Tritech_Group_Limited - Accounts

The directors present the strategic report for the year ended 31 March 2022.

The Tritech group business was founded in 1982 as a centre if excellence for providing investment casting products and services. Ultimate ownership of the group headed by Neterson Holdings Limited is with Chemical and Ferro Alloys Private Limited which is part of the Neterwala group of companies. The origins of the group in investment casting still dominate activities, but continuous later developments, which included new acquisitions, new applications and process improvements, have seen the business go from strength to strength.

The financial measures used by the Group is set out below:

The financial review provides a summary of how Tritech Group Limited “the group” has performed during the year and provides additional information to that contained within the financial statements. The report also comments further on the group’s profitability and cash flow and the key performance measures that are used to manage the ongoing performance of the group.

The financial year ended 31 March 2022 saw the start of the recovery of the strategic markets to which the company operates within.

Continuing Operations saw a small increase in turnover of 4% compared to a reduction of 24% in the prior year. The change in Turnover was entirely because of the lessening of the Covid-19 Pandemic effect on the UK economy and an increase in demand for product in the Aviation Market. Many and varied actions were taken in the prior year by management to adjust the group’s cost base for the change in demand during the prior year, both from a manufacturing and Income statement perspective and, in Working capital. The gradual improvement in the UK economy in 2022 has seen the company orderbook show a continuation in improvement for the next financial year. The latest sales forecast for the Year ending 31 March 2023 is set at £32.3m, a significant increase of 19% on the Year ended 31 March 2022.

Through various business improvement activities within all areas of the business, increases in the supply of parts from the India manufacturing site and an overall control of direct costs, Gross Margin for Continuing Operations improved to 24% from 19% in the year ended 31 March 2021.

Administrative expenses were reduced from £6.4m to £6.1m in the year ended 31 March 2022. Employment cost increases were made in 2021/22 in-line with Government minimum wage changes and a small number of redundancies were completed to adjust the cost base going forward.

EBITDA increased to £1.4m compared to £0.6m in the prior year as a direct result of increased Turnover year on year, and the cost reductions made in the prior year

The group invested in £0.4m of fixed asset additions during the year largely in Health and Safety areas. Net current assets decreased to £3.7m compared to £5.2m as at 31 March 21 as Coronavirus Loans were taken at the Holding company level and funds released to the Group to support the recovery of the Group through the Covid-19 Pandemic. Deferred Employees taxes continued to be paid back and no new Hire Purchase Debt was purchased leading to a reduction of £1.2m in Finance Lease Obligations as at 31 March 2022. The level of retained profits remained substantial at £1.9m compared to £2.2m in the prior year.

At the year end, the group’s net assets decreased by £0.4m to £8.2m (2021: £8.6m).

The group has a constant challenge to meet customer expectation and demand in constantly expanding markets with added risks and uncertainties generated by the Covid-19 pandemic.

The Tritech group is still benefitting by being part of many long-term and growing programs with our valued long-term customers. It is important that the business is ready to absorb the growth. The expansion plans which started in 2016 (addition of adjacent new site for the Wrexham foundry and plans for expansion of the Wrexham machining facility) puts the business in a good position to deal with any uplift in business. Also, the wider group can share business around the 4 foundries within the group (including the ultimate parent company's operation in India) with customer approval.

The business has good long-term visibility of customer orders (up to 18 months) and good intelligence of the various programs of work we are engaged upon. This enables early warning of capacity and manning level requirements and gives pre warning of any potential reductions to the order book so that corrective actions can be taken. The directors are confident that even with current market conditions and the impact of Covid-19 that orderbooks will support the revised sales expectations into March 2023. New contracts continue to be secured which will lead to additional sales in forward years. Further development of the India casting supply chain will continue in the forward years and is planned to create capacity for the UK site to work on higher complexity product manufacturing.

Employment cost increases were made in 2021/22 in line with Government guidelines. The directors addressed the downturn in the market conditions due to the impact of Covid-19 via an employee restructure and no further indirect employee spend will be required going forward into the following year.

Whilst Brexit developments have led to some uncertainty this is tempered by the group having a reasonably low level of sales and supply chain exposure from the EU.

The main risks associated with the group’s financial assets and liabilities are set out below:

Interest rate risks

The group finances its operations through a mixture of retained profits and external borrowings. The external borrowings are at rates fixed above the Bank of England base rate.

Foreign currency risk

The group’s transactions are predominantly in Sterling, US Dollar and Euros. The group seeks to mitigate the effect of its structural currency exposure by purchasing in the same functional currency as it sells. The group does not hedge any currency exposure.

Cash flow risk

The group aims to mitigate cash flow risk by managing cash generated by its operations. Authorisation limits are in place for all types of expenditure.

Credit risk

The group’s objective is to reduce the risk of financial loss due to a customer's failure to honour its obligations. All customers are subject to credit control procedures and each customer has an appropriate credit limit set. Where credit risk is perceived, payment must be made by letter of credit or payment in advance of sale/distribution.

Liquidity risk

Daily cash flows are forecast and monitored to ensure that the group remains within its available funding facilities. Revised trading and cash flow forecasts have been communicated to the bank and the directors consider the available and proposed facilities to be adequate.

The long-term strategic vision for the group remains the creation of long-term value for our shareholders. Whilst the Covid-19 pandemic has had an immediate detrimental impact, the longer-term aim is still to provide value from sales growth, profitability, cash generation and strong return on capital employed. These shared views drive decision making and behaviour in the group with the financial objectives aligned to this end and focused on five key objectives:

• Increasing revenue;

• Improving operating margins;

• Maximising return on capital employed;

• Maximising free cash flow;

• Focus on 'Right First Time' manufacturing.

The record of financial performance metrics is set out below:

                2022        2021        2020        2019

Sales Turnover             £27.1m     £26.3m         £37.0m     £35.2m

Gross Profit             £6.5m          £4.9m          £9.0m          £8.8m

EBITDA                 £1.4m          £0.6m          £3.1m          £3.4m

EBITDA % of Sales         5.1%          2.3%          8.0%          9.8%

(Loss)/Profit before tax         £(0.28m)      £(1.59m)     £0.98m     £1.51m

In the year ended 31 March 2022, group revenue in continuing operations increased by £1.1m (4%) to £27.1m (2021: £26m). This increase was wholly driven by the diminishing impact of the Covid-19 pandemic and the start of the recovery in the Civil Aviation Market as customer demand began to recover in the second half of the year. This improvement has continued into the new financial year to March 2023.

Gross profit of £6.5m was largely affected by the cost reductions executed in the prior year and the small improvement in Turnover. Uncertainty around the Covid-19 pandemic in the first half of the year led to cost reduction activities being undertaken to reduce costs whilst maintaining the ability to increase sales at short notice. The gross margin percentage at 24% retained cost to support future on-going recovery in Sales Markets.

EBITDA at £1.4m was largely due to the re-sized cost base being able to profitably increase output. Elements of the Manufacturing base had been retained in prior years in order to support increasing production in the year to March 2023 and going forward.

Loss before taxation for continuing operations was £0.28m compared to £1.59m Loss in the prior year.

The group also uses non key performance indicators to manage its operations. The group monitors employee numbers to track the number of staff required in the manufacturing process and the number of administration staff required to support it.

Staff numbers are as follows:

                2022    2021

Production            246    324

Selling and distribution        10    11

Office and management    78    97

Total                334    432

Cash Flow

Working capital has been tightly controlled during the year, with only recent increases in Inventory to support the increasing demand made by Customers. Trade Debtors days decreased slightly in the year whilst small extensions were achieved on payment terms with Trade creditors. No major capital investment was made in the year other than small items of Health & Safety infrastructure required due to the impact of Covid-19. Government support was provided though the Coronavirus Job Retention scheme and repayments started on unpaid Employees taxes, deferred from the prior year. Coronavirus Business Interruption loans were accessed during the year to further support short term cash flow.

Debt

During the year the group level of total external debt was decreased due to repayment of Finance leases, Other Loans, Bank overdrafts and deferred Employee taxes. Coronavirus Loans secured at the Holding Company were released to the group leading to an increase in amounts owed to group Undertakings. Working capital finance balances were reduced due to the funds from the Holding company. The directors believe that the level of debt in the group is manageable.

The directors have prepared trading and cash forecasts extending to at least 12 months from the date of these financial statements. The forecasts incorporate assumptions in respect of future market conditions and customer programme requirements, new business expectation, pricing changes, timing of repayment of deferred PAYE/NIC and VAT liabilities and ongoing availability of bank funding.

The directors welcome the opportunity to explain how they have had regard to matters set out in section 172(1), Companies Act 2006, considering factors (a) to (f):

(a) the likely consequences of any decision in the long term

The Board are cognisant of the changing environment in which we operate and meet regularly to review our performance and outlook. With this vision and values, we aim to maintain our position of the leading UK providers of our services and continually strive to deliver long term economic, social, and environmental value to our clients, our staff and all our stakeholders.

At all Board Meetings the Board consider the present position of the group and how that impacts on the position of the group and all its stakeholders. At the monthly Board Meetings, the Board further reviews current strategy and seeks opportunities for safety, innovation, delivery, community, and continual improvement for the benefit of group and its stakeholders.

(b) the interests of the group’s employees

The management continues to ensure that the interests of the employees are considered when making operational decisions which may affect them. To ensure that decisions are taken with the interests of the employees in mind the management meet each month with representatives of the employees to discuss significant operational matters. This forum has helped improve relationships at all levels of the workforce. The group’s ability to continue in production during Covid-19 has been greatly assisted by this close relationship with employees and decisions about furlough and related matters have been discussed openly with the representatives of the employee body. Health and Safety of all employees is of paramount importance and the company continues to enhance the health and safety culture within the business, throughout all our people.

(c) the need to foster the group’s business relationships with suppliers, customers, and others

During Covid-19 especially, the group has continued to foster close relationships with key suppliers and customers of the business. The management has worked very hard over the last year or so to develop sound working practices with suppliers and customers and has focused on those suppliers and customers who demonstrate commitment to the relationship to ensure a quality product to the end user.

(d) the impact of the group’s operations on the community and the environment

The group has ongoing projects which review gas and electricity usage. We have a program of work in place to review energy consumption and loading across the manufacturing equipment. This involves monitoring each particular piece of equipment to understand energy loading.

From data collected we have been able to reduce the equipment operating periods in line with reduced working periods. We are also planning our component loading to maximise the capacities of the equipment we use, by ensuring fully loaded runs take place wherever possible.

(e) the desirability of the group maintaining a reputation for high standards of business conduct

The standard and quality of our product is critical in the Sales Markets within which we operate. Management continually reviews the systems and procedures to ensure compliance with all quality and specification standards. The business has a process of internal monitoring of these standards which help ensure the quality and safety of product is maintained.

(f) the need to act fairly between members of the group

The group is wholly owned, and the ultimate shareholder body has regular oversight of the running of the business. All strategic decisions are taken following consultation with the shareholder body and so management can be seen to act fairly with all members of the group.

On behalf of the board

The directors present their annual report and financial statements for the year ended 31 March 2022.

The principal activity of the company and group continued to be that of the manufacture of precision investment castings.

The results for the year are set out on pages 13 to 14.

No ordinary dividends were paid. The directors do not recommend payment of a further dividend.

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

Going concern

The directors have carefully considered the continued impact of Covid-19, and the steps taken to mitigate increased risks and uncertainties, on the company's current financial position, liquidity and future performance.

The directors have prepared detailed trading and cashflow forecasts extending to 31 March 2024.

Based on these forecasts and the assumptions made therein the directors have a reasonable expectation that the company has sufficient access to resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis of accounting in preparing the financial statements. Further details regarding the adoption of the going concern basis can be found in the notes to the financial statements.

The group and its subsidiaries undertake research and development activities. The activities seek to achieve an advance in science or technology through the resolution of scientific or technical uncertainty.

Activities include, shelling process improvement, business management application process improvement, Exhaust duct cast development, casting process improvement and other development projects.

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the group continues and that the appropriate training is arranged. It is the policy of the group that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.

The group's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.

Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.

There is no employee share scheme at present, but the directors are considering the introduction of such a scheme as a means of further encouraging the involvement of employees in the company's performance.

The group has followed the 2019 HM Government Environmental Reporting Guidelines. The group has also used the GHG Reporting Protocol – Corporate Standard and have used the 2021 UK Government’s Conversion Factors for Company Reporting. The Energy consumption and Emissions of CO2 equivalent presented above for 2022 include an estimation of usage.

The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per £1m of turnover.

The group has an ongoing project to review gas and electricity energy usage across the group. The group has a program of work in place to review energy consumption and loading across our manufacturing equipment. This involves monitoring each particular piece of equipment to understand energy loading. From data collected the group has been able to reduce the equipment operating periods in line with reduced working periods. The group is planning our component loading to maximise the capacities of the equipment we use, by ensuring full loaded runs take place wherever possible.

The group has also commenced on a programme to replace lighting with LED.

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

•     select suitable accounting policies and then apply them consistently;

•     make judgements and accounting estimates that are reasonable and prudent;

•     state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the ;

•     prepare the 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’s 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 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 company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report.true

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.

We have audited the financial statements of Tritech Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 March 2022 which comprise the group income statement, the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including 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 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

•     give a true and fair view of the state of the group's and the parent company's affairs as at 31 March 2022 and of the group's loss for the year then ended;

•     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 financial statements section of our report. We are independent of the group and parent company 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, 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.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. 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. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of 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 this gives rise to a material misstatement in the financial statements themselves. 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.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

• the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report. 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.

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the 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 financial statements that are free from material misstatement, whether due to fraud or error. In preparing the 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.

Our objectives are to obtain reasonable assurance about whether the 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 financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities,

including fraud and non-compliance with laws and regulations, was as follows:

• the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;

• we identified the laws and regulations applicable to the company through discussions with directors and other management;

• we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including legislation such as the Companies Act 2006, taxation legislation, data protection, employment, and health and safety legislation;

• we assessed the extent of compliance with the laws and regulations through making enquiries of management and reviewing legal and professional fee invoices.

We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

• making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and

• considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.

To address the risk of fraud through management bias and override of controls, we:

• performed analytical procedures to identify any unusual or unexpected relationships;

• tested journal entries posted during the period and at the period end to identify unusual transactions; and

• investigated the rationale behind significant or unusual transactions.

In response to the risk of irregularities and non-compliance with laws and regulations, we designed

procedures which included, but were not limited to:

• agreeing financial statement disclosures to underlying supporting documentation;

• enquiring of management as to actual and potential litigation and claims;

• reviewing correspondence and agreements with HMRC; and

• reviewing legal and professional fees incurred during the period to identify any potential indications of non-compliance with laws and regulations.

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

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.

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £0 (2021 - £387,142 profit).

Tritech Group Limited (“the company”) is a private company, limited by shares, domiciled and incorporated in England and Wales. The registered office is Bridge Road North, Wrexham Industrial Estate, Wrexham, Clwyd, Wales, LL13 9PS.

The group consists of Tritech Group Limited and all of its subsidiaries.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

The group has taken advantage of the following disclosure exemption in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

• Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.

The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:

• Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;

• Section 3 Financial Statement presentation paragraph 3.17(d);

• Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;

• Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.

The information is included in the consolidated financial statements of Neterson Holdings Limited and these financial statements may be obtained from Bridge Road North, Wrexham Industrial Estate, Wrexham, Clwyd, LL13 9PS.

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries are accounted for at cost less impairment.

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

The consolidated group financial statements consist of the financial statements of the parent company Tritech Group Limited together with all entities controlled by the parent company (its subsidiaries).

All financial statements are made up to 31 March 2022. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

Sale of goods

Turnover from the sale of goods is recognised when all of the following conditions are satisfied:

• the group has transferred the significant risks and rewards of ownership to the buyer;

• the group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

• the amount of turnover can be measured reliably;

• it is probable that the group will receive the consideration due under the transaction; and

• the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.

Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

The directors have adopted this useful life as they believe that the majority of computer software has no value after this point.

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.

Tangible fixed assets under the cost model are stated at historical cost (or deemed cost) less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. On transition to FRS 102 the group elected to revalue some of its plant and machinery and adopt this revaluation as deemed cost.

The group adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when that cost is incurred, if the replacement part is expected to provide incremental future benefits to the company. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to profit or loss during the period in which they are incurred.

During the year, the group revised its estimation over the useful life of certain assets. For further information see the "Judgements and key sources of estimation uncertainty" note 2, to the financial statements.

Equity investments are measured cost less impairment.

In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

Stocks include items purchased and exclude items sold, subject to reservation of title.

Stocks and work in progress are valued at the lower of cost and net realisable value, after making due allowance for obsolete, slow moving or defective items. The cost of stock includes all expenditure in bringing stocks to their present location and condition, as follows:

•     Raw materialsCost on a first in, first out basis

•     Work in progress - Measured using the retail method, which is estimated selling price reduced by a profit margin percentage, multiplied by an estimated percentage stage completion.

•     Finished goods - Manufactured finished goods are measured using the retail method, which is estimated selling price reduced by a profit margin percentage. Purchased finished goods are measured at cost on a first in, first out basis.

Net realisable value is based on estimated selling price less further costs expected to be incurred to completion and disposal.

Cash and cash equivalents are basic financial assets and include cash in hand, amounts drawn down on an invoice finance facility and bank overdrafts. Amounts drawn down on invoice finance facility and bank overdrafts are shown within borrowings in current liabilities.

The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the group's statement of financial position when the group becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

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 group after deducting all of its liabilities.

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the statement of financial position as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease.

Government grants are recognised based on the accrual model and are measured at the fair value of the asset received or receivable. Grants are classified as relating either to revenue or to assets. Grants relating to revenue are recognised in income over the period in which the related costs are recognised.

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

Discontinued operations

A discontinued operation is a component of the company's business (i.e. the operations and cash flows can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the company). It also represents a separate major line of business or geographical area of operations, or is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations.

Classification as a discontinued operation occurs on disposal or when the operation meets the criteria to be classified as held for sale, if earlier.

Related party exemption

The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group.

In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Forecasts have been prepared for the next two financial periods.

The directors have considered the potential impact of lower assumed activity levels and gross profit margins on the trading and cashflow forecasts.

Based on this assessment, the directors' judgement is that the company and group is able to continue in operational existence for the foreseeable future and the going concern basis of accounting has therefore been adopted in preparing the financial statements.

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

The group has adopted the retail method for valuing all work in progress and manufactured finished goods. This requires management to estimate the profit margin percentage used to reduce selling price to the estimated cost. This estimated profit margin percentage is based on the average results for the previous year, current year and a 'normalised' year and is calculated as gross profit less an estimated portion of production overheads attributed to direct costs, as a percentage of turnover.

The directors have estimated the provision required for stocks that have been manufactured, but currently have no orders allocated against them. A provision is made against finished goods that have no orders against them and have not moved in the last 12 months.

The directors estimate the stage of completion for products in work in progress, based on their expertise and knowledge of the production process. Different stages of production are documented and a percentage stage of completion applied depending on the part of the process that the product is currently in. Uncertainties in the stage of completion of work in progress relate to the actual amount of work completed on a product at the year end, compared to the estimated percentage stage of completion applied.

The directors review the useful economic lives of depreciable assets at each reporting date as to allocate the cost of assets, less their residual value, over their estimated useful lives. Uncertainties in these estimates relate to the actual life of the tangible fixed assets.

Upon review of the estimated useful economic lives of plant and machinery, the directors have determined that certain key assets should be depreciated over either 15 or 20 years rather than the originally estimated 10 years.

The change in accounting estimate has resulted in an increase to both the tangible fixed assets and operating profit of £289,800 compared to the original estimate.

The turnover and loss (2021: loss) before taxation are attributable to the one principal activity of the group.

The group received government grant income of £114,601 (2021: £969,155) under the Coronavirus Job Retention Scheme and £44,723 (2021: £14,703) under the Coronavirus Business Interruption Loan Scheme. There are no unfulfilled conditions or other contingencies attached to the grant income.

The group also received support with the agreement of HM Revenue & Customs, to defer an element of employee taxes.

The average monthly number of persons employed by the group and company during the year was:

Their aggregate remuneration comprised:

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 6 (2021 - 6).

The actual charge/(credit) for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:

With the availability of significant tax reliefs for capital expenditure, such as the 130% first year allowance super deduction, the group anticipates continuing to be able to claim capital allowances in excess of depreciation in the short term. However, if capital expenditure slows down, this trend will reverse.

The group has unrelieved tax losses carried forward which can be offset against future profits to reduce the tax payable.

The main corporation tax rate has been legislated to increase from 19% to 25% with effect from 1 April 2023, significantly increasing the tax payable on profits earned.

Given the imminent change to the main corporation tax rate, deferred tax has been provided for at 25% where appropriate.

During the year to 31 March 2021, a subsidiary undertaking was sold generating a loss on disposal of £158,513.

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

On transition to FRS 102 the group elected to revalue some of its plant and machinery and adopt this valuation as deemed cost. If plant and machinery had not been revalued it would have been included at cost as follows:

Details of the company's subsidiaries at 31 March 2022 are as follows:

Registered office addresses (all UK unless otherwise indicated):

Included within bank loans and overdrafts is an invoice finance facility of £4,070,074 (2021 - £6,042,774), which is secured by a legal mortgage and fixed and floating charges over all assets of the group via a group company cross-guarantee.

Obligations under finance leases and secured by the assets to which they relate. See "Finance Lease Obligations" for further information.

Other borrowings are secured by a fixed and floating charge over all assets of the group and a group guarantee. For further information see "Loans and Overdrafts".

Obligations under finance leases and secured by the assets to which they relate. See "Finance Lease Obligations" for further information.

Other borrowings are secured by a fixed and floating charge over all assets of the company and a group guarantee. For further information see "Loans and Overdrafts".

The creditor maturity presented for social security and other taxes reflects a payment arrangement agreed with HMRC to repay deferred liabilities over a 24 month period.

The group's bank overdrafts are invoice financing facilities, secured by a legal mortgage and fixed and floating charges over all assets of the group, via a group company cross-guarantee.

Other loans are secured by a fixed and floating charge over all assets of the group and a group guarantee.

Finance lease payments represent rentals payable by the group for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

Obligations under finance leases and hire purchase contracts are secured by the assets to which they relate.

The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:

Accelerated capital allowances relate to timing differences on capital allowances. The amount expected to reverse in 2023 is £174,000.

Retirement benefit obligations relate to deferred tax on amounts owed to pension schemes. These assets are expected to reverse within 12 months.

Tax losses carried forward relate to deferred tax on unutilised tax losses. These assets are expected to reverse in 2023/24.

A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

Contributions totalling £66,616 (2021 - £63,096) were payable to the fund at the balance sheet date.

There is a single class of ordinary shares. There are no restrictions on the distribution of dividends and the repayment of capital.

Share premium was created on the issue of shares at amounts above the nominal value of the shares.

Unrealised retained earnings is the increase on revaluation of some plant and machinery on transition to FRS 102. The transfer to retained earnings is the excess depreciation charge on the revalued assets, including a provision for any deferred tax.

The profit earned less any distributions made and transfer of unrealised retained earnings.

Group

The group has charges over its assets, in the form of all assets debentures, as security for the borrowings of fellow group undertakings. At 31 March 2022 these borrowings amounted to £9,120,836 (2021 - £5,931,448). As at the date of approval of these financial statements the directors do not anticipate that the charges will be called upon.

Company

The company has charges over its assets, in the form of an all assets debenture, as security for the borrowings of fellow group undertakings. At 31 March 2022 these borrowings amounted to £13,820,003 (2021 - £12,724,222). As at the date of approval of these financial statements the directors do not anticipate that the charges will be called upon.

At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

During the year the group entered into the following transactions with related parties:

The following amounts were outstanding at the reporting end date:

The amounts owed to the above are interest free with no fixed repayment terms.

The following amounts were outstanding at the reporting end date:

The amounts owed by the above are interest free with no fixed repayment terms.

The immediate parent company and parent company of the smallest group where group accounts are drawn up is Neterson Holdings Limited which is incorporated in the UK. Copies of the group accounts of Neterson Holdings Limited are available from Bridge Road North, Wrexham Industrial Estate, Wrexham, Clwyd, LL13 9PS.

The ultimate parent company and parent company of the largest group for which group accounts are drawn up is Chemical and Ferro Alloys Private Limited, a company incorporated in India. Copies of the group accounts of Chemical and Ferro Alloys Private Limited are available from Liberty Building, Sir Vithaldas Thackersey Marg, Mumbai, MH 400020 IN.

The ultimate controlling party is F.D.Neterwala due to his controlling interest in the company's ultimate holding company, Chemical & Ferro Alloys Private Limited.

In the current year the group entered into obligations under finance lease to the value of £Nil (2021 - £504,233).

Consideration on the disposal of a subsidiary company included a £Nil (2021 - £1,506,979) reduction to group loans owing to this subsidiary.