liabilities. financial liabilities are presented as such in the balance sheet. finance costs and gains or losses relating to financial liabilities are included in the profit and loss account. finance costs are calculated so as to produce a constant rate of return on the outstanding liability. Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed as an equity instrument. dividends and distributions relating to equity instruments are debited direct to equity. Deferred taxation deferred tax is recognised on all timing differences where the transactions or events that give the Company 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. share-based payments All share-based payment arrangements are recognised in the parent company’s financial statements. The Company operates equity-settled share-based remuneration plans for remuneration of employees of the Company and its subsidiaries. Options are issued by the parent to the employees of the Company and its subsidiaries. The charge for the share based remuneration is recognised in the parent company profit and loss account. All employee services received in exchange for the grant of any share-based remuneration are measured at their fair values. These are indirectly determined by reference to the fair value of the share options awarded. Their value is appraised at the grant date and excludes the impact of any non-market vesting conditions (for example, profitability and sales growth targets). All share-based remuneration is ultimately recognised as an expense in profit or loss with a corresponding credit to the share-based payment reserve, net of deferred tax where applicable. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised, if there is any indication that the number of share options expected to vest differs from previous estimates. No adjustment is made to the expense recognised in prior periods if fewer share options ultimately are exercised than originally estimated. Upon exercise of share options, the proceeds received net of any directly attributable transaction costs up to the nominal value of the shares issued are allocated to share capital with any excess being recorded as share premium. 53 www.tricorn.uk.com21489-04 27/07/2012 PROOF 10OUR GovernanceOUR BUSIneSSOUR fInancIalS noteS TO THE fINANCIAL sTATEMENTs continued 2 aCCounting poliCieS continued equity share capital is determined using the nominal value of shares that have been issued. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. When the Company purchases its own shares, the consideration is deductible from equity attributable to the Company’s equity holders until the shares are either cancelled or reissued. When this happens, any consideration received is included in equity attributable to equity holders. Treasury shares are held at cost. The share premium account represents premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits. The merger reserve represents the difference between the issue price and the nominal value of shares issued as consideration for the acquisition of a subsidiary undertaking when the Company has taken advantage of merger relief. The profit and loss account includes all current and prior period results. 3 profit for tHe finanCial year The Company has taken advantage of section 408 of the Companies Act 2006 and has not included its own profit and loss account in these financial statements. The Company’s loss for the year was £142,000 (2011: £77,000). Auditors’ remuneration incurred by the Company during the year for audit services totalled £13,000 (2011: £13,000), and for tax compliance services totalled £2,000 (2011: £2,000). 4 direCtorS’ and employeeS’ remuneration Wages and salaries social security costs Other pension costs 2012 £’000 745 80 41 866 2011 £’000 709 57 31 797 The average number of persons (including directors) employed by the Company during the year was 10 (2011: 10). 5 direCtorS emolumentS All details on directors’ remuneration are given in note 5 to the Group financial statements. 6 SHare-baSed employee remuneration All details on share options are included in note 7 to the Group financial statements. 54 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 7 fixed aSSet inveStmentS cost At 1 April 2011 and 31 March 2012 Impairment At 1 April 2011 and 31 March 2012 net book value at 31 March 2012 At 31 March 2011 Total £’000 7,478 (1,282) 6,196 6,196 At 31 March 2012 the Company holds 100% of the ordinary share capital of the following subsidiaries: Name of subsidiary undertaking Country of incorporation description of shares held % of nominal value of shares held Malvern Tubular Components Limited United Kingdom Ordinary 100 Redman fittings Limited United Kingdom Ordinary 100 RMdG Aerospace Limited United Kingdom Ordinary 100 Maxpower Automotive Limited United Kingdom Ordinary 100 Principal business activity Manufacturer of tubular components sales and marketing company for specialist pipe fittings Manufacturer of aerospace fittings Manufacturer of highway and automotive tubular and pipe components Robert Morton dG Limited* United Kingdom Ordinary 100 dormant * Held by a subsidiary undertaking. Issquared Limited, searchwell Limited, Integrated statistical solutions Limited and MTC Holdings Limited which were all dormant companies as at 31 March 2011, were dissolved during the current year. 55 www.tricorn.uk.com21489-04 27/07/2012 PROOF 10OUR GovernanceOUR BUSIneSSOUR fInancIalS noteS TO THE fINANCIAL sTATEMENTs continued 8 debtorS Amounts owed by subsidiary undertakings Other debtors Prepayments and accrued income 9 CreditorS : amountS due witHin one year bank borrowings Other creditors Trade creditors Amounts due to subsidiary undertakings Other taxes and social security Corporation tax Accruals and deferred income 10 CreditorS: amountS falling due after more tHan one year bank borrowings borrowings are repayable as follows: Within one year — bank borrowings After one and within two years — bank borrowings 2012 £’000 7,268 — 24 2011 £’000 4,246 2 32 7,292 4,280 2012 £’000 — — 26 2011 £’000 292 3 78 7,645 3,853 19 — 290 7,980 2012 £’000 — 2012 £’000 — — — 14 1 208 4,449 2011 £’000 94 2011 £’000 292 94 386 On 30 september 2011 the Company gave notice to its bankers to repay its term loan facility. This facility was repaid in full on 14 October 2011. 56 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 11 SHare Capital Allotted and issued 2012 £’000 2011 £’000 33,395,000 (2011: 33,045,000) ordinary shares of 10 pence each 3,339 3,304 All 10p ordinary shares carry the same voting rights and rights to discretionary dividends. On 11 March 2010 the Group purchased 875,000 of its own ordinary shares on the open market into treasury at a price of 5.5 pence per ordinary share. These shares were sold to satisfy institutional demand on 9 June 2011 for 32 pence per share. 12 reServeS At 1 April 2011 share issues sale of own shares share based payment charge share based payment reserve transfer Loss for the year dividends paid at 31 March 2012 share premium £’000 share based payment reserve £’000 1,448 15 229 — — — — 1,692 237 — — 54 (64) — — 227 Merger reserve £’000 1,592 — — — — — — 1,592 13 reConCiliation of movement in eQuity SHareHolderS’ fundS Loss for the financial year sale of own shares Issue of new shares dividends paid share-based payment charge Net increase/(decrease) to shareholders’ funds Opening equity shareholders’ funds Closing equity shareholders’ funds Investment in own shares £’000 profit and loss account £’000 (49) — 49 — — — — — 2012 £’000 (142) 278 50 (56) 54 184 7,025 7,209 493 — — — 64 (142) (56) 359 2011 £’000 (77) — 2 — 44 (31) 7,056 7,025 57 www.tricorn.uk.com21489-04 27/07/2012 PROOF 10OUR GovernanceOUR BUSIneSSOUR fInancIalS noteS TO THE fINANCIAL sTATEMENTs continued 14 Contingent liabilitieS The Company has given an unlimited guarantee against the bank borrowings of its subsidiaries. At 31 March 2012 the balances amounted to nil (2011: nil). There were no further contingent liabilities at 31 March 2012 or 31 March 2011. 15 Capital CommitmentS There were no capital commitments at 31 March 2012 or at 31 March 2011. 16 related partieS The Company has taken advantage of the exemption under fRs 8 from disclosure of related party transactions with other Group companies, on the grounds that they are wholly owned subsidiaries. 58 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 SHareHolder NOTEs 59 www.tricorn.uk.com21489-04 27/07/2012 PROOF 10OUR GovernanceOUR BUSIneSSOUR fInancIalS Bankers: bank of scotland plc 125 Colmore Row birmingham b3 3sf solicitors: Orme & slade Limited National Westminster bank Chambers The Homend Ledbury Herefordshire HR8 1Ab auditors: Grant Thornton UK LLP Registered Auditors Chartered Accountants Colmore Plaza 20 Colmore Circus birmingham b4 6AT Company INfORMATION company registration number: 1999619 registered office: spring Lane Malvern Link Malvern Worcestershire WR14 1dA Directors: Nicholas Campbell Paul CbE (Chairman and Non-Executive director) Michael Ian Welburn (Chief Executive Officer) Phillip Lee (Group finance director) david Edward Leakey (Group sales director) Roger Allsop (Non-Executive director) secretary: Michael Greensmith nominated adviser and nominated broker: Westhouse securities Limited One Angel Court London EC2R 7HJ registrars: Neville Registrars Limited Neville House 18 Laurel Lane Halesowen West Midlands b63 3dA 60 Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10 www.tricorn.uk.com Our Businesses MTC is a specialist manufacturer of manipulated tubular assemblies supplying blue chip companies involved in power generation. This includes diesel engine, generator set and radiator manufacture. www.mtc.uk.com Acquired in June 2007 the business manufactures a wide range of tubular assemblies in ferrous, non-ferrous and nylon materials primarily for off highway and niche automotive applications. www.maxaut.co.uk Acquired in June 2006 the company supplies specialised rigid pipe assemblies to meet the demanding needs of the aerospace sector. Its products are found in a wide range of aircraft and are recognised for their excellence worldwide. www.rmdg.co.uk The business develops and supplies major OEM’s with bespoke jointing systems for multi layer polyethylene pipe systems. The innovative jointing system is patented worldwide and continues to attract considerable interest. www.redmanfittings.com Tricorn Group plc spring Lane Malvern Link Malvern Worcestershire WR14 1dA Tel: 01684 569956 Fax: 01684 892337 www.tricorn.uk.com Tricorn Group plc AnnuAl RepoRt And Accounts 201221489-04 27/07/2012 pRooF 10
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