Tricon Residential
Annual Report 2014

Plain-text annual report

tRiCoRn gR ouP PLC AnnuAL RePoR t AnD ACCountS 2014 T r i c o r n G r o u p p l c A n n u A l r e p o r T A n d A c c o u n T s 2 0 1 4 LAying the founDAtionS foR Long teRM gR oWth 为长远发展奠定基础 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn group is the holding company for a group of companies that develop and manufacture pipe solutions to a growing and increasingly international customer base. inVesTmenT proposiTion ❱ tricorn’s strategy is to grow & acquire engineering based businesses that supply blue chip oeM customers with attractive end markets. ❱ the focus within these engineering businesses is on manipulating pipes and tubular assemblies where double-digit operating margins can be achieved. ❱ tricorn subsidiaries typically supply niche pipe solutions rather than those that can be considered commoditised. ❱ Principal markets currently addressed are energy (power generation, mining, oil & gas), transportation (on and off highway including trucks, construction & agriculture) and Aerospace (civil and military). The key elemenTs oF This ApproAch Are:– 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. “Investing in customer relationships through product innovation and expansion of international manufacturing capability.” 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn Group plc AnnuAl RepoRt And Accounts 2014hiGhliGhTs ❱ Revenue up 14.6% to £24.46m ❱ Sale of Redman fittings business for £0.6m ❱ further progress in China including formation of joint venture ❱ new business revenues continue to grow in uS ❱ investment in product development REVENUE restated (£’000) REVENUE BY SECTOR (%) £24,460 £23,821 £21,347 2011/12 2012/13 2013/14 58% 29% 13% Energy & Utilites Transportation Aerospace NET DEBT/CASH (£’000) ADjUSTED pROfiT/(lOSS) BEfORE TAx (£’000) £586 £1,622 £1,614 £1,908 £3,386 2011/12 2012/13 2013/14 2011/12 2012/13 2013/14 £343 23447.04 - 25 July 2014 11:28 AM - Proof 7 CONTENTS 02 tricorn group at a glance 04 Chairman’s and Chief executive’s Statement 06 finance Directors’ Statement 08 Board of Directors 09 Strategic Report 10 Report of the Directors 12 Corporate governance including Remuneration Report 15 Report of the independent Auditors 17 group income Statement 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 47 Company Statutory financial Statements (prepared under uK gAAP) 56 Company information 01 www.tricorn.uk.comOUR BUSINESSOUR GOVERNANCEOUR FINANCIALSGroup At A gLAnCe Timeline oF key eVenTs NOVEmBER 2013 – Disposed of Redman fittings business jUlY 2013 – investment in joint venture, Minguang- tricorn tubular Products (nanjing) Ltd mARCH 2013 – Acquired franklin tubular Products inc – first products shipped from our manufacturing facility in Wuxi, China mARCH 2012 – Announced investment in China manufacturing facility jUNE 2007 – Acquired Maxpower Automotive Ltd jUNE 2006 – Acquired RMDg Aerospace Ltd jUNE 2005 – China team based in nanjing established DECEmBER 2001 – Listed on AiM norTh AmericA 30% of group sales 120 employees 02 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn Group plc AnnuAl RepoRt And Accounts 2014uk 67% of group sales 229 employees chinA 3% of group sales 55 employees 23447.04 - 25 July 2014 11:28 AM - Proof 7 03 www.tricorn.uk.comOUR BUSINESSOUR GOVERNANCEOUR FINANCIALSchAirmAn’s AnD Chief exeCutive’S StAteMent foR the yeAR enDeD 31 MARCh 2014 “Tricorn has made significant progress in laying the foundations for long term growth and has made further encouraging progress in strengthening relationships with it’s blue chip customers. With manufacturing facilities now established in the USA and China, the Group is well positioned to capitalise on the growth anticipated from these regions and as markets recover.” business reView the group operates three main business segments and, following the sale of the Redman fittings business, is focused on the energy, transportation and Aerospace sectors. the businesses serve a global blue chip oeM customer base, many of whom have major facilities in the uK and throughout the world. increasingly, as these customers expand their manufacturing footprint, they are looking to develop close relationships with those suppliers who understand their requirements and are able to support their facilities worldwide. it is against this back drop that the group has made significant progress in establishing a manufacturing capability in the uSA and China, in addition to its facilities in the uK. today the group has six manufacturing facilities on three continents with around 90% of the final product ultimately destined for markets outside the uK. perFormAnce in The yeAr ended 31 mArch 2014 the year has proved challenging with demand lower through the second half of the year when compared to the first half. nevertheless, the group has made significant progress in laying the foundations for long term growth and has made further encouraging progress in strengthening relationships with its blue chip customers. Revenue for the year was up 14.6% at £24.460m (2013 restated: £21.347m). underlying LBt was £0.343m (2013: PBt £1.614m). given the results for the year, the Board is not recommending the payment of a final dividend. the restructuring of the energy and Aerospace businesses was completed as planned and the group has continued to focus on maintaining a strong balance sheet. overall cash inflow in the second half of the year was positive and net debt reduced from the half year position. Whilst there have been some recent signs of improvements in our markets more recently, the Board remains cautious regarding the group’s short term prospects. ENERgY the sale of Redman fittings in november 2013 enabled the Malvern tubular Components business to focus fully on its key capabilities in the design and fabrication of manipulated tubular assemblies for large diesel engines and radiator sets used within the energy sector. the key markets served through its customers are power generation, mining and oil and gas applications. With customers reporting weaker demand, particularly in the mining sector, revenue slowed through the second half, and for the year fell to £6.933m compared to £8.568m for the previous year. Costs have been reduced in response to these lower levels of demand with manufacturing now consolidated onto a single site. Markets appear to have stabilised and, while there is some ongoing fragility, the business is now much better positioned. 04 REVENUE (£’000) £9,806 £8,568 £6,933 2011/12 2012/13 2013/14 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn Group plc AnnuAl RepoRt And Accounts 2014TRANSpORTATiON the segment is focused on rigid, nylon and hybrid tubular products for engines, braking systems fuel sender sub-systems and hydraulic actuation in a variety of on and off road applications including construction, trucks and agriculture. the segment has been considerably expanded with operations now established in the uSA and China as well as the uK. Revenue for the year was £14.289m compared to £7.011m for the previous year with the segment benefitting both from the full year impact of the acquisition of franklin tubular Products in the uSA and continued growth in operations in China. in the uK, new business won has helped to offset slightly weaker underlying demand. Supplier Quality excellence Process (SQeP) certification awarded by its largest customer has now been upgraded to silver and reflects the continuing commitment of Maxpower to achieving world class operational performance. Significant new business opportunities are being pursued. in China, the group has made good progress during the year. the group’s wholly owned manufacturing facility in Wuxi continues to secure new business and to broaden its customer base. the business has achieved excellent quality and delivery performance reflecting both the strong support from the uK and the enthusiasm of the local management team. the joint venture located in nanjing, which employs AEROSpACE this segment supplies rigid pipe assemblies used in a variety of applications principally within the Aerospace sector. With the contract loss announced in november 2012 impacting revenue, the year was a difficult period with revenue lowering to £3.238m compared with £5.768m for the previous year. Restructuring was completed as planned and underlying losses reduced in the second half of the year. excellent quality and delivery performance has been maintained with its customers and new business continues to be secured as a result of this performance. Steady progress is anticipated. REVENUE (£’000) £14,289 £8,681 £7,011 2011/12 2012/13 2013/14 around 40 people, became fully operational in September and significantly expands the capabilities in larger diameter tubular assemblies in the region. in the uSA, new business revenues continue to grow. this has included a highly engineered and technically demanding set of tubular assembles for a new transmission system for a new customer and the development of rigid pipe assemblies for the hydraulic actuation market again for a new customer. While this new revenue has not yet offset the impact of the business resourcing decisions that were made by existing customers at the time the business went into receivership and prior to the acquisition by tricorn, discussions with both existing and prospective clients are progressing well. REVENUE (£’000) £5,768 £5,334 £3,238 2011/12 2012/13 2013/14 ouTlook the year has proved challenging with revenue being lower than had been anticipated at the start of the year. nevertheless, with manufacturing facilities now well established in the uSA and China, the group has significantly enhanced its capabilities from a year ago. this expansion of international capabilities aligns the group as a key strategic supplier to its customers positioning us well to capitalise on the significant growth opportunities in these regions. further progress is expected as markets recover. Nick paul Director 9 June 2014 mike Welburn Director 9 June 2014 05 23447.04 - 25 July 2014 11:28 AM - Proof 7 www.tricorn.uk.comOUR BUSINESSOUR GOVERNANCEOUR FINANCIALS FinAnce DiReCtoR’S StAteMent foR the yeAR enDeD 31 MARCh 2014 “Following the completion of the sale of Redman Fittings and the acquisition of a 51% share of a joint venture in China, the Group is now focused on supplying pipe assemblies to customers globally.” oVerView the year to 31 March 2014 has been a year of further change for the group. following completion of the sale of Redman fittings and the acquisition of a 51% share of a joint venture in China, the group is now focused on supplying pipe assemblies to customers globally. the group’s China subsidiary has continued to grow while the uS operation has seen a full year of trading within the group. With the acquisition of franklin tubular Products occurring close to the prior year end, a number of fair value adjustments were finalised during the current financial year. As a result, comparative results for 2013 have been restated to take into account these fair value adjustments. in addition, comparative results have also been adjusted to show the Redman fittings business as discontinued. the group made an underlying loss before tax of £0.343m (2013: PBt £1.614m) in the year. given the results for the year, the Board is not recommending the payment of a final dividend. income sTATemenT Revenue for the year increased 14.6% to £24.460m (2013 restated: £21.347m) largely on the back of a full year of revenue from the uS acquisition completed at the end of the last financial year. gross margins were down slightly on last year at 34.2% (2013 restated: 36.5%). the adjusted operating loss for the year was £0.152m (2013: operating profit £1.668m) and after adjusting for one-off costs the operating loss was £0.808m (2013 restated: operating profit £1.365m), with significant group gross profit margins Revenue – restated Cost of Sales gross Profit gross profit margin costs around restructuring within the Aerospace and energy segments, as well as China start-up costs being incurred in the year. pictured above: Production capability at our Wuxi facility 2011/12 £’000 2012/13 £’000 23,821 (15,783) 8,038 33.7% 21,347 (13,554) 7,793 36.5% 2013/14 £’000 24,460 (16,101) 8,359 34.2% Bargain purchase on acquisition of the trade and certain assets of Whitley products Property, plant and equipment inventories trade of other payables identifiable net assets Amount settled in cash Bargain purchase on aquisition 06 23447.04 - 25 July 2014 11:28 AM - Proof 7 £’000 2,544 690 (152) 3,082 1,984 1,098 Tricorn Group plc AnnuAl RepoRt And Accounts 2014During the year, the group completed the fair value assessment of the net assets acquired following the acquisition of franklin tubular Products in March 2013. As a result the bargain purchase on acquisition increased by £0.267m to £1.098m. this has been shown in the comparative results for 2013 with acquisition related items now at £0.021m and headline operating profit restated to £1.365m. finance costs for the year increased to £0.149m (2013 restated: £0.059m). All finance costs incurred relate to short term borrowing and lease finance arrangements. After taking into account the trading operating loss from the joint venture, the group returned an adjusted loss before tax of £0.343m (2013: profit of £1.614m). Basic LPS was (2.58)p (2013: ePS 2.98p) and after adjusting for one-off costs, the underlying LPS was (0.75)p (2013: ePS 4.02p). cAsh Flow During the year, the group continued to invest in expanding its footprint globally and also in its capabilities. At 31 March 2014 cash and equivalents had increased to £1.284m (2013: £0.697m) and net debt increased to £3.386m (2013: £1.908m) with gearing, based on total net debt, at 49.5% (2013: 23.9%). net cash used in investing activities was £0.824m (2013: £2.956m) and included the investment in the Chinese joint venture of £0.413m. the group continued to invest in growing its existing infrastructure with capital Cashflow investment in capability and infrastructure 2011/12 £’000 2012/13 £’000 2013/14 £’000 Capital expenditure Capital expenditure to depreciation ration investments in acquisitions investments in joint ventures China start up costs Development expenditure 465 1.54 — — — — 978 2.36 1,984 — 260 — 714 0.97 — 413 104 297 Total infastruture and capability investment 465 3,222 1,528 expenditure at £0.714m, which as a ratio to depreciation was 0.97. in addition, the group spent £0.297m on product development with a new customer. these costs have been capitalised as an intangible asset. During the year the group sold the Redman fittings business for cash proceeds of £0.600m, realising a profit on the disposal of the business of £0.076m. the group continues to use short term borrowings to fund all of its activities, with selected capital additions being financed by lease finance arrangements. At the year end, the group did not have any long term debt finance in place. pictured above: Development expenditure on a new technology gearbox positions the group well with its customers. bAlAnce sheeT total non-current assets at the end of the year were £6.161m (2013: £5.774m). the investment in the Chinese joint venture resulted in an increase of £0.371m, net of trading losses incurred and goodwill reduced by £0.060m as a result of the disposal of the Redman fittings business. intangible assets increased due to the addition of £0.297m for product development costs. following on from the uS acquisition, the group has been successful in working with a new customer to develop a range of pipework for incorporation into a new transmission system. this development is expected to come into full production during 2014 and, as a result, the group has taken the opportunity, in accordance with iAS 38, to capitalise these costs on its balance sheet and amortise once production commences. net working capital at £4.197m, reduced by £0.364m over the prior year restated position. this was mainly as a result of lower inventory and trade and other receivables. CASH AND EqUiVAlENTS (£’000) £2,468 on translation of the assets and liabilities of its overseas businesses, the group incurred a loss of £0.226m. (2013: £nil). this is a non-cash movement which is not hedged and is treated as a movement in other comprehensive income. the group continues to use short term hedging instruments to hedge against foreign exchange movements on transactions where the group makes sales or purchases in foreign currencies. £1,284 £697 2011/12 2012/13 2013/14 phil lee group finance Director 9 June 2014 23447.04 - 25 July 2014 11:28 AM - Proof 7 07 www.tricorn.uk.comOUR BUSINESSOUR GOVERNANCEOUR FINANCIALSboArd of DiReCtoRS foR the yeAR enDeD 31 MARCh 2014 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. Member of the Remuneration and nomination Committees and a member of the Audit Committee. 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 Purchased MtC in 1984 and 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 Phil Lee – Secretary Nomination Committee nick Paul – Chairman Roger Allsop Phil Lee – Secretary Remuneration Committee Roger Allsop – Chairman nick Paul Phil Lee – Secretary 08 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn Group plc AnnuAl RepoRt And Accounts 2014sTrATeGic RePoRt foR the yeAR enDeD 31 MARCh 2014 tricorn group plc is the parent company of a group of specialist engineering subsidiaries whose activities incorporate high precision tube manipulation and systems engineering. 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 loss for the year after taxation amounting to £0.863m (2013 Restated: Profit for the year £0.994m). 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. glOBAl pRESENCE the group now operates through wholly owned subsidiaries in the uK, uS and China, as well as being a partner in a Joint venture in China. As a result of international expansion in these jurisdictions, new risks have been presented. Senior management have responded by making frequent visits overseas in order to mitigate and control those risks. on BehALf of the BoARD m i Welburn Director 9 June 2014 23447.04 - 25 July 2014 11:28 AM - Proof 7 09 www.tricorn.uk.comOUR FINANCIALSOUR GOVERNANCEOUR BUSINESSreporT of the DiReCtoRS foR the yeAR enDeD 31 MARCh 2014 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 shAre cApiTAl Details of the Company’s share capital, are given in note 26 to the financial statements. the group’s policy for managing capital and financing to support the activities of the group is detailed in note 24 to the financial statements. subsTAnTiAl shAreholdinGs the only interests in excess of 3% of the issued share capital of the Company, which have been notified as at 28 May 2014, were as follows: R Allsop hargreave hale Limited Rock nominees Limited (account 501198) J M finn & Co Limited Quilter nominees Limited Ordinary shares of 10 pence each Number 11,220,000 6,341,655 1,370,150 1,358,334 1,025,000 percentage of capital % 33.50 18.93 4.09 4.06 3.06 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 clients comply with health and Safety legislation. FinAnciAl risks And mAnAGemenT the group’s principal financial instruments comprise an invoice discounting and revolving credit facilities, short term borrowings, 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 look to recharge any increased cost of commodities to customers. 10 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn Group plc AnnuAl RepoRt And Accounts 2014fOREigN CURRENCY RiSk Certain purchases and sales are made in foreign currencies. in order to minimise the impact of currency movements the group utilise 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 profit or loss. 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 on-going 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’ responsibiliTies For The Group FinAnciAl sTATemenTs the Directors are responsible for preparing the Strategic Report, the Report of the Directors’ 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. 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 auditor in accordance with section 489 of the Companies Act 2006. on BehALf of the BoARD m i Welburn Director 9 June 2014 23447.04 - 25 July 2014 11:28 AM - Proof 7 11 www.tricorn.uk.comOUR FINANCIALSOUR GOVERNANCEOUR BUSINESScorporATe goveRnAnCe foR the yeAR enDeD 31 MARCh 2014 sTATemenT by The direcTors on compliAnce wiTh The proVisions oF The uk corporATe GoVernAnce code (The code) As a company listed on the Alternative investment Market of the London Stock exchange, tricorn group plc is not required to comply with the full requirements of the uK Corporate governance Code. We do not therefore comply with the uK Corporate governance Code. however, we have reported on our Corporate governance arrangements by drawing upon best practice available, including those aspects of the uK Corporate governance Code we consider relevant to the group and best practice. 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 approve 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 the group; – there is a clear division of responsibilities in running the Board and running the group’s business; – the Board includes 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. 12 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn Group plc AnnuAl RepoRt And Accounts 2014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 covering at least 12 months from the date that these accounts were approved 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 it 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 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 and D e Leakey have service agreements with the Company which are terminable on not less than six 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. 23447.04 - 25 July 2014 11:28 AM - Proof 7 13 www.tricorn.uk.comOUR FINANCIALSOUR GOVERNANCEOUR BUSINESScorporATe goveRnAnCe continued foR the yeAR enDeD 31 MARCh 2014 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 2014 the following options were held by the directors: Unapproved share options n C Paul CBe M i Welburn M i Welburn D e Leakey Enterprise management incentive scheme (Emi) options P Lee P Lee M i Welburn At beginning of period Number lapsed during the year Number granted during the year Number Exercised during the year Number At end of year Number Exercise price £ 300,000 361,844 1,000,000 500,000 500,000 921,000 1,263,156 — — — — — — — — — — — — — — — — — — — — — 300,000 361,844 1,000,000 500,000 500,000 921,000 1,263,156 0.10 0.10 0.10 0.30 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 5 June 2011. the option is exercisable after three months’ continuous employment. this option is in force for 10 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 10 years and does not have performance conditions attached to it. in addition an option over a further 921,000 shares was granted on 5 August 2010, 736,800 of which have vested at 31 March 2014. 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 2014 was 17.00p (31 March 2013: 23.25p) and the range during the year was 17.00p to 41.00p (2013: 16.50p to 36.10p). 14 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn Group plc AnnuAl RepoRt And Accounts 2014 reporT of the inDePenDent AuDitoR to the MeMBeRS of tRiCoRn gRouP PLC We have audited the group financial statements of tricorn group plc for the year ended 31 March 2014 which comprise the group income statement, 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 page 11, 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 fRC’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 2014 and of its loss 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 iFrss 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 Strategic Report and 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 2014. David munton Senior Statutory Auditor for and on behalf of grant thornton uK LLP Statutory Auditor, Chartered Accountants Birmingham 9 June 2014 23447.04 - 25 July 2014 11:28 AM - Proof 7 15 www.tricorn.uk.comOUR FINANCIALSOUR GOVERNANCEOUR BUSINESSTricorn group plc Group consolidated Financial statements For the year ended 31 march 2014 company number 1999619 Contents 17 group income Statement 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 16 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn Group plc AnnuAl RepoRt And Accounts 2014Group inCoMe StAteMent foR the yeAR enDeD 31 MARCh 2014 Revenue Cost of sales gross profit Distribution costs Administration costs — general administration costs — Restructuring costs — Bargain purchase on aquisition — Acquisition related items — China start-up costs — intangible asset amortisation — Share based payment charge — fair value change relating to forward exchange contracts total administration costs Operating (loss)/profit Share of loss from joint venture finance income finance costs (loss)/profit before tax income tax credit/(expense) (loss)/profit after tax from continuing operations profit/(loss) for the year attributable to discontinued operations (loss)/profit for the year and total comprehensive (expense)/income Attributable to: equity holders of the parent company Earnings per share: Basic (loss)/earnings per share Diluted (loss)/earnings per share note 3 27 27 12 6 3/4 14 8 8 3 9 10 10 All of the activities of the group are classed as continuing unless otherwise stated. the accompanying notes form an integral part of these financial statements. 2014 £’000 underlying 24,460 (16,101) 8,359 (1,550) (6,961) — — — — — — — (6,961) (152) (42) — (149) (343) 92 (251) 2014 £’000 other — — — — — (439) — — (104) (55) (58) — (656) (656) — — — (656) — (656) 2014 £’000 group 24,460 (16,101) 8,359 2013 £’000 Restated 21,347 (13,554) 7,793 (1,550) (906) (6,961) (439) — — (104) (55) (58) — (7,617) (808) (42) — (149) (999) 92 (907) (5,150) (12) 1,098 (1,077) (260) (70) (58) 7 (5,522) 1,365 — 6 (59) 1,312 (248) 1,064 — 44 44 (70) (251) (612) (863) (251) (612) (863) (2.58)p (2.58)p 994 994 2.98p 2.74p 17 23447.04 - 25 July 2014 11:28 AM - Proof 7 www.tricorn.uk.comOUR GOVERNANCEOUR BUSINESSOUR FINANCIALSGroup StAteMent of CoMPRehenSive inCoMe foR the yeAR enDeD 31 MARCh 2014 (loss)/profit for the year Other comprehensive income items that will subsequently be reclassified to profit or loss foreign exchange translation differences Total comprehensive (expense)/income attributable to equity holders of the parent the accompanying notes form an integral part of these financial statements. 2014 £’000 (863) (226) (1,089) 2013 £’000 994 — 994 18 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn Group plc AnnuAl RepoRt And Accounts 2014Group StAteMent of ChAngeS in eQuity foR the yeAR enDeD 31 MARCh 2014 Share premium £’000 merger reserve £’000 Translation reserve £’000 Balance at 1 April 2012 Share based payment charge Dividends paid total transactions with owners Profit and total Comprehensive income as previously reported Remeasurement of fair value on acquisition (note 27) Profit and total Comprehensive income as restated Restated balance at 31 march 2013 issue of new shares Share based payment charge Dividends paid total transactions with owners Loss and total Comprehensive expense Share capital £’000 3,339 — — — — — — 1,692 1,388 — — — — — — — — — — — — 3,339 1,692 1,388 10 — — 10 — — — — — — — — — — — Balance at 31 march 2014 3,349 1,692 1,388 the accompanying notes form an integral part of these financial statements. Share based payment reserve £’000 227 58 — 58 — — — 285 — 58 — 58 — 343 profit and loss account £’000 347 — (77) (77) 754 240 994 Total £’000 6,993 58 (77) (19) 754 240 994 1,264 7,968 — — (111) (111) (863) 290 10 58 (111) (43) (1,089) 6,836 — — — — — — — — — — — — (226) (226) 23447.04 - 25 July 2014 11:28 AM - Proof 7 19 www.tricorn.uk.comOUR GOVERNANCEOUR BUSINESSOUR FINANCIALS2014 £’000 2013 £’000 Restated note 11 12 13 14 16 17 18 20 21 21 19 26 531 730 4,529 371 6,161 3,149 5,197 1,284 36 9,666 15,827 (4,149) (4,511) — (8,660) (159) (172) (331) (8,991) 6,836 3,349 1,692 1,388 (226) 343 290 6,836 591 488 4,695 — 5,774 3,292 5,590 697 — 9,579 15,353 (4,321) (2,385) (280) (6,986) (220) (179) (399) (7,385) 7,968 3,339 1,692 1,388 — 285 1,264 7,968 Group StAteMent of finAnCiAL PoSition At 31 MARCh 2014 Assets Non-current goodwill intangible assets Property, plant and equipment investment in joint venture Current inventories trade and other receivables Cash and cash equivalents Corporation tax Total assets liabilities Current trade and other payables Borrowings Corporation tax Non-current Borrowings Deferred tax Total liabilities Net assets Equity attributable to owners of the parent Share capital Share premium account Merger reserve translation reserve Share based payment reserve Profit and loss account Total equity the financial statements were approved by the Board of Directors on 9 June 2014. m i Welburn Director Company number: 1999619 the accompanying notes form an integral part of these financial statements. 20 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn Group plc AnnuAl RepoRt And Accounts 2014Group StAteMent of CASh fLoWS foR the yeAR enDeD 31 MARCh 2014 Cash flows from operating activities (Loss)/profit after taxation Adjustment for: — Depreciation — net finance costs in income statement — Amortisation charge — Share based payment charge — Share of joint venture operating losses — Bargain purchase recognised in income statement — gain relating to foreign exchange derivative contract — taxation expense recognised in income statement — Profit on sale of operations — Decrease in trade and other receivables — Decrease in trade payables and other payables — (increase)/decrease in inventories Cash (absorbed)/generated from operations interest paid income taxes paid Net cash from operating activities Cash flows from investing activities Purchase of business investment in overseas joint venture Sale of operations Purchase of plant and equipment Purchase of intangible assets interest received Net cash used in investing activities Cash flows from financing activities issue of ordinary share capital Dividend paid Movement in short term borrowings Payment of finance lease liabilities Net cash used in financing activities Net increase/(decrease) 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. 23447.04 - 25 July 2014 11:28 AM - Proof 7 2014 £’000 2013 £’000 Restated (863) 734 149 55 58 42 — — (92) (76) 394 (354) (222) (175) (117) (225) (517) — (413) 600 (714) (297) — (824) 10 (111) 2,128 (99) 1,928 587 697 1,284 994 414 54 70 58 — (1,098) (7) 248 — 233 (343) 326 949 (86) (324) 539 (1,984) — — (978) — 6 (2,956) — (77) 819 (96) 646 (1,771) 2,468 697 21 www.tricorn.uk.comOUR GOVERNANCEOUR BUSINESSOUR FINANCIALSnoTes to the finAnCiAL StAteMentS foR the yeAR enDeD 31 MARCh 2014 1 GenerAl inFormATion tricorn group plc and subsidiaries’ (the ‘group’) principal activities comprise high precision tube manipulation and systems engineering. the group’s customer base includes major blue chip companies with world-wide activities in key market sectors, including 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 tricorn group plc’s registered office, which is also its principal place of business, is Spring Lane, Malvern, Worcestershire, WR14 1DA. tricorn group plc’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 9 June 2014. 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 for the period at least 12 months from the date that these accounts were approved, 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. the group presents separately underlying and other items in the income statement in order to provide a more transparent view of underlying performance and trends. the Directors consider that the underlying income statement is a more appropriate reflection of the group’s performance. Where the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the group shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, the group shall retrospectively adjust the provisional amounts recognised at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date and, if known, would have affected the measurement of the amounts recognised as of that date. the measurement period shall not exceed one year from the acquisition date. the group has revised comparative information for the prior period presented in its financial statements due to new information obtained by the directors about facts and circumstances of the business combination completed during the year ended 31 March 2013. A third statement of financial position has not been presented as the restatement relates to the remeasurement of fair values only, and not an accounting policy which has been retrospectively applied or a retrospective restatement of items. STANDARDS AND iNTERpRETATiONS NOT YET AppliED BY THE gROUp A number of new standards are effective for the first time in the current year, including the following: ifRS 10 Consolidated financial Statements ifRS 11 Joint Arrangements ifRS 12 Disclosure of interests in other entities ifRS 13 fair value Measurement 22 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn Group plc AnnuAl RepoRt And Accounts 20142 AccounTinG policies continued the introduction of these standards has not resulted in any significant changes to the accounting policies of 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 financial instruments Effective for reporting periods starting on or after 1 January 2015 Based on the group’s current business model and accounting policies, management does not expect a material impact on the group’s financial statements when the Standards and interpretations become effective. there are other new Standards and interpretations not listed which are not relevant to the group. 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 whether certain assets/ liabilities that are recorded at fair value which requires 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) • 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. CONSOliDATiON AND iNVESTmENTS iN SUBSiDiARiES the group financial statements consolidate those of the parent company and all of its subsidiaries as of 31 March 2014. the parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. 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 acquisition method. this involves the valuation 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 fair value, which are also used as the basis for subsequent measurement in accordance with the group accounting policies. goodwill represents the excess of fair value consideration over the fair value of the group’s share of the identifiable net assets of the acquired subsidiary at the date of acquisition. Acquisition costs are expensed as incurred. if the fair value of identifiable net assets exceeds the sum calculated above, the excess amount (ie gain on a bargain purchase) is recognised in profit or loss immediately. intra-group balances and transactions, and any unrealised gains or losses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. iNVESTmENTS iN jOiNT VENTURES A joint venture is an arrangement that the group controls jointly with one or more other investors, and over which the group has rights to a share of the arrangement’s net assets rather than direct rights to underlying assets and obligations for underlying liabilities. investments in joint ventures are accounted for using the equity method. Any goodwill or fair value adjustment attributable to the group’s share in the joint venture is not recognised separately and is included in the amount recognised as investment. the carrying amount of the investment in joint ventures is increased or decreased to recognise the group’s share of the profit or loss and other comprehensive income of the associate and joint venture, adjusted where necessary to ensure consistency with the accounting policies of the group. unrealised gains and losses on transactions between the group and its joint ventures are eliminated to the extent of the group’s interest in those entities. Where unrealised losses are eliminated, the underlying asset is also tested for impairment. 23447.04 - 25 July 2014 11:28 AM - Proof 7 23 www.tricorn.uk.comOUR GOVERNANCEOUR BUSINESSOUR FINANCIALSnoTes to the finAnCiAL StAteMentS continued foR the yeAR enDeD 31 MARCh 2014 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 the group’s material revenue stream is in respect of the sale of tubular components. Revenue is measured by reference to the fair value of consideration received or receivable by the group for goods supplied, excluding vAt and trade discounts. Revenue is recognised upon the transfer of risk to the customer. the group recognises revenue when persuasive evidence of an arrangement exists; delivery has occurred; the sale price is 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 fair value of consideration transferred 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 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn Group plc AnnuAl RepoRt And Accounts 2014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. OTHER iNTANgiBlE ASSETS PRodUCT develoPmenT CoSTS expenditure on the research phase of projects to develop new customised products for customers is recognised as an expense as incurred. Costs that are directly attributable to a project’s development phase are recognised as intangible assets, provided they meet the following recognition requirements: • • • • • the development costs can be measured reliably the project is technically and commercially feasible the group intends to and has sufficient resources to complete the project the group has the ability to use or sell the product the product will generate probable future economic benefits. Development costs not meeting these criteria for capitalisation are expensed as incurred. Directly attributable costs include employee costs incurred on product development along with an appropriate portion of relevant overheads. iNTANgiBlE AmORTiSATiON intangible assets are amortised over the following periods: Brand names Customer contracts Product development costs 15 years 5 years 3 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: Land and buildings 40 years Plant and equipment 3 to 10 years Motor vehicles 5 years 23447.04 - 25 July 2014 11:28 AM - Proof 7 25 www.tricorn.uk.comOUR GOVERNANCEOUR BUSINESSOUR FINANCIALSnoTes to the finAnCiAL StAteMentS continued foR the yeAR enDeD 31 MARCh 2014 2 AccounTinG policies continued 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 up-front 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. 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 income statement. 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. 26 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn Group plc AnnuAl RepoRt And Accounts 20142 AccounTinG policies continued 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. 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. pROfiT OR lOSS fROm DiSCONTiNUED OpERATiONS A discontinued operation is a component of the group that either has been disposed of, or is classified as held for sale, and: – – – represents a separate major line of business or geographical area of operations is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations or is a subsidiary acquired exclusively with a view to resale. Profit or loss from discontinued operations, including prior year components of profit or loss, is presented in a single amount in the statement of profit or loss. 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 income statement. 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 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. 23447.04 - 25 July 2014 11:28 AM - Proof 7 27 www.tricorn.uk.comOUR GOVERNANCEOUR BUSINESSOUR FINANCIALSnoTes to the finAnCiAL StAteMentS continued foR the yeAR enDeD 31 MARCh 2014 2 AccounTinG policies continued 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 income statement. 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. 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 obligation 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. Borrowings are subsequently stated at amortised cost 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. 28 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn Group plc AnnuAl RepoRt And Accounts 20143 seGmenTAl reporTinG THE gROUp OpERATES THREE mAiN OpERATiNg SEgmENTS: • energy: manipulated tubular assemblies for use in power generation, oil and gas and marine sectors. • transportation: ferrous, non-ferrous and nylon material tubular assemblies for use in on and off-highway and other such applications. • Aerospace: specialised rigid pipe assemblies for use in the aerospace sector. the financial information detailed below is frequently reviewed by the Chief operating Decision maker. Year ended 31 march 2014 Revenue — from external customers — from other segments Segment revenues Adjusted operating profit/(loss)* Restructuring charges intangible asset amortisation China start up costs Share based payment charge operating loss Share of loss from joint venture net finance costs Loss before tax Segmental assets other segment information: Capital expenditure Depreciation Energy £’000 Transportation £’000 Aerospace £’000 Unallocated £’000 6,933 — 6,933 12 (114) — — — (102) — (39) (141) 4,033 238 230 14,289 — 14,289 87 (10) — (104) — (27) — (66) (93) 8,765 495 427 3,238 — 3,238 (135) (275) — — — (410) — (15) (425) 1,991 22 76 — — — (116) (40) (55) — (58) (269) (42) (29) (340) 1,038 2 1 Total £’000 24,460 — 24,460 (152) (439) (55) (104) (58) (808) (42) (149) (999) 15,827 757 734 * Before intangible asset amortisation, share based payment charges, China start-up costs and restructuring costs. 23447.04 - 25 July 2014 11:28 AM - Proof 7 29 www.tricorn.uk.comOUR GOVERNANCEOUR BUSINESSOUR FINANCIALSnoTes to the finAnCiAL StAteMentS continued foR the yeAR enDeD 31 MARCh 2014 3 seGmenTAl reporTinG continued year ended 31 March 2013 (Restated) Revenue — from external customers — from other segments Segment revenues Adjusted operating profit* Restructuring charges intangible asset amortisation Bargain purchase Acquisition related costs China start up costs 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 £’000 transportation £’000 Aerospace £’000 unallocated £’000 8,568 — 8,568 881 (9) — — — — — — 872 (29) 843 7,011 — 7,011 573 — — — — (260) — — 313 (1) 312 5,768 — 5,768 309 (3) — — — — — — 306 (29) 277 — — — (26) — (70) 1,098 (1,077) — (58) 7 (126) 6 (120) total £’000 21,347 — 21,347 1,737 (12) (70) 1,098 (1,077) (260) (58) 7 1,365 (53) 1,312 3,844 7,301 2,968 1,240 15,353 368 181 488 161 81 70 1 2 938 414 * Before acquisition related costs, China start-up costs, restructuring costs, intangible asset amortisation, share based payment charges and foreign exchange derivative valuation. 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 Year ended 31 march 2014 year ended 31 March 2013 Revenue £’000 12,788 2,721 8,951 24,460 Assets £’000 9,672 — 6,155 15,827 Revenue £’000 14,566 3,970 2,811 21,347 Assets £’000 10,352 — 5,001 15,353 no single customer accounts for more than 10% of revenue. During the year, management decided to dispose of the Redman fittings business which was part of the group’s energy division. Revenue and expenses, gains and losses relating to the discontinuation of this subgroup have been eliminated from profit or loss from the group’s continuing operations and are shown as a single line item on the face of the group income statement (see profit for the year from discontinued operations). Redman fittings was sold for a total of £600,000 in cash resulting in a profit on disposal of £76,000 before tax. the operating loss of Redman fittings until the date of disposal was £32,000. 30 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn Group plc AnnuAl RepoRt And Accounts 20144 proFiT beFore TAxATion the profit on ordinary activities before taxation is stated after charging: Auditors’ remuneration: Audit of parent company Audit of subsidiaries Total audit Non-audit services: Corporate taxation Corporate finance Total non-audit services Total fees Operating lease charges: Land and buildings Plant and equipment Motor vehicles Depreciation and amortisation: intangible assets Property, plant and equipment — owned Property, plant and equipment — leased 5 direcTors’ emolumenTs 2014 £’000 2013 £’000 13 54 67 14 — 14 81 537 69 75 55 677 57 13 45 58 13 96 109 167 404 39 72 70 382 32 2014 2013 Basic £’000 Bonus £’000 Benefits in kind £’000 Total £’000 Basic £’000 Bonus £’000 Benefits in kind £’000 2014 pension £’000 2013 Pension £’000 total £’000 30 15 140 110 103 398 — — — — — — — — 22 15 8 45 30 15 162 125 111 443 30 15 120 90 88 343 — — 30 23 22 75 — — 22 13 8 43 30 15 172 126 118 461 — — 8 6 — 14 — — 8 6 — 14 n C Paul CBe R Allsop M i Welburn* P Lee* D e Leakey* * the executive Directors are classified as the key management personnel of the group as defined in iAS 24 Related Party Disclosures. employers national insurance Contributions made relating to Directors’ emoluments were £54k (2013: £62k). SHARE-BASED pAYmENT CHARgE BY DiRECTOR (NOTE 7) M i Welburn* P Lee* D e Leakey* * the executive Directors are classified as the key management personnel of the group as defined in iAS 24 Related Party Disclosures. 2014 £’000 15 13 23 51 2013 £’000 15 13 23 51 31 23447.04 - 25 July 2014 11:28 AM - Proof 7 www.tricorn.uk.comOUR GOVERNANCEOUR BUSINESSOUR FINANCIALSnoTes to the finAnCiAL StAteMentS continued foR the yeAR enDeD 31 MARCh 2014 6 employees 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 2014 Number 2013 number 292 80 372 2014 £’000 8,061 796 153 58 264 55 319 2013 £’000 6,738 576 177 58 9,067 7,549 7 shAre bAsed employee remunerATion there are two share based remuneration schemes in operation: • Approved enterprise Management incentive (eMi) scheme • unapproved share options. At 31 March 2013 no. of shares granted in year no. of shares exercised in year no. of shares Lapsed in year no. of shares At 31 march 2014 No. of shares exercise price Pence Life remaining on options at 31 March 2014 Months Enterprise management incentive (Emi) scheme exercise date: March 2009 – March 2019 December 2009 – December 2019 August 2010 – August 2020 500,000 100,000 2,184,156 2,784,156 — — — — — (100,000) — — 500,000 — — — 2,184,156 (100,000) — 2,684,156 10p 10p 10p 60 — 77 the weighted average exercise price of the eMi Scheme at 31 March 2014 was 10p (2013: 10p). 2,499,956 options were available for exercise at 31 March 2014 (2013: 2,599,956). 32 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn Group plc AnnuAl RepoRt And Accounts 20147 shAre bAsed employee remunerATion continued At 31 March 2013 no. of shares granted in year no. of shares exercised in year no. of shares Lapsed in year no. of shares At 31 march 2014 No. of shares exercise price Pence Life remaining on options at 31 March 2014 Months Unapproved share options exercise date: September 2010 – September 2015 September 2010 – September 2020 June 2011 – June 2021 December 2011 – December 2021 1,000,000 661,844 500,000 200,000 2,361,844 Total share options 5,146,000 — — — — — — — — — — — — 1,000,000 — — — 661,844 500,000 200,000 — 2,361,844 (100,000) — 5,046,000 10p 10p 30p 25p 18 78 87 90 the weighted average exercise price of the unapproved share options at 31 March 2014 was 15.5p (2013: 15.5p). 2,161,844 options were available for exercise at 31 March 2014 (2013: 2,161,844). the approved and unapproved option schemes have been valued 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 to 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 days. 8 FinAnce income And expense Bank interest receivable finance income invoice discounting interest interest on short term borrowing interest on hire purchase agreements and finance leases finance expense 9 TAxATion on (loss)/proFiT on ordinAry AcTiViTies the tax is based on the loss/(profit) for the year and represents: uK corporation tax Adjustments in respect of prior years Current tax charge for the year Deferred taxation (note 19) tax on (loss)/profit on ordinary activities 23447.04 - 25 July 2014 11:28 AM - Proof 7 2014 £’000 — — 113 24 12 149 2014 £’000 — (85) (85) (7) (92) 2013 £’000 6 6 51 — 9 60 2013 £’000 355 (61) 294 (46) 248 33 www.tricorn.uk.comOUR GOVERNANCEOUR BUSINESSOUR FINANCIALSnoTes to the finAnCiAL StAteMentS continued foR the yeAR enDeD 31 MARCh 2014 9 TAxATion on (loss)/proFiT on ordinAry AcTiViTies continued the tax assessed is different to the standard rate of corporation tax in the uK of 23% (2013: 24%). the differences are explained as follows: (Loss)/profit on ordinary activities before tax (Loss)/profit on ordinary activities multiplied by standard rate of corporation tax in the uK of 23% (2013: 24%) effect of: expenses not deductible for tax purposes income not taxable for tax purposes unprovided losses Losses carried back Chargeable gain other short term timing differences Adjustments in respect of prior years 2014 £’000 (999) 2013 £’000 Restated 1,242 (230) 286 6 (11) 128 31 31 38 (85) (92) 90 (244) 58 — — 144 (86) 248 At 31 March 2014 the group had tax losses of £149,000 (2013: £nil) to offset against future profits within the united Kingdom. 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 loss per share Dilutive shares Diluted loss per share 31 march 2014 Weighted average number of shares Number ’000 loss £’000 loss per share pence (863) 33,468 (2.58) — (863) 33,468 (2.58) there is no dilution to the basic or adjusted loss per share in 2014 owing to a loss for the year being reported. 34 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn Group plc AnnuAl RepoRt And Accounts 201410 eArninGs per shAre continued Basic earnings per share Dilutive shares Diluted earnings per share 31 March 2013 (restated) Weighted average number of shares number ’000 33,395 2,891 36,286 Profit £’000 994 994 earnings per share Pence 2.98 2.74 the directors consider that the following adjusted earnings per share calculation is a more appropriate reflection of the group performance. 31 march 2014 Weighted average number of shares Number ’000 loss per share pence 33,468 (2.58) loss £’000 (863) (76) 104 439 55 58 32 (251) 33,468 (0.75) — (251) 33,468 (0.75) Profit £’000 994 (21) 260 12 48 58 (7) 1,344 1,344 31 March 2013 Weighted average number of shares number ’000 earnings per Share Pence 33,395 2.98 33,395 2,891 36,286 4.02 3.70 35 Basic loss per share Profit on sale of businesses China start up costs Restructuring costs Amortisation of intangible asset Share based payment charge Losses relating to discontinued businesses Adjusted loss per share Dilutive shares Diluted adjusted loss per share Basic earnings per share (restated) Bargain purchase and acquisition related costs China start-up costs Restructuring costs Amortisation of intangible asset (net of deferred tax) Share based payment charge Charge relating to foreign exchange contract Adjusted earnings per share Dilutive shares Diluted adjusted earnings per share 23447.04 - 25 July 2014 11:28 AM - Proof 7 www.tricorn.uk.comOUR GOVERNANCEOUR BUSINESSOUR FINANCIALSnoTes to the finAnCiAL StAteMentS continued foR the yeAR enDeD 31 MARCh 2014 11 Goodwill Cost At 31 March 2012 and 31 March 2013 Disposals At 31 March 2014 impairment At 31 March 2012, 31 March 2013 and 31 March 2014 Net book value At 31 March 2012 At 31 March 2013 At 31 march 2014 goodwill above relates to the following cash generating units: RMDg Aerospace Limited Maxpower Automotive Limited Total £’000 591 (60) 531 — 591 591 531 Date of acquisition June 2006 June 2007 Original cost £’000 140 391 531 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 5 year forecast and applying a discount rate of 3.1% 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 management does 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 its key estimates. 36 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn Group plc AnnuAl RepoRt And Accounts 201412 inTAnGible AsseTs Cost At 1 April 2012 and 1 April 2013 Additions At 31 March 2014 Amortisation At 1 April 2012 Charge for the year At 1 April 2013 Charge for the year At 31 March 2014 Net book value At 31 March 2012 At 31 March 2013 At 31 march 2014 Product development costs £’000 Brand names £’000 Customer contracts £’000 — 297 297 — — — — — — — 297 830 — 830 (289) (53) (342) (55) (397) 541 488 433 312 — 312 (295) (17) (312) - (312) 17 — — total £’000 1,142 297 1,439 (584) (70) (654) (55) (709) 558 488 730 All intangible asset amortisation is included in the group income statement under amortisation of intangibles as detailed on the face of the group income statement. 23447.04 - 25 July 2014 11:28 AM - Proof 7 37 www.tricorn.uk.comOUR GOVERNANCEOUR BUSINESSOUR FINANCIALSnoTes to the finAnCiAL StAteMentS continued foR the yeAR enDeD 31 MARCh 2014 13 properTy, plAnT And equipmenT Cost At 1 April 2012 Additions Additions — Business combinations At 1 April 2013 as previously reported fair value remeasurement (note 27) At 1 April 2013 as restated Additions Disposals foreign exchange revaluation At 31 March 2014 Depreciation At 1 April 2012 Charge for the year At 1 April 2013 Charge for the year Disposals At 31 March 2014 Net book value At 31 March 2012 At 31 March 2013 as restated At 31 march 2014 Land and buildings £’000 Plant and equipment £’000 Motor vehicles £’000 — — 300 300 989 1,289 6 — (28) 1,267 — — — 15 — 15 — 1,289 1,252 5,769 938 1,254 7,961 — 7,961 751 (85) (101) 8,526 4,141 414 4,555 719 (25) 5,249 1,628 3,406 3,277 43 — — 43 — 43 — — — 43 43 — 43 — — 43 — — — total £’000 5,812 938 1,554 8,304 989 9,293 757 (85) (129) 9,836 4,184 414 4,598 734 (25) 5,307 1,628 4,695 4,529 the net book value of property, plant and equipment includes £392,000 (2013: £416,000) in respect of assets held under finance leases and hire purchase contracts. 38 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn Group plc AnnuAl RepoRt And Accounts 201414 inVesTmenT in JoinT VenTure During the year, the group agreed terms for the formation of a joint venture in China, Minguang-tricorn tubular Products nanjing Ltd, which manufactures larger diameter tubular assemblies. the investment in Minguang-tricorn tubular Products nanjing Ltd is accounted for using the equity method in accordance with ifRS 11. Summarised financial information for Minguang-tricorn tubular Products nanjing Ltd is set out below: non-current assets Current assets Total assets non-current liabilities Current liabilities Total liabilities Revenue Loss for the year 2014 £’000 363 407 770 109 — 109 2014 £’000 379 82 A reconciliation of the above summarised financial information to the carrying amount of the investment in Minguang-tricorn tubular Products nanjing Ltd is set out below: total net assets of Minguang-tricorn tubular Products nanjing Ltd Proportion of ownership interests held by the group Carrying amount of the investment no dividends were received from Minguang-tricorn tubular Products nanjing Ltd during the year from the joint venture. Minguang-tricorn tubular Products nanjing Ltd is a private company, therefore no quoted market prices are available for its shares 2014 £’000 727 51% 371 15 principAl subsidiAries At 31 March 2014 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 RMDg Aerospace Limited united Kingdom Maxpower Automotive Limited united Kingdom Maxpower Automotive Components Manufacturing (Wuxi) Limited China franklin tubular Products inc uSA Robert Morton Dg Limited* united Kingdom hallco 347 Limited united Kingdom * held by a subsidiary undertaking ordinary ordinary ordinary ordinary ordinary ordinary 100 100 100 100 100 100 100 23447.04 - 25 July 2014 11:28 AM - Proof 7 principal business activity Manufacturer of tubular components Manufacturer of aerospace fittings Manufacturer of highway and automotive tubular and pipe components Manufacturer of highway and automotive tubular and pipe components Manufacturer of tubular assemblies and components to highway and heavy duty truck market Dormant Dormant 39 www.tricorn.uk.comOUR GOVERNANCEOUR BUSINESSOUR FINANCIALSnoTes to the finAnCiAL StAteMentS continued foR the yeAR enDeD 31 MARCh 2014 16 inVenTories Raw materials Work in progress finished goods 2014 £’000 1,850 567 732 3,149 2013 £’000 Restated 1,513 833 946 3,292 in the year to 31 March 2014, a total of £10,352,000 of inventory (2013: £9,016,000) was included in the income statement as an expense. 17 TrAde And oTher receiVAbles trade receivables impairment of trade receivables other receivables Prepayments and accrued income total 2014 £’000 4,844 — 4,844 115 238 5,197 2013 £’000 4,912 — 4,912 330 348 5,590 At 31 March 2014, some of the unimpaired trade receivables are past their due date but all are considered recoverable. the age of financial assets past due but not impaired, is as follows: not more than one month not more than two months not more than three months 2014 £’000 536 245 — 781 2013 £’000 1,056 309 14 1,379 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 regards to trade and other receivables as the amounts recognised represents 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. 18 cAsh And cAsh equiVAlenTs Cash and cash equivalents 2014 £’000 1,284 2013 £’000 697 Cash and cash equivalents consist of cash on hand and balances with banks only. At the year end £1,255,000 (2013: £571,000) of cash on hand and balances with banks were held by the subsidiary undertakings, however this balance is available for use by the group. 40 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn Group plc AnnuAl RepoRt And Accounts 201419 deFerred TAxATion the deferred tax included in the statement of financial position arose in the following areas: intangible assets Plant and equipment the movement in the deferred taxation account during the year was: Balance brought forward group income statement movement arising during the year Balance carried forward As at 31 March 2014 the group has unprovided deferred tax assets as follows: trading losses Assets liabilities 2014 £’000 — — — 2013 £’000 — — — 2014 £’000 (146) (26) (172) Assets liabilities 2014 £’000 — — — 2013 £’000 — — — 2014 £’000 (179) 7 (172) 2013 £’000 (112) (67) (179) 2013 £’000 (225) 46 (179) Unprovided 2014 £’000 unprovided 2013 £’000 204 58 this deferred tax asset is not recognised due to uncertainty over its recoverability. At 31 March 2014 the group had tax losses of £171,000 (2013: £nil) to offset against future profits within the united Kingdom. tax losses available to utilise outside of the uK at 31 March 2014 are £849,000 (2013: £254,000). 20 TrAde And oTher pAyAbles trade and other payables other taxation and social security Accruals 2014 £’000 2,545 356 1,248 4,149 2013 £’000 Restated 1,958 298 2,065 4,321 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. 23447.04 - 25 July 2014 11:28 AM - Proof 7 41 www.tricorn.uk.comOUR GOVERNANCEOUR BUSINESSOUR FINANCIALSnoTes to the finAnCiAL StAteMentS continued foR the yeAR enDeD 31 MARCh 2014 21 borrowinGs Current borrowings invoice discounting facility other short term borrowings hire purchase agreements and finance lease liabilities (note 22) Non-current borrowings hire purchase agreements and finance lease liabilities (note 22) 2014 £’000 3,998 413 100 4,511 159 159 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 invoice discounting facility other short term borrowing invoice discounting facility interest on the invoice discounting facility is paid at the rate of 2.10% over bank base rate per annum. 22 hire purchAse AGreemenTs And FinAnce leAse liAbiliTies the commitments under hire purchase agreements and finance lease liabilities are as follows: 2014 £’000 3,998 413 4,411 2013 £’000 2,283 — 102 2,385 220 220 2013 £’000 2,283 — 2,283 31 march 2014 Payments Discounting 31 March 2013 Payments Discounting Within 1 year Within 1–2 years Within 2–5 years Total 127 (24) 103 127 (25) 102 127 (24) 103 117 (15) 102 61 (8) 53 126 (8) 118 315 (56) 259 370 (48) 322 the hire purchase agreements and finance lease liabilities are secured against the assets to which they relate. 23 FinAnciAl insTrumenTs the group uses financial instruments comprising cash and short term deposits, invoice discounting, other short term borrowings and hire purchase agreements and finance leases. the group has items such as trade receivables and trade payables that arise directly from its operations. 42 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn Group plc AnnuAl RepoRt And Accounts 201423 FinAnciAl insTrumenTs continued 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 group’s objective is to maintain a balance between continuity of funding and flexibility through the use of deposits, bank loans, invoice discounting, other short term borrowings 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 group’s policy 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: • Short term borrowings at between 2.1% over base rate and 8% • 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 £14k (2013: £2k), equity and reserves would reduce/increase by the same amount, and the charge would be £135,000/£163,000 (2013: £58,000/£62,000). fOREigN CURRENCY RiSk the group transacts certain purchases and sales in foreign currencies. At 31 March 2014 there were no (2013: none) foreign currency forward contracts in force. foreign exchange differences on retranslation of monetary foreign currency assets and liabilities are taken to the income statement of the group. if the uS Dollar and euro were to fall/rise against gBP by 10% on the closing rate and average annual rate at 31 March 2014 then group profits would rise/fall by £181,000 at 31 March 2014 (2013: £230,000) 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 £417,000 at 31 March 2014 (2013: £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: non financial asset Loans and other receivables Total assets 23447.04 - 25 July 2014 11:28 AM - Proof 7 2014 £’000 238 6,243 6,481 2013 £’000 348 5,939 6,287 43 www.tricorn.uk.comOUR GOVERNANCEOUR BUSINESSOUR FINANCIALSnoTes to the finAnCiAL StAteMentS continued foR the yeAR enDeD 31 MARCh 2014 23 FinAnciAl insTrumenTs continued 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 2014 £’000 4,959 1,284 6,243 2013 £’000 5,242 697 5,939 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 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 Borrowings Non-current liabilities Borrowings fAiR VAlUE HiERARCHY 2014 £’000 356 8,463 8,819 2014 £’000 3,793 4,511 159 8,463 2013 £’000 298 6,628 6,926 2013 £’000 4,023 2,385 220 6,628 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 (ie as prices) or indirectly (ie 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. there are no financial assets or liabilities measured at fair value in the statement of financial position at 31 March 2014 (2013: none). 24 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. 44 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn Group plc AnnuAl RepoRt And Accounts 201425 deriVATiVes At the year end the group had no (2013: none) forward currency exchange contracts in place. 26 shAre cApiTAl Authorised 100,000,000 ordinary shares of 10 pence each Allotted and issued 2014 £’000 2013 £’000 10,000 10,000 33,495,000 (2013: 33,395,000) ordinary shares of 10 pence each 3,349 3,339 All 10 pence ordinary shares carry the same voting rights and rights to discretionary dividends. 27 business combinATion As reported in the previous financial year, on 4 March 2013 the group acquired the trade and assets of Whitley Products inc, a company incorporated in the uSA via an intermediate subsidiary, franklin tubular Products inc, for consideration of $2,994,000. Due to the proximity of the acquisition to the previous year end, the Directors performed an initial assessment of the fair value of the net assets acquired. Where the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the group reports in its financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, the group retrospectively adjusts the provisional amounts recognised at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date and, if known, would have affected the measurement of the amounts recognised as of that date. the measurement period ends as soon as the acquirer receives the information it was seeking about facts and circumstances that existed as of the acquisition date or learns that more information is not obtainable. the measurement period shall not exceed one year from the acquisition date. ifRS 3 Business Combinations requires that during the measurement period, the acquirer shall recognise adjustments to the provisional amounts as if the accounting for the business combination had been completed at the acquisition date. thus, the group has revised comparative information for prior periods presented in its financial statements as needed, including making any change in depreciation, amortisation or other income effects recognised in completing the initial accounting. the measurement period adjustments were recorded due to new information obtained by the directors about facts and circumstances that existed at the acquisition date around the valuation of freehold property and inventories. those fair value estimates have been revisited during the current financial year and remeasured as follows: fair value of consideration transferred Amount settled in cash Recognised amounts of identifiable net assets Property, plant and equipment total non-current assets inventories total current assets trade and other payables total liabilities identifiable net assets Provisional amounts £’000 Remeasure- ment £’000 Revised £’000 1,984 1,555 1,555 1,260 1,260 — — 2,815 — 1,984 989 989 (570) (570) (152) (152) 267 2,544 2,544 690 690 (152) (152) 3,082 Bargain purchase on acquisition 831 267 1,098 45 23447.04 - 25 July 2014 11:28 AM - Proof 7 www.tricorn.uk.comOUR GOVERNANCEOUR BUSINESSOUR FINANCIALSnoTes to the finAnCiAL StAteMentS continued foR the yeAR enDeD 31 MARCh 2014 27 business combinATion continued CONSiDERATiON TRANSfERRED the acquisition was settled in cash amounting to $2,994,000 (£1,984,000). BARgAiN pURCHASE ON ACqUiSiTiON the gain on the bargain purchase is recognised in prior year profit or loss. 28 conTinGenT liAbiliTies there were no contingent liabilities at 31 March 2014 or 31 March 2013. 29 cApiTAl commiTmenTs there were no capital commitments at 31 March 2014 or 31 March 2013. 30 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 2014 land and buildings £’000 490 1,506 2,250 4,246 2013 Land and buildings £’000 513 1,826 643 2,982 2014 Other £’000 106 114 — 220 2013 other £’000 117 116 — 233 31 TrAnsAcTions wiTh relATed pArTies During the year Malvair Properties Limited, in which R Allsop, a non-executive director, has a beneficial interest acquired ownership of a property occupied by a group company under an operating lease. the company incurred operating lease charges of £24k during this ownership period and included in prepayments is £14k relating to this lease. During the year, the group agreed terms for the formation of a joint venture in China, Minguang-tricorn tubular Products nanjing Ltd. Since the date of incorporation of the joint venture, the group has made sales to the joint venture of £nil and purchases from the joint venture of £0.379m. At the balance sheet date amounts held in trade and other receivables and owed to the group by the joint venture amounted to £nil, and amounts held in trade and other payables and owed by the group to the joint venture of £0.125m. 46 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn Group plc AnnuAl RepoRt And Accounts 2014Tricorn group plc company statutory Annual report under uk GAAp For the year ended 31 march 2014 company number 1999619 Contents 48 Company Statement of Directors’ Responsibilities 49 Report of the independent Auditors 50 Company Balance Sheet 51 notes to the financial Statements 23447.04 - 25 July 2014 11:28 AM - Proof 7 47 www.tricorn.uk.comOUR GOVERNANCEOUR BUSINESSOUR FINANCIALScompAny StAteMent of DiReCtoRS’ ReSPonSiBiLitieS foR the yeAR enDeD 31 MARCh 2014 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 auditor is 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. 48 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn Group plc AnnuAl RepoRt And Accounts 2014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 2014 which comprise the parent company balance sheet and notes 1 to 15. 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 48, 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 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 fRC’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 2014; • 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 Strategic Report and 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 2014. David munton Senior Statutory Auditor for and on behalf of grant thornton uK LLP Statutory Auditor, Chartered Accountants Birmingham Date: 9 June 2014 23447.04 - 25 July 2014 11:28 AM - Proof 7 49 www.tricorn.uk.comOUR GOVERNANCEOUR BUSINESSOUR FINANCIALScompAny BALAnCe Sheet At 31 MARCh 2014 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 liabilities Total assets less current liabilities Net assets Capital and reserves Called up share capital Share premium account Share based payment reserve Merger reserve Profit and loss account Equity shareholders’ funds the financial statements were approved by the Board of Directors on 9 June 2014. m i Welburn Director Company number: 1999619 note 7 8 9 10 11 11 11 11 2014 £’000 3 8,447 8,450 518 29 547 (1,635) (1,588) 6,862 7,362 3,349 1,692 343 1,592 386 7,362 2013 £’000 2 8,420 8,422 10,860 126 10,986 (12,305) (1,319) 7,103 7,103 3,339 1,692 285 1,592 195 7,103 50 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn Group plc AnnuAl RepoRt And Accounts 2014noTes to the finAnCiAL StAteMentS foR the yeAR enDeD 31 MARCh 2014 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. 23447.04 - 25 July 2014 11:28 AM - Proof 7 51 www.tricorn.uk.comOUR GOVERNANCEOUR BUSINESSOUR FINANCIALSnoTes to the finAnCiAL StAteMentS continued foR the yeAR enDeD 31 MARCh 2014 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. 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 profit for the year was £302,000 (2013: Loss £87,000). Auditor’s remuneration incurred by the Company during the year for audit services totalled £13,000 (2013: £13,000), and for tax compliance services totalled £2,000 (2013: £2,000). 4 direcTors’ And employees’ remunerATion Staff costs during the year were as follows: Wages and salaries Social security costs other pension costs 2014 £’000 869 77 37 983 2013 £’000 815 103 29 947 the average number of persons (including directors) employed by the Company during the year was 11 (2013: 11). 5 direcTors’ emolumenTs All details on directors remuneration are given in note 5 of the group financial statements. 6 shAre bAsed employee remunerATion All details on share options are included in note 7 of the group financial statements. 52 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn Group plc AnnuAl RepoRt And Accounts 20147 Fixed AsseT inVesTmenTs Cost At 1 April 2013 Additions At 31 March 2014 impairment At 1 April 2013 and 31 March 2014 Net book value At 31 march 2014 At 31 March 2013 Total £’000 9,702 27 9,729 (1,282) 8,447 8,420 During the year ended 31 March 2013 the company acquired the trade and assets of Whitley Products inc, a company incorporated in the uSA, via an intermediate subsidiary, franklin tubular Products inc, for consideration of $2,994,000. the company incurred associated legal and professional costs of £240,000, which are included within the cost of investment shown above. At 31 March 2014 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 RMDg Aerospace Limited united Kingdom Maxpower Automotive Limited united Kingdom Maxpower Automotive Components Manufacturing (Wuxi) Limited China franklin tubular Products inc uSA Robert Morton Dg Limited* united Kingdom hallco 347 Limited united Kingdom * held by a subsidiary undertaking ordinary ordinary ordinary ordinary ordinary ordinary 100 100 100 100 100 100 100 principal business activity Manufacturer of tubular components Manufacturer of aerospace fittings Manufacturer of highway and automotive tubular and pipe components Manufacturer of highway and automotive tubular and pipe components Manufacturer of tubular assemblies and components to highway and heavy duty truck market Dormant Dormant 23447.04 - 25 July 2014 11:28 AM - Proof 7 53 www.tricorn.uk.comOUR GOVERNANCEOUR BUSINESSOUR FINANCIALSnoTes to the finAnCiAL StAteMentS continued foR the yeAR enDeD 31 MARCh 2014 8 debTors Amounts owed by subsidiary undertakings other debtors Prepayments and accrued income 9 crediTors: AmounTs due wiThin one yeAr Bank borrowings trade creditors Amounts due to subsidiary undertakings other taxes and social security Corporation tax Accruals and deferred income Borrowings are repayable as follows: Within one year — bank borrowings After one and within two years — bank borrowings 10 shAre cApiTAl Authorised 100,000,000 ordinary shares of 10 pence each Allotted and issued 2014 £’000 500 18 — 518 2014 £’000 337 — 2013 £’000 10,697 59 104 10,860 2013 £’000 579 157 1,104 11,267 28 — 166 1,635 2014 £’000 337 — 337 29 7 266 12,305 2013 £’000 579 — 579 2014 £’000 2013 £’000 10,000 10,000 33,495,000 (2013: 33,395,000) ordinary shares of 10 pence each 3,349 3,339 All 10p ordinary share capital carry the same voting rights and rights to discretionary dividends. 54 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn Group plc AnnuAl RepoRt And Accounts 201411 reserVes At 1 April 2013 Share based payment charge Profit for the year Dividends paid At 31 march 2014 Share premium £’000 1,692 — — — 1,692 Share based payment reserve £’000 285 58 — — 343 merger Reserve £’000 1,592 — — — 1,592 12 reconciliATion oF moVemenT in equiTy shAreholders’ Funds Profit for the financial year issue of new shares Dividends paid Share based payment charge net decrease to shareholders’ funds opening equity shareholders’ funds Closing equity shareholders’ funds 2014 £’000 302 10 (111) 58 259 7,103 7,362 profit and loss account £’000 195 — 302 (111) 386 2013 £’000 (87) — (77) 58 (106) 7,209 7,103 13 conTinGenT liAbiliTies the Company has given an unlimited guarantee against the bank borrowings of its subsidiaries. At 31 March 2014 the balances amounted to £nil (2013: £nil). there were no further contingent liabilities at 31 March 2014 or 31 March 2013. 14 cApiTAl commiTmenTs there were no capital commitments at 31 March 2014 or at 31 March 2013. 15 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. 23447.04 - 25 July 2014 11:28 AM - Proof 7 55 www.tricorn.uk.comOUR GOVERNANCEOUR BUSINESSOUR FINANCIALSBankers: hSBC Bank plc 5 Broad Street Worcester WR1 2eJ Solicitors: harrison Clark 5 Deansway Worcester WR1 2Jg 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: Phillip Lee Nominated adviser and Nominated broker: Westhouse Securities Limited 20th floor heron tower 110 Bishopsgate London eC2n 4Ay Registrars: neville Registrars Limited neville house 18 Laurel Lane halesowen West Midlands B63 3DA 56 23447.04 - 25 July 2014 11:28 AM - Proof 7 Tricorn Group plc AnnuAl RepoRt And Accounts 201423447.04 - 25 July 2014 11:28 AM - Proof 7 T r i c o r n G r o u p p l c A n n u A l r e p o r T A n d A c c o u n T s 2 0 1 4 Tricorn Group plc Spring Lane Malvern Link Malvern Worcestershire WR14 1DA T: 01684 569956 F: 01684 892337 Visit us online at www.tricorn.uk.com 23447.04 - 25 July 2014 11:28 AM - Proof 7 

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