Tricon Residential
Annual Report 2018

Plain-text annual report

Annual Report & Accounts for the year ended 31 March 2018 Stock code: TCN Tricorn Annual Report 2018.indd 3 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:29 Welcome to our Annual Report 2018 TRICORN GROUP Tricorn creates value for our stakeholders by focusing on our area of expertise and being the best at what we do. We aim to be recognised as the “best in class” tube solutions provider in terms of service, quality and brand reputation. Global manufacturing footprint Operational excellence Large blue-chip OEM customers Tricorn Capitalise on growth opportunities Leveraging capabilities and know how Financial disciplines Our Strategic Enablers Establishing a global manufacturing footprint − With manufacturing operations now firmly established in the UK, USA and China the Group is ideally positioned to support its customer’s facilities in these key areas as they continue to seek to localise supply and technical support. We continue to evaluate opportunities to expand further in response to the growing needs of our customers. The Group’s Growth Priorities Focus on large blue-chip OEM customers We focus on a limited number of highly successful customers where we can build long-term, collaborative relationships. By working closely with them from early design, through product validation and onto full production we can provide highly cost effective solutions and at the same time benefit from high levels of recurring revenue over the life of the product. Leveraging the capabilities and know how across the Group − To harness the Group’s full potential we remain determined to channel and maximise our scale and act wherever possible as one Tricorn. Best practise is shared across the Group and operations are consistently benchmarked. Maintaining financial disciplines − As we execute our strategy to deliver profitable growth, we continue to maintain financial discipline. Businesses are targeted to achieve EBITDA/sales of a minimum of 10% and a cash generation/EBITDA ratio of 1:1. Our strong cash generation allows the Group to make significant investments in our operations and at the same time reduce debt/increase funds. Contents Capitalise on significant growth opportunities By being alert, agile and responsive to growth opportunities we are winning new business and securing significant long-term agreements. We continue to invest in developing our capabilities and expanding our capacity ensuring that we maintain our competitive advantage and can meet the increasing needs of our customers. Drive for operational excellence We are committed to a relentless focus on how to improve the way our businesses operate. By doing this we will better utilise capacity, enhance our competitiveness, reduce working capital and generate cost savings by operating more efficiently. Our journey is underpinned by the engagement of management and employees at all levels and we remain absolutely confident that embedding Lean across the whole of Tricorn is an essential enabler to deliver and sustain our goals Strategic Report Board of Directors Report of the Directors Corporate Governance (including remuneration report) Report of the Independent Auditor 02 07 08 10 13 Group Income Statement Group Statement of Comprehensive Income Group Statement of Changes in Equity Group Statement of Financial Position 18 19 20 21 Group Statement of Cash Flows Notes to the Financial Statements Company Statutory Financial Statements (prepared under UK GAAP) 22 23 47 Tricorn Annual Report 2018.indd 4 26058.01 31 July 2018 5:22 PM Proof 3 31/07/2018 17:22:29 NOTES-HEADING-LEVEL- Our Business HIGHLIGHTS 2018 Highlights Operational Highlights • Revenue increased 19.8% to £22.180m • Profits up 260% to £0.827m • Excellent progress across both divisions and our Chinese joint venture • Long-term agreement secured with London Electric Vehicle Company • Cash generated by operations of £1.532m, up £0.717m on previous year ONE notes-heading-level-two notes-heading-level-three notes-heading-level-four notes-strapline notes-text-body • notes-list-bullet • notes-list-bespoke − notes-list-dash d. notes-list-alpha 5. notes-list-number vi. notes-list-roman Financial Highlights Revenue up 19.8% £22.180m £18.519m £18.016m 2 0 1 8 2 0 1 7 2 0 1 6 Underlying earnings/(loss) per share up 268% 2.65p 0.72p 2 0 1 8 2 0 1 7 (0.19p) 2 0 1 6 Our locations Key Manufacturing facilities Purchasing office Our timeline December 2001 Listed on AIM Underlying EBITDA up 63.8% Underlying profit before tax up 260% £1.575m £0.961m £0.638m £0.827m £0.230m 2 0 1 8 2 0 1 7 2 0 1 6 (£0.273m) Cash generated by operations up 87.9% Net debt reduced by 14.7% £1.532m £0.815m £1.363m (£2.982m) (£3.497m) (£2.920m) 2 0 1 8 2 0 1 7 2 0 1 6 2 0 1 8 2 0 1 7 2 0 1 6 2 0 1 8 2 0 1 7 2 0 1 6 Revenue for the year ended 31 March 2018 Transportation 72% Energy 28% 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 www.tricorn.uk.com TRICORN GROUP PLC Annual Report and Accounts 2018 01 Tricorn Annual Report 2018.indd 1 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:31 STRATEGIC REPORT Chairman’s and Chief Executive’s Statement Performance in the year ended 31 March 2018 Revenue for the year at £22.180m was 19.8% higher than the previous year (2017: £18.519m) with the Group benefitting from buoyant end markets and new business wins. Excellent progress has been made across both of the Group’s divisions with all businesses delivering increased revenue and substantial improvements in profitability over the previous year. The performances of the Group’s USA business and its joint venture in China have been particularly encouraging. Underlying profit before tax at £0.827m was significantly up from the previous year (2017: £0.230m). Customer Product Markets Global Markets Construction Agriculture Mining Application: Hydraulic fluid transfer – Actuator control Global Markets Agriculture Construction Mining Oil and Gas Application: Fluid transfer of oil, fuel, air water and coolant 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 firmly established in each of these key locations and performing well, the Group is ideally positioned to support its customers’ facilities as they continue to seek to localise supply and technical support. “ The Group has made excellent progress in the execution of its strategy which is delivering revenue growth and a substantial improvement in profitability.” Andrew Moss Chairman Application: Engine Gearbox Lube Coolant Global Markets Truck – Medium and Heavy Duty Coolant Application: Gas Vacuum Braking System Transmission Breathers Fuel suction Global Markets Semi-Con. Medium and Heavy Duty Truck Application: Fluid Transfer – Oil, Air, and Water Global Markets Power Generation Construction Mining On Road Truck Off Road Machines Other Off Road Engines Energy Generation 02 TRICORN GROUP PLC Annual Report and Accounts 2018 Stock Code: TCN Tricorn Annual Report 2018.indd 2 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:33 Our Business 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. External revenue for the year ended 31 March 2018 was £15.901m (2017: £13.595m) and underlying profit increased by 110% to £0.410m (2017: £0.195m). In the USA, Franklin Tubular Products continued to make excellent progress on all fronts. Operational performance was strong and new product introduction activity was at record levels. In the final quarter alone, 65 part numbers were introduced representing around £1.4m of annualised revenue. In the year, we also made further investment in our cleaning capabilities and are now able to supply “super clean” parts. New business is already being won as a result. In the UK, Maxpower Automotive grew its rigid hydraulic tube business substantially and capacity was increased with the addition of further TIG welding stations. In the earlier part of the financial year, the business was successful in securing a long-term agreement with the London Electric Vehicle Company for the supply of brake pipe assemblies on the recently launched TX eCity electric taxi. The project entered the production phase towards the end of the financial year and is expected to generate around £5m of revenue for the Group over the length of the contract. 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 and gas applications. External revenue for the year at £6.279m was well ahead of the previous year (2017: £4.924m), with the business benefitting from revenue in the power generation rental sector through the early part of the year. It was also successful in securing new business for cooling set support frames. Underlying profit at £0.567m was substantially up on the previous year (2017: £0.251m). Revenue (£m) £15.901 (2017: £13.595m) Profit before tax (£m) £0.410 (2017: £0.195m) Up 16.9% Up 110.2% Revenue (£m) £6.279 (2017: £4.924m) Profit before tax (£m) £0.567 (2017: £0.251m) Up 27.5% Up 125.9% All references to EBITDA, profit/(loss) before tax and earnings/(loss) per share are before restructuring costs, intangible asset amortisation, share based payment charges and fair value charges relating to foreign exchange contracts. www.tricorn.uk.com TRICORN GROUP PLC Annual Report and Accounts 2018 03 Tricorn Annual Report 2018.indd 3 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:35 26058.01 31 July 2018 5:22 PM Proof 5STRATEGIC REPORTChairman’s and Chief Executive’s StatementAll references to EBITDA, profit/(loss) before tax and earnings/(loss) per share are before restructuring costs, intangible asset amortisation, share based payment charges and fair value charges relating to foreign exchange contracts.“ The restructuring activities over the last couple of years, combined with the global investment in our capability, have transformed and strengthened the Group. The business in the USA continues to grow and the merging of our facilities in China has resulted in that part of the Group now being profitable.”ChinaOur Chinese joint venture, Minguang-Tricorn Tubular Products, performed well, benefitting from the consolidation of our activities in China in the previous year and improved market conditions. Relationships with customers continued to build and the business was successful on a number of new project wins. The Group’s share of profit before tax at £0.209m was substantially improved (2017: loss £0.049m). The Group continues to invest to support new business activityFinancial ReviewThe restructuring activities over the last couple of years, combined with the global investment in our capability, have transformed and strengthened the Group. The business in the USA continues to grow and the merging of our facilities in China has resulted in that part of the Group now being profitable.With improved trading conditions, all of the Group’s subsidiary businesses were profitable in the year. Financial results for the Group were much improved with underlying EBITDA for the year at £1.575m (2017: £0.961m) and underlying profit before tax at £0.827m (2017: £0.230m).31 March2017net debtUnderlyingoperatingprofitDepreciationNet movementin workingcapitalCash generated by operations£1,532kFinancechargesCapitalexpenditureOthermovements31 March2018net debt(3,497)(2,982)(101)(696)(220)166522844Change in net funds£000’s04TRICORN GROUP PLC Annual Report and Accounts 2018Stock Code: TCNTricorn Annual Report 2018.indd 431/07/2018 17:22:36Our Business Balance Sheet Total assets of the Group as at 31 March 2018 were £14.359m, which was £0.571m higher than the prior year, driven mainly by the increase in the value of the Group’s investment in its joint venture in China and higher levels of debtors given the increased sales volume. Net working capital for the Group decreased in the year to £3.475m (2017: £3.890m). On translation of its overseas assets and liabilities, the Group made an exchange loss of £0.487m (2017: gain £0.269m). 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 £0.111m deficit (2017: surplus £0.376m). People The Board would like to take the opportunity to thank 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. The Group offers world class welding capabilities Income Statement Revenue for the year, at £22.180m, increased by 19.8% over the previous year of £18.519m. This was driven by a combination of the impact of new business growth and the improved market demand from key customers. In line with Group policy when reporting the results for its joint venture in China, 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. Gross margins were at 38.3%, after incurring a level of new business introduction costs. Distribution costs at £1.005m were up £0.212m over the prior year, with the increase largely volume related. The Group also saw administration costs increase by 6.7% over the prior year to £6.646m. However, despite these cost increases, operational gearing reduced to 29.9% (2017: 33.6%). The Group’s Chinese joint venture, Minguang-Tricorn Tubular Products, delivered its first full year profit following its merger in July 2016. The Group’s share of profit for the year was £0.209m (2017 loss: £0.049m). EBITDA for the year was £1.575m (2017: 0.961m). Finance costs for the year were £0.226m (2017: £0.218m) and the Group delivered an underlying profit before tax for the year of £0.827m (2017: £0.230m). After deducting intangible asset amortisation, share based payment charges and fair value charges relating to foreign exchange contracts, the profit before tax for the year was £0.606m (2017 loss: £0.287m). Basic earnings per share (EPS) was 2.00p (2017 LPS: 0.81p) and after adjusting for one-off items, the underlying EPS was 2.65p (2017: 0.72p). The Board is not recommending the payment of a final dividend (2017: nil). Cash Flow The Group’s cashflow from operations improved significantly in the year to £1.532m (2017: £0.815m), reflecting the profit performance and management of working capital. For the year, the Group achieved a cash generated by operations to EBITDA ratio of 0.97:1 (2017: 0.85:1), only marginally short of its ongoing 1:1 target. After interest payments and net tax receipts, cash generated by operating activites was £1.321m (2017: £0.614m). Capital expenditure, net of finance leases, was £0.696m (2017: £0.559m). During the year, the Group repaid borrowings in China of £0.439m, initially used to fund its joint venture. This repayment was funded from the Group’s cash resources. At 31 March 2018, net debt was £2.982m (2017: £3.497m), cash and cash equivalents were £0.692m (2017: £0.642m) and gearing was 47.6% (2016: 57.9%). 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 and had no covenants on its borrowings. www.tricorn.uk.com TRICORN GROUP PLC Annual Report and Accounts 2018 05 Tricorn Annual Report 2018.indd 5 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:38 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 have responded by making frequent visits overseas in order to mitigate and control those risks. Andrew Moss Chairman 5 June 2018 Mike Welburn Chief Executive 5 June 2018 STRATEGIC REPORT Chairman’s and Chief Executive’s Statement continued Outlook The Group has made excellent progress in the execution of its strategy which is delivering revenue growth and a substantial improvement in profitability. Our strong cash generation has enabled us to reduce our net debt whilst continuing to invest in the business. These investments in developing our capabilities and increasing our capacity have enabled us to win new business, grow market share and take full advantage of buoyant end markets. With momentum building across the businesses, the Board expects the Group to make further significant 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. 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. The Group’s capabilities include the manufacture of complex fabrications and painting 06 TRICORN GROUP PLC Annual Report and Accounts 2018 Stock Code: TCN Tricorn Annual Report 2018.indd 6 31/07/2018 17:22:40 Job Number 31 July 2018 5:22 PM 3 26058.01 31 July 2018 5:22 PM Proof 5BOARD OF DIRECTORSMike WelburnChief Executive OfficerJoined 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 DirectorJoined 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 LeakeyGroup Sales DirectorJoined 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 DirectorPurchased MTC in 1984 and Chief Executive of Tricorn up to 2002 after which he became a non-executive Director. Chairman of the Audit, Nominations and Remuneration Committees. He was previously managing director of Westwood Dawes plc and non-executive director of Netcall plc. Andrew MossNon Executive ChairmanAppointed as non-executive Director in November 2014 and Chairman in December 2014. Member of the Audit, Remuneration and Nomination Committees. 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 was 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.Executive DirectorsNon-Executive DirectorsTricorn Group plc is the parent company of a group of specialist engineering subsidiaries whose activities incorporate high precision tube manipulation, systems engineering and specialist fittings.Directors The present membership of the Board is set out below.A B Moss R Allsop M I Welburn P Lee D E Leakey07TRICORN GROUP PLC Annual Report and Accounts 2018www.tricorn.uk.comJob Number 31 July 2018 5:22 PM 3Our GovernanceTricorn Annual Report 2018.indd 731/07/2018 17:22:41REPORT OF THE DIRECTORS for the year ended 31 March 2018 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 17 May 2018, were as follows: Ordinary shares of 10 pence each Number 11,220,000 6,358,900 1,378,334 1,370,150 1,300,000 Percentage of capital % 33.20 18.82 4.08 4.05 3.85 R Allsop Canaccord Genuity Wealth Management W B Nominees FNZ Nominees Limited Cheviot Capital 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 key financial salients 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 emphasise 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 take 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 looks to recharge any increased cost of commodities to customers. Foreign currency risk Certain purchases and sales are made in foreign currencies. In order to minimise the impact of currency movements the Group utilises short term forward currency contracts. Such cover is determined by written policies set by the Board. Foreign exchange differences on retranslation of foreign currency assets and liabilities are taken to the Group profit or loss. 08 TRICORN GROUP PLC Annual Report and Accounts 2018 Stock Code: TCN Tricorn Annual Report 2018.indd 8 31/07/2018 17:22:41 Job Number 31 July 2018 5:22 PM 3 Our Governance Credit risk The Group trades with only recognised, creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit vetting procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant. Other non-financial risks The Group supplies products to a large number of customers and works with a number of key suppliers. Successful management of this process is key to delivering the results of the Group. This is also underpinned by retention and training of our staff to ensure that our knowledge and skills are maintained. Directors’ 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 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. The Directors confirm that: • so far as each Director is aware, there is no relevant audit information of which the Group and Company’s auditor is unaware; and • the Directors have taken all steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the auditor is 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 auditor in accordance with section 489 of the Companies Act 2006. ON BEHALF OF THE BOARD M I Welburn Director Date: 5 June 2018 Job Number 31 July 2018 5:22 PM 3 Tricorn Annual Report 2018.indd 9 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:41 www.tricorn.uk.com TRICORN GROUP PLC Annual Report and Accounts 2018 09 CORPORATE GOVERNANCE for the year ended 31 March 2018 Statement by the Directors on compliance with the provisions of the UK Corporate Governance Code (the Code) On 30 March 2018 revised “AIM Rules For Companies” were issued by the London Stock Exchange that require companies with shares admitted to trading on AIM to adopt a recognised formal corporate governance code by no later than 28th September 2018 and to disclose how they comply with and, if applicable, where they depart from, that code. The Board is currently updating its corporate governance procedures prior to 28th September 2018. 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. 10 TRICORN GROUP PLC Annual Report and Accounts 2018 Stock Code: TCN Tricorn Annual Report 2018.indd 10 31/07/2018 17:22:41 Job Number 31 July 2018 5:22 PM 3 Our Governance Policy on executive directors’ remuneration Detail of individual Directors’ remuneration is set out in note 5 to the financial statements. The policy of the Board is to provide executive remuneration packages designed to attract, motivate and retain Directors of the calibre necessary to maintain the Group’s position and to reward them for enhancing shareholder value and return. It aims to provide sufficient levels of remuneration to do this, but to avoid paying more than is necessary and reflects the Directors’ responsibilities. A separate remuneration committee has been established comprising the non-executive Directors and is chaired by R Allsop. Basic annual salary The Remuneration Committee reviews each executive Director’s basic salary annually. In deciding upon appropriate levels of remuneration the Board believes that the Group should offer levels of base pay reflecting individual responsibilities and which are commensurate with similar jobs in other business sectors. Annual bonus payments, benefits and pension arrangements M I Welburn, P Lee and D E Leakey participate in a performance related bonus arrangement through Tricorn Group plc. M I Welburn, P Lee and D E Leakey benefit from the provision of private medical insurance, the provision of company cars or car allowance and are eligible to participate in a contributory pension scheme. R Allsop and 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 2018 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 1,000,000 500,000 500,000 500,000 921,000 1,263,156 Lapsed during the year Number Granted during the year Number Exercised during the year Number – – – – – – – – – – – – – – – – – – – – – At end of year 2018 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 Job Number 31 July 2018 5:22 PM 3 Tricorn Annual Report 2018.indd 11 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:42 www.tricorn.uk.com TRICORN GROUP PLC Annual Report and Accounts 2018 11 CORPORATE GOVERNANCE for the year ended 31 March 2018 continued 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 2018, 800,000 of these shares had vested. D E Leakey 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 2018 was 22.00p (31 March 2017: 12.75p) and the range during the year was 15.75p to 24.75p (2017: 8.25p to 15.75p). 12 TRICORN GROUP PLC Annual Report and Accounts 2018 Stock Code: TCN Tricorn Annual Report 2018.indd 12 31/07/2018 17:22:42 Job Number 31 July 2018 5:22 PM 3 INDEPENDENT AUDITOR’S REPORT To the members of Tricorn Group Plc Our Governance Opinion Our opinion on the group financial statements is unmodified We have audited the Group financial statements of Tricorn Group plc for the year ended 31 March 2018 which comprise the Group income statement, the Group statement of comprehensive income, the Group statement of changes in equity, the Group statement of financial position, the Group statement of cash flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. In our opinion, the Group financial statements: • give a true and fair view of the state of the Group’s affairs as at 31 March 2018 and of its profit for the year then ended; • have been properly prepared in accordance with IFRSs as adopted by the European Union; and • have been prepared in accordance with the requirements of the Companies Act 2006. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Group financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Who we are reporting to 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. Conclusions relating to going concern We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where: • the Directors’ use of the going concern basis of accounting in the preparation of the Group financial statements is not appropriate; or • the Directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Group’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue. Overview of our audit approach • Overall materiality: £32,000 which represents 5% of the Group’s preliminary profit before taxation; • Key audit matter was identified as revenue recognition; • We performed full scope audit procedures on UK based operations (Tricorn Group plc, Maxpower UK Limited, Malvern Tubular Components Limited) and Franklin Tubular Components and performed targeted audit procedures on its joint venture, Minguang-Tricorn Tubular Products Nanjing Ltd . Key audit matters The graph below depicts the audit risks identified and their relative significance based on the extent of the financial statement impact and the extent of management judgement. High Impairment Potential financial statement impact Inventory Revenue recognition Foreign exchange translation Low Receivables/payables Low High www.tricorn.uk.com TRICORN GROUP PLC Annual Report and Accounts 2018 13 Job Number 31 July 2018 5:22 PM 3 Tricorn Annual Report 2018.indd 13 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:42 INDEPENDENT AUDITOR’S REPORT To the members of Tricorn Group Plc Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Group financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those that had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the Group financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key Audit Matters How the matter was addressed in the audit Revenue recognition Revenue is recognised to the extent that economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is a key driver of the business and is also a significant value in the financial statements. We therefore identified revenue recognition (focusing on occurrence) as one of the most significant assessed risks of material misstatement . Our audit work included, but was not restricted to: • Evaluating the Group’s accounting policies for recognition of revenue for compliance with with the requirements of International Accounting Standard (IAS) 18 ‘Revenue’ as adopted by the European Union . • Agreeing as to whether revenue has been recognised in accordance with these policies. • Agreeing, on a sample basis, amounts recognised in revenue of source and supporting documents including proof of shipment documents. The Group’s accounting policy on revenue is shown in note 2 to the financial statements and related disclosures are included in note 3. Key Observations: Based on our audit work, we found the Group’s revenue recognition policy was consistently applied. There are no findings in relation to revenue recognition. Our application of materiality We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality in determining the nature, timing and extent of our audit work and in evaluating the results of that work. We determined materiality for the audit of the Group financial statements as a whole to be £32,000, which is 5% of the preliminary profit for the year. This benchmark is considered the most appropriate because this is a key performance measure used by the Board of Directors to report to investors on the financial performance of the Group. Materiality for the current year is lower than the level that we determined for the year ended 31 March 2017 to reflect the use of profit for the year as the benchmark as opposed to revenues which were used as the benchmark in the prior year due to the Group being loss making in the prior year. We use a different level of materiality, performance materiality, to drive the extent of our testing and this was set at 75% of financial statement materiality for the audit of the Group financial statements. The graph below illustrates how performance materiality interacts with our overall materiality and the tolerance for potential uncorrected misstatements. Overall materiality 25% Tolerance for potential uncorrected mistatements Performance materiality 75% We determined the threshold at which we will communicate misstatements to the Audit Committee to be £1,600. In addition, we will communicate misstatements below that threshold that, in our view, warrant reporting on qualitative grounds. 14 TRICORN GROUP PLC Annual Report and Accounts 2018 Stock Code: TCN Tricorn Annual Report 2018.indd 14 31/07/2018 17:22:42 Job Number 31 July 2018 5:22 PM 3 26058.01 31 July 2018 5:22 PM Proof 5An overview of the scope of our auditOur audit approach was a risk-based approach founded on a thorough understanding of the Group’s business, its environment and risk profile. We performed full scope audit procedures on UK based operations (Tricorn Group plc, Maxpower UK Limited, Malvern Tubular Components Limited) and the USA operation (Franklin Tubular Components Limited). The Group audit team visited the location in the USA and performed the audit procedures. Our current year audit approach on Franklin Tubular Components Limited is consistent with the prior year approach. The Group also has an investment in a joint venture in China, Minguang-Tricorn Tubular Products Nanjing Ltd, which makes up 31% of profit before tax and 6% of total assets and we determined this is also a significant component. The Group audit team performed targeted audit procedures over the balances within the joint venture. The prior year audit approach to the joint venture was the performance of analytical procedures with the change in scope in the current year being as a result of the joint venture contributing a larger proportion of Group profit before tax. Revenue recognitionFull scopeTargeted proceduresAnalytical proceduresScoped outOther informationThe Directors are responsible for the other information. The other information comprises the information included in the Annual Report set out on pages 23 to 46, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the Group financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Group financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement of the Group financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.Our opinion on other matters prescribed by the Companies Act 2006 is unmodifiedIn our opinion, based on the work undertaken in the course of the audit: •the information given in the strategic report and the Directors’ report for the financial year for which the Group financial statements are prepared is consistent with the Group financial statements; and •the Strategic Report and the Directors’ report have been prepared in accordance with applicable legal requirements.15TRICORN GROUP PLC Annual Report and Accounts 2018www.tricorn.uk.comJob Number 31 July 2018 5:22 PM 3Our GovernanceTricorn Annual Report 2018.indd 1531/07/2018 17:22:42INDEPENDENT AUDITOR’S REPORT To the members of Tricorn Group Plc Matters on which we are required to report under the Companies Act 2006 In the light of the knowledge and understanding of the Group and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors’ report. Matters on which we are required to report by exception We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: • certain disclosures of Directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit. Responsibilities of directors for the financial statements As explained more fully in the Directors’ responsibilities statement set out on page 9, the Directors are responsible for the preparation of the Group financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of Group financial statements that are free from material misstatement, whether due to fraud or error. In preparing the Group financial statements, the Directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the group financial statements Our objectives are to obtain reasonable assurance about whether the Group financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Group financial statements. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Other matters We have reported separately on the parent Company financial statements of Tricorn Group plc for the year ended 31 March 2018. That report includes details of the parent Company key audit matters; how we applied the concept of materiality in planning and performing our audit; and an overview of the scope of our audit. Rebecca Eagle Senior Statutory Auditor for and on behalf of Grant Thornton UK LLP Statutory Auditor, Chartered Accountants Birmingham 5 June 2018 16 TRICORN GROUP PLC Annual Report and Accounts 2018 Stock Code: TCN Tricorn Annual Report 2018.indd 16 31/07/2018 17:22:42 Job Number 31 July 2018 5:22 PM 3 Our Financials TRICORN GROUP PLC GROUP CONSOLIDATED FINANCIAL STATEMENTS for the year ended 31 March 2018 Company number 1999619 Group Income Statement Group Statement of Comprehensive Income Group Statement of Changes in Equity Group Statement of Financial Position Group Statement of Cash Flows Notes to the Financial Statements 18 19 20 21 22 23 Job Number 31 July 2018 5:22 PM 3 Tricorn Annual Report 2018.indd 17 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:43 www.tricorn.uk.com TRICORN GROUP PLC Annual Report and Accounts 2018 17 GROUP INCOME STATEMENT For the year ended 31 March 2018 22,180 (13,685) 8,495 (1,005) (6,646) – – – – (6,646) 844 209 (226) 827 70 897 Revenue Cost of sales Gross profit Distribution costs Administration costs – General administration costs – Restructuring costs – Intangible asset amortisation – Fair value charge relating to forward exchange contracts – Share based payment charge Total administration costs Operating profit/(loss) Share of profit/(loss) from joint venture Finance costs Profit/(loss) before tax Income tax (charge)/credit Profit/(loss) after tax from continuing operations Attributable to: Equity holders of the parent company Earnings per share: Basic profit/(loss per share) Diluted profit/(loss per share) Note 3 12 6 3/4 14 8 3/4 9 10 10 2018 £’000 Underlying 2018 £’000 Non-underlying 2018 £’000 Group 2017 £’000 Underlying 2017 £’000 Non-underlying – – – – 22,180 (13,685) 8,495 (1,005) 18,519 (11,002) 7,517 (793) – – (175) (6) (40) (221) (6,646) – (175) (6) (40) (6,867) (6,227) – – – – (6,227) – – – – – (303) (190) – (24) (517) 2017 £’000 Group 18,519 (11,002) 7,517 (793) (6,227) (303) (190) – (24) (6,744) (221) 623 497 (517) (20) – – (221) – 209 (226) 606 70 (49) (218) 230 12 – – (517) – (49) (218) (287) 12 (221) 676 242 (517) (275) 897 (221) 676 242 (517) (275) 2.00p 1.86p (0.81)p (0.81)p All of the activities of the Group are classed as continuing unless otherwise stated. The accompanying notes form an integral part of these financial statements. 18 TRICORN GROUP PLC Annual Report and Accounts 2018 Stock Code: TCN Tricorn Annual Report 2018.indd 18 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:43 GROUP STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 March 2018 Our Financials Profit/(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 The accompanying notes form an integral part of these financial statements. 2018 £’000 676 (487) 189 2017 £’000 (275) 269 (6) www.tricorn.uk.com TRICORN GROUP PLC Annual Report and Accounts 2018 19 Tricorn Annual Report 2018.indd 19 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:43 GROUP STATEMENT OF CHANGES IN EQUITY For the year ended 31 March 2018 Balance at 1 April 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 based payment charge Write back of share based payment reserve Total transactions with owners Profit and total comprehensive income Balance at 31 March 2018 Share capital £’000 3,379 – – – – 3,379 – – – Share premium £’000 1,692 – – – – 1,692 – – – Merger reserve £’000 1,388 – – – – 1,388 – – – 107 – – – 269 376 – – – Translation reserve £’000 Share based payment reserve £’000 Profit and loss account £’000 Total £’000 6,019 24 – 24 (6) 6,037 40 – 40 (847) – 15 15 (275) (1,107) – – – 300 24 (15) 9 – 309 40 – 40 – 349 – 3,379 – 1,692 – 1,388 (487) (111) 676 (431) 189 6,266 The accompanying notes form an integral part of these financial statements. 20 TRICORN GROUP PLC Annual Report and Accounts 2018 Stock Code: TCN Tricorn Annual Report 2018.indd 20 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:43 GROUP STATEMENT OF FINANCIAL POSITION At 31 March 2018 Our Financials Assets Non-current Goodwill Intangible assets Property, plant and equipment Investment in joint venture Current Inventories Trade and other receivables Cash and cash equivalents Corporation tax Total assets Liabilities Current Trade and other payables Borrowings Fair value of foreign exchange contracts 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 Note 2018 £’000 2017 £’000 11 12 13 14 16 17 18 20 21 21 19 25 391 210 4,325 917 5,843 2,867 4,957 692 – 8,516 14,359 (4,349) (3,522) (6) (39) (7,916) (152) (25) (177) (8,093) 6,266 3,379 1,692 1,388 (111) 349 (431) 6,266 391 385 4,300 684 5,760 2,662 4,692 642 32 8,028 13,788 (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 The financial statements were approved by the Board of Directors on 5 June 2018. M I Welburn Director Company number: 1999619 The accompanying notes form an integral part of these financial statements. www.tricorn.uk.com TRICORN GROUP PLC Annual Report and Accounts 2018 21 Tricorn Annual Report 2018.indd 21 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:43 GROUP STATEMENT OF CASH FLOWS For the year ended 31 March 2018 Cash flows from operating activities Profit/(loss) after taxation from continuing operations Adjustment for: – Depreciation – Non-cash restructuring – Net finance costs in income statement – Charge relating to foreign exchange derivative contract – Amortisation charge – Share based payment charge – Share of joint venture operating (profit)/loss – Taxation charge/(credit) recognised in income statement – (Increase) in trade and other receivables – Increase 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 Repayment of overseas short term borrowing Repayment/(proceeds) of short term borrowings Payment of finance lease liabilities Net cash used in financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year The accompanying notes form an integral part of these financial statements. 2018 £’000 2017 £’000 676 (275) 522 – 226 6 175 40 (209) (70) (443) 950 (341) 1,532 (220) 9 1,321 – (696) – (696) (439) (60) (76) (575) 50 642 692 513 114 218 – 190 24 49 (12) (984) 1,003 (25) 815 (226) 25 614 (157) (559) (75) (791) – 41 (77) (36) (213) 855 642 22 TRICORN GROUP PLC Annual Report and Accounts 2018 Stock Code: TCN Tricorn Annual Report 2018.indd 22 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:43 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2018 Our Financials 1 General information Tricorn Group plc and subsidiaries’ (the ‘Group’) principal activities comprise high precision tube manipulation and systems engineering. The Group’s customer base includes major blue chip companies with world-wide activities in key market sectors, including Power Generation, 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 5 June 2018. 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. www.tricorn.uk.com TRICORN GROUP PLC Annual Report and Accounts 2018 23 Tricorn Annual Report 2018.indd 23 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:43 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2018 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 Effective for reporting periods starting on or after IFRS 9 IFRS 15 IFRS 16 Amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions Financial Instruments Revenue from Contracts with Customers Leases 1 January 2018 1 January 2018 1 January 2019 1 January 2018 Management is assessing the impact of IFRS 15 – Revenue from Contracts with Customers, on its financial statements. It has concluded that the financial impact of the standard will be minimal and immaterial to the financial statements of the Group. In addition, management are undertaking an exercise to assess the impact of 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 that are recorded at fair value which requires a number of estimates and assumptions to be made. The major areas for estimation within the financial statements are as follows: • Performance of impairment reviews to assess the carrying value of goodwill (see note 11) • 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 forecasts 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 percent. 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 £3,450,000 (year ended 31 March 2017: £3,285,000). • In July 2016, 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. 24 TRICORN GROUP PLC Annual Report and Accounts 2018 Stock Code: TCN Tricorn Annual Report 2018.indd 24 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:44 Our Financials Consolidation and investments in subsidiaries The Group financial statements consolidate those of the parent Company and all of its subsidiaries as of 31 March 2018. The parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. The consolidated financial statements of the Group incorporate the financial statements of the parent Company as well as those entities controlled by the Group by full consolidation. Acquired subsidiaries are subject to application of the acquisition method. This involves the valuation at fair value of all identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the acquisition date, regardless of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition. On initial recognition, the assets and liabilities of the subsidiary are included in the Group Statement of Financial Position at their fair value, which are also used as the basis for subsequent measurement in accordance with the Group accounting policies. Goodwill represents the excess of fair value consideration over the fair value of the Group’s share of the identifiable net assets of the acquired subsidiary at the date of acquisition. Acquisition costs are expensed as incurred. If the fair value of identifiable net assets exceeds the sum calculated above, the excess amount (ie gain on a bargain purchase) is recognised in profit or loss immediately. Intra-group balances and transactions, and any unrealised gains or losses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Investments in joint ventures A joint venture is an arrangement that the Group controls jointly with one or more other investors, and over which the Group has rights to a share of the arrangement’s net assets rather than direct rights to underlying assets and obligations for underlying liabilities. Investments in joint ventures are accounted for using the equity method. Any goodwill or fair value adjustment attributable to the Group’s share in the joint venture is not recognised separately and is included in the amount recognised as investment. The carrying amount of the investment in joint ventures is increased or decreased to recognise the Group’s share of the profit or loss and other comprehensive income of the associate and joint venture, adjusted where necessary to ensure consistency with the accounting policies of the Group. Unrealised gains and losses on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in those entities. Where unrealised losses are eliminated, the underlying asset is also tested for impairment. 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 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. www.tricorn.uk.com TRICORN GROUP PLC Annual Report and Accounts 2018 25 Tricorn Annual Report 2018.indd 25 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:44 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2018 2 Accounting policies (continued) Revenue recognition The Group’s material revenue stream is in respect of the sale of tubular components. Revenue is measured by reference to the fair value of consideration received or receivable by the Group for goods supplied, excluding VAT and trade discounts. Revenue is recognised upon the transfer of risk to the customer. The Group recognises revenue when persuasive evidence of an arrangement exists; delivery has occurred; the sale price is fixed and determinable; and collectability is reasonably assured. Amounts received are recognised immediately as revenue where there are no substantial risks, there are no ongoing performance obligations and amounts received are not refundable. Amounts are deferred over an appropriate period where these conditions are not met. Inventories Inventories are stated at the lower of cost and net realisable value. Costs of ordinarily interchangeable items are assigned using the first in, first out cost formula. Cost of work in progress and finished goods includes materials, direct labour and an attributable proportion of manufacturing overheads based on normal levels of activity. Provisions are made against inventories where there is evidence that the carrying amount has fallen below recoverable amount. Goodwill Goodwill arising on consolidation represents the excess of the fair value of consideration transferred over the Group’s interest in the fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition. Goodwill which is recognised as an asset is reviewed for impairment at least annually. Any impairment is recognised immediately through profit or loss and is not subsequently reversed. Impairment The Group’s goodwill, intangible assets and property, plant and equipment are subject to impairment testing. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Goodwill is allocated to those cash-generating units that are expected to benefit from synergies of the related business combination and represent the lowest level within the Group at which management controls the related cash flows. Goodwill with an indefinite useful life is tested for impairment at least annually. All other individual assets or cash- generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell and value in use, based on an internal discounted cash flow evaluation. Impairment losses recognised for cash-generating units, to which goodwill has been allocated, are credited initially to the carrying amount of goodwill. Any remaining impairment loss is charged pro rata to the other assets in the cash generating unit. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. If the impairment is subsequently reversed, the carrying amount, except in the case of goodwill, is increased to the revised estimate of its recoverable amount, limited to the carrying value that would have been determined had no impairment been recognised previously. Impairment losses in respect of goodwill are not subsequently reversed. 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. 26 TRICORN GROUP PLC Annual Report and Accounts 2018 Stock Code: TCN Tricorn Annual Report 2018.indd 26 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:44 Our Financials 2 Accounting policies (continued) 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. Intangible amortisation Intangible assets are amortised over the following periods: Brand names Customer contracts Product development costs 15 years 5 years 3 years Foreign currencies These financial statements are presented in UK Sterling which is the functional currency of the parent and the presentational currency of the Group. Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the reporting date. Exchange differences are dealt with through profit or loss. Property, plant and equipment Property, plant and equipment are carried at acquisition cost less subsequent depreciation and impairment losses. Depreciation is charged on these assets, after adjusting for their residual values, on a straight line basis over the estimated useful economic life of each asset. The useful lives of property, plant and equipment can be summarised as follows: Buildings Plant and equipment Motor vehicles 40 years 3 to 15 years 5 years Leases The economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards related to the ownership of the leased asset and is then disclosed and accounted for as a finance lease asset. The related asset is recognised at the time of inception of the lease at the fair value of the leased asset or, if lower, the present value of the lease payments plus incidental payments, if any, to be borne by the lessee. A corresponding amount is recognised as a finance leasing liability, irrespective of whether some of these lease payments are payable 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. www.tricorn.uk.com TRICORN GROUP PLC Annual Report and Accounts 2018 27 Tricorn Annual Report 2018.indd 27 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:44 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2018 2 Accounting policies (continued) Taxation Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting period, that are unpaid at the reporting date. They are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate, based on the taxable profit for the year. Deferred income taxes are calculated using the liability method on temporary differences. This involves the comparison of the carrying amounts of assets and liabilities in the consolidated financial statements with their respective tax bases. However, in accordance with the rules set out in IAS 12, no deferred taxes are recognised in conjunction with the initial recognition of goodwill on acquisitions. This applies also to temporary differences associated with shares in subsidiaries if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future. In addition, tax losses available to be carried forward as well as other income tax credits available to the Group are assessed for recognition as deferred tax assets. Deferred tax liabilities are always provided for in full. Deferred tax assets are recognised to the extent that it is probable that they will be able to be offset against future taxable income. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the reporting date. Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the 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. 28 TRICORN GROUP PLC Annual Report and Accounts 2018 Stock Code: TCN Tricorn Annual Report 2018.indd 28 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:44 Our Financials 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 at amortised costs using the effective interest rate. A financial liability is derecognised only when the obligation is extinguished, that is, when the obligation is discharged or cancelled or expires. Provisions for liabilities Provisions are recognised when present obligations will probably lead to an outflow of economic resources from the Group and they can be reliably estimated. A present obligation arises from the presence of a legal or constructive obligation that has resulted from past events. Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at reporting date and all future estimated cash flows are discounted to arrive at the present value of the provision. Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost using the effective rate of interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. www.tricorn.uk.com TRICORN GROUP PLC Annual Report and Accounts 2018 29 Tricorn Annual Report 2018.indd 29 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:44 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2018 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 2018 Revenue – from external customers – from other segments Segment revenues Underlying operating profit/(loss)* Fair value charge relating to forward exchange contracts Intangible asset amortisation Share based payment charge Operating profit/(loss) Share of profit from joint venture Net finance costs Profit/(loss) before tax Other segment information: Segmental assets Capital expenditure Depreciation Energy £’000 Transportation £’000 Unallocated £’000 Total £’000 6,279 – 6,279 604 – – – 604 – (37) 567 3,249 299 121 15,901 – 15,901 512 – – – 512 – (102) 410 9,508 526 400 – – – (272) (6) (175) (40) (493) 209 (87) (371) 1,602 3 1 22,180 – 22,180 844 (6) (175) (40) 623 209 (226) 606 14,359 828 522 * Before intangible asset amortisation, share based payment charges and fair value charges on foreign exchange contracts 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 Energy £’000 Transportation £’000 Unallocated £’000 Total £’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 18,519 – 18,519 497 (303) (190) (24) (20) (49) (218) (287) 13,788 660 513 * Before intangible asset amortisation, share based payment charges and restructuring costs. 30 TRICORN GROUP PLC Annual Report and Accounts 2018 Stock Code: TCN Tricorn Annual Report 2018.indd 30 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:44 Our Financials The Group’s revenue from external customers (by destination) and its geographic allocation of total assets may be summarised as follows: Year ended 31 March 2018 United Kingdom Europe North America Rest of World Year ended 31 March 2017 United Kingdom Europe North America Rest of World Revenue £’000 10,805 825 9,861 689 22,180 Revenue £’000 8,989 1,086 7,645 799 18,519 Non-current assets £’000 3,392 – 2,451 – 5,843 Non-current assets £’000 2,455 – 2,622 683 5,760 4 Profit/(loss) before taxation The profit/(loss) on ordinary activities before taxation is stated after charging: Auditors’ remuneration: Audit of parent Company Audit of subsidiaries Total audit Non-audit services : Corporate taxation R&D claims 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 Current assets £’000 5,142 – 3,159 215 8,516 Current assets £’000 4,903 – 2,938 187 8,028 Total assets £’000 8,543 – 5,610 215 14,359 Total assets £’000 7,358 – 5,560 870 13,788 2018 £’000 2017 £’000 14 44 58 12 3 15 73 316 117 48 176 499 23 13 42 55 15 – 15 70 349 52 76 190 495 18 www.tricorn.uk.com TRICORN GROUP PLC Annual Report and Accounts 2018 31 Tricorn Annual Report 2018.indd 31 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:44 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2018 5 Directors’ emoluments 2018 Basic £’000 Bonus £’000 Benefits in kind £’000 2017 2018 2017 Total £’000 Basic £’000 Bonus £’000 Benefits in kind £’000 Total £’000 Pension £’000 Pension £’000 30 15 150 140 113 448 – – 75 70 56 201 – – 22 22 9 53 30 15 247 232 177 702 30 15 140 115 103 403 – – 14 12 10 36 – – 24 22 9 55 30 15 178 149 122 494 – – 10 10 8 28 – – 10 8 – 18 A B Moss R Allsop M I Welburn* P Lee* D E Leakey* * The Executive Directors are classified as the key management personnel of the Group as defined in IAS 24 Related Party Disclosures. Employers’ National Insurance Contributions made relating to Directors’ emoluments were £0.064m (2017: £0.051m). Share-based payment charge by Director (note 6) 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 2018 £’000 – – 7 7 2017 £’000 – – 11 11 2018 Number 2017 Number 227 56 283 2018 £’000 7,381 713 81 40 8,215 209 54 263 2017 £’000 6,512 628 81 24 7,245 32 TRICORN GROUP PLC Annual Report and Accounts 2018 Stock Code: TCN Tricorn Annual Report 2018.indd 32 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:45 Our Financials 7 Share based employee remuneration There are two share based remuneration schemes in operation: • Approved Enterprise Management Incentive (EMI) scheme • Unapproved share options. At 31 March 2017 No. of shares Granted in year No. of shares Exercised in year No. of shares Lapsed in year No. of shares At 31 March 2018 No. of shares Life remaining on options at 31 March 2018 Months Exercise price Pence Enterprise Management Incentive (EMI) Scheme Exercise date: March 2009 – March 2019 August 2010 – August 2020 500,000 2,184,156 2,684,156 – – – – – – – 500,000 – 2,184,156 – 2,684,156 10p 10p 12 29 The weighted average exercise price of the EMI scheme at 31 March 2018 was 10p (2017: 10p). 2,499,956 options were available for exercise at 31 March 2018 (2017: 2,499,956). At 31 March 2017 No. of shares Granted in year No. of shares Exercised in year No. of shares Lapsed in year No. of shares At 31 March 2018 No. of shares Life remaining on options at 31 March 2018 Months Exercise price Pence Unapproved share options Exercise date: September 2010 – September 2020 September 2010 – September 2020 June 2011 – June 2021 March 2015 – March 2025 April 2016 – April 2026 January 2018 – January 2028 Total share options 1,000,000 – 361,844 500,000 250,000 600,000 – 2,711,844 5,396,000 – – – – 650,000 650,000 650,000 – – – – – – – – – 1,000,000 10p – 361,844 – 500,000 – 250,000 – 600,000 – 650,000 – 3,361,844 – 6,046,000 10p 17.5p 17p 10p 21.5p 30 30 39 84 96 118 The weighted average exercise price of the unapproved share options at 31 March 2018 was 13.9p (2017: 12.0p). 3,161,844 options were available for exercise at 31 March 2018 (2017: 2,511,844). The market price of the Company’s shares at 31 March 2018 was 22.00p (31 March 2017: 12.75p) and the range during the year was 15.75p to 24.75p (2017: 8.25p to 15.75p). 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 35%-60% 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, £40,000 (2017: £24,000) of share based employee remuneration expense has been included in the consolidated income statement. No liabilities were recognised due to share based transactions. www.tricorn.uk.com TRICORN GROUP PLC Annual Report and Accounts 2018 33 Tricorn Annual Report 2018.indd 33 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:45 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2018 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 2018 £’000 – – 169 51 6 226 2017 £’000 – – 161 49 8 218 2018 £’000 2017 £’000 39 8 (26) 21 (91) (70) – 16 (9) 7 (19) (12) The tax assessed is different to the standard rate of corporation tax in the UK of 19% (2017: 20%). The differences are explained as follows: Profit/(loss) on ordinary activities before tax Profit/(loss) on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2017: 20%) Effect of: Movement in unprovided deferred tax asset Overseas tax charge Deduction for R&D Adjustments in respect of prior years Deferred tax regarding intangibles Deferred tax on share based payment charge Other differences 2018 £’000 606 115 (85) 8 (20) (5) – (99) 16 (70) 2017 £’000 (287) (57) – 16 – (12) 37 – 4 (12) At 31 March 2018 the Group had tax losses of £592,000 (2017: £686,000) to offset against future profits within the United Kingdom. 34 TRICORN GROUP PLC Annual Report and Accounts 2018 Stock Code: TCN Tricorn Annual Report 2018.indd 34 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:45 Our Financials 10 Earnings per share The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. The calculation of diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares and the post-tax effect of dividends and/or interest, on the assumed conversion of all dilutive options and other dilutive potential ordinary shares. Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below: Basic earnings per share Dilutive shares Diluted earnings per share Basic loss per share Dilutive shares Diluted loss per share 31 March 2018 Weighted average number of shares Number ‘000 Earnings per share Pence 33,795 2,546 36,341 2.00 – 1.86 31 March 2017 Weighted average number of shares Number ‘000 Earnings per share Pence 33,795 – 33,795 (0.81) – (0.81) Profit £’000 676 – 676 Profit £’000 (275) – (275) The diluted loss per share for 2017 is the same as the basic loss per share as the Group was loss making in 2017 and, therefore, share options were anti-dilutive. The Directors consider that the following adjusted earnings per share calculation is a more appropriate reflection of the Group’s performance. Basic earnings per share Fair value of foreign exchange contracts Amortisation of intangible assets Share based payment charge Adjusted earnings per share Dilutive shares Diluted adjusted earnings per share Basic loss per share Restructuring costs Amortisation of intangible assets Share based payment charge Adjusted earnings per share Dilutive shares Diluted adjusted earnings per share 31 March 2018 Weighted average number of shares Number ‘000 Earnings per share Pence 33,795 2.00 33,795 2,546 36,341 2.65 – 2.47 31 March 2017 Weighted average number of shares Number ‘000 Earnings per share Pence 33,795 (0.81) 33,795 – 33,795 0.72 – 0.72 Profit £’000 676 6 175 40 897 – 897 Profit £’000 (275) 303 190 24 242 – 242 www.tricorn.uk.com TRICORN GROUP PLC Annual Report and Accounts 2018 35 Tricorn Annual Report 2018.indd 35 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:45 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2018 11 Goodwill Cost At 31 March 2016, 31 March 2017 and 31 March 2018 Impairment At 31 March 2016, 31 March 2017 and 31 March 2018 Net book value At 31 March 2016 At 31 March 2017 At 31 March 2018 Goodwill above relates to the following cash generating units: Maxpower Automotive Limited Total £’000 391 – 391 391 391 Date of acquisition Original cost £’000 June 2007 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%. 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. 36 TRICORN GROUP PLC Annual Report and Accounts 2018 Stock Code: TCN Tricorn Annual Report 2018.indd 36 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:45 Our Financials Product development costs £’000 Brand names £’000 Customer contracts £’000 563 – 563 (336) (145) (481) 312 227 82 450 – 450 (292) (30) (322) 188 158 128 312 – 312 (312) – (312) – – – Total £’000 1,325 – 1,325 (940) (175) (1,115) 500 385 210 12 Intangible assets Cost At 1 April 2017 Additions At 31 March 2018 Amortisation At 1 April 2017 Charge for the year At 31 March 2018 Net book value At 31 March 2016 At 31 March 2017 At 31 March 2018 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 two years. www.tricorn.uk.com TRICORN GROUP PLC Annual Report and Accounts 2018 37 Tricorn Annual Report 2018.indd 37 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:45 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2018 13 Property, plant and equipment Cost At 1 April 2016 Additions Disposals of business Foreign exchange revaluation At 1 April 2017 Additions Foreign exchange revaluation At 31 March 2018 Depreciation At 1 April 2016 Charge for the year Disposals of business At 1 April 2017 Charge for the year At 31 March 2018 Net book value At 31 March 2016 At 31 March 2017 At 31 March 2018 Land and buildings £’000 Plant and equipment £’000 Motor vehicles £’000 1,465 – – 215 1,680 – (183) 1,497 81 39 – 120 37 157 1,384 1,560 1,340 7,485 660 (31) 161 8,275 828 (98) 9,005 5,073 474 (12) 5,535 485 6,020 2,412 2,740 2,985 43 – – – 43 – – 43 43 – – 43 – 43 – – – Total £’000 8,993 660 (31) 376 9,998 828 (281) 10,545 5,197 513 (12) 5,698 522 6,220 3,796 4,300 4,325 The net book value of property, plant and equipment includes £377,000 (2017: £265,000) 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. 38 TRICORN GROUP PLC Annual Report and Accounts 2018 Stock Code: TCN Tricorn Annual Report 2018.indd 38 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:46 Our Financials 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 Principal business activity Country of incorporation Minguang-Tricorn Tubular Products Nanjing Ltd Manufacturer of large diameter tubular assemblies People’s Republic of China Proportion of ownership interest held by the Group 31 March 2018 31 March 2017 63% 63% 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 venturers. 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 Includes cash and cash equivalents Revenue Profit/(loss) for the year Depreciation 2018 £’000 555 1,576 2,131 860 860 121 2018 £’000 2,498 209 (101) 2017 £’000 420 559 979 359 359 98 2017 £’000 1,031 (103) (90) 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 profit/(loss) Capital contribution Carried forward at the end of the year 2018 £’000 984 331 – 1,315 2017 £’000 423 (103) 664 984 Proportion of ownership interest held by the Group 63% 63% Interest in joint venture Foreign exchange gain on translation of investment Goodwill Carrying amount of the investment at the end of the financial year 829 24 64 917 620 – 64 684 No dividends were received from Minguang-Tricorn Tubular Products Nanjing Ltd during the year. Minguang-Tricorn Tubular Products Nanjing Ltd is a private company, therefore no quoted market prices are available for its shares. www.tricorn.uk.com TRICORN GROUP PLC Annual Report and Accounts 2018 39 Tricorn Annual Report 2018.indd 39 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:46 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2018 15 Subsidiaries At 31 March 2018 the subsidiaries of the Group were as follows: Name of subsidiary undertaking Country of incorporation Description of shares held % of nominal value of shares held Malvern Tubular Components Limited United Kingdom Ordinary Hallco 348 Limited (formerly RMDG Aerospace Limited) Maxpower Automotive Limited United Kingdom Ordinary United Kingdom Ordinary 100 100 100 Maxpower Automotive Components Manufacturing (Wuxi) Limited China Ordinary 100 Franklin Tubular Products Inc USA Ordinary 100 Robert Morton DG Limited* Hallco 347 Limited United Kingdom United Kingdom Ordinary Ordinary 100 100 * Held by a subsidiary undertaking 16 Inventories Raw materials Work in progress Finished goods Principal business activity Manufacturer of tubular components Non-trading Manufacturer of highway and automotive tubular and pipe components Manufacturer of highway and automotive tubular and pipe components. Dormant in the year Manufacturer of tubular assemblies and components to highway and heavy duty truck market Dormant Dormant 2018 £’000 1,794 327 746 2,867 2017 £’000 1,911 219 532 2,662 In the year to 31 March 2018, a total of £8,513,211 of inventory (2017: £6,734,000) was included in the income statement as an expense. 40 TRICORN GROUP PLC Annual Report and Accounts 2018 Stock Code: TCN Tricorn Annual Report 2018.indd 40 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:46 17 Trade and other receivables Trade receivables Impairment of trade receivables Other receivables Prepayments and accrued income Total Our Financials 2018 £’000 4,299 (25) 4,274 262 421 4,957 2017 £’000 4,248 (28) 4,220 61 411 4,692 At 31 March 2018, 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 2018 £’000 187 – 5 192 2017 £’000 189 – 39 228 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 2018 £’000 692 2017 £’000 642 Cash and cash equivalents consist of cash on hand and balances with banks only. At the year end £615,000 (2017: £422,000) of cash on hand and balances with banks were held by the subsidiary undertakings, however this balance is available for use by the Group. www.tricorn.uk.com TRICORN GROUP PLC Annual Report and Accounts 2018 41 Tricorn Annual Report 2018.indd 41 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:46 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2018 19 Deferred taxation The deferred tax included in the statement of financial position arose in the following areas: Intangible assets Accelerated capital allowances Short term timing differences Losses Share based payment 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 2018 £’000 – 27 23 119 169 2017 £’000 – – 26 23 19 68 2018 £’000 (25) (169) – – – (194) Assets Liabilities 2018 £’000 68 101 169 2017 £’000 – 68 68 2018 £’000 (184) (10) (194) 2017 £’000 (54) (130) – – – (184) 2017 £’000 (135) (49) (184) As at 31 March 2018 the Group has unprovided deferred tax assets as follows: Trading losses Unprovided 2018 £’000 Unprovided 2017 £’000 592 686 This deferred tax asset is not recognised due to uncertainty over its recoverability. At 31 March 2018 the Group had tax losses of £71,000 (2017: £78,000) to offset against future profits within the United Kingdom. Tax losses available to utilise outside of the UK at 31 March 2018 are £2,538,000 (2017: £3,000,000). 20 Trade and other payables Trade and other payables Other taxation and social security Accruals 2018 £’000 3,241 374 734 4,349 2017 £’000 2,624 329 511 3,464 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. 42 TRICORN GROUP PLC Annual Report and Accounts 2018 Stock Code: TCN Tricorn Annual Report 2018.indd 42 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:46 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) Our Financials 2018 £’000 3,437 – 85 3,522 152 152 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 borrowing 2018 £’000 3,437 – 3,437 2017 £’000 3,545 413 3,958 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 2018 Payments Discounting 31 March 2017 Payments Discounting Within 1 year Within 1–2 years Within 2–5 years 96 (11) 85 62 (7) 55 83 (9) 74 62 (7) 55 89 (11) 78 80 (9) 71 Total 268 (31) 237 204 (23) 181 The hire purchase agreements and finance lease liabilities are secured against the assets to which they relate. www.tricorn.uk.com TRICORN GROUP PLC Annual Report and Accounts 2018 43 Tricorn Annual Report 2018.indd 43 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:46 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2018 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 (2017: £2,000) equity and reserves would reduce/increase by the same amount, and the interest charge would be £224,000/£228,000 (2017: £216,000/£220,000). Foreign currency risk The Group transacts certain purchases and sales in foreign currencies. At 31 March 2018 there were two (2017: two) foreign currency forward contracts in force. Foreign exchange differences on retranslation of monetary foreign currency assets and liabilities are taken to the income statement of the Group. If the US Dollar and Euro were to fall/rise against GBP by 10% on the closing rate and average annual rate at 31 March 2018 then Group profits would rise/fall by £133,000 at 31 March 2018 (2017: £91,000) 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 £177,000 at 31 March 2018 (2017: £175,000) and equity and reserves would increase/reduce by the same amount. 44 TRICORN GROUP PLC Annual Report and Accounts 2018 Stock Code: TCN Tricorn Annual Report 2018.indd 44 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:46 Our Financials 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 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 2018 £’000 421 5,228 5,649 2018 £’000 4,536 692 5,228 2017 £’000 411 4,997 5,408 2017 £’000 4,355 642 4,997 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 Fair value of foreign exchange contracts 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 2018 £’000 374 6 7,649 8,029 2018 £’000 3,975 3,522 152 7,649 2017 £’000 329 – 7,274 7,603 2017 £’000 3,135 4,013 126 7,274 All financial liaibilities mature in less than one year, except for £0.074m (2017: £0.055m) which matures in 1-2 years and £0.079m (2017: £0.071m) 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 (ie as prices) or indirectly (ie derived from prices) and Level 3 : inputs for the asset or liability that are not based on observable market data (unobservable inputs). The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair value measurement. There are no financial assets and one financial liability measured at fair value in the statement of financial position at 31 March 2018 (2017: none). All financial liabilities are level one. www.tricorn.uk.com TRICORN GROUP PLC Annual Report and Accounts 2018 45 Tricorn Annual Report 2018.indd 45 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:46 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2018 24 Capital management policies procedures The Group’s capital management objectives are: • to ensure that the Group can continue as a going concern: • to ensure the Group has adequate resources to support the strategy of the Group; and • to provide a return to the Group’s shareholders. The Group’s capital equals total equity less cash and cash equivalents. The Group’s financing includes total equity plus borrowings. The borrowings have been taken out to provide working capital for the Group. 25 Share capital Authorised 100,000,000 ordinary shares of 10 pence each Allotted and issued 2018: 33,795,000 (2017: 33,795,000) ordinary shares of 10 pence each All 10 pence ordinary shares carry the same voting rights and rights to discretionary dividends. 2018 £’000 2017 £’000 10,000 10,000 3,379 3,379 26 Contingent liabilities There were no contingent liabilities at 31 March 2018 or 31 March 2017. 27 Capital commitments At 31 March 2018 the Group had capital commitments of £Nil (2017: £Nil). 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 2018 Land and buildings £’000 251 600 150 1,001 2017 Land and buildings £’000 310 683 225 1,218 2018 Other £’000 131 190 – 321 2017 Other £’000 96 117 16 229 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 (2017: £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 £0.375m (2017: £0.142m) and purchases from the joint venture of £0.410m (2017: 0.101m). At the balance sheet date amounts held in trade and other receivables and owed to the Group by the joint venture amounted to £0.219m (2017: £0.126m), and amounts held in trade and other payables and owed by the Group to the joint venture amounted to £0.266m (2017: £0.001m). 46 TRICORN GROUP PLC Annual Report and Accounts 2018 Stock Code: TCN Tricorn Annual Report 2018.indd 46 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:47 Our Financials TRICORN GROUP PLC COMPANY STATUTORY FINANCIAL STATEMENTS for the year ended 31 March 2018 Independent Auditor’s Report Company Statement of Changes in Equity Company Statement of Financial Position Notes to the Financial Statements 48 51 52 53 www.tricorn.uk.com TRICORN GROUP PLC Annual Report and Accounts 2018 47 Tricorn Annual Report 2018.indd 47 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:47 INDEPENDENT AUDITOR’S REPORT to the members of Tricorn Group plc Opinion Our opinion on the parent Company financial statements is unmodified We have audited the parent Company financial statements of Tricorn Group plc for the year ended 31 March 2018 which comprise the Company statement of changes in equity, the Company statement of financial position and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ (United Kingdom Generally Accepted Accounting Practice). In our opinion the parent Company financial statements: • give a true and fair view of the state of the parent Company’s affairs as at 31 March 2018; • have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and • have been prepared in accordance with the requirements of the Companies Act 2006. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the parent Company financial statements section of our report. We are independent of the parent company in accordance with the ethical requirements that are relevant to our audit of the parent Company financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Who we are reporting to 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. Conclusions relating to going concern We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where: • the Directors’ use of the going concern basis of accounting in the preparation of the parent Company financial statements is not appropriate; or • the Directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the parent Company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue. Overview of our audit approach • Overall materiality: £29,000, which is 1% of total assets capped at 90% of Group materiality. This benchmark is considered the most appropriate because the parent Company operates as a cost centre for the Group. • There were no key audit matters identified for the Company Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent Company financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those that had the greatest effect on: the overall audit strategy; the awllocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the parent Company financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 48 TRICORN GROUP PLC Annual Report and Accounts 2018 Stock Code: TCN Tricorn Annual Report 2018.indd 48 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:47 Our Financials There are no key audit matters to report in respect of Tricorn Group plc Company only. Our application of materiality We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality in determining the nature, timing and extent of our work and in evaluating the results of that work. We determined materiality for the audit of the parent Company financial statements as a whole to be £29,000 which was capped as a percentage of Group materiality. Materiality for the current year is lower than the level that we determined for the year ended 31 March 2017 to reflect the reduction in Group materiality. We use a different level of materiality, performance materiality, to drive the extent of our testing and this was set at 75% of financial statement materiality. The graph below illustrates how performance materiality interacts with our overall materiality and the tolerance for potential uncorrected misstatements. 25% Tolerance for potential uncorrected mistatements Performance materiality 75% We determined the threshold at which we will communicate misstatements to the Audit Committee to be £1,150. In addition, we will communicate misstatements below that threshold that, in our view, warrant reporting on qualitative grounds. An overview of the scope of our audit Our audit approach was a risk-based approach founded on a thorough understanding of the Company’s business, its environment and risk profile and included no changes in the scope of the current year audit from the full scope audit procedures of the prior year. Other information The directors are responsible for the other information. The other information comprises the information included in the annual report set out on pages 53 to 56, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the parent Company financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the parent Company financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement of the parent Company financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. www.tricorn.uk.com TRICORN GROUP PLC Annual Report and Accounts 2018 49 Tricorn Annual Report 2018.indd 49 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:47 INDEPENDENT AUDITOR’S REPORT to the members of Tricorn Group plc Our opinion on other matters prescribed by the Companies Act 2006 is unmodified In our opinion, based on the work undertaken in the course of the audit: • the information given in the Strategic Report and the Directors’ report for the financial year for which the parent Company financial statements are prepared is consistent with the parent Company financial statements; and • the Strategic Report and the Directors’ report have been prepared in accordance with applicable legal requirements. Matters on which we are required to report under the Companies Act 2006 In the light of the knowledge and understanding of the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the directors’ report. Matters on which we are required to report by exception We have nothing to report in respect of the following matters in relation to which 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. Responsibilities of directors for the financial statements As explained more fully in the Directors’ responsibilities statement set out on page 9, the Directors are responsible for the preparation of the parent Company financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of parent Company financial statements that are free from material misstatement, whether due to fraud or error. In preparing the parent Company financial statements, the Directors are responsible for assessing the parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the parent Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the parent company financial statements Our objectives are to obtain reasonable assurance about whether the parent Company financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these parent Company financial statements. A further description of our responsibilities for the audit of the parent Company financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Other matters We have reported separately on the Group financial statements of Tricorn Group plc for the year ended 31 March 2018. That report includes details of the Group key audit matters; how we applied the concept of materiality in planning and performing our audit; and an overview of the scope of our audit. Rebecca Eagle Senior Statutory Auditor for and on behalf of Grant Thornton UK LLP Statutory Auditor, Chartered Accountants Birmingham 5 June 2018 50 TRICORN GROUP PLC Annual Report and Accounts 2018 Stock Code: TCN Tricorn Annual Report 2018.indd 50 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:47 COMPANY STATEMENT OF CHANGES IN EQUITY For the year ended 31 March 2018 Our Financials Balance at 1 April 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 based payment charge Write back of share based reserve Total transactions with owners Dividends from subsidiary companies Loss and total comprehensive expense Balance at 31 March 2018 Share capital £’000 3,379 – – – – 3,379 – – – – – 3,379 Share premium £’000 1,692 – – – – 1,692 – – – – – 1,692 Share based payment reserve £’000 300 24 (15) 9 – 309 40 – 40 – – 349 Profit and loss account £’000 (722) – 15 15 (183) (890) – – – 2,000 (283) 827 Merger reserve £’000 1,592 – – – – 1,592 – – – – – 1,592 Total £’000 6,241 24 – 24 (183) 6,082 40 – 40 2,000 (283) 7,839 www.tricorn.uk.com TRICORN GROUP PLC Annual Report and Accounts 2018 51 Tricorn Annual Report 2018.indd 51 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:47 COMPANY STATEMENT OF FINANCIAL POSITION At 31 March 2018 Note 7 8 9 10 2018 £’000 2 6,814 6,816 4,232 77 4,309 2017 £’000 2 6,814 6,816 1,877 220 2,097 (3,286) (2,831) 1,023 7,839 3,379 1,692 349 1,592 827 7,839 (734) 6,082 3,379 1,692 309 1,592 (890) 6,082 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 5 June 2018. The Company’s loss for the year was £283,000 (2017: Loss £183,000). M I Welburn Director Company number: 1999619 52 TRICORN GROUP PLC Annual Report and Accounts 2018 Stock Code: TCN Tricorn Annual Report 2018.indd 52 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:47 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2018 Our Financials 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 preparded under the historcial cost convention and in accordance with Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ and the Companies Act 2006. Functional and presentational 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; − paragraph 76 and 79(d) of IAS 40 Inventory Property; and − paragraph 50 of IAS 41 Agriculture • the requirements of paragraph 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 paragraph 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors • the requirements of paragraph 17 and 18a 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 direct to equity. www.tricorn.uk.com TRICORN GROUP PLC Annual Report and Accounts 2018 53 Tricorn Annual Report 2018.indd 53 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:47 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2018 Deferred taxation Deferred tax is recognised on all timing differences where the transactions or events that give the Company an obligation to pay more tax in the future, or a right to pay less tax in the future, have occurred by the balance sheet date. Deferred tax assets are recognised when it is more likely than not that they will be recovered. Deferred tax is measured using rates of tax that have been enacted or substantially enacted by the balance sheet date. Share based payments All share-based payment arrangements are recognised in the parent Company’s financial statements. The Company operates equity-settled share-based remuneration plans for remuneration of employees of the Company and its subsidiaries. Options are issued by the parent to the employees of the Company and its subsidiaries. The charge for the share based remuneration is recognised in the parent Company 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 £283,000 (2017: Loss £183,000). Auditor’s remuneration incurred by the Company during the year for audit services totalled £14,000 (2017: £13,000), and for tax compliance services totalled £2,000 (2017: £2,000). 54 TRICORN GROUP PLC Annual Report and Accounts 2018 Stock Code: TCN Tricorn Annual Report 2018.indd 54 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:47 4 Directors’ and employees’ remuneration Staff costs during the year were as follows: Wages and salaries Social security costs Other pension costs Our Financials 2018 £’000 847 64 18 929 2017 £’000 655 56 25 736 The average number of persons (including Directors) employed by the Company during the year was 10 (2017: 10). 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 2017 and 31 March 2018 Impairment At 1 April 2017 Charge At 31 March 2018 Net book value At 31 March 2018 At 31 March 2017 Total £’000 9,729 (2,915) – (2,915) 6,814 6,814 At 31 March 2018 the Company holds 100% of the ordinary share capital of the following subsidiaries: Name of subsidiary undertaking Country of incorporation Description of shares held % of nominal value of shares held Malvern Tubular Components Limited United Kingdom Ordinary 100 Hallco 348 Limited (formerly RMDG Aerospace Limited) Maxpower Automotive Limited United Kingdom Ordinary United Kingdom Ordinary 100 100 Maxpower Automotive Components Manufacturing (Wuxi) Limited* China Ordinary 100 Franklin Tubular Products Inc USA Ordinary 100 Robert Morton DG Limited * Hallco 347 Limited * Held by a subsidiary undertaking United Kingdom United Kingdom Ordinary Ordinary 100 100 Principal business activity Manufacturer of tubular components Non–trading Manufacturer of highway and automotive tubular and pipe components Manufacturer of highway and automotive tubular and pipe components. Domant this year. Manufacturer of tubular assemblies and components to highway and heavy duty truck market Dormant Dormant www.tricorn.uk.com TRICORN GROUP PLC Annual Report and Accounts 2018 55 Tricorn Annual Report 2018.indd 55 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:48 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2018 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 Fair value of foreign exchange contracts Accruals and deferred income Borrowings are repayable as follows: Within one year – bank borrowings 10 Share capital 2018 £’000 4,011 193 28 4,232 2018 £’000 332 11 2,470 24 6 443 3,286 2018 £’000 332 332 2018 £’000 2017 £’000 1,830 28 19 1,877 2017 £’000 478 – 2,155 24 – 174 2,831 2017 £’000 478 478 2017 £’000 Authorised 100,000,000 ordinary shares of 10 pence each Allotted and issued 2018: 33,795,000 (2017: 33,795,000) ordinary shares of 10 pence each 10,000 10,000 3,379 3,379 All 10p ordinary share capital carry 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 2018 is £2.781m (2017: £2.913m) There were no further contingent liabilities at 31 March 2018 or 31 March 2017. 12 Capital commitments There were no capital commitments at 31 March 2018 or at 31 March 2017. 13 Related parties The Company has taken advantage of the exemption available under section 17 and 18a to not disclose transactions with wholly owned subsidiaries in the Group. 56 TRICORN GROUP PLC Annual Report and Accounts 2018 Stock Code: TCN Tricorn Annual Report 2018.indd 56 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:48 Our Financials 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 (Finance Director) David Edward Leakey (Sales Director) Roger Allsop (Non-Executive Director) Secretary: Phillip Lee Nominated adviser and Nominated broker: Registrars: Bankers: Solicitors: Auditors: Stockdale Securities Limited 100 Wood Street London EC2V 7AN 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 Auditor and Chartered Accountants The Colmore Building 20 Colmore Circus Birmingham West Midlands B4 6AT www.tricorn.uk.com TRICORN GROUP PLC Annual Report and Accounts 2018 Tricorn Annual Report 2018.indd 6 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:30 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 Tricorn Annual Report 2018.indd 1 26058.01 31 July 2018 5:22 PM Proof 5 31/07/2018 17:22:29 

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