Tricon Residential
Annual Report 2017

Plain-text annual report

TRICORN GROUP PLC Annual Report & Accounts for the year ended 31 March 2017 Stock code: TCN 25561.04 28/07/2017 Proof 625561.04 28/07/2017 Proof 6Welcome to our Annual Report 2017 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. Our investment proposition ¹ 2 3 Organic Growth Improving Margins Driving Excellence — 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, marine and mining, oil & gas) and Transportation (on and off highway including trucks, construction & agriculture). Read about our Sectors on page 3 Read our Financial Review on page 4 25561.04 28/07/2017 Proof 625561.04 28/07/2017 Proof 6Organically by increasing share within its customers and developing new customers. Inorganically through selective acquisitions where Tricorn’s management expertise can generate sufficient added value.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.Highlights 2017 Highlights Operational Highlights — Significant improvement in underlying operating profit and profit before tax — Successfully completed consolidation of China operations — Over £10m ($12.9m) of business secured in a long term agreement and new contract wins in the US — Investment in manufacturing footprint aligned to a growing customer base — Positive cash flow from operating activities Financial Highlights Revenue £m 2 0 1 7 2 0 1 6 2 0 1 5 £18.519m £18.016m £21.186m Underlying Operating profit £m £0.497m 2 0 1 7 2 0 1 6 2 0 1 5 £0.033m £0.176m Underlying profit/(loss) before tax £m Underlying earnings/(loss) per share pence 2 0 1 7 £0.230m 2 0 1 7 0.72p (£0.273m) (£0.055m) 2 0 1 6 2 0 1 5 (0.19p) (0.50p) 2 0 1 6 2 0 1 5 Cash flow from operations £m Net debt £m 2 0 1 7 2 0 1 6 £0.614m (£3.497m) £1.222m (£2.920m) (£0.742m) 2 0 1 5 (£3.125m) 2 0 1 7 2 0 1 6 2 0 1 5 Contents 02 Strategic Report 06 Board of Directors 07 Report of the Directors 09 Corporate Governance (including Remuneration Report) 11 Report of the Independent Auditors 13 Group Income Statement 14 Group Statement of Comprehensive Income 15 Group Statement of Changes in Equity 16 Group Statement of Financial Position 17 Group Statement of Cash Flows 18 Notes to the Financial Statements 40 Company Statutory Financial Statements Visit us online at www.tricorn.uk.com Icons used in this report This icon signposts the reader to other sections in this report 01 25561.04 28/07/2017 Proof 6OUR BUSINESSStock code: TCNTRICORN GROUP PLC Annual Report and Accounts 2017 Strategic Report Chairman’s and Chief Executive’s Statement “ The Group is ideally positioned to support its customers’ facilities as they continue to seek to localise supply and technical support.” Andrew Moss Chairman Revenue £18.519m for the year ended 31 March 2017 Transportation 73% Energy 27% Performance in the year ended 31 March 2017 Revenue for the year at £18.519m was 2.8% higher than the previous year (2016: £18.016m) reflecting the impact of new business growth and improved trading across the Group towards the end of the period. Second half revenue was 8% up on the first six months and 21.5% higher than the corresponding period last year. From July 2016, the Group’s businesses in China were consolidated into an enlarged joint venture, which in line with Group policy is reported on a profit or loss only basis. A favourable US dollar translation impact more than offset the resulting reduction in reported revenue. Underlying operating profit at £0.497m was significantly up from the previous year (2016: £0.033) and with the joint venture in China operating profitably, following the consolidation, the underlying profit before tax for the year at £0.230m was up £0.503m on the previous year (2016: loss £0.273m). In the Transportation division, good progress continued to be made on several fronts. In the USA over £10m ($12.9m) of business was secured from both existing and new customers reflecting the strengthening customer relationships being developed in the region. In the UK revenue continued to grow as a result of new business and the product application base was expanded to include braking systems for electric vehicles. The Energy division expanded its reach into the power generation sector and with customer end markets starting to improve saw a notable increase in demand through the latter part of the year. Business Review The Group operates two main business divisions focused on the transportation and energy sectors. From the Group’s four manufacturing facilities, the businesses serve a global blue chip OEM customer base many of whom have major facilities in the UK, USA, and China as well as elsewhere in the world. With manufacturing operations now established in each of these key locations, the Group is ideally positioned to support its customers’ facilities as they continue to seek to localise supply and technical support. All references to operating profit, profit/(loss) before tax and earnings/(loss) per share are for continuing operations and before restructuring costs, intangible asset amortisation and share based payment charges. June 2005 China team established in Nanjing June 2007 Acquired Maxpower Automotive Limited, UK March 2012 Announced investment in China manufacturing facility March 2013 Acquired Franklin Tubular Products Inc, US July 2013 Investment in Joint Venture, Minguang- Tricorn Tubular Products (Nanjing) Limited June 2017 Completed consolidation of China activities Our timeline December 2001 Listed on AIM 02 25561.04 28/07/2017 Proof 6TRICORN GROUP PLC Annual Report and Accounts 2017www.tricorn.uk.comTransportation The Transportation division is focused on rigid, nylon and hybrid tubular products for engines, braking systems, transmission lubrication, fuel sender sub-systems and hydraulic actuation in a variety of on and off road applications including construction, trucks and agriculture. In the UK, Maxpower Automotive benefited from the impact of new business growth following the prior year investment in rigid hydraulic tube manufacture. More recently, the development of brake system products for electric vehicle applications provides further scope for expansion. Revenue (£m) £13.595 (2016: £12.538) In China, both the Group’s wholly owned facility and joint venture were combined into an enlarged operation. This reduced operational gearing and concentrated resources into a single location in an enlarged joint venture in Nanjing. The business operated profitably over the latter part of the financial year and is now firmly established on a solid platform for growth. Operating Profit (£m) £0.329 (2016: £0.043m) Revenue (£m) £4.924 (2016: £5.478m) Operating Profit (£m) £0.280 (2016: £0.098m) External revenue for the year ended 31 March 2017 was £13.595m (2016: £12.538m) and underlying operating profit increased to £0.329m (2016: £0.043m). In the USA, Franklin Tubular Products continued to develop its relationships and secure market share with a growing customer base. Strong operational performance and early investment in innovative capabilities for the business has resulted in new contract wins and a long term agreement with a combined estimated value of over £10m ($12.9m) for the supply of on-board heavy truck products as well as hydraulic fluid systems for off road machines. Energy The Energy division is focused on the design and manufacture of larger tubular assemblies and fabrications for diesel engines and power generator sets. The key markets served through its customers are power generation, mining, marine and oil & gas applications. External revenue for the year at £4.924m was down on the previous year (2016: £5.478m); however, second half revenue was up 39.5% on the previous six months. This was a result of the impact of new business secured, principally in the power generation sector, and improving end markets for its existing customer base. Underlying operating profit at £0.280m was substantially up on the previous year (2016: £0.098m) as the business benefited from restructuring in the prior year. All references to operating profit, profit/(loss) before tax and earnings/(loss) per share are for continuing operations and before restructuring costs, intangible asset amortisation and share based payment charges. 03 25561.04 28/07/2017 Proof 6OUR BUSINESSStock code: TCNTRICORN GROUP PLC Annual Report and Accounts 2017Strategic Report “ All of the Group’s subsidiary businesses were profitable in the year and the China joint venture was profitable through the final quarter.” Cash and equivalents 2 0 1 7 2 0 1 6 2 0 1 5 £0.642m £0.855m £0.694m People The Board would like to take the opportunity to thank all its employees for their hard work and support through the year. Their commitment and dedication ensures that we continue to drive the business forward and deliver quality products to our customers. Financial Review The Group entered the financial year with a lower overhead base following the restructuring implemented in the previous financial year. Costs were further reduced in July 2016 through the consolidation of the Group’s operations in China. As a result, and coupled with improving trading conditions, all of the Group’s subsidiary businesses were profitable in the year and the China joint venture was profitable through the final quarter. Financial results for the Group were much improved on the prior year with underlying operating profit for the year of £0.497m (2016: £0.033m) and after finance costs and the share of the full year loss from the joint venture, underlying profit before tax was £0.230m (2016 loss: £0.273m). Income Statement Revenue for the year, at £18.519m, was up £0.503m on the prior year of £18.016m. The improvement over the prior year reflected the impact of new business growth and the improved trading experienced towards the end of the financial year. The impact of the strengthening US dollar during the year was largely offset by a reduction in revenues in China following the completion of the merger of the Group’s China activities at the end of June 2016. From that date and in line with Group policy the Group has reported its share of the profit or loss before tax whilst the revenue figure for the joint venture is not reported in the Group consolidated income statement. Headline administration and distribution costs were down £0.211m over the previous financial year despite a stronger US dollar, which, on translation added £0.410m to these costs in the year. Excluding the impact of the movement of the US dollar the Group has seen a £0.621m reduction in its distribution and admistrative cost base over the previous financial year. Underlying operating profit improved significantly to £0.497m when compared to the prior year’s underlying operating profit of £0.033m. Finance costs for the year were £0.218m (2016: £0.207m) and the Group delivered an underlying profit before tax for the year of £0.230m (2016: underlying loss before tax £0.273m). Total restructuring costs for the Group in the year were £0.303m (2016: 0.270m), of which £0.223m related to the consolidation of activities in China and of that figure £0.114m comprised non-cash asset write- downs. After deducting restructuring costs, intangible asset amortisation and share based payment charges, the loss before tax for the year was £0.287m (2016: £0.552m). Change in net funds £000’s 31 March 2016 Net Debt Operating Profit Dep’n Tax receipts Net movement on working capital Finance charges Restructuring costs Capital expenditure Intangible assets Other Movements 31 March 2017 Net debt excl. FX Movements FX on overseas borrowings 30 March 2017 Net Debt Net Cash Generated from Operating Activities £614k 25 (6) (226) (2,920) 513 (189) 497 (660) (3,151) (3,497) £231k movement in net debt excluding impact of FX in the year (75) (110) (346) All references to operating profit, profit/(loss) before tax and earnings/(loss) per share are for continuing operations and before restructuring costs, intangible asset amortisation and share based payment charges. 04 25561.04 28/07/2017 Proof 6TRICORN GROUP PLC Annual Report and Accounts 2017www.tricorn.uk.comBasic loss per share (LPS) for continuing businesses was 0.81p (2016: LPS 1.64p) and after adjusting for one-off items, the underlying earnings per share was 0.72p (2016: LPS 0.19p). The Board is not recommending the payment of a final dividend (2016: nil pence). Cash Flow The improved profit position of the Group and the management of working capital, as demand increased through the final quarter of the financial year, enabled it to generate net cash from operating activities of £0.614m (2016: £1.222m). Capital expenditure for the year was £0.559m (2016: £0.629m). At 31 March 2017, net debt was £3.497m (2016: £2.920m). The stronger US dollar at the year end had a significant impact on the reported net debt figure, resulting in an increase in reported borrowings of £0.346m on translation at year end rates. A large proportion of the US dollar debt is used for working capital purposes in the US and is secured against US assets. Cash and cash equivalents were £0.642m (2016: £0.855m) and gearing was 57.9% (2016: 48.5%), which again was impacted by the stronger US dollar. The Group uses short term borrowings to fund its operating activities, with selected capital additions and larger projects being financed by lease finance arrangements. At the year end, the Group did not have any term debt in place. Balance Sheet Total assets of the Group as at 31 March 2017 were £13.788m, which was an increase of £1.425m on the prior year, with net working capital in the year also increasing to £3.890m (2016: £3.374m). During the year, the Group assessed the useful lives of its plant and equipment. As a result of this review, the Group increased the maximum life for this class of asset from 10 years to 15 years. Assets were not revalued as a part of this exercise and the impact on the depreciation charge in the year was a reduction of £0.122m. On translation of its overseas assets and liabilities, the Group made an exchange gain of £0.269m (2016: gain £0.052m). This is a non-cash movement, which is not hedged and is treated as a movement in other comprehensive income. As a result, the translation reserve in shareholders’ funds now shows a £0.376m surplus (2016: surplus £0.107m). Outlook In a period in which market conditions have at times been challenging, we are pleased to report a significant improvement in our performance, with profits in the year to 31 March 2017 being significantly ahead of market expectations. During the year we successfully completed the consolidation of our manufacturing operations in China, which is now trading profitably. The investment we have made in aligning our manufacturing footprint to the needs of our customers combined with our ongoing focus on operational performance is enabling us to win new business, grow market share and improve profitability. We are encouraged by the improved trading in the final quarter of the year and expect to make further progress in the current year. 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. Following the recent EU Referendum, the Group has assessed its exposure to European markets as small, but will continue to monitor the situation closely. 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 operates through wholly owned subsidiaries in the UK and the US 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 has responded by making frequent visits overseas in order to mitigate and control those risks. Andrew Moss Chairman 6 June 2017 Mike Welburn Chief Executive 6 June 2017 05 25561.04 28/07/2017 Proof 6OUR BUSINESSStock code: TCNTRICORN GROUP PLC Annual Report and Accounts 2017Board of Directors 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. 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, Nomination and Remuneration Committees. He was previously managing director of Westwood Dawes plc and non-executive director of Netcall plc. Nomination Committee Roger Allsop – Chairman Andrew Moss Phil Lee – Secretary Remuneration Committee Roger Allsop – Chairman Andrew Moss Phil Lee – Secretary Non-Executive Directors Andrew Moss Non-Executive Chairman Appointed as non-executive Director in November 2014 and Chairman in December 2014. Member of the Audit, Remuneration and Nomination Committee. He has over 30 years’ experience in international engineering groups specialising in aviation, automotive and power electronics products, and advanced composite materials. He spent 13 years with Umeco Plc, five years of which were spent as a main board director, resulting in his appointment as Chief Executive in 2011. Prior to this he was with BTR/Invensys Plc managing a number of international manufacturing businesses. Committees Audit Committee Roger Allsop – Chairman Andrew Moss Phil Lee – Secretary 06 25561.04 28/07/2017 Proof 6TRICORN GROUP PLC Annual Report and Accounts 2017www.tricorn.uk.comReport of the Directors for the year ended 31 March 2017 Share capital Details of the Company’s share capital are given in note 25 to the financial statements. The Group’s policy for managing capital and financing to support the activities of the Group is detailed in note 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 24 May 2017, were as follows: Ordinary shares of 10 pence each Number 11,220,000 6,087,655 1,378,334 1,370,150 1,037,500 Percentage of capital % 33.20 18.01 4.08 4.05 3.07 R Allsop Hargreave Hale Limited W B Nominees FNZ Nominees Limited Quilter Nominees Limited Business review, key performance indicators (KPIs) and principal risks and uncertainties A review of the Group’s trading operations, KPIs and principal risks and uncertainties is contained in the Strategic Report on page 2. The financial highlights shown on page 1 are deemed to be the KPIs of the Group. Employment policies Management places emphasis on training and developing its employees. In addition, management encourages self-development which in turn aids succession planning, supporting the strategic growth of the Group. Employees are kept up to date with management policies and their respective duties. Management emphasises the importance of good communication and relations with all employees throughout the Group. It is the policy of the Group that there should be no unfair discrimination in considering applications for employment, including those from disabled persons. Employees are given equal opportunities for career development and promotion. Management takes a proactive approach to the welfare of the Group’s employees and the strong commitment to health and safety is cascaded down to all levels of the business by senior management. 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 facility, 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. 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 ongoing basis with the result that the Group’s exposure to bad debts is not significant. 07 25561.04 28/07/2017 Proof 6Stock code: TCNTRICORN GROUP PLC Annual Report and Accounts 2017OUR GOVERNANCE Report of the Directors for the year ended 31 March 2017 The Directors confirm that: • so far as each Director is aware, there is no relevant audit information of which the Group and Company’s auditors are unaware; and • the Directors have taken all steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group and Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Auditors Grant Thornton UK LLP offer themselves for reappointment as auditors in accordance with section 489 of the Companies Act 2006. ON BEHALF OF THE BOARD M I Welburn Director Date: 6 June 2017 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 and Company financial statements The Directors are responsible for preparing the Strategic Report, the Report of the Directors, the Group financial statements and the Company only 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 to prepare the Group and Company 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 and Company 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 and Company 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 and Company will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the Group and Company financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. 08 25561.04 28/07/2017 Proof 6TRICORN GROUP PLC Annual Report and Accounts 2017www.tricorn.uk.comCorporate Governance for the year ended 31 March 2017 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 and 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 supplies 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 A B Moss and the other non-executive Director is R Allsop. The Board approves the strategic decisions of the Group. The Group’s business is run on a day-to-day basis by M I Welburn, P Lee and D E Leakey, with M I Welburn having overall responsibility as the Chief Executive. Relations with shareholders The Group values the views of its shareholders and recognises their interest in the Group’s strategy and performance. The Annual General Meeting will be used to communicate with private investors and they are encouraged to participate. The Directors will be available to answer questions. Separate resolutions will be proposed on each issue so that they can be given proper consideration and there will be a resolution to approve the annual report and accounts. Internal control The Board is responsible for maintaining a strong system of internal control to safeguard shareholders’ investment and the Group’s assets and for reviewing its effectiveness. The system of internal control is designed to provide reasonable, but not absolute, assurance against material misstatement or loss. An audit committee has been established comprising the non- executive Directors which is chaired by R Allsop. The committee 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. 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 within its bank facilities 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. 09 25561.04 28/07/2017 Proof 6Stock code: TCNTRICORN GROUP PLC Annual Report and Accounts 2017OUR GOVERNANCECorporate Governance for the year ended 31 March 2017 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 A B Moss 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. A B Moss has a letter of appointment with the Company which is terminable upon one months’ written notice being given by either party. R Allsop has a letter of appointment with the Company which is terminable upon six months’ written notice being given by either party. 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 2017 the following options were held by the Directors: Unapproved share options M I Welburn M I Welburn D E Leakey D E Leakey Enterprise management incentive scheme (EMI) options P Lee P Lee M I Welburn At beginning of period Number 361,844 1,000,000 500,000 – 500,000 921,000 1,263,156 Lapsed during the year Number – – – – – – – Granted during the year Number – – – 500,000 – – – Exercised during the year Number – – – – – – – At end of year 2017 Number 361,844 1,000,000 500,000 500,000 500,000 921,000 1,263,156 Exercise price £ 0.10 0.10 0.175 0.10 0.10 0.10 0.10 Unapproved share options 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. At 31 March 2017, 800,000 of these shares had vested. D E Leakey’s has an unapproved option over 500,000 shares at 17.5p granted on 30 June 2015. A further option over 500,000 shares was granted on 4 April 2016 at an option price of 10p. Both options vest immediately and run for ten years. EMI options M I Welburn’s EMI share option for 1,263,156 shares was granted on 5 August 2010. This scheme has vested and is in force for ten years with an exercise price of 10p per share. P Lee was granted an EMI option over 500,000 shares at 10p on 31 March 2009. The first 250,000 are exercisable after three months’ continuous employment. The second 250,000 are exercisable after a further 12 months’ continuous employment. This option is in force for ten years and does not have performance conditions attached to it. In addition, an option over a further 921,000 shares was granted on 5 August 2010, 736,800 of which have vested at 31 March 2017. 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 2017 was 12.75p (31 March 2016: 8.00p) and the range during the year was 8.25p to 15.75p (2016: 8.00p to 20.50p). 10 25561.04 28/07/2017 Proof 6TRICORN GROUP PLC Annual Report and Accounts 2017www.tricorn.uk.comReport of the Independent Auditors to the members of Tricorn Group plc We have audited the financial statements of Tricorn Group plc for the year ended 31 March 2017 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, the Company statement of changes in equity, the Company statement of financial position and related notes. The financial reporting framework that has been applied in the presentation of the Group financial statement is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been applied in the preparation of the parent Company financial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including FRS 101 ‘Reduced Disclosure Framework’. 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 8, the Directors are responsible for the preparation of the 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 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 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 Financial Reporting Council’s website at www.frc.org.uk/auditscopeukprivate. Opinion on financial statements In our opinion: • the financial statements give a true and fair view of the state of the Group’s and of the parent Company’s affairs as at 31 March 2017 and of the Group’s profit for the year then ended; • the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; • the parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and • the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. Opinion on other matters prescribed by the Companies Act 2006 In our opinion, based on the work undertaken in the course of the audit: • the information given in the Strategic Report and Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements. • the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements. Matter on which we are required to report under the Companies Act 2006 In light of the knowledge and understanding of the Group and parent Company and its environment obtained in the course of the audit, we have not identified any material misstatements in the Strategic Report and Report of the Directors. 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. Becky Eagle Senior Statutory Auditor for and on behalf of Grant Thornton UK LLP Statutory Auditor, Chartered Accountants Birmingham Date: 6 June 2017 11 25561.04 28/07/2017 Proof 6Stock code: TCNTRICORN GROUP PLC Annual Report and Accounts 2017OUR GOVERNANCETricorn Group plc Group Consolidated Financial Statements for the year ended 31 March 2017 Company number 1999619 13 Group Income Statement 14 Group Statement of Comprehensive Income 15 Group Statement of Changes in Equity 16 Group Statement of Financial Position 17 Group Statement of Cash Flows 18 Notes to the Financial Statements 12 25561.04 28/07/2017 Proof 6TRICORN GROUP PLC Annual Report and Accounts 2017www.tricorn.uk.comGroup Income Statement for the year ended 31 March 2017 Revenue Cost of sales Gross profit Note 3 2017 £’000 Underlying 18,519 (11,002) 7,517 2017 £’000 Non-underlying – – – 2017 £’000 Group 18,519 (11,002) 7,517 2016 £’000 Underlying 18,016 (10,752) 7,264 2016 £’000 Non-underlying – – – 2016 £’000 Group 18,016 (10,752) 7,264 Distribution costs (793) – (793) (969) – (969) Administration costs – General administration costs – Restructuring costs – Intangible asset amortisation – Share based payment charge Total administration costs Operating profit/(loss) Share of loss from joint venture Finance costs Profit/(loss) before tax Income tax credit Profit/(loss) after tax from continuing operations Attributable to: Equity holders of the parent company Earnings per share: Basic loss per share Diluted loss per shares 12 6 3/4 14 8 9 3 10 10 (6,227) – – – (6,227) 497 (49) (218) 230 12 242 – (303) (190) (24) (517) (517) – – (517) – (6,227) (303) (190) (24) (6,744) (20) (49) (218) (287) 12 (517) (275) (6,262) – – – (6,262) 33 (99) (207) (273) 160 (113) – (270) (158) (59) (487) (487) – – (487) 48 (439) (6,262) (270) (158) (59) (6,749) (454) (99) (207) (760) 208 (552) 242 (517) (275) (113) (439) (552) (0.81)p (0.81)p (1.64)p (1.64)p All of the activities of the Group are classed as continuing unless otherwise stated. 13 25561.04 28/07/2017 Proof 6Stock code: TCNTRICORN GROUP PLC Annual Report and Accounts 2017OUR FINANCIALSGroup Statement of Comprehensive Income for the year ended 31 March 2017 Loss for the year Other comprehensive income Items that will subsequently be reclassified to profit or loss: Foreign exchange translation differences Total comprehensive loss attributable to equity holders of the parent 2017 £’000 (275) 269 (6) 2016 £’000 (552) 52 (500) 14 25561.04 28/07/2017 Proof 6TRICORN GROUP PLC Annual Report and Accounts 2017www.tricorn.uk.comShare premium £’000 Merger reserve £’000 Translation reserve £’000 Share based payment reserve £’000 Profit and loss account £’000 Group Statement of Changes in Equity for the year ended 31 March 2017 Balance at 1 April 2015 Share based payment charge Write back of share based payment reserve Issue of new shares Total transactions with owners Loss and total comprehensive expense Balance at 31 March 2016 Share based payment charge Write back of share based payment reserve Total transactions with owners Loss and total comprehensive expense Balance at 31 March 2017 Share capital £’000 3,349 – – 30 30 – 1,692 – 1,388 – – – – – – – – – 3,379 – 1,692 – 1,388 – – – – – – – – – – 3,379 1,692 1,388 55 – – – – 52 107 – – – 269 376 Total £’000 6,430 59 – 30 89 (455) – 160 – 160 (552) (500) (847) – 6,019 24 15 15 (275) – 24 (6) 401 59 (160) – (101) – 300 24 (15) 9 – 309 (1,107) 6,037 15 25561.04 28/07/2017 Proof 6Stock code: TCNTRICORN GROUP PLC Annual Report and Accounts 2017OUR FINANCIALSGroup Statement of Financial Position At 31 March 2017 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 Assets held in disposal group classified as held for sale 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 6 June 2017. M I Welburn Director Company number: 1999619 The accompanying notes form an integral part of these financial statements. 16 Note 11 12 13 14 16 17 18 20 21 21 19 25 2017 £’000 391 385 4,300 684 5,760 2,662 4,692 642 32 8,028 – 2016 £’000 391 500 3,796 216 4,903 2,258 3,550 855 32 6,695 765 13,788 12,363 (3,464) (4,013) (32) (7,509) (126) (116) (242) (7,751) 6,037 3,379 1,692 1,388 376 309 (1,107) 6,037 (2,434) (3,677) – (6,111) (98) (135) (233) (6,344) 6,019 3,379 1,692 1,388 107 300 (847) 6,019 25561.04 28/07/2017 Proof 6TRICORN GROUP PLC Annual Report and Accounts 2017www.tricorn.uk.comGroup Statement of Cash Flows for the year ended 31 March 2017 Cash flows from operating activities Loss after taxation from continuing operations Adjustment for: – Depreciation – Non-cash restructuring – Net finance costs in income statement – Amortisation charge – Share based payment charge – Share of joint venture operating losses – Taxation credit recognised in income statement – (Increase)/decrease in trade and other receivables – Increase/(decrease) in trade payables and other payables – Increase in inventories Cash generated by operations Interest paid Income taxes received Net cash generated by operating activities Cash flows from investing activities Proceeds of assets sold on disposal of business Purchase of plant and equipment Additions in intangible assets Net cash used in investing activities Cash flows from financing activities Issue of ordinary share capital Movement in short term borrowings Payment of finance lease liabilities Net cash used in financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 2017 £’000 2016 £’000 (275) (552) 513 114 218 190 24 49 (12) (984) 1,003 (25) 815 (226) 25 614 (157) (559) (75) (791) – 41 (77) (36) (213) 855 642 704 – 207 158 59 99 (208) 1,329 (414) (19) 1,363 (207) 66 1,222 – (629) (192) (821) 30 (201) (69) (240) 161 694 855 17 25561.04 28/07/2017 Proof 6Stock code: TCNTRICORN GROUP PLC Annual Report and Accounts 2017OUR FINANCIALSNotes to the Financial Statements for the year ended 31 March 2017 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 worldwide activities in key market sectors, including Power Generation, Oil & Gas, Off Highway, Commercial Vehicles, Agriculture 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. The consolidated financial statements have been approved for issue by the Board of Directors on 6 June 2017. Amendments to the financial statements are not permitted after they have been approved. 2 Accounting policies Basis of preparation This financial information has 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. The Group distinguishes between underlying and non-underlying items in its Consolidated Income Statement. Non-underlying items are material items which arise from unusual non-recurring or non-trading events. They are disclosed on the face of the Consolidated Income Statement where in the opinion of the Directors such disclosure is necessary in order to fairly present the results for the period. Non-underlying items comprise exceptional costs of Group restructuring, intangible assets amortisation and share based payment charges. 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 headroom within its bank facilities 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. 18 25561.04 28/07/2017 Proof 6TRICORN GROUP PLC Annual Report and Accounts 2017www.tricorn.uk.com2 Accounting policies (continued) Standards and interpretations not yet applied by the Group The following new Standards and Interpretations, which are yet to become mandatory, have not been applied in the Group’s financial statements. Standard or Interpretation IFRS 9 IFRS 15 IFRS 16 Amendments to IAS 7 Amendments to IFRS 2 Amendments to IAS 12 Financial Instruments Revenue from Contracts with Customers Leases Statement of Cash Flows Classification and Measurement of Share-based Payment Transactions Recognition of Deferred Tax Assets for Unrealised Losses Effective for reporting periods starting on or after 1 January 2018 1 January 2018 1 January 2019 1 January 2017 1 January 2018 1 January 2017 Management are undertaking an exercise to assess the impact of IFRS 15 and IFRS 16 on the financial statements, but are not yet able to quantify the effect. Based on the Group’s current business model and accounting policies, management does not expect a material impact on the Group’s financial statements in relation to other Standards 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 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). • In valuing goodwill and intangible assets, management has made certain assumptions in terms of cash flows attributable to cash generating units to which goodwill and intangibles have been allocated. As a result, estimates of future cash flows are required, together with an appropriate discount factor for the purpose of determining the present value of the future cash flows. The basis of review of the carrying value of goodwill and intangibles is detailed later in the accounting policies section. • Estimates of inventory recoverability. Management reviews ageing of inventory, movement levels throughout the year and forecast future usage levels to set an adequate inventory provision to cover obsolete inventory lines. Management also calculates a general stock provision over slow moving stock based on last usage dates. Stock that has not been used for over two years is provided for in full and stock that has not been used for more than one year, but has been used within the last two years, is provided for at fifty per cent Factors that could impact estimated demand and selling prices are the timing and success of technological developments, competitor actions, supplier prices and economic trends. The carrying value of gross stock, before the stock provision, at the year end was £3,285,000 (year ended 31 March 2016: £3,116,000). • During the year the Group increased its holding and now holds a 63% share in a joint venture in China, Minguang-Tricorn Tubular Products (Nanjing) Limited. The Group accounts for the joint venture under the equity accounting method rather than full consolidation, on the basis that no one party to the venture has sole authority for decisions reserved for the Board, as detailed in note 14. Consolidation and investments in subsidiaries The Group financial statements consolidate those of the parent Company and all of its subsidiaries as of 31 March 2017. 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. 19 25561.04 28/07/2017 Proof 6Stock code: TCNTRICORN GROUP PLC Annual Report and Accounts 2017OUR FINANCIALSNotes to the Financial Statements for the year ended 31 March 2017 2 Accounting policies (continued) 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 Consolidated 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 (i.e. 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. The investment in the joint venture is initially recognised at cost. When the investor has previously held an investment in the joint venture, accounted for in line with the above policy, the deemed cost of the investment in the joint venture is the fair value of the original investment at the date that joint control is achieved plus the consideration paid for the additional stake. Any difference between the cost of the investment and the entity’s share of the net fair value of the investee’s identifiable assets and liabilities, is included in the carrying amount of the investment and represents either positive or negative goodwill. 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 the 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. 20 25561.04 28/07/2017 Proof 6TRICORN GROUP PLC Annual Report and Accounts 2017www.tricorn.uk.com2 Accounting policies (continued) 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 the 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. 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; and • 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. 21 25561.04 28/07/2017 Proof 6Stock code: TCNTRICORN GROUP PLC Annual Report and Accounts 2017OUR FINANCIALSNotes to the Financial Statements for the year ended 31 March 2017 2 Accounting policies (continued) Intangible amortisation Intangible assets are amortised over the following periods: 15 years Brand names Customer contracts 5 years Product development costs 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: Buildings Plant and equipment Motor vehicles 40 years 3 to 15 years 5 years At 1 April 2016, the Group reassessed the useful lives of its plant and equipment. As a result of this review, the Group changed its depreciation policy for this class of asset to between 3 and 15 years. The impact of this change on the income statement for the current financial year was £0.122m. 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 accounting policies carried forward as well as other income tax credits available to the Group are assessed for recognition as deferred tax assets. 22 25561.04 28/07/2017 Proof 6TRICORN GROUP PLC Annual Report and Accounts 2017www.tricorn.uk.com2 Accounting policies (continued) 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. 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. A disposal group will be recognised as held for sale when its carrying value will be recovered principally through a sale, and: • it is available for immediate sale; and • the sale is highly probable. 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. 23 25561.04 28/07/2017 Proof 6Stock code: TCNTRICORN GROUP PLC Annual Report and Accounts 2017OUR FINANCIALSNotes to the Financial Statements for the year ended 31 March 2017 2 Accounting policies (continued) Equity Share capital is determined using the nominal value of shares that have been issued. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. When the Company purchases its own shares, the consideration is deductible from equity attributable to the Company’s equity holders until the shares are either cancelled or reissued. When this happens, any consideration received is included in equity attributable to equity holders. Treasury shares are held at cost. The share premium account represents premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits. The merger reserve represents the difference between the issue price and the nominal value of shares issued as consideration for the acquisition of a subsidiary undertaking when the Company has taken advantage of merger relief. All current and prior period results are taken to 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. Share based charges for employees who leave the Group and whose options lapse are written back to the profit and loss reserve. 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 as 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 the 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. 24 25561.04 28/07/2017 Proof 6TRICORN GROUP PLC Annual Report and Accounts 2017www.tricorn.uk.com3 Segmental reporting The Group operates two 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 applications. The financial information detailed below is frequently reviewed by the Chief Operating Decision Maker. Year ended 31 March 2017 Revenue – from external customers – from other segments Segment revenues Underlying operating profit/(loss)* Restructuring charges Intangible asset amortisation Share based payment charge Operating profit/(loss) Share of loss from joint venture Net finance costs Profit/(loss) before tax Other segment information: Segmental assets Capital expenditure Depreciation * Before intangible asset amortisation, share based payment charges and restructuring costs. Year ended 31 March 2016 Revenue – from external customers – from other segments Segment revenues Underlying operating profit/(loss)* Restructuring charges Intangible asset amortisation Share based payment charge Operating profit/(loss) Share of loss from joint venture Net finance costs Profit/(loss) before tax Other segment information: Segmental assets Capital expenditure Depreciation * Before intangible asset amortisation, share based payment charges and restructuring costs. Energy £’000 Transportation £’000 Unallocated £’000 4,924 157 5,081 280 (34) – – 246 – (29) 217 3,332 184 200 13,595 40 13,635 329 (252) – – 77 – (134) (57) 10,051 476 311 – (197) (197) (112) (17) (190) (24) (343) (49) (55) (447) 405 – 2 Energy £’000 Transportation £’000 Unallocated £’000 5,478 329 5,807 98 (32) – – 66 – (35) 31 2,573 251 271 12,538 191 12,729 43 (225) – – (182) – (125) (307) 9,137 529 431 – (520) (520) (108) (13) (158) (59) (338) (99) (47) (484) 653 1 2 Total £’000 18,519 – 18,519 497 (303) (190) (24) (20) (49) (218) (287) 13,788 660 513 Total £’000 18,016 – 18,016 33 (270) (158) (59) (454) (99) (207) (760) 12,363 781 704 25 25561.04 28/07/2017 Proof 6Stock code: TCNTRICORN GROUP PLC Annual Report and Accounts 2017OUR FINANCIALSNotes to the Financial Statements for the year ended 31 March 2017 3 Segmental reporting (continued) 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 United Kingdom Europe Rest of World 4 Loss before taxation The loss on ordinary activities before taxation is stated after charging: Year ended 31 March 2017 Current assets £’000 4,903 – 3,125 8,028 Non-current assets £’000 2,455 – 3,305 5,760 Year ended 31 March 2016 Non-current assets £’000 2,386 – 2,517 4,903 Current assets £’000 4,197 – 3,263 7,460 Revenue £’000 8,989 1,086 8,444 18,519 Revenue £’000 7,805 1,109 9,102 18,016 Total assets £’000 7,358 – 6,430 13,788 Total assets £’000 6,583 – 5,780 12,363 2017 £’000 2016 £’000 13 42 55 15 15 70 349 52 76 190 495 18 13 57 70 15 15 85 428 59 69 158 669 35 Auditors’ remuneration: Audit of parent Company Audit of subsidiaries Total audit Non-audit services: Corporate taxation 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 26 25561.04 28/07/2017 Proof 6TRICORN GROUP PLC Annual Report and Accounts 2017www.tricorn.uk.com5 Directors’ emoluments 2017 Benefits in kind £’000 – – 24 22 9 55 Bonus £’000 – – 14 12 10 36 Basic £’000 30 15 140 115 103 403 Total £’000 30 15 178 149 122 494 2016 Benefits in kind £’000 – – 25 20 9 54 Basic £’000 30 15 140 115 103 403 A B Moss R Allsop M I Welburn* P Lee* D E Leakey* Total £’000 30 15 165 135 112 457 Pension £’000 – – 10 8 – 18 * 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 £0.051m (2016: £0.051m). Share based payment charge by Director (note 6) 2017 2016 M I Welburn* P Lee* D E Leakey* 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 Pension £’000 – – 11 9 – 20 2016 £’000 6 6 47 59 2017 £’000 – – 11 11 2017 Number 2016 Number 209 54 263 2017 £’000 6,512 628 81 24 7,245 237 71 308 2016 £’000 6,181 623 133 59 6,996 27 25561.04 28/07/2017 Proof 6Stock code: TCNTRICORN GROUP PLC Annual Report and Accounts 2017OUR FINANCIALSNotes to the Financial Statements for the year ended 31 March 2017 7 Share based employee remuneration There are two share based remuneration schemes in operation: • Approved Enterprise Management Incentive (EMI) scheme; and • Unapproved share options. At 31 March 2016 No. of shares Granted in year No. of shares Enterprise Management Incentive (EMI) Scheme Exercise date: March 2009 – March 2019 August 2010 – August 2020 500,000 2,184,156 2,684,156 Exercised in year No. of shares Lapsed in year No. of shares At 31 March 2017 No. of shares Exercise price Pence Life remaining on options at 31 March 2017 Months – – – – – – 500,000 2,184,156 2,684,156 10p 10p 24 41 – – – The weighted average exercise price of the EMI scheme at 31 March 2017 was 10p (2016: 10p). 2,499,956 options were available for exercise at 31 March 2017 (2016: 2,499,956). At 31 March 2016 No. of shares Granted in year No. of shares Exercised in year No. of shares Lapsed in year No. of shares At 31 March 2017 No. of shares Exercise price Pence Life remaining on options at 31 March 2017 Months Unapproved share options Exercise date: September 2010 – September 2020 September 2010 – September 2020 June 2011 – June 2021 December 2011 – December 2021 March 2015 – March 2025 April 2016 – April 2026 Total share options 1,000,000 361,844 500,000 100,000 250,000 – 2,211,844 4,896,000 – – – – – 600,000 600,000 600,000 – – – – – – – – – – – 1,000,000 10p 361,844 500,000 10p 17.5p (100,000) – – (100,000) (100,000) – 250,000 600,000 2,711,844 5,396,000 25p 17p 10p 42 42 51 54 96 108 The weighted average exercise price of the unapproved share options at 31 March 2017 was 12.0p (2016: 13.2p). 2,511,844 options were available for exercise at 31 March 2017 (2016: 2,011,844). The market price of the Company’s shares at 31 March 2017 was 12.75p (31 March 2016: 8.00p) and the range during the year was 8.25p to 15.75p (2016: 8.00p to 20.50p). 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 40%-60%, expected life of option of between three to five years and the expected risk-free interest rates of 1.25%-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. In total, £24,000 (2016: £59,000) of share based employee remuneration expense has been included in the Consolidated Income Statement. No liabilities were recognised due to share based transactions. 28 25561.04 28/07/2017 Proof 6TRICORN GROUP PLC Annual Report and Accounts 2017www.tricorn.uk.com8 Finance income and expense Other income Finance income Invoice discounting interest Interest on short term borrowing Interest on hire purchase agreements and finance leases Finance expense 9 Taxation on loss on ordinary activities The tax is based on the loss for the year and represents: UK corporation tax Overseas taxes Adjustments in respect of prior years Current tax charge for the year Deferred taxation (note 19) Tax on (loss)/profit on ordinary activities 2017 £’000 – – 161 49 8 218 2017 £’000 – 16 (9) 7 (19) (12) 2016 £’000 – – 150 49 8 207 2016 £’000 – – (184) (184) (24) (208) The tax assessed is different to the standard rate of corporation tax in the UK of 20% (2016: 20%). The differences are explained as follows: Loss on ordinary activities before tax Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 20% (2016: 20%) Effect of: Expenses not deductible for tax purposes Overseas tax charge Unprovided losses Losses carried back Other short term timing differences Adjustments in respect of prior years Deferred tax regarding intangibles Other differences 2017 £’000 (287) (57) – 16 – – – (12) 37 4 (12) At 31 March 2017 the Group had tax losses of £686,000 (2016: £468,000) to offset against future profits within the United Kingdom. 2016 £’000 (760) (152) 98 – 66 19 – (184) (48) (7) (208) 29 25561.04 28/07/2017 Proof 6Stock code: TCNTRICORN GROUP PLC Annual Report and Accounts 2017OUR FINANCIALSNotes to the Financial Statements for the year ended 31 March 2017 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 Basic loss per share Dilutive shares Diluted loss per share 31 March 2017 Weighted average number of shares , 000 33,795 – 33,795 Number 31 March 2016 Weighted average number of shares Number ’000 33,646 – 33,646 Loss £’000 (275) – (275) Loss £’000 (552) (552) Loss per share Pence (0.81) – (0.81) Loss per share Pence (1.64) (1.64) The Directors consider that the following adjusted earnings per share calculation is a more appropriate reflection of the Group’s performance. Basic loss per share Restructuring costs Amortisation of intangible asset Share based payment charge Adjusted earnings per share Dilutive shares Diluted adjusted earnings per share Basic loss per share Restructuring costs Amortisation of intangible asset Share based payment charge Adjusted loss per share Dilutive shares Diluted adjusted loss per share 31 March 2017 Weighted average number of shares Number ’000 33,795 Loss per share Pence (0.81) 33,795 – 33,795 0.72 – 0.72 31 March 2016 Weighted average number of shares Number ’000 33,646 Loss per share Pence (1.64) 33,646 – 33,646 (0.19) – (0.19) Loss £’000 (275) 303 190 24 242 – 242 Loss £’000 (552) 270 158 59 (65) – (65) There is no dilution to the basic or adjusted (loss)/earnings per share in 2017 or 2016 owing to a loss for the year being reported. 30 25561.04 28/07/2017 Proof 6TRICORN GROUP PLC Annual Report and Accounts 2017www.tricorn.uk.com11 Goodwill Cost At 31 March 2015, 31 March 2016 and 31 March 2017 Impairment At 31 March 2015, 31 March 2016 and 31 March 2017 Net book value At 31 March 2015 At 31 March 2016 At 31 March 2017 Goodwill above relates to the following cash-generating units: Maxpower Automotive Limited Total £’000 391 – 391 391 391 Date of acquisition June 2007 Original cost £’000 391 391 Goodwill arising on consolidation represents the excess of the fair value of the consideration given over the fair value of the identifiable net assets acquired. The Group tests annually for impairment, or more frequently if there are indicators that goodwill might be impaired. The recoverable amounts of the cash-generating units (CGUs) are determined from value in use calculations, covering a detailed five-year forecast and applying a discount rate of 10.0% 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 rate of 10.0% 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 believes that no impairment is required. Management is not aware of any other changes that would necessitate changes to its key estimates. 31 25561.04 28/07/2017 Proof 6Stock code: TCNTRICORN GROUP PLC Annual Report and Accounts 2017OUR FINANCIALSNotes to the Financial Statements for the year ended 31 March 2017 12 Intangible assets Cost At 1 April 2016 Additions At 31 March 2017 Amortisation At 1 April 2016 Charge for the year At 31 March 2017 Net book value At 31 March 2015 At 31 March 2016 At 31 March 2017 Product development costs £’000 Brand names £’000 Customer contracts £’000 488 75 563 (176) (160) (336) 249 312 227 450 – 450 (262) (30) (292) 218 188 158 312 – 312 (312) – (312) – – – Total £’000 1,250 75 1,325 (750) (190) (940) 467 500 385 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. The brand names have a remaining useful economic life of five years. The product development costs have, on average, a remaining useful economic life of one year. 13 Property, plant and equipment Cost At 1 April 2015 Additions Items recognised in disposal group Foreign exchange revaluation At 1 April 2016 Additions Disposals of business Foreign exchange revaluation At 31 March 2017 Depreciation At 1 April 2015 Charge for the year Items recognised in disposal group At 1 April 2016 Charge for the year Disposals of business At 31 March 2017 Net book value At 31 March 2015 At 31 March 2016 At 31 March 2017 Land and buildings £’000 Plant and equipment £’000 Motor vehicles £’000 1,425 – – 40 1,465 – – 215 1,680 48 33 – 81 39 – 120 1,377 1,384 1,560 7,373 781 (738) 69 7,485 660 (31) 161 8,275 4,650 671 (248) 5,073 474 (12) 5,535 2,723 2,412 2,740 43 – – – 43 – – – 43 43 – – 43 – – 43 – – – Total £’000 8,841 781 (738) 109 8,993 660 (31) 376 9,998 4,741 704 (248) 5,197 513 (12) 5,698 4,100 3,796 4,300 The net book value of property, plant and equipment includes £265,000 (2016: £303,000) in respect of assets held under finance leases and hire purchase contracts. The borrowings of the Group are secured by a floating and fixed charge over the assets of the Group. 32 25561.04 28/07/2017 Proof 6TRICORN GROUP PLC Annual Report and Accounts 2017www.tricorn.uk.com14 Investment in joint venture Details of the Group’s material joint venture at the end of the reporting period is as follows: Name of joint venture Minguang-Tricorn Tubular Products Nanjing Ltd Principal business activity Manufacturer of large diameter tubular assemblies Country of incorporation People’s Republic of China Proportion of ownership interest held by the Group 31 March 2017 63% 31 March 2016 51% In July 2013, the Group agreed terms for the formation of the joint venture above. In May 2016, the Group increased its shareholding from 51% to 63% via a contribution of plant, machinery and inventory into the joint venture. At this time the joint venture partner also made a contribution of cash into the joint venture. Minguang-Tricorn Tubular Products Nanjing Ltd is still deemed to be a joint venture of the Group as the appointment of its directors and the allocation of voting rights for key business decisions, require the unanimous approval of its ventures. 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 (a) Total assets Current liabilities Total liabilities (a) Includes cash and cash equivalents Revenue Loss for the year Depreciation 2017 £’000 420 559 979 359 359 98 2017 £’000 1,031 (103) (90) 2016 £’000 348 285 633 216 216 22 2016 £’000 581 (194) (69) 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: Net assets Brought forward at the beginning of the year Total comprehensive loss Capital contribution Carried forward at the end of the year Proportion of ownership interest held by the Group Interest in joint venture Goodwill Carrying amount of the investment at the end of the financial year No dividends were received from Minguang-Tricorn Tubular Products Nanjing Ltd during the year. 2017 £’000 423 (103) 664 984 63% 620 64 684 2016 £’000 617 (194) – 423 51% 216 – 216 Minguang-Tricorn Tubular Products Nanjing Ltd is a private company, therefore no quoted market prices are available for its shares. 33 25561.04 28/07/2017 Proof 6Stock code: TCNTRICORN GROUP PLC Annual Report and Accounts 2017OUR FINANCIALSNotes to the Financial Statements for the year ended 31 March 2017 15 Principal subsidiaries At 31 March 2017 the principal subsidiaries of the Group were as follows: Name of subsidiary undertaking Malvern Tubular Components Limited Hallco 348 Limited (formerly RMDG Aerospace Limited) Maxpower Automotive Limited Country of incorporation United Kingdom Description of shares held Ordinary % of nominal value of shares held 100 United Kingdom Ordinary 100 Principal business activity Manufacturer of tubular components Non-trading United Kingdom Ordinary Maxpower Automotive Components Manufacturing (Wuxi) Limited China Ordinary Franklin Tubular Products Inc. USA Ordinary Robert Morton DG Limited* Hallco 347 Limited * Held by a subsidiary undertaking United Kingdom United Kingdom Ordinary Ordinary 16 Inventories Raw materials Work in progress Finished goods 100 100 Manufacturer of highway and automotive tubular and pipe components Manufacturer of highway and automotive tubular and pipe components. Dormant in the year 100 Manufacturer of tubular assemblies and components to highway and heavy duty truck market Dormant Dormant 100 100 2017 £’000 1,911 219 532 2,662 2016 £’000 1,510 182 566 2,258 In the year to 31 March 2017, a total of £6,734,000 of inventory (2016: £7,202,000) 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 2017 £’000 4,248 (28) 4,220 61 411 4,692 2016 £’000 3,440 (161) 3,279 67 204 3,550 34 25561.04 28/07/2017 Proof 6TRICORN GROUP PLC Annual Report and Accounts 2017www.tricorn.uk.com17 Trade and other receivables (continued) At 31 March 2017, 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 2017 £’000 189 – 39 228 2016 £’000 335 – 22 357 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 represent a large number of receivables from various customers. The fair value of these short term financial assets is not individually determined as the carrying amount is a reasonable approximation of fair value. 18 Cash and cash equivalents Cash and cash equivalents 2017 £’000 642 2016 £’000 855 Cash and cash equivalents consist of cash on hand and balances with banks only. At the year end £422,000 (2016: £476,000) of cash on hand and balances with banks were held by the subsidiary undertakings, however this balance is available for use by the Group. 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 Assets Liabilities 2016 £’000 – – – 2017 £’000 (54) (83) (137) Assets Liabilities 2016 £’000 – – – 2017 £’000 (135) (2) (137) 2016 £’000 (45) (90) (135) 2016 £’000 (159) 24 (135) 2017 £’000 – 21 21 2017 £’000 – 21 21 As at 31 March 2017 the Group has unprovided deferred tax assets as follows: Trading losses Unprovided 2017 £’000 686 Unprovided 2016 £’000 468 This deferred tax asset is not recognised due to uncertainty over its recoverability. At 31 March 2017 the Group had tax losses of £78,000 (2016: £175,000) to offset against future profits within the United Kingdom. Tax losses available to utilise outside of the UK at 31 March 2017 are £3,000,000 (2016: £2,191,000). 35 25561.04 28/07/2017 Proof 6Stock code: TCNTRICORN GROUP PLC Annual Report and Accounts 2017OUR FINANCIALSNotes to the Financial Statements for the year ended 31 March 2017 20 Trade and other payables Trade and other payables Other taxation and social security Accruals 2017 £’000 2,624 329 511 3,464 2016 £’000 1,410 296 728 2,434 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. 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) 2017 £’000 3,545 413 55 4,013 126 126 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 borrowings 2017 £’000 3,545 413 3,958 2016 £’000 3,205 413 59 3,677 98 98 2016 £’000 3,205 413 3,618 Invoice discounting facility Interest on the invoice discounting facility, which is secured on the debtors financed, 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: 31 March 2017 Payments Discounting 31 March 2016 Payments Discounting Within 1 year Within 1–2 years Within 2–5 years 62 (7) 55 66 (7) 59 62 (7) 55 109 (11) 98 80 (9) 71 – – – Total 204 (23) 181 175 (18) 157 The hire purchase agreements and finance lease liabilities are secured against the assets to which they relate. 36 25561.04 28/07/2017 Proof 6TRICORN GROUP PLC Annual Report and Accounts 2017www.tricorn.uk.com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. 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 Liquidity risk arises due to the Group’s requirement to fund working capital and investment in the business. 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 12%. • 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 £2,000 (2016: £2,000), equity and reserves would reduce/increase by the same amount, and the interest charge would be £216,000/£220,000 (2016: £205,000/£209,000). Foreign currency risk The Group transacts certain purchases and sales in foreign currencies. At 31 March 2017 there were two (2016: none) foreign currency forward contracts in force. Due to the short term nature of these contracts, the fair value movement is deemed to be immaterial to the financial statements, and as such, full disclosure requirements of IFRS 7 have not been included here. 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 2017 then Group profits would rise/fall by £91,000 at 31 March 2017 (2016: £204,000) 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 £175,000 at 31 March 2017 (2016: £184,000) 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 2017 £’000 411 4,997 5,408 2016 £’000 204 4,201 4,405 37 25561.04 28/07/2017 Proof 6Stock code: TCNTRICORN GROUP PLC Annual Report and Accounts 2017OUR FINANCIALSNotes to the Financial Statements for the year ended 31 March 2017 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 2017 £’000 4,355 642 4,997 2016 £’000 3,346 855 4,201 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 2017 £’000 329 7,274 7,603 2017 £’000 3,135 4,013 126 7,274 2016 £’000 296 5,912 6,208 2016 £’000 2,137 3,677 98 5,912 All financial liabilities mature in less than one year, except for £0.055m (2016: £0.098m) which matures in 1–2 years and £0.071m (2016: £nil) which matures in 2–5 years. Fair value hierarchy The following analyses financial assets and liabilities measured at fair value in the statement of financial position in accordance with the fair value hierarchy prescribed by IFRS 7 Financial Instruments: Disclosures. This hierarchy groups financial assets and liabilities into three levels based on the significance of inputs used in measuring the fair value of the financial assets and liabilities. The fair value hierarchy has the following levels: Level 1 : quoted prices (unadjusted) in active markets for identical assets and liabilities; Level 2 : inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and Level 3 : inputs for the asset or liability that are not based on observable market data (unobservable inputs). The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair value measurement. There are no financial assets or liabilities measured at fair value in the statement of financial position at 31 March 2017 (2016: none). All financial liabilities are level one. 38 25561.04 28/07/2017 Proof 6TRICORN GROUP PLC Annual Report and Accounts 2017www.tricorn.uk.com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 that 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. 25 Share capital Authorised 100,000,000 ordinary shares of 10 pence each Allotted and issued 2017: 33,795,000 (2016: 33,795,000) ordinary shares of 10 pence each All 10 pence ordinary shares carry the same voting rights and rights to discretionary dividends. 26 Contingent liabilities There were no contingent liabilities at 31 March 2017 or 31 March 2016. 27 Capital commitments At 31 March 2017 the Group had capital commitments of £nil (2016: £0.028m). 2017 £’000 2016 £’000 10,000 10,000 3,379 3,379 28 Leasing commitments The Group’s aggregate minimum operating lease payments for the remaining lives of the leases are as follows: In one year or less One to five years Greater than five years 2017 Land and buildings £’000 310 683 225 1,218 2016 Land and buildings £’000 417 841 375 1,633 2017 Other £’000 96 117 16 229 2016 Other £’000 112 134 32 278 29 Transactions with related parties Malvair Properties Limited, a company in which R Allsop, a non-executive Director, has a beneficial interest, owns a property occupied by a Group company under an operating lease. The company incurred operating lease charges of £0.150m (2016: £0.150m) during the year relating to this lease. The Group also has a joint venture in China, Minguang-Tricorn Tubular Products Nanjing Ltd. During the year the Group has made sales to the joint venture of £0.142m (2016: £nil) and purchases from the joint venture of £0.101m (2016: £0.581m). At the balance sheet date, amounts held in trade and other receivables and owed to the Group by the joint venture amounted to £0.126m (2016: £nil), and amounts held in trade and other payables and owed by the Group to the joint venture amounted to £0.001m (2016: £0.097m). 39 25561.04 28/07/2017 Proof 6Stock code: TCNTRICORN GROUP PLC Annual Report and Accounts 2017OUR FINANCIALSTricorn Group plc Company Statutory Annual Report for the year ended 31 March 2017 Company number 1999619 41 Company Statement of Changes in Equity 42 Company Statement of Financial Position 43 Notes to the Financial Statements 40 25561.04 28/07/2017 Proof 6TRICORN GROUP PLC Annual Report and Accounts 2017www.tricorn.uk.comCompany Statement of Changes in Equity for the year ended 31 March 2017 Balance at 1 April 2015 Share based payment charge Write back of share based reserve Issue of new shares Total transactions with owners Loss and total comprehensive expense Balance at 31 March 2016 Share based payment charge Write back of share based reserve Total transactions with owners Loss and total comprehensive expense Balance at 31 March 2017 Share capital £’000 3,349 – – 30 30 – 3,379 – – – – 3,379 Share premium £’000 1,692 – – – – – 1,692 – – – – 1,692 Share based payment reserve £’000 401 59 (160) – (101) – 300 24 (15) 9 – 309 Profit and loss account £’000 (617) – 160 – 160 (265) (722) – 15 15 (183) (890) Merger reserve £’000 1,592 – – – – – 1,592 – – – – 1,592 Total £’000 6,417 59 – 30 89 (265) 6,241 24 – 24 (183) 6,082 41 25561.04 28/07/2017 Proof 6Stock code: TCNTRICORN GROUP PLC Annual Report and Accounts 2017OUR FINANCIALSCompany Statement of Financial Position At 31 March 2017 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 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 6 June 2017. The Company’s loss for the year was £183,000 (2016: loss of £265,000). M I Welburn Director Company number: 1999619 Note 7 8 9 10 2017 £’000 2 6,814 6,816 1,877 220 2,097 2016 £’000 2 6,814 6,816 1,774 379 2,153 (2,831) (2,728) (734) 6,082 3,379 1,692 309 1,592 (890) 6,082 (575) 6,241 3,379 1,692 300 1,592 (722) 6,241 42 25561.04 28/07/2017 Proof 6TRICORN GROUP PLC Annual Report and Accounts 2017www.tricorn.uk.comNotes to the Financial Statements for the year ended 31 March 2017 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 Basis of preparation The financial statements have been prepared under the historcial cost convention and in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework and the Companies Act 2006. Functional and presentation currency The financial statements are presented in British Pounds Sterling. Financial Reporting Standard 101 – reduced disclosure exemptions The Company has taken advantage of the following disclosure exemptions under FRS 101: • The requirement of IFRS 7 Financial Instruments: Disclosure • The requirements of paragraphs 91-99 of IFRS 13 Fair Value Measurement • The requirement in paragraph 38 of IAS 1 Presentation of Financial Statements to present comprehensive information in respect of: — paragraph 79(a)(iv) of IAS 1; — paragraph 73(e) of IAS 16 Property, Plant and Equipment; — paragraph 118(e) of IAS 38 Intangible Assets; — paragraphs 76 and 79(d) of IAS 40 Inventory Property; and — paragraph 50 of IAS 41 Agriculture • The requirements of paragraphs 10(d), 10(f), 16, 38A, 38C, 38D, 40A, 40B, 40C, 40D, 111 and 134-136 of IAS 1 Presentation of Financial Statements • The requirements of IAS 7 Statement of Cash Flows • The requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors • The requirements of paragraph 17 of IAS 24 Related Party Disclosures Investments Investments held by the Company are included at cost less accumulated impairment. 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 income statement. 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 directly 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. 43 25561.04 28/07/2017 Proof 6Stock code: TCNTRICORN GROUP PLC Annual Report and Accounts 2017OUR FINANCIALSNotes to the Financial Statements for the year ended 31 March 2017 2 Accounting policies (continued) 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 income statement. 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). Share based payments 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. 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 income statement 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 income statement in these financial statements. The Company’s loss for the year was £183,000 (2016: loss of £265,000). The auditors’ remuneration incurred by the Company during the year for audit services totalled £13,000 (2016: £13,000), and for tax compliance services totalled £2,000 (2016: £2,000). 44 25561.04 28/07/2017 Proof 6TRICORN GROUP PLC Annual Report and Accounts 2017www.tricorn.uk.com4 Directors’ and employees’ remuneration Staff costs during the year were as follows: Wages and salaries Social security costs Other pension costs 2017 £’000 655 56 25 736 2016 £’000 822 67 51 940 The average number of persons (including Directors) employed by the Company during the year was 10 (2016: 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. 7 Fixed asset investments Cost At 1 April 2016 and 31 March 2017 Impairment At 1 April 2016 Charge At 31 March 2017 Net book value At 31 March 2017 At 31 March 2016 At 31 March 2017 the Company holds 100% of the ordinary share capital of the following subsidiaries: Total £’000 9,729 (2,915) – (2,915) 6,814 6,814 Name of subsidiary undertaking Malvern Tubular Components Limited Hallco 348 Limited (formerly RMDG Aerospace Limited) Maxpower Automotive Limited Country of incorporation United Kingdom Description of shares held Ordinary % of nominal value of shares held 100 United Kingdom Ordinary 100 Principal business activity Manufacturer of tubular components Non-trading United Kingdom Ordinary Maxpower Automotive Components Manufacturing (Wuxi) Limited* China Ordinary Franklin Tubular Products Inc. USA Ordinary Robert Morton DG Limited * Hallco 347 Limited * Held by a subsidiary undertaking United Kingdom United Kingdom Ordinary Ordinary 100 100 Manufacturer of highway and automotive tubular and pipe components Manufacturer of highway and automotive tubular and pipe components. Dormant this year 100 Manufacturer of tubular assemblies and components to highway and heavy duty truck market Dormant Dormant 100 100 45 25561.04 28/07/2017 Proof 6Stock code: TCNTRICORN GROUP PLC Annual Report and Accounts 2017OUR FINANCIALSNotes to the Financial Statements for the year ended 31 March 2017 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 Accruals and deferred income Borrowings are repayable as follows: Within one year – bank borrowings 10 Share capital 2017 £’000 1,830 28 19 1,877 2017 £’000 478 – 2,155 24 174 2,831 2017 £’000 478 478 2017 £’000 2016 £’000 1,755 7 12 1,774 2016 £’000 434 7 2,082 25 180 2,728 2016 £’000 434 434 2016 £’000 Authorised 100,000,000 ordinary shares of 10 pence each Allotted and issued 2017: 33,795,000 (2016: 33,795,000) ordinary shares of 10 pence each 10,000 10,000 3,379 3,379 All 10 pence ordinary share capital carries the same voting rights and rights to discretionary dividends. 11 Contingent liabilities A cross guarantee exists between all companies in the Group for all amounts payable to the bank. The maximum potential liability to the Company at 31 March 2017 is £2.913m (2016: £2.424m). There were no further contingent liabilities at 31 March 2017 or 31 March 2016. 12 Capital commitments There were no capital commitments at 31 March 2017 or at 31 March 2016. 13 Related parties The Company has taken advantage of the exemption available in section 33 Related Party Disclosures to not disclose transactions with wholly owned subsidiaries in the Group. 46 25561.04 28/07/2017 Proof 6TRICORN GROUP PLC Annual Report and Accounts 2017www.tricorn.uk.comCompany Information Company registration number: 1999619 Registered office: Directors: Spring Lane Malvern Link Malvern Worcestershire WR14 1DA Mr Andrew Brian Moss (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: Registrars: Bankers: Solicitors: Auditors: Stockdale Securities Limited Beaufort House 15 St Botolph Street London EC3A 7BB Neville Registrars Limited Neville House 18 Laurel Lane Halesowen West Midlands B63 3DA HSBC Bank plc 5 Broad Street Worcester WR1 2EJ Harrison Clark 5 Deansway Worcester WR1 2JG Grant Thornton UK LLP Statutory Auditors and Chartered Accountants The Colmore Building 20 Colmore Circus Birmingham West Midlands B4 6AT 25561.04 28/07/2017 Proof 625561.04 28/07/2017 Proof 6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 25561.04 28/07/2017 Proof 625561.04 28/07/2017 Proof 6

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