Manganese Bronze Holdings PLC Annual Report 2008
Manganese Bronze Holdings PLC
Annual Report 2008 Overview
01 Summary
02 Financial highlights
03 Chairman’s statement
Performance review
05 Chief Executive’s statement
08 Business review
12 Sustainable development report
Management and governance
15 Board of directors
16 Advisers
17 Directors’ report
20 Corporate governance
26 Statement of directors’ responsibilities
27 Directors’ remuneration report
Financial statements
32 Independent auditors’ report
34 Consolidated income statement
34 Consolidated statement of recognised
income and expense
35 Consolidated balance sheet
36 Consolidated cash flow statement
37 Notes to the consolidated financial statements
Additional information
77 Group contacts
68 Company income statement
68 Company statement of recognised income
and expense
69 Company balance sheet
70 Company cash flow statement
71 Notes to the Company financial statements
76 Consolidated five-year statistics Overview
01
Manganese Bronze Holdings PLC
Summary
MANGANESE BRONZE HOLDINGS PLC, THE LEADING MANUFACTURER OF THE
DISTINCTIVE LONDON TAXI, ANNOUNCES ITS AUDITED ANNUAL RESULTS FOR THE YEAR
ENDED 31 DECEMBER 2008.
•
Operating loss before exceptional items and tax of £5.4 million (17 months ended 31 December
2007: £5.6 million profit).
•
Exceptional costs of £8.1 million including £3.8 million for the TX4 recall and non-cash
accounting impairments of £3.2 million in the US and £0.7 million in the UK resulting in
a loss after tax of £12.3 million (17 months ended 31 December 2007: £3.4 million profit).
•
Prototype production of the London taxi commenced at Shanghai LTI in June 2008 –
start of commercial production announced by SLTI in January 2009.
•
Shanghai built TX4 has now passed European homologation, official vehicle launch in China
planned for the Shanghai Auto Show in April 2009.
•
On plan to meet aggressive component cost reduction targets for Chinese produced parts
for UK production.
•
International marketing progressing to plan despite worsening market conditions.
International vehicle sales from SLTI scheduled to commence in second half of 2009,
with a current indicative order book of 8,000 vehicles over the next three years.
•
UK sales performance continues to be adversely impacted by current economic conditions,
particularly in London.
•
TX4 recall substantially complete within a total forecast cost of £3.8 million.
•
Reduced gross margin from component price increases from struggling suppliers.
•
Despite impact of the credit crunch the finance business has had a strong year with
good profitability.
•
Strong performance of LTI’s parts business.
•
Net debt increased to £7.2 million (31 December 2007: £3.2 million net cash).
•
Following consultation with pension trustees and the Pensions Regulator, no final dividend
for 2008 will be paid.
Commenting on the results, John Russell, Group Chief Executive, said:
“2008 was a challenging year for our UK taxi manufacturing operation coupled with significant
progress towards our international ambitions. While sales and margins were under pressure in the
UK, our Chinese joint venture passed significant milestones. Commercial production of the London
taxi has now commenced in Shanghai, with indicative orders for 8,000 vehicles. Current trading
continues to be adversely impacted by the wider downturn in the automotive market whereas our
confidence in the medium-term prospects for the Group continues to grow.” Manganese Bronze Holdings PLC
02
Overview
Financial highlights
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
New vehicle sales volumes
UK 1,951 4,147
Overseas 173 52
Total 2,124 4,199
£000 £000
From continuing operations:
Revenue 77,242 144,494
Operating (loss)/profit before exceptional items (5,364) 5,575
Exceptional items (8,078) –
Operating (loss)/profit after exceptional items (13,442) 5,575
Finance costs – net (798) (648)
(Loss)/profit before tax (14,240) 4,927
Net assets 26,799 37,530
Pence Pence
Basic (loss)/earnings per ordinary share (49.30) 15.89
Interim dividend per ordinary share 2.25 2.25
Second interim dividend per ordinary share – 3.50
Final dividend per ordinary share – 1.75
Price range of ordinary shares
1 January 2008-31 December 2008 (2007: 1 August 2006-31 December 2007) 48-569 241-950
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
Weighted average number of ordinary shares in issue 25,026,787 21,328,415
Market capitalisation at 1 February £17.59m £133.55m
Net assets per ordinary share 106.7p 150.3p Overview Manganese Bronze Holdings PLC
Chairman’s statement
Results for the year
Manganese Bronze, along with most of our automotive peers,
has had a very challenging year with a significant downturn
in vehicle sales and margins in all markets but particularly our
core London market. This combined with the impact of the TX4
product recall has severely impacted the Group resulting in a
post exceptional loss before tax of £14.2 million (17 months
ended 31 December 2007: £4.9 million profit). This loss
includes exceptional costs of £8.1 million.
The rather unusual comparative period is caused by our decision
to align the Company’s year end with that of our Chinese joint
venture, Shanghai LTI (“SLTI”), and our joint venture partner, Geely.
Despite the steep losses we have continued to make good
progress at SLTI, which offers considerable opportunity to expand,
and internationalise, our product offering. In addition to business
expansion, the procurement of parts from SLTI will afford a
greater opportunity to return our UK manufacturing operations
to profitability.
The direct and indirect opportunities arising from our Chinese
operations give the Group confidence to endure what we believe
will be a continuing difficult UK market in 2009.
In the year to 31 December 2008, 1,951 new vehicles were
sold in the UK (17 months ended 31 December 2007: 4,147).
On a like-for-like basis, UK sales have declined by 37.5% due to
a combination of uncertain economic conditions and the fact that
the comparative period saw a near record sales volume following
the launch of the TX4. As reported at the half year, UK sales
performance continues to be challenging as drivers’ confidence
to commit themselves to the purchase of a new taxi remains
weak due to uncertainty about the general state of the economy.
Volume in the second half was, as expected, below that of the
first half and this volume was generated with greater levels of
discounting than were prevalent in the first half of the year.
Due to our declining sales, we have instigated a rapid series
of cost reduction measures.These have included a reduction in
headcount by almost 20%, reductions in fixed costs, short-time
working, reduced daily output, and a pay reduction for all
employees and directors.
In September, LTI, a wholly owned subsidiary of Manganese
Bronze PLC, commenced a product recall following a small number
of under bonnet fires that had occurred in early production models
of the TX4 taxi. LTI has now substantially completed this recall
which included modifications to the emission control equipment,
the heat management system and under bonnet insulation.
The cost of the recall has been expensed in 2008 as an exceptional
item. The total of £3.8 million is lower than originally envisaged
in September. We are advancing well in negotiations with our
insurers, independent dealer and relevant suppliers and believe
significant opportunity exists for recovery of some of these costs.
Other exceptional costs have been incurred in the year arising from
the current economic circumstances. This includes the impairment
of the Group’s investment in London Taxis North America (“LTNA”),
the write down of used vehicle inventory, and redundancy costs.
LTNA impairments of £3.2 million include £2.2 million impairment
of goodwill and other intangible assets and £1.0 million
reduction in vehicle valuations. The valuation of our UK used
vehicle inventory has also been written down by £0.7 million
to £3.4 million (2007: £2.6 million) and redundancy costs
of £0.4 million have been incurred to reduce our cost base.
Total headcount (including temporary employees) has reduced
from 469 at 31 December 2007 to 389 at 31 December 2008.
Funding/dividend
There has been a net cash outflow of £9.1 million in the year
largely arising from the loss net of depreciation and impairment
of £5.6 million, working capital increase of £1.4 million, pension
contributions of £1.2 million and dividends of £0.9 million.
At 31 December 2008, the Group had net cash resources of
£1.3 million (2007: £10.3 million) and the Group’s stocking loan,
an asset finance facility secured on the stock of finished vehicles,
was utilised up to a level of £8.4 million (2007: £7.0 million).
The Group has a £2.5 million (2007: £2.5 million) overdraft
facility provided by HSBC Bank plc. This facility has been renewed
up to the 31 December 2009, which included the additional
requirement for the provision of security by way of debenture over
the Group’s assets. Discussions with HSBC with regard to future
borrowings have been positive and no matters have been drawn
to our attention to suggest that renewal may not be forthcoming.
This charge has been approved by the Group’s old closed pension
fund trustees as well as by the Pension Regulator. An important
aspect of this approval was the Group’s agreement not to pay a
final ordinary dividend for 2008. We intend to renew dividend
payments as soon as practicable from underlying net profits
provided sufficient Company distributable reserves exist.
The Group’s asset finance facilities comprise a stocking loan facility
of £13.0 million (31 December 2007: £13.4 million) which is
provided by the Lloyds Banking Group PLC and attracts interest
linked to the Finance House Base Rate. This facility has been
renewed for the period to 31 March 2010.
Following the announcement by H.M. Government of its intention
to provide working capital finance to the UK automotive industry,
additional financing facilities that may be required to support our
future environmental initiatives and mitigate potential additional
risk, have been sought, with the assistance of HSBC, under the
Loan Guarantee Scheme as well as under the special assistance
scheme for the UK automotive industries.
The Group’s relationships with its bankers remain good, despite
the challenging business and economic circumstances, with
non-utilised facilities of £8.4 million at 31 December 2008
(2007: £8.9 million), including £4.6 million under the stocking
loan facility which can be utilised providing suitable vehicles are
available as security.
03 Manganese Bronze Holdings PLC
04
Overview
Chairman’s statement continued
Progress on China and international sales
Our joint venture in China, Shanghai LTI, offers the best potential
to secure the long-term profitable future for the Group. The joint
venture will allow us to solve our strategic issues in relation to
significantly reducing the cost base both internationally from
Shanghai and in the UK, and our over-reliance on a single market.
This should enable growth in international sales and a return to
profitability for the UK operation. I am, therefore, very pleased to
report good progress with start of prototype production, as planned,
in June 2008 and the announcement by SLTI of commercial
production in January-2009. The Shanghai produced diesel
powered TX4 has passed European homologation which is
an excellent achievement. The thorough programme of testing
is moving toward completion with vehicles being prepared for
dealerships ready for the launch of the vehicle at the Shanghai
Motor Show in April.
We have already signed memoranda of understanding (“MoU”) for
a total of 8,000 vehicles, produced by SLTI in Shanghai, over three
years with delivery starting in mid-2009. Close to 200 of these
vehicles are currently secured by firm contracts. The conversion rate
of MoUs to firm contracts has been impacted by our international
partners finding it harder to meet our order funding requirements
of payment in advance or letters of credit. Additionally, the decline
in the value of sterling against both the Chinese Reminbi (“RMB”)
and US dollar may reduce margins on international sales.
People
Our people have risen to the dual challenges of the difficult UK
market and supporting the development of SLTI against a backdrop
of significant redundancies, short-time working and pay constraints.
The overall headcount has reduced from 469 including temporary
workers in December 2007 to 389 in December 2008. In the
12-month period under review a total of six weeks’ production
has been taken out, comprising three complete weeks and three
weeks from reduced-time working. During these periods our
production staff were not fully paid, in accordance with the terms
of union agreements.
From the beginning of February 2009, all employees (including
executive and non-executive directors) have agreed a 10% reduction
in salary. This position will be reviewed at the half-year. A scheme
has been put in place for employees to earn back this reduction in
the event of the Group’s cash generation exceeding expectations.
This is a vital and challenging stage in our development, and
I would like to pay tribute to all our employees for their skill,
flexibility, resourcefulness and commitment.
Current trading and prospects
Due to the current economic situation forecasting has become
far more difficult. Sales volumes in the UK in the first two months
of 2009, which are typically low sales months, were down 18%
on last year, with total sales (including exports) up 19%. This is
in line with our expectations. Despite the benefit of cost savings
generated in 2008, the ramp up of procurement saving from
Chinese parts and additional cost savings targeted for 2009,
the UK business is expected to be challenging in both margin
and volume terms.
Shanghai LTI remains on plan to deliver a step change in the
Group’s prospects and financial performance. International sales
will ramp up from the second half of 2009 and will be of greater
significance with a full year impact from 2010 onwards.
Tim Melville-Ross
Chairman
4 March 2009 Performance review
05
Manganese Bronze Holdings PLC
Chief Executive’s statement
UK trading/market
UK TX4 sales in the 12 months to 31 December 2008, at 1,951,
were down 37.5% on 2007, which was a near record year
following the launch of TX4 in late 2006. When sales are compared
with typical volumes over the previous decade, the decline in TX4
sales in 2008 is broadly in line with the car industry performance
and better than the commercial vehicle sector.
As well as rapidly declining sales, we have also experienced far
greater volatility in monthly sales than has historically been the
case. This is best demonstrated by the two months of October and
December 2008. In October sales were down 72% on 2007 but
up 48% on 2007 in December. The peak sales months of March
and September (around registration plate changes) were also far
more significant in 2008 representing 36.5% of total UK sales
in 2008 compared to 27.7% in 2007. This increased volatility
has made balancing production to sales more challenging than in
the past. This, combined with far greater risk of loss of key single
source suppliers, has led to our holding higher levels of inventory
than in prior years contributing to the large cash outflow.
An undesirable consequence of the downturn in sales has been
an increase in discounting both in our wholly owned dealerships
as well as in independent dealerships. This has contributed to a
decline in residual values which has resulted in a reduction in the
value of our used vehicle inventory by £0.7 million to £3.4 million.
In June, the independent dealer in London announced plans to
sell an adapted Mercedes van that was approved to comply with
the Transport for London Conditions of Fitness. In the second half
of 2008 the Society of Motor Manufacturers and Traders has
reported sales of 108 Mercedes van conversions and sales of
traditional purpose built TX4s of 839 vehicles. We believe that the
availability of a choice of vehicle in London is of long-term benefit
to the development of the market. We also believe that the
purpose-built TX4 will continue to perform well against this
new competition.
Historically, when new vehicle sales are reduced, the drivers
run their existing vehicle for longer. We have therefore experienced
a strong parts performance in 2008.
Against the challenging new sales backdrop and external
expectation the finance business has had a strong year with new
business volumes up 10.8% and fixed rate margin on new business
up by 4.0%. This has been driven by a reduction in the volume
of competitors in the UK vehicle finance and taxi finance market.
Our relationship with Black Horse Taxi Finance, a business of
Lloyds Banking Group PLC, remains strong.
As previously reported, we have been adversely impacted by the
weakness of sterling versus the euro, as TX4 engines are imported
from Italy. The full year impact is £1.1 million. Cost to support
the Chinese joint venture has reduced in the second half with
a total of £0.6 million for the full year. The Group should benefit
in 2009 as SLTI have agreed to contribute £0.3 million to these
additional costs.
Due to lower sales, the Group’s finished goods inventory is up
by £2.6 million. This, together with losses for the year, dividends,
and pension contributions, has resulted in lower cash at bank
of £1.3 million (2007: £10.3 million). At 31 December 2008
the Group had net debt of £7.2 million (2007: net funds of
£3.2 million).
Shanghai LTI
SLTI, our joint venture with Geely Automotive to produce the
TX4 in Shanghai, has passed a series of significant milestones.
SLTI offers excellent potential to achieve our vision and secure
the long-term profitable future for the Group. SLTI will allow the
volume production of the London taxi at a lower cost, enabling
sales into international markets which we have been unable to
penetrate due to our high cost base UK manufacturing operation.
We are very pleased to report further strong progress in SLTI.
All factory modifications have been completed on time and
to budget, the start of prototype production has been achieved
on schedule and the full ramp up to commercial production
has been announced by SLTI. We are now completing a thorough
programme of final testing and stocking the Geely dealerships
in China prior to the launch of the Shanghai produced TX4 at
the Shanghai Auto Show in April.
In excess of 90% of the individual components required for
the London taxi production in Shanghai are now being procured
in China. Contracted procurement savings are in line with our
expectations. We expect to be utilising in excess of 100 Chinese
produced parts, representing approximately one-third of all
components by value on the UK produced TX4 during 2009, with
a saving of up to 50% of equivalent UK parts prices. This will also
reduce our reliance on our UK supply base which has become
increasingly fragile during the current recession.
International sales
From mid-2009 we will be selling the Chinese produced VM diesel
powered TX4 into international markets. The petrol powered TX4
will be sold into international markets from the third quarter of
2009. Of the 8,000 vehicles signed on MoU the majority are
petrol powered Shanghai produced TX4s.
Close to 200 of these vehicles are currently secured by firm
contracts. The conversion rate of MoUs to firm contracts has been
impacted by our international partners finding it harder to meet our
order funding requirements for payment in advance or letters of
credit. Despite this we still envisage international sales exceeding
our UK sales in 2009.
We expect there may be some loss of vehicles as these convert
from MoU to contract. We do however believe, this wastage aside,
that we can meet the market estimate for international sales
in 2009. Manganese Bronze Holdings PLC
06
Performance review
Chief Executive’s statement continued
The profit per vehicle on international sales may, however, be affected
by the decline in the value of sterling against both the Chinese
Reminbi (“RMB”) and US dollar. This is because, in particular, the
devaluation against the RMB has been almost one-third over the
period from 31 December 2007 to 31 December 2008.
Recall
In September, we announced a TX4 recall with product actions to
include modifications to the emission control equipment, the heat
management system and under bonnet insulation. At that stage,
we announced the cost of the recall to be approximately £4 million.
The recall is now substantially complete with cash costs incurred
of £2.2 million and £1.6 million expected over the course of the
first six months of 2009. A total of £3.8 million has been expensed
in the financial year to 31 December 2008 as an exceptional item.
We are currently in advanced negotiations with our insurers
as well as relevant suppliers and our independent dealer in London
to establish liability and opportunities for recovery of some of
these costs.
We have been notified of three class actions from driver groups
seeking compensation. In addition, we have a small number of direct
claims from drivers. Our lawyers advise these do not have sufficient
legal foundation for liability reasons and therefore no provision has
been made. Our product liability insurers have been notified.
Mann & Overton
Our Mann and Overton retail operation has had a challenging year
with the impact of lower demand, rising discount, falling residual
values and the impact of the recall.
London Taxis North America (“LTNA”)
Much effort has been applied by the management team to address
the underlying performance issues in North America to exploit
the advertising and event marketing opportunity in the USA more
effectively. Financial performance has improved but our view of
likely future trading does not support the carrying value of goodwill
with higher Group cost of capital (due to the credit crunch).
We have therefore written off our investment in goodwill and
intangibles of £2.2 million and also written down the value of the
vehicle fleet by £1.0 million. These are included as exceptional
non-cash accounting items in the income statement.
Production
Due to the extreme volatility we have experienced during 2008
we have had to fully utilise our inherent manufacturing flexibility
and adjust our build rate to balance good availability of product
in the market place with sensible inventory levels. During the year
the daily production rate has swung from a peak of 16 vehicles
per day to 12 vehicles per day. In addition, we have had a total
of six weeks’ production taken out through short-time working
and complete shutdown periods. The Coventry plant is currently
working a four-day week with production of 12 vehicles per day.
The health and safety performance in all areas of the business
continues to be a key focus of the organisation and is of particular
importance in the production operations. Our record is good,
with a measurable improvement in 2008 but with no room for
complacency and we continue to look for ways of improving the
processes, policies, management and operating environment for
the benefit of all associated with our business.
Risk/going concern
The risk profile of the Group has increased significantly in the past
year due to the effects of the current recession. Together with the
marked reduction in our sales we have experienced a far more
significant volatility in our sales cycle. This has made optimisation
of inventory levels far more challenging and has resulted in
higher levels of inventory than would be ideal. This puts pressure
on the use of financing facilities at a time when additional
banking facilities are challenging to obtain. We have provided
security to HSBC over the Group’s assets by way of debenture.
Our relationships with our bankers HSBC and Lloyds remain good.
Another negative consequence of the current economic climate
has seen a significant increase in the risk of loss of key suppliers.
LTI, like most small automotive companies, is single source
for almost every component used to manufacture the vehicle.
Any loss of a key supplier can have major funding consequences
if production is suspended even for a short time period. We do
have contingency plans in place, including procurement from
China, but some components are of greater impact than others.
The restriction of credit from suppliers could have a marked effect
on our working capital. This could arise both from credit suppliers
restricting insurance to the automotive industry as well as suppliers
who do not utilise credit insurance seeking to better manage their
own funding position. The availability of finance to fund our vehicle
sales has not been a major risk for us as it has been for the
automotive industry as a whole.
We are compliant with all terms of finance facilities and these
facilities have been renewed. We have management plans in
place to seek to mitigate financial risks and these have been
stress tested. The directors will seek to investigate opportunities
to strengthen the capital base of the Group in the event of a
further downturn in the economic environment.
We do not provide significant guarantees and do not enter into
long-term arrangements. Liabilities are known and fully managed
within contractual terms. We have demonstrated financial
adaptability through previous periods of low sales. As noted,
our customers are not struggling to access credit to purchase new
TX4s. Our most significant risk is therefore dependence on
counterparties, particularly our suppliers and in most instances
we have contingency plans in place to manage this risk.
The significant risks to the business are detailed below. Performance review
07
Manganese Bronze Holdings PLC
However, current economic conditions create uncertainty
particularly over the level of demand for the Group’s products.
For these reasons, a sensitivity analysis has been performed on
the Group’s forecasts and projections, to take account of
reasonably possible changes in trading performance. This analysis
shows that the Group will be able to operate within the level of its
borrowing facilities. As a consequence, and after making relevant
other enquiries, the directors have a reasonable expectation that
the Company and the Group have adequate resources to continue
in operational existence for the foreseeable future. Accordingly, the
Board has continued to adopt the going concern basis in preparing
the Group’s Annual Report and Accounts 2008.
Summary
The past year has been very challenging. We do not believe that
2009 will be any easier than 2008. The early signs are that UK
volumes may well be lower in 2009 than in 2008, but in line with
our expectations. We have a lower cost base entering 2009 than
we had going into 2008 and with lower carrying values of our
assets. We have sufficient financing facilities in place to manage
through our current financial plan and we are also seeking
Government support additional to these facilities. We continue to
investigate schemes with which to strengthen our balance sheet.
As noted, Shanghai LTI offers the best potential to secure the
long-term profitable future for our Company. The joint venture
will in one step allow us to solve our strategic issues in relation
to significantly reducing our cost base both internationally from
Shanghai and in the UK. This should enable substantial
international sales and a return to profitability for the UK operation.
Our focus in 2009 is on managing the UK operation for cash
and developing a profitable international market and joint venture
operation in China. Our vision remains to make the London Taxi
a successful global icon and successful implementation of our
planned actions will generate marked improvement in our future
profitability and cash flow.
John Russell
Group Chief Executive
4 March 2009 Manganese Bronze Holdings PLC
08
Performance review
Business review
This review covers the 12-month period to 31 December 2008.
It details our Group activities, key financial performance measures
and the principal risks and uncertainties the Group faces.
Group activities
Manganese Bronze is the leading manufacturer of the distinctive
London taxi, employing just under 400 people, predominantly
in the UK. About two-thirds of our staff are employed in our main
manufacturing site in Coventry with the majority of the remaining
staff in our wholly owned dealer group sites, Mann & Overton,
around the UK. The Group has a 99% shareholding in London
Taxis North America (“LTNA”), the distributor of the London Taxi
in North America, based in Chicago, USA, and a 48%
shareholding in Shanghai LTI Ltd, our joint venture that produces
London taxis in Shanghai, China. The Group provides retail and
service through Mann & Overton as well as through a number of
independently owned dealerships throughout the UK. The Group
also provides finance to taxi operators and owners through its
partnership with Lloyds Banking Group PLC which trades under
the brand Black Horse Taxi Finance. Additionally, the Group also
supplies parts to taxi operators and owners through its distribution
agreement with Unipart.
Statement of accounting policies
The Group’s consolidated financial statements have been prepared
in accordance with International Financial Reporting Standards
(IFRS) in issue and effective for periods commencing on or after
1 January 2008. The Group’s accounting policies are set out in
note 3 of the notes to the consolidated financial statements.
Review of performance for the period
The table below sets out the key financial performance indicators
(KPIs) which are closely monitored by the directors and
management throughout the year and which are measured against
preset targets. These show performance for the 12-month period
to 31 December 2008, the 17-month accounting period to
31 December 2007 and the 12-month period to 31 July 2006.
Revenue
For the 12-month period to 31 December 2008 total revenue
was £77.2 million, which compares to £106.9 million for the
12 months to 31 December 2007, a reduction of 27.8%.
UK sales volume has declined by 37.5%, there has been pressure
on sales prices through increased discounting, and used vehicle
volumes have declined by 17.2%. These declines have been
partially offset by higher international sales volumes (up 260%)
and a strong performance from our parts and service activities.
Operating loss
An operating loss of £5.4 million was incurred in the year to
31 December 2008, with further exceptional costs of £8.1 million,
including £3.8 million for the TX4 recall, £0.7 million used
vehicle write down in the UK, £0.4 million of redundancy cost,
£2.2 million impairment of LTNA intangibles and £1.0 million of
LTNA write down in vehicle valuations. The Group’s results include
a 48% share of Shanghai LTI start up losses of £0.6 million
(2007: nil). These are lower than expectation due to the nature of
start up operation and high interest received on the cash balances
within Shanghai LTI of £23.6 million at 31 December 2008.
12 months to 17 months to 12 months to
31 Dec 31 Dec 31Jul
2008 2007 2006
New vehicle sales volumes
– UK 1,951 4,147 2,388
– Overseas 173 52 92
– Total 2,124 4,199 2,480
Revenue £m 77.2 144.5 83.8
Operating (loss)/profit before exceptional items £m (5.4) 5.6 3.2
(Loss)/profit before tax £m (14.2) 4.9 3.7
Net assets £m 26.8 37.5 21.5
Basic (loss)/earnings per share p (49.30) 15.89 15.02
Operating cash flow £m (8.9) 8.4 1.1
Net cash £m 1.3 10.3 12.9
Net (debt)/funds £m (7.2) 3.2 2.6 Performance review
09
Manganese Bronze Holdings PLC
Finance expense
The net finance expense has increased by £0.2 million to
£0.8 million as a result of increase in interest charges as the
Group moved from net cash to net debt, partially offset by reduced
pension scheme finance charges arising from lower interest rates.
Net assets
The Group’s net assets have reduced from £37.5 million at
31 December 2007 to £26.8 million. This is due to losses
in the year, partly offset by a reduction in the pension deficit
and exchange gains taken to reserves.
Operating cash flow
The operating cash outflow of £8.9 million has principally arisen
due to the operating loss net of depreciation and impairments and
an increase in inventories.
Dividends
Following consultation with the pension trustees and Pension
Regulator, and as a concession to achieving approval for the
provision of security to HSBC, no final dividend will be paid
for 2008. This follows an interim dividend of 2.25p paid on
1 September 2008. The total dividend for the 17-month period
ended 31 December 2007 was 7.5p.
Pensions
The Group’s pension deficit, for the old closed scheme, reduced
by £2.5 million to £1.6 million in the year due to contributions
of £1.2 million and an increase in the discount rate from 5.6%
to 6.2%. We will seek to negotiate lower cash pension payments
to the pension scheme during 2009. The pension scheme assets
are invested two-thirds in gilts one-third in cash and equities.
The scheme achieved a positive investment return during the
challenging conditions in equity markets during the period.
The assumptions underpinning the scheme are disclosed in
note 34 of the notes to the consolidated financial statements.
Financing and liquidity
There has been a net cash outflow of £9.1 million in the year
largely arising from the loss net of depreciation and impairments
and other non-cash items of £5.6 million, an increase in working
capital of £1.4 million, pension contributions of £1.2 million
and dividends of £0.9 million. At 31 December 2008, the Group
had net cash resources of £1.3 million (2007: £10.3 million)
and the Group’s stocking loan, an asset finance facility secured
on the stock of finished vehicles, was utilised by £8.4 million
(2007: £7.0 million).
The Group has a £2.5 million (2007: £2.5 million) overdraft
facility provided by HSBC Bank plc. This facility has been renewed
for the period to 31 December 2009 including the additional
requirement for the provision of security by way of debenture over
the Group’s assets. Discussions with HSBC with regard to future
borrowings have been positive and no matters have been drawn to
our attention to suggest that renewal may not be forthcoming.
This charge has been approved by the Group’s old closed pension
fund trustees as well as by the Pension Regulator. An important
aspect of this approval was the Group’s agreement not to pay a
final ordinary dividend for 2008. We intend to renew dividend
payments as soon as practicable from underlying net profits,
provided sufficient Company distributable reserves exist.
The Group’s asset finance facility is a stocking loan facility of
£13.0 million (31 December 2007: £13.4 million) which is
provided by the Lloyds Banking Group PLC and attracts interest
linked to the Finance House Base Rate. This facility has been
renewed for a period to 31 March 2010.
The Group has sought additional financing facilities under the UK
Government Loan Guarantee Scheme as well as under the special
assistance scheme for the UK automotive industries.
The Group’s relationships with banks remain good, despite the
challenging business and economic circumstances, with total
facilities non-utilised of £8.4 million as at 31 December 2008
(2007: £8.9 million), including £4.6 million under the stocking
loan facility which can be utilised providing suitable vehicles are
available as security.
Principal risks
The Group is exposed to a variety of risks in the conduct of its
business operations. Every 12 months the Group conducts a formal
review of those risks and reports these to the Board of Manganese
Bronze Holdings PLC. Mitigation action and strategies to reduce
the likely impact are agreed and put in place wherever possible.
The Group centrally maintains a wide range of insurance to cover
major identified insurable risks, including (but not limited to) those
relating to product liability, business interruption, damage to property
and equipment, motor trading, fleet operation and employment.
As noted in the Chief Executive’s statement, the risk profile of the
Group has increased significantly in the past year due to the effects
of the current recession. This is evidenced through downturn in
sales, significant volatility in our sales cycle, funding pressure and
greater risk of loss of key suppliers. This has made optimisation of
inventory levels more challenging and has resulted in higher levels
of inventory than would be ideal.
Whilst it is not possible to either completely record or to quantify
every individual risk the Group faces, below is a summary of the
risks the directors believe are most significant to the Group’s
business and future performance.
Reliance on suppliers
The Group relies on suppliers for all key components for the TX4
other than the vehicle chassis, fuel tank and body panels which we
manufacture in Coventry. The Group is often reliant on a single
supplier for its requirement for a particular component placing the
Group at risk of product delays. This is probably the most significant
risk the Group currently faces due to failure of suppliers during
the current economic conditions and is not therefore entirely in Manganese Bronze Holdings PLC
10
Performance review
Business review continued
our control.The Group has insurance against loss of supply from
key suppliers due to natural disasters/events and seeks to mitigate
the remaining risks by seeking alternative supply from China and
keeping higher raw material stock from at-risk suppliers. This might
not always be possible which requires our seeking solutions with
receivers/administrators should suppliers fail.
Funding risk
The Group relies on the continued availability of its existing bank
borrowing facilities and asset financing facilities.The continuing
provision of these facilities has been agreed with concessions
as previously disclosed. Given the prevailing economic climate,
our financial performance and banking situation this risk has risen
significantly over the past year. The directors monitor the utilisation
of facilities and detailed cash flow forecasts on a daily basis to
identify any potential liquidity issues and to implement actions
to mitigate any such issues.
Markets
The demand for taxis is affected by the general prevailing
economic sentiment and conditions, particularly those in London.
The current prevailing sentiment is that global and UK vehicle
sales will be lower in 2009 than in 2008. This expectation is
built into our financial plans. This risk cannot be fully mitigated,
although increased export sales, innovative marketing plans and
cost savings supporting a lower cost vehicle can go some way
to reducing this risk.
Competition
In all markets the Group competes with a variety of alternative
vehicles. The performance of the Group will continue to be very
closely linked to the success of the TX4, which we believe will
remain the market leader.
Technical change
In order to remain competitive and meet regulatory hurdles the
Group must commit regular investment in internal and external
research and development. This will increasingly become relevant
as the Group seeks to produce more environmentally friendly
derivatives of existing and new products. This funding has become
constrained as the Group’s UK operation is managed for cash
and such projects (other than Euro V emission regulation which
will be required by 2012 and is included in our financial planning)
will require UK government, EU and/or regional partner support.
Regulatory
Taxis operating in London must currently comply with the
Conditions of Fitness laid down by Transport for London’s Public
Carriage Office. Outside of London the regulation of taxis in the
UK is controlled by local authorities, some of whom have
voluntarily adopted the Conditions of Fitness requirements. If new
requirements are imposed on the way in which taxis are regulated,
or amendments are made to the existing Conditions of Fitness,
this could have a material impact. The Group mitigates this risk
through investment in our vehicles, lobbying for the benefits of
our vehicle and through maintaining our relationship with key
regulatory bodies.
Product quality and liability
The Group is exposed to certain product liability risks. The Group
seeks to mitigate this risk through selection of the highest quality
suppliers, maintenance of demanding quality systems in our
assembly and service operations and through quality accreditation.
The Group maintains insurance for public and product liability
claims and self insures against the risk of product warranty.
The Group will be actively seeking redress for the costs of the
TX4 recall during 2009.
Raw material/utility prices
The nature of the Group’s business means that fluctuations in raw
material prices, particularly steel and energy, can have significant
impacts on profitability. The Group seeks to mitigate this fluctuation
through competitive tender and through seeking longer-term supply.
The threatened loss of key suppliers, administration processes and
the financial losses of small UK automotive suppliers have led to
pricing increases which have to date offset savings we have been
able to achieve from Chinese supply. We have not planned for this
situation to continue through 2009 as Chinese cost saving starts
to impact more significantly.
Disruption to production
The Group could be impacted through loss of production in our
main facility in Coventry through equipment malfunction, theft
of key equipment, strike or natural events such as fire, flooding,
and wind. The Group has controls in place to mitigate these risks,
however, in the event of failure; the Group’s insurance provides
cover for business interruption.
Relationship with Geely
The Group will become increasingly exposed to the operation of
SLTI and its partner Geely. Geely is itself controlled by Mr Li Shufu,
the Chairman and executive director of Geely. The ongoing success
of SLTI will be reliant on the Group’s continued good relations with
Geely and Mr Li Shufu in particular.
China
SLTI is based in Shanghai, China. The Group, therefore, will increase
its exposure to new business practices and methods of working and
will need to adapt accordingly. SLTI will also require the commitment
of key staff which is being managed through appointment of these
staff both internally and externally who are either Chinese Nationals
or who are experienced working in China. The Group remains
exposed to the extent to which the Peoples’ Republic of China’s
government regulates the automobile industry and the pace of
economic liberalisation.
Chinese vehicle/component supply
The Group will become increasingly reliant on components
imported from China and these will need to meet the Group’s
exacting standards. This supply will increase the Group’s working
capital requirement which will be met within our existing facilities.
In addition, the Group’s international sales will be increasingly
dependent on the quality of product exported from China.
The Group is seeking to manage this through significant investment
in facilities, high-quality personnel and tooling as well as through
appointing high-quality suppliers. The Group is also seeking to
utilise its UK quality systems in the Shanghai facility. Performance review
11
Manganese Bronze Holdings PLC
Foreign exchange risk
Whenever possible, foreign exchange risk of a transactional nature
is hedged using forward foreign exchange contracts.This is a
particular exposure for LTI, where the single highest cost, other
than payroll, is the cost of engines which are charged in euros.
The devaluation of sterling against the euro had a major impact
on 2008 results and we expect this situation to remain in 2009.
Transactional exposure will increase exponentially when
component supply increases significantly from Shanghai as well
as international sales commence from Shanghai in the second half.
We are looking to limit this exposure through purchase and sale
of taxis in US dollars although we will need to limit exposure to
the profit element.
Translational risk arising from the consequence of applying different
exchange rates to net assets denominated in currencies other than
sterling and not being an exposure that results in actual cash flow,
is not hedged. This is a particular exposure for SLTI, which currently
has cash deposits in US dollars.
People
Due to the economic climate we have made significant
redundancies, there have been periods of short-time working, and
recently an agreed 10% pay abatement applied to all employees.
These factors have contributed to much lower levels of employee
satisfaction which is being managed by an experienced
management team.
Pension plans
The interaction of, among other things, equity market performance
and reduced interest rates could have the impact of increasing the
funding requirement for the Group’s closed defined benefit pension
scheme. In conjunction with the scheme actuaries and trustees of
the scheme, the Group has an agreed funding structure in place.
Cautionary statement
This Business Review (“BR”) has been prepared solely to provide
additional information to shareholders to access the Group’s
strategies and the potential for those strategies to succeed. The BR
should not be relied on by any other party for any other purpose.
The BR contains certain forward-looking statements. These
statements are made by the directors in good faith based on the
information available to them up to the time of their approval of this
report and such statements should be treated with caution due to
the inherent uncertainties, including both economic and business
risk factors, underlying any such forward-looking information. Manganese Bronze Holdings PLC
12
Performance review
Sustainable development report
Our philosophy and approach
As a speciality automotive products and services group, the Board
takes seriously its responsibilities to the environment and the
communities in which the Group operates. We believe that these
responsibilities can have a positive impact on profitability and
therefore on shareholder returns as well as on our reputation and
growth prospects. We further believe that neither business growth
nor efficiency need be compromised by striving to achieve high
standards of social and environmental responsibility.
This report sets out details of our sustainability activities during
the year ended 31 December 2008 during which the Group
continued the process of developing systems and processes
for gathering and analysing performance data which will enable
us to measure more effectively the cost benefits of addressing
our regulatory obligations.
In preparing this report, consideration has been given to the
Association of British Insurers’ disclosure guidelines on socially
responsible investment. These guidelines were developed to help
provide a basic benchmark for companies wishing to develop
best practice in this area.
The activities of Shanghai LTI and London Taxis North America Inc
are not covered by this report on the grounds of materiality.
This will be periodically reviewed.
Governance, leadership and accountability
At a corporate level, the various aspects of sustainability are
assigned to different layers of management. The Board of
Manganese Bronze Holdings PLC takes account of significant
environmental, social and governance risks within the context of
the whole range of risks and opportunities facing the Group and
formulates and approves Group policies accordingly. These include
policies in relation to the environment, equal opportunities,
discrimination and diversity, training and development, supply
chain and a code of business ethics. These policies are reviewed
within the normal business planning cycle and, as and when
necessary, updated to reflect changes to legislation, emerging
best practice and the needs of the business.
The Executive Committee, chaired by John Russell, Chief Executive
Officer, comprises senior managers at operational level. It is
responsible for the implementation of these policies, their
communication across the business units and compliance with the
policies and supporting principles, delegating as appropriate to
designated individuals in their part of the business. The corporate
governance report on pages 20 to 25 provides further details
about the responsibilities and activities of the Board and the
Executive Committee.
Implementation of the policies is effected at each facility in order
to ensure that the overall activities of each site are compatible with,
and conform to, the policies and international standards as these
apply to individual businesses.
All our employees have a responsibility to be aware of, and to comply
with, the Group’s policies and processes, which have been developed
for their guidance and in order to regulate the conduct of the
day-to-day operations of the business. Employees are encouraged
to make suggestions to improve these policies and procedures.
Process for identifying and assessing risks
In the sustainable development report for the 17-month period to
31 December 2007, we reported that the Group expected to achieve
compliance with ISO14001 during 2008. Whilst we continued
to make progress towards this goal, the challenging economic
and market conditions do not currently justify the significant levels
of investment required to implement the training programme
(a key element of the accreditation process). Notwithstanding this,
an environmental committee was established, an environmental
management training programme developed and some training
delivered in areas including the management of spillages. Whilst
the accreditation process therefore continues, completion will be
deferred until financial conditions are more favourable.
ISO14001 specifies the actual requirements for an Environmental
Management System (“EMS”) and applies to those environmental
aspects over which the organisation has control and can be
expected to have an influence.
The cornerstone of the EMS is a process by which each operating
unit will identify in respect of each stage of every process the
associated risks and allocating a severity rating depending upon
the significance of each risk in terms of its impact on the business.
The allocation of a severity rating will be the starting point in
determining how best to address each risk in turn.
Supply chain
The Group is often reliant on a single supplier for specific
components, placing the Group at risk should there be a product
delay or in the event of a supplier failing. The Board recognises
the particular risks posed to its supply chain by the current
economic conditions and the potential impact should key suppliers
fail. To mitigate these impacts, the Group monitors suppliers’
business continuity issues, providing such practical support and
advice as may be appropriate. The increasing use of Chinese-based
suppliers further mitigates the risk to the Group’s supply chain.
Our people
Employee consultation
The Group places considerable value on keeping employees
informed on matters affecting them and on the various factors
affecting the performance of the Group. This is achieved through
formal and informal meetings and a company newsletter. Employee
representatives are consulted regularly on a wide range of matters
affecting their current and future interests. The Group is committed
to providing equal opportunities and opposes all forms of unfair
or unlawful discrimination. Employees will not be discriminated
against because of race, colour, nationality, ethnic origin, disability,
sex or sexual orientation, marital status or age.
The employee bonus scheme is open to all salaried staff and
encourages employees to contribute towards the achievement
of individual and Group-defined objectives. The recognition
of extraordinary effort is further rewarded through the Group’s
Reward and Recognition Scheme.
All employees are encouraged to raise genuine concerns about
possible improprieties in the conduct of our business, whether in
matters of financial reporting or other malpractices, at the earliest
opportunity and in an appropriate way. Performance review
13
Manganese Bronze Holdings PLC
The impact of the economic downturn on production has inevitably
impacted upon staffing levels. Notwithstanding this, underlying
employee turnover has increased only marginally during the year.
Disabled persons
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 with
the Group continues and that 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.
Training and development
Our business is increasingly knowledge-based. Employing the
right people and encouraging the continuous development of the
skills of our employees is key to developing a successful business.
Accordingly, the development of individuals at all levels is
encouraged with the objective of maximising the overall performance
of the business. This is achieved through a combination of
work-based learning together with the provision of development
opportunities and external training, supported by a formal
programme of coaching and mentoring.
Health and safety
The Board is committed to ensuring that Manganese’s activities
do not result in injury or illness to any employee, contractor or
member of the public and strives hard to prevent work-related
incidents, illnesses and injuries.
All operating units must comply with our health and safety policies
in addition to meeting requirements specific to their businesses,
for example, the Control of Substances Hazardous to Health
(“COSHH”), as well as customers’ expectations. The Board is
committed to ensuring that these principles are articulated to all
employees and that they are effectively implemented.
The Group’s insurers, QBE, review existing systems and audit the
health and safety performance, making recommendations accordingly.
Each of our businesses maintains accident reporting systems.
These systems are used to identify trends with a view to developing
strategies for reducing the number of reportable as well as
non-reportable accidents and near misses.
Environment
The Group’s operations strive to achieve continuous improvements
in environmental performance and seek to prevent, mitigate,
reduce or offset the environmental impact of our activities.
The Executive Committee monitors a range of non-financial key
performance indicators in relation to the environment and these
are reported by the Chief Operating Officer at the Board’s regular
meetings in order to monitor performance over time. By raising
awareness of energy usage amongst the management cadre,
the Group aims to develop and maintain an effective energy
management strategy in order to achieve reductions in the levels
of energy consumed and cost savings.
During the year, a combination of lower production in response
to the economic downturn and fixed energy costs resulted in an
increase in energy consumption per vehicle.
Community
The Group recognises the importance of engaging with the
communities in which it operates. It encourages operating units
to develop their own corporate social involvement plans in
consultation with stakeholders in order to identify programmes
with tangible and sustainable community benefits in line with
our corporate social involvement policy.
An example of one such initiative is a project supported by
the Confederation of British Industry aimed at encouraging local
schools to develop courses designed to give students practical
exposure to local businesses to the mutual benefit of both. Whilst
an element of the work is theoretical, projects are based upon
business objectives set by the companies with which individual
schools have chosen to work. During 2008, LTI worked with
Coundon Court School in Coventry on a project to design LTI’s
Christmas card with students being encouraged to develop their
own designs from which one was selected by the Company.
Two further projects are in progress, also with Coundon Court
School as follows:
1. Creating a marketing proposal for LTI. Based around actual
market research, Year 12 students on the GCSE Applied
Business course will develop marketing plans for LTI,
which will benefit from the students’ market research; and
2. Producing a disability training film to demonstrate the
accessibility capabilities of the taxi and training techniques
for drivers, thereby highlighting to councils, driver and
disabled groups the benefits of the TX4.
During the period, the Group made financial contributions to
charities and local community causes totalling £23,675 (2007:
£36,661), including amounts raised and donated by employees.
13
Manganese Bronze Holdings PLC Manganese Bronze Holdings PLC
14
Performance review
Sustainable development report continued
Sustainable development report (KPIs)
Employee turnover (factory operations only)
Year ended 17 months ended Year ended
31 Dec 31 Dec 31 Jul
Key performance indicator 2008 2007 2007
Staff turnover (voluntary leavers only, annualised %) 8.87 8.81 8.82
Training and development (factory only)
Year ended 17 months ended Year ended
31 Dec 31 Dec 31 Jul
Key performance indicator 2008 2007 2007
Training days Total 768 1,809 1,312
Average training days Per employee 3.1 5.4 3.9
Health and safety (factory and retail operations)
Year ended 17 months ended Year ended
31 Dec 31 Dec 31 Jul
Key performance indicator 2008 2007 2007
Accidents per 100,000 hours worked 0.8 1.1 1.3
Total reportable accidents 6 13 10
Utility usage (per vehicle produced for the factory operations only)
% decrease/
Year ended 17 months ended Year ended (increase)
31 Dec 31 Dec 31 Jul Dec 2008 vs
Key performance indicator Units 2008 2007 2007 Dec 2007
Gas KWh 3,476 2,368 2,314 (47)%
Water M3 1.54 1.13 1.23 (36)%
Electricity KWh 1,426 1,245 1,273 (14)% Management and governance
15
Manganese Bronze Holdings PLC
Board of directors
Tim Melville-Ross
†
Non-executive Chairman
Tim Melville-Ross (64) was appointed as a non-executive director
of Manganese in March 2000 and Chairman in January 2003.
He was previously Chief Executive of the Nationwide Building
Society (1985-94) and Director General of the Institute of Directors
(1994-1999). He is currently Chairman of DTZ Holdings plc,
Royal London Mutual Insurance and the Higher Education Funding
Council for England.
Mr John Russell
Group Chief Executive
Mr Russell (59), who was previously Vice President of Harley
Davidson Motor Company and Managing Director of Harley
Davidson Europe, joined the Board in March 2007 as Group
Chief Executive.
Mr Russell began his career in the automotive industry at Unipart
in 1972 before moving to Peugeot Talbot Motor Co in 1980.
He spent six years at Peugeot, initially as UK Parts Marketing
Director, and then as UK Marketing Director. This was followed
by ten years at the Rover Group where he progressed from
Marketing Director for Land Rover to Rover Group Board Director
responsible for Sales, Marketing and Overseas Manufacturing.
Prior to joining Harley Davidson he was Director General of the
Walpole Committee, an organisation that promotes British luxury
brands, and Interim CEO of Bombay Dyeing, a Mumbai,
India-based textile manufacturer. John is currently a non-executive
director of Atmaana, a management consultancy business.
Mark Fryer
Group Finance and Business Development Director
Mark Fryer (41) was appointed Group Finance Director in January
2002. A chartered accountant, he joined the Group from GKN plc
where he had been Finance Director of the Industrial Services
Division and latterly Chief Financial Officer of a GKN subsidiary
in the United States.
Peter Shillcock
Chief Operating Officer
Peter Shillcock (47) was appointed Chief Operating Officer
in March 2005 having been Managing Director of LTI Limited,
the Company’s principal subsidiary, since December 2000.
A chartered engineer, he has over 30 years’ automotive engineering
experience having previously held a number of senior positions
within BMW and the Rover Group. Mr Shillcock is a non-executive
director of the Motor Industry Research Association Limited (MIRA).
Christopher Ross FREng *
†
Deputy Chairman and senior independent director
Christopher Ross (64) was appointed as a non-executive director
in June 1995 and Deputy Chairman in March 2003. He has had
a long career in manufacturing and professional service companies.
He is currently Chairman of Carclo PLC and a non-executive director
of The Electric Car Corporation Plc. He was appointed as a Fellow
of the Royal Academy of Engineering by Prince Philip in 1995.
Andrew Walker *
†
Non-executive director
Andrew Walker (57) was appointed as a non-executive director
in August 2003. Formerly he was Group Chief Executive of
McKechnie plc (1997 to 2001) and of South Wales Electricity plc
(1993 to 1996) having previously spent 14 years with Dowty
Group PLC. He is currently a non-executive director of Ultra
Electronics Holdings plc, Delta plc, May Gurney plc, Plastics
Capital plc, Brintons Limited, Porvair plc and API Group plc.
Siu Lun Lawrence Ang *
Non-executive director
Mr Ang Siu Lun, Lawrence (48) was appointed a non-executive
director in September 2007. Mr Ang is the executive director
of Geely Automobile Holdings Limited and is mainly responsible
for international business development, capital markets and
investor relations for Geely. He holds a Bachelor of Science degree
in Physics and Computer Science and a Master of Business
Administration degree from the Chinese University of Hong Kong.
Prior to joining Geely, he worked in a number of major international
investment banks for 17 years and has extensive experience in
equity research, investment banking and financial analysis,
focusing on China’s equity market, automobile industry and
investment banking business.
Sheng Yue Gui
†
Non-executive director
Mr Gui (45) was appointed as a non-executive director in
September 2007. Mr Gui is the Chief Executive Officer of Geely
Automobile Holdings Limited and is responsible for the
administration of the company. Mr Gui has over 20 years’
experience in administration and project management. Mr Gui had
also worked with China Resources (Holdings) Company Limited.
Mr Gui holds a Bachelor of Science degree in mechanical
engineering from Xian Jiaotong University and a Masters degree
in business administration from the University of San Francisco.
* Member of the Audit Committee
† Member of the Remuneration and Nominations Committee Manganese Bronze Holdings PLC
16
Management and governance
Advisers
Company Secretary
Mark Devin FCIS
Registered office
Holyhead Road
Coventry CV5 8JJ
Telephone +44 (0) 247 657 2041
Fax +44 (0) 247 659 4363
Company number
61050
Website
www.manganese.com
News service
Reuters MNGS.L
Auditors
Deloitte LLP
Bankers
HSBC Bank plc
The Lloyds Banking Group PLC
Merchant bankers
N M Rothschild & Sons Limited
Stockbrokers
Collins Stewart Limited
Financial PR consultants
Financial Dynamics
Telephone +44 (0) 207 831 3113
Fax +44 (0) 207 831 7961
Solicitors
Wragge & Co
Simmons & Simmons
Registrars
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Telephone 0871 664 0300
#
+44 208 639 3399
#
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Investor calendar
Event Date
Annual results announcement, financial year ended 31 December 2008 5 March
First interim management statement 13 May
110th Annual General Meeting 13 May
Preference share dividend payable 30 June
Half year results announcement, six months to 30 June 2009 29 July
Second interim management statement 21 October
Preference share dividend payable 31 December
Financial year end 31 December Management and governance
17
Manganese Bronze Holdings PLC
Directors’ report
The directors present the annual report on the affairs of the Group,
together with the financial statements and auditors’ report, for the
year ended 31 December 2008.
1 Principal activities
Manganese Bronze Holdings PLC is a UK-based speciality
automotive and taxi services group.
The subsidiary and associated undertakings principally affecting
the profits or net assets of the Group in the period are listed in
note 45 to the financial statements.
2 Business review
The Company is required by Section 417 the Companies Act 2006
to include a business review in this report. The information that fulfils
the requirements of the business review can be found in the sections
set out below and is incorporated by reference into this report:
1. The Chairman’s statement on pages 3 and 4;
2. The Chief Executive’s statement, including details of the
main trends and factors likely to affect the future development,
performance and position of the Company’s business and
an indication of its activities in the field of research and
development, on pages 5 to 7;
3. The business review on pages 8 to 11;
4. The sustainable development report on pages 12 to 14.
The business review has been prepared to provide the Company’s
shareholders with a fair review of the Company’s business and
a description of the principal risks and uncertainties facing it.
It may not be relied upon by anyone, including the Company’s
shareholders, for any other purpose.
Information about the use of financial instruments by the
Company and its subsidiaries is given in note 35 to the
consolidated financial statements.
Details of significant events since the balance sheet date are
contained in note 36 to the financial statements.
3 Dividends
As noted in the Chairman’s statement on page 3, the Board
does not recommend the payment of a final dividend given the
continuing difficulties in the market. The total dividend for the year
ended 31 December 2008 therefore comprises only the interim
dividend paid on 1 September 2008 totalling 2.25p (total dividend
for the 17 months ended 31 December 2007: 7.25p).
4 Directors
The directors who served throughout the year were as follows:
Tim Melville-Ross* Non-executive Chairman
John Russell Group Chief Executive
Mark Fryer Group Finance and Business
Development Director
Peter Shillcock Chief Operating Officer
Christopher Ross
#
* Deputy Chairman and
Senior Independent
non-executive Director
Andrew Walker
#
* Non-executive Director
Sheng Gui* Non-executive Director
Lawrence Ang
#
Non-executive Director
# Member of the Audit Committee
* Member of the Remuneration and Nomination Committee
Provision A.7.2 of the Combined Code recommends that
non-executive directors who have served more than nine years
on a Company’s Board should be subject to annual re-election.
Accordingly, Christopher Ross, who was appointed as a
non-executive director in June 1995 and Deputy Chairman
in March 2003, offers himself for re-election.
The Articles of Association provide that at every annual general
meeting, one-third of the directors or, if their number is not three
or a multiple of three, the number nearest to one-third shall retire
from office. Accordingly, Mr Fryer and Mr Russell will retire by
rotation and, being eligible, offer themselves for re-election.
Biographies of all the directors at the date of this report, including
those retiring at this year’s annual general meeting, are set out on
page 15. Manganese Bronze Holdings PLC
18
Management and governance
Directors’ report continued
5 Directors’ interests
The directors who held office at 31 December 2008 had the
following interests in the ordinary share capital of the Company:
Name of director 31 Dec 2008 31 Dec 2007
Tim Melville-Ross 8,000 8,000
John Russell – –
Mark Fryer 25,500 –
Peter Shillcock 21,800 –
Christopher Ross – –
Andrew Walker – –
Sheng Gui – –
Lawrence Ang – –
Directors’ interests in share options and Long-Term Incentive Plans
are disclosed in the directors’ remuneration report on page 31.
No director had any interest in the preference share capital of the
Company or in the shares of any other Company in the Group.
There were no changes in the interests of any of the directors
between 31 December 2008 and the date of this report.
No director had any interest in any contract of significance with
the Company during the year ended 31 December 2008 other
than their service contracts, details of which are given in the
directors’ remuneration report on pages 27 to 31.
6 Directors’ indemnities
Following the year end, the Board resolved to enter into deeds
of indemnity for individual directors. Such indemnities are
increasingly common amongst listed companies and the Board
regards them as being a means of attracting and retaining
directors. After careful consideration, the provision of deeds of
indemnity was considered to be in the Company’s best interests
and the Board accordingly resolved to indemnify the directors
individually against any and all liability suffered or incurred by
them (except to the extent that the Company would be prohibited
by applicable law or regulation from providing such indemnity)
in respect of acts or omissions while, or in the course of acting
as a director of the Company.
7 Supplier payment policy
The Group’s policy is to settle terms of payment with suppliers
when agreeing the terms of each transaction and ensure that
suppliers are made aware of, and abide by, the terms of payment.
Trade creditors of the Group at 31 December 2008 were equivalent
to 65 (2007: 51) days’ purchases, based on the average daily
amount invoiced by suppliers during the year. The Company is a
holding company and had no trade creditors at 31 December 2008
(2007: £nil).
8 Charitable and political donations
During the period under review, the Group made charitable
donations of £12,692 (2007: £13,092), principally to local
charities serving the communities in which the Group operates.
No political donations were made (2007: £nil).
9 Substantial shareholdings
The Company had been notified of the following interests in 3%
or more of the Company’s total voting rights up to 4 March 2009:
% of
voting rights
and issued No of Nature of
share capital ordinary shares holding
Morgan Stanley 25.221 6,336,083 Direct
Linkstate Overseas Limited
(Geely Automobile Holdings) 22.689 5,700,000 Direct
BT Pension Scheme
and subsidiaries
(including Hermes
UK Small Companies
Focus Fund) 16.062 4,035,213 Indirect
Lansdowne Partners 7.262 1,824,500 Indirect
10 Annual General Meeting
This year’s Annual General Meeting will be held on 13 May 2009.
The notice of meeting together with details of the business to be
conducted and form of proxy are set out in the separate booklet
enclosed with this report.
11 Auditors
Each person who is a director at the date of approval of this annual
report confirms that:
1. So far as the director is aware, there is no relevant audit
information of which the Company’s auditors are unaware; and
2. The director has taken all the steps that he ought to have taken
as a director to make himself aware of any relevant audit
information and to establish that the company’s auditors are
aware of that information.
This confirmation is given and should be interpreted in accordance
with the provisions of Section 234ZA of the Companies Act 1985.
Deloitte LLP have expressed their willingness to continue in office
as auditors and a resolution proposing their re-appointment will be
proposed at the forthcoming Annual General Meeting.
12 Directors’ and officers’ liability insurance
The Company purchases and maintains liability insurance for
its directors and officers and those of the subsidiaries of the Group
as permitted by the Companies Act 2006. Management and governance
19
Manganese Bronze Holdings PLC
13 Additional information
Articles of Association
A special resolution adopting new Articles of Association
(the “Articles”) to accommodate certain provisions within
the Companies Act 2006 was passed at the Annual General
Meeting held on 3 June 2008. These provisions related
primarily to directors’ conflicts of interests.
The following description summarises certain provisions in
the Company’s Articles and applicable English law concerning
companies (the Companies Act 1985 and the Companies Act
2006, together the “Companies Acts”). This is a summary only
and the relevant provisions of the Companies Acts or the Articles
should be consulted if further information is required.
Share capital structure
Details of the authorised and issued share capital, together
with details of movements in the Company’s issued share capital
during the year are shown in notes 28 and 29 to the consolidated
financial statements.
The Company has one class of ordinary share which carries
no right to fixed income. Each share carries the right to one vote
at general meetings of the Company. The cumulative preference
shares carry 8¼% interest but do not carry voting rights.
The percentage of the issued nominal value of the ordinary shares
is 90.74% of the total issued nominal value of all share capital.
There are no specific restrictions on the size of a holding nor on the
transfer of shares, which are both governed by the general provisions
of the Articles and prevailing legislation. The directors are not
aware of any agreements between the holders of the Company’s
shares that may result in restrictions on the transfer of securities
or on voting rights. No person has any special rights of control over
the Company’s share capital and all issued shares are fully paid.
At the end of the year, the directors had authority, under a
shareholders’ resolution dated 3 June 2008, to purchase through
the market:
1. 2,496,192 of the Company’s ordinary shares (representing
10% of the issued ordinary share capital) at prices ranging
between 25p and 105% of the average mid-market price
for the preceding five business days; and
2. 640,959 of the Company’s 8¼% cumulative preference shares
of £1 each in the capital of the Company at prices ranging
between 10p and £1.50.
The authority expires at the conclusion of the Annual General
Meeting of the Company on 13 May 2009.
The Company made no purchases of its own ordinary shares
during the year. 258 preference shares were purchased following
the death of a shareholder.
During the year, the Company allotted 160,413 ordinary 25p
shares for cash following the exercise of options granted under
the Company’s share schemes.
Resolutions will be proposed at the forthcoming Annual General
Meeting seeking shareholder approval to (i) increase the authorised
ordinary share capital, (ii) allot equity securities, (iii) disapply
statutory pre-emption rights and (iv) authorise the Company to
make market purchases of its own shares. Such authorities will
be exercised having regard to applicable guidelines of the Investor
Protection Committees.
Details of share schemes are set out in note 33 to the consolidated
financial statements and in the directors’ remuneration report on
pages 27 to 31.
Substantial shareholdings
Details of significant direct and indirect holdings in the Company
are given in section 9 of this report.
Powers of the directors
With regard to the appointment and replacement of directors,
the Company is governed by its Articles, the Combined Code,
the Companies Acts and related legislation. The Articles themselves
may be amended by special resolution of the shareholders.
The powers of the directors are described in the corporate
governance statement on pages 20 to 25
Significant agreements – change of control
Under the agreement governing the Company’s joint venture (“JV”)
agreement with Geely Automobile Holdings Limited, if a competitor
directly or indirectly takes control of the Company, Geely may require
the Company to sell its shares in the JV to them. There are also
a number of other agreements that take effect, alter or terminate
upon a change of control of the Company such as commercial
contracts, bank loan agreements, property lease arrangements
and employee share plans. None of these are considered to be
significant in terms of their likely impact on the business of the
Group as a whole. Furthermore, the directors are not aware of any
agreements between the Company and its directors or employees
that provide for compensation for loss of office or employment that
occurs because of a takeover bid.
By order of the Board
Mark Devin
Company Secretary
Manganese Bronze Holdings PLC
Holyhead Road
Coventry CV5 8JJ
4 March 2009 Manganese Bronze Holdings PLC
20
Management and governance
Corporate governance
Introduction
The Board continues to review the governance requirements
in the context of the size, organisational structure and commercial
strengths of the Group.
During this review process, the purpose of good governance has
remained paramount, namely to provide the framework of business
principles, structures and controls within the Group, which enable
the directors, management and shareholders to ensure:
• accountability;
• transparency of responsibility;
• the appropriate management of conflicts of interest; and
• effective relationships between the Board, its committees
and shareholders.
All of the above support the overall objective of creating
shareholder value through the delivery of the Group’s strategy,
the reduction of risks and the protection of the long-term interests
of shareholders.
Statement of compliance with Combined
Code provisions
With the exception of the following matters, the Board considers
that the Company has complied with the principles set out in the
Financial Reporting Council’s Combined Code on Corporate
Governance issued in 2006 (the “Code”):
• Code provision A.3.1. Neither Christopher Ross, Lawrence Ang
nor Sheng Gui are considered independent under the provisions
of the Code. The Company’s position is explained below under
the heading “Board balance and independence”. Since
Christopher Ross has served on the Board for more than nine
years, in terms of the Code he can be regarded as independent
only if the Board deems him to be so. The Board has concluded
that Mr Ross remains independent in character and judgement,
that his performance continues to be effective and that he
demonstrates continued commitment to the role.
• Code provision D.1.1. The independent non-executive directors
have not attended formal meetings with major shareholders
during 2008. However, the senior independent director
corresponded with a number of the largest institutional investors
during the year, thereby giving them the opportunity to comment
on performance. In addition, the senior independent director
and the Chairman have had informal dialogue with several
institutional investors throughout the course of the year.
The Board
1. Structure and composition
As at 31 December 2008, the Board comprised three executive
and five non-executive directors:
Tim Melville-Ross Non-executive Appointed
(Chairman) 1 March 2000
John Russell Group Chief Appointed
Executive 1 March 2007
Mark Fryer Group Finance Appointed
and Business 2 January 2002
Development
Director
Peter Shillcock Chief Operating Appointed
Officer 18 March 2005
Christopher Ross Non-executive Appointed
(Deputy Chairman 22 June 1995
and Senior
Independent Director)
Andrew Walker Non-executive Appointed 1
August 2003
Lawrence Ang Non-executive Appointed 25
September 2007
Sheng Gui Non-executive Appointed 25
September 2007
The non-executive directors bring a broad range of business,
financial and global experience to the Board. Biographical details
of all the directors are set out on page 15.
The roles of Chairman and Chief Executive are separate and
clearly defined so that no individual has unfettered powers of
decision-making. The Chairman is responsible for the leadership
and governance of the Board as a whole and the Group Chief
Executive for the management of the Group and the implementation
of Board strategy and policy on the Board’s behalf. In discharging
his responsibilities, the Group Chief Executive is advised and
assisted by the Executive Committee comprising senior managers.
Christopher Ross is the senior independent director to whom
concerns may be conveyed by shareholders if they are unable
to resolve them through existing mechanisms for investor
communications or where such channels are inappropriate
The Chairman meets, at least annually, with the non-executive
directors without the executive directors being present. Management and governance
21
Manganese Bronze Holdings PLC
The Company Secretary is responsible for assisting the Chairman
in all matters relating to corporate governance.
Details of the terms of appointment of both the executive and
non-executive directors are set out in the directors’ remuneration
report, which refers to executive service contracts and
non-executive letters of appointment, copies of which are available
for inspection at the Company’s registered office and which will
be available for inspection at the forthcoming Annual General
Meeting to be held on 13 May 2009.
2. Board process
The directors ensure the effectiveness of the Board through regular
Board meetings and by having open lines of communication
between Board members. Details of attendance at scheduled Board
and Board committee meetings during the period are as follows:
Audit Remuneration
Board Committee & Nominations
meetings meetings Committee meetings
Number Attended Number Attended Number Attended
Tim Melville-Ross 77 3 3
John Russell 77
Mark Fryer 77
Peter Shillcock 76
Christopher Ross* 77 223 3
Andrew Walker* 76 223 2
Lawrence Ang
†
77 22
Sheng Gui
†
71 3 0
Notes:
* Considered by the Board to be independent for Combined Code purposes
† Considered by the Board not to be independent for Combined Code purposes
Non-attendance at meetings was due to prior business or personal
commitments and illness. Directors unable to attend Board or
Committee meetings reviewed the relevant papers and provided
comments to the Chairman or Committee Chairman.
The Board sets the strategic objectives of the Group, agrees on
performance criteria and delegates to management the detailed
planning and implementation of those objectives and policies in
accordance with appropriate risk parameters. The Board monitors
compliance with policies and achievements against objectives by
holding management accountable for its activity through regular
reporting and budget updates. The schedule of matters reserved
to the Board includes the approval of financial statements;
the Group’s business strategy; capital expenditure plans and
major capital projects; major changes to the Group’s management
and control structure; risk management strategy and social and
environmental policy.
The Board is supplied in a timely manner with the appropriate
information to enable it to discharge its duties, including providing
constructive challenge to, and scrutiny of, management. Further
information is obtained by the Board from the executive directors
and other relevant senior executives as the Board, particularly its
non-executive members, considers appropriate. Procedures are in
place for directors to take independent professional advice, when
necessary, at the Company’s expense. No such advice was sought
during the year under review.
The Board is supported by the Company Secretary who, under the
direction of the Chairman, ensures good communication and
information flows within the Board, including between executive and
non-executive directors and between the Board and its Committees.
Where directors have concerns that cannot be resolved regarding
the running of the Company or a proposed action, they are
encouraged to make their views known and these are recorded
in the Board minutes.
3. Directors’ conflicts of interest
Under the Companies Act 2006, from 1 October 2008 a director
must avoid a situation where he has, or can have, a direct or
indirect interest that conflicts, or possibly may conflict with the
Company’s interests. The requirement is considered very broad and
could apply, for example, if a director becomes a director of another
company or a trustee of another organisation. The Act allows
directors of public companies to authorise conflicts and potential
conflicts, where appropriate, provided that the articles of
association contain a provision to this effect. The Act also allows
the articles of association to contain other provisions for dealing
with directors’ conflicts of interest to avoid a breach of duty.
At the Annual General Meeting held on 3 June 2008, shareholders
approved the adoption of new articles giving the directors authority
to approve such situations and to include other provisions to allow
conflicts of interest to be dealt with in a similar way.
There are safeguards which will apply when directors decide
whether to authorise a conflict or potential conflict. First, only
directors who have no interest in the matter being considered
will be able to take the relevant decision, and second, in taking
the decision, the directors must act in a way they consider,
in good faith, will be most likely to promote the Company’s
success. The directors will be able to impose limits or conditions
when giving authorisation if they think this is appropriate.
Following adoption of the new articles, the Board approved conflicts
declared by directors as at 1 October 2008. Directors are required
to notify the Company Secretary of any additional conflict situation
or if there is a material change in a conflict situation previously
notified, giving sufficient details of the situation to allow the board
to make an informed decision when considering authorisation. Manganese Bronze Holdings PLC
22
Management and governance
Corporate governance continued
Board balance and independence
The Code requires smaller companies to have at least two
non-executive directors determined by the Board to be independent
(Code Provision A.3.2) and to establish remuneration and audit
committees comprising at least two independent non-executive
directors (Code Provisions B.2.1 and C.3.1 respectively).
Independence is considered at least annually and is based on
the factors set out in the Code but importantly examines whether
each director is independent in character, judgement and behaviour,
the Board believing that strength of character and independence of
judgement and opinion are more important than absolute numbers
on the Board. Accordingly, the Board is satisfied that no individual
or group has unfettered powers of decision-making or unequal
access to information. Furthermore, non-executive directors do
not participate in the Company’s cash bonus scheme, share option
plans, long-term incentive plan or pension scheme and are not
dependent upon the fees received from the Company as their
primary source of income.
The Board has assessed the five non-executive directors against
the criteria set out in the Code, and considers Andrew Walker to be
independent of management and free from any business or other
relationship that would materially interfere with the exercise of his
independent judgement.
As noted in the statement of compliance above, Christopher Ross
is regarded by the Board as being independent and his performance
and commitment justify his being proposed for re-election at the
forthcoming Annual General Meeting.
Lawrence Ang and Sheng Gui are directors of Geely Automobile
Holdings Limited, a significant shareholder and joint venture
partner in Shanghai. The Board considers it appropriate for Geely
to be represented on the Board.
Re-election of directors
In accordance with the Company’s Articles of Association, not more
than one-third of the directors are required to be re-elected at each
Annual General Meeting of the Company, the directors doing so
being those who have been longest in office since their last
appointment or re-election. Every director must, in any event, be
re-elected at least every three years. John Russell and Mark Fryer
are the directors retiring by rotation at the forthcoming Annual
General Meeting of the Company and, being eligible, offer
themselves for re-election. Following the evaluation of the Board
referred to below, the Board was satisfied that each director’s
performance continues to be effective and accordingly recommends
the re-election of both directors.
As recommended by the Code, non-executive directors who
have been in office for more than nine years will stand for annual
re-election at the Annual General Meeting. Christopher Ross was
appointed to the Board in June 1995, a length of tenure that
the Code suggests may reduce independence. The Board does
not consider that tenure alone compromises independence and,
particularly in the current challenging economic and trading
climate, values independence of character and judgement,
continuity and experience. Accordingly, and following consultation
with the Company’s major shareholders, it has been decided
that Mr Ross should stand for re-election for one further year at
the 2009 Annual General Meeting. However, the issue of Board
refreshment will be addressed during the forthcoming year.
Board development and performance evaluation
The Board believes that the benefit of its collective experience
is a valuable asset but recognises that directors need to keep
their professional knowledge up to date. On joining the Board,
new directors are given background information describing the
Company and its activities and site visits to the major business
units and meetings with principal shareholders and some of our
advisers are arranged.
The performance of the Board, its main committees and the
individual directors was formally evaluated under the leadership
and direction of the Chairman. A discussion document was
circulated to the directors concerning the performance of the Board
as a whole and its main committees. The Chairman then discussed
with each director individually specific issues, which were then
addressed as appropriate. The evaluation process concluded that
the Board as a whole and its main committees had functioned
effectively during the period and that the individuals had also
performed well, with each making a significant contribution to the
Company. The mix of skills and experience on the Board was felt
to be appropriate.
Board committees
The Board has three committees, as follows:
1. Audit Committee
The Audit Committee consists of three non-executive directors and
is chaired by Andrew Walker. Mr Walker is deemed to have recent
and relevant financial experience.
Meetings are attended by the Chief Executive, the Group Finance
and Business Development Director and representatives of the
auditors as required. The Committee assists the Board in the
discharge of its duties concerning the announcement of results,
the preparation of the Annual Report and financial statements and
the maintenance of proper internal controls. It reviews the scope
and planning of the audit and the auditors’ findings, and considers
Group accounting policies and the compliance of those policies
with applicable legal and accounting standards. Management and governance
23
Manganese Bronze Holdings PLC
The objectives of the Audit Committee have been confirmed
in the terms of reference as:
• ensuring the integrity of the financial statements of
the Company;
• reviewing and monitoring the Group’s internal control systems;
• overseeing the Group’s relationship with its external auditors;
• periodically reviewing the need to establish an internal audit
function; and
• ensuring that Group reporting complies in all respects with
relevant statutory and required financial reporting standards,
including corporate governance disclosures.
A copy of the terms of reference is available on the Company’s
website (www.manganese.com).
A procedure setting out responsibilities for the preparation of
the Group’s financial statements and their review by the external
auditor and the Audit Committee has been documented. This also
sets out the basis on which the Board make its statement on
“Going Concern”. The Audit Committee reviewed the preliminary
and interim statements prior to their approval by the Board.
The Committee has also considered the external auditor’s
management letter and the assumptions underlying the financial
statements prior to recommending their approval to the Board.
2. Remuneration and Nominations Committee
The Remuneration and Nominations Committee comprises
four non-executive directors and is chaired by Christopher Ross.
John Russell is invited to attend meetings as necessary.
Under its terms of reference, the Remuneration and Nominations
Committee is responsible for:
• ensuring that the Company’s executive directors and certain
other agreed senior executives are fairly rewarded for their
individual contributions to the Company’s overall performance;
• demonstrating to shareholders and other interested parties
that the remuneration (including all benefits and terms of
employment) of the executive directors is set by a committee of
Board members who have no personal interest in the outcome
of their decisions and who will give due regard to the interests of
the shareholders and to the financial and commercial health of
the Company;
• assessing how the Company should comply with established
best practice in directors’ remuneration;
• ensuring that the size and composition of the Board is
appropriate to the needs of the Group;
• selecting the most suitable candidate or candidates for
appointment to the Board; and
• overseeing succession planning for the Board.
A copy of the terms of reference is available on the Company’s
website (www.manganese.com).
Full details of the role, policies and activities of the Remuneration
and Nominations Committee are set out in the directors’
remuneration report on pages 27 to 31.
3. Executive Committee
The Board’s role is to set the Company’s values and standards,
determine its strategic objectives and monitor operational
performance. The Executive Committee, chaired by the Chief
Executive Officer, supports the Board in fulfilling this role and is
essentially responsible for the operational running of the business
of the Company, including:
1. implementing and delivering the strategic plans formulated
by the Board;
2. monitoring operational and financial performance;
3. assessing and controlling risk;
4. prioritising and allocating resources; and
5. developing and reviewing objectives and budgets with
subsidiary company boards to ensure that these fall within
agreed targets and parameters set by the Board. Manganese Bronze Holdings PLC
24
Management and governance
Corporate governance continued
In discharging its duties, the Committee considers issues for
submission to the Board to ensure that all relevant factors have
been considered, in particular the following:
1. long-term consequences;
2. employees;
3. business relationships with suppliers, customers and others;
4. community and the environment;
5. reputational risk;
6. the Company’s members;
7. internal control considerations;
8. legal and regulatory issues; and
9. risk assessments.
The Chief Executive, or his nominated replacement, reports on
the proceedings of the Executive Committee to the next meeting
of the Board, making whatever recommendations to the Board the
Committee deems appropriate on any area within its remit where
action or improvement is needed.
Internal controls
The Board confirms that it has maintained a sound system of
internal control to provide reasonable assurance that all information
used within the business and for external publication is adequate,
including financial, operational, compliance control and risk
management information. This ensures that assets are safeguarded
and shareholders’ investments protected.
The Board acknowledges its overall responsibility for the Group’s
system of internal control and for reviewing its effectiveness.
Through the Audit Committee, the Board continues to keep the
internal control systems under review and has in place ongoing
processes for identifying, evaluating and managing the significant
risks faced by the Group. In addition, it carries out an annual
assessment of its risk management systems. The Board confirms
that the actions it considers necessary have been or are being
taken to rectify such failings and weaknesses which it considers
to be significant from its review of the system of internal control.
It should be noted that, whilst subject to regular review and
update, the Group’s systems can provide only reasonable,
not absolute, assurance against material misstatement or loss.
The key procedures that the directors have established and which
are designed to provide effective internal control for the Group are:
1. regular Board meetings to consider a schedule of matters
reserved for the directors’ consideration;
2. the Audit Committee of the Board considers significant financial
control matters as appropriate;
3. monitoring of the financial performance of operating companies
and divisions through analysis of regular financial and
management reports together with continuous direct contact
with operating company and divisional management.
Consolidated reports and independent commentaries are
prepared and submitted to the Board for review at scheduled
Board meetings;
4. maintenance of local operating boards and divisional
management teams, enabling the Board to delegate appropriate
levels of authority to a small number of subsidiary Company
directors and managers, all of whom are accountable to
the Board;
5. the application of a rigorous annual budgeting process.
All budgets are subject to approval at Group Board level;
6. the review and comparison of detailed monthly management
reports, received from each business unit, against budgets
and forecasts;
7. adoption of a Group Risk Management Framework that
identifies responsibilities at both Group and subsidiary level
for the ongoing management of risk across the business;
8. programming internal reviews to take account of the risk
assessment results and processes; and
9. the use of external professional advisers to carry out due
diligence for potential acquisitions.
The Board is satisfied with the effectiveness of the Group’s current
system of internal control.
The Board has considered the need for an internal audit function
and concluded that the size of the Group does not currently justify
establishing an internal audit capability. At present, internal reviews
are programmed according to results of risk assessments and
processes and carried out under the direction of the Group
Financial Controller, whose findings are reported to the Executive
Committee, part of whose role is to support the Board by assessing
and controlling risk. Management and governance
25
Manganese Bronze Holdings PLC
The Group has a whistle-blowing policy enabling the Group
Financial Controller to receive, in confidence, complaints on
accounting, risk issues, internal controls, auditing issues and
related matters for reporting to the Audit Committee.
Audit independence
The Audit Committee and the Board place great emphasis on the
objectivity of the Group’s auditor, Deloitte LLP (“Deloitte”), in their
reporting to shareholders. The audit partner and senior manager
are present at Audit Committee meetings as required to ensure
full communication of matters relating to the audit. The overall
performance of the auditor is reviewed annually by the Audit
Committee, taking into account the views of management, and
feedback is provided when necessary to senior members of Deloitte
unrelated to the audit. This activity also forms part of Deloitte’s
own system of quality control. The Audit Committee also has
discussions with the auditor, without management being present,
on the adequacy of controls and on any judgemental areas.
These discussions have proved satisfactory to date. The scope of
the forthcoming year’s audit is discussed in advance by the Audit
Committee. Audit fees are reviewed by the Audit Committee after
discussions between the businesses and Deloitte and are then
referred to the Board for approval.
Rotation of the audit partner’s responsibilities within Deloitte is
required by their profession’s ethical standards. The current audit
partner is in his first year of signing the audit report following
the retirement of the previous audit partner at the 2008 Annual
General Meeting. There is also rotation of key members within
the audit team.
Assignments of non-audit work have been and are subject to
controls by management that have been agreed by the Audit
Committee so that audit independence is not compromised.
In summary, these procedures are as follows:
1. Audit related services: as auditor, this is the main area of work
of Deloitte and its associates. If any additional accounting
support is required, this is considered competitively.
2. Tax consulting: in cases where they are best suited, the Group
engages Deloitte and its associates but the Group also uses
other tax consultancies. Significant pieces of tax work are
evaluated competitively; and
3. General and systems consulting: all significant consulting
projects are subject to competitive tender.
Other than audit, the Group Finance and Business Development
Director is required to give prior approval of work carried out by
Deloitte and its associates in excess of a predetermined threshold.
Part of this review is to determine that other potential providers
of the services have been adequately considered. These controls
provide the Audit Committee with confidence in the independence
of Deloitte in their reporting on the audit of the Group.
Group treasury management
The Group’s financial instruments comprise borrowing, cash and
liquid resources and various items such as trade receivables and
trade payables that arise directly from, and finance, operations.
It is, and has been throughout the period under review and up
to the date of approval of this report, the Group’s policy that no
speculative trading in financial instruments shall be undertaken.
Relations with shareholders
1. Dialogue
The Board is committed to maintaining good communications
with shareholders. Other than during close periods, the Group
Chief Executive and Group Finance and Business Development
Director maintain a regular dialogue with institutional shareholders
throughout the year. The Group Chief Executive and Group
Finance and Business Development Director give presentations
to institutional shareholders and analysts immediately after the
announcement of the Group’s half-year and full-year results.
The Group also encourages communications with private
shareholders throughout the year and welcomes their participation
at shareholder meetings.
The Company issues interim management statements to provide
an indication of trading and prospects in line with current
applicable regulations. The Group’s annual and half-year reports,
trading statements and press releases are available on its website
(wwww.manganese.com) as are all regulatory announcements
relating to the Group.
2. Constructive use of the AGM
The Board wishes to encourage the constructive use of the
Company’s Annual General Meeting for shareholder communication.
The chairmen of the Audit, Remuneration and Nominations
Committees will be available to answer questions at the
forthcoming Annual General Meeting, which will be convened
on at least 20 working days’ notice. As with previous practice,
resolutions will be proposed on each substantially separate
issue and the level of proxies cast for each resolution will be
communicated following approval of each resolution at the
forthcoming Annual General Meeting.
Going concern
The directors have a reasonable expectation that the Company
and the Group have adequate resources to continue in operational
existence for the foreseeable future and accordingly the going
concern basis continues to be adopted in preparing the accounts.
In forming this view, the directors have reviewed the risk profile
of the Group, along with budgets for at least 12 months from the
date of signing this report and outline plans for future periods,
including capital expenditure plans and cashflow forecasts.
This matter is dealt with further in the Chief Executive’s statement
and in the business review on pages 5 to 11. Manganese Bronze Holdings PLC
26
Management and governance
Statement of directors’ responsibilities
The directors are responsible for preparing the Annual Report
and the financial statements.
The directors are required to prepare financial statements for
the Group in accordance with International Financial Reporting
Standards as adopted by the EU (IFRSs) and have also elected
to prepare financial statements for the Company in accordance
with IFRSs. Company law requires the directors to prepare such
financial statements in accordance with IFRSs, the Companies
Act [1985] [2006] and Article 4 of the IAS Regulation.
International Accounting Standard 1 requires that financial
statements present fairly for each financial year the Company’s
financial position, financial performance and cash flows. This
requires the faithful representation of the effects of transactions,
other events and conditions in accordance with the definitions
and recognition criteria for assets, liabilities, income and expenses
set out in the International Accounting Standards Board’s
“Framework for the Preparation and Presentation of Financial
Statements”. In virtually all circumstances, a fair presentation
will be achieved by compliance with all applicable IFRSs.
Directors are also required to:
• properly select and apply accounting policies;
• present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable
information; and
• provide additional disclosures when compliance with the
specific requirements in IFRSs is insufficient to enable users
to understand the impact of particular transactions, other events
and conditions on the entity’s financial position and financial
performance.
The directors are responsible for keeping proper accounting records
which disclose with reasonable accuracy at any time the financial
position of the Company, for safeguarding the assets, for taking
reasonable steps for the prevention and detection of fraud and
other irregularities and for the preparation of a directors’ report and
directors’ remuneration report which comply with the requirements
of the Companies Act [1985] [2006].
The directors are responsible for the maintenance and integrity
of the Company website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements differs from legislation in other jurisdictions.
Directors’ responsibility statement
We confirm to the best of our knowledge:
1. the financial statements, prepared in accordance with
International Financial Reporting Standards as adopted by
the European Union, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Group
and the undertakings included in the consolidation taken
as a whole; and
2. the business review, which is incorporated into the directors’
report, includes a fair review of the development and
performance of the business and the position of the Company
and the undertakings included in the consolidation taken
as a whole, together with a description of the principal risks and
uncertainties they face.
By order of the Board
John Russell Mark Fryer
Chief Executive Officer Group Finance and Business
Development Director
4 March 2009 4 March 2009 Management and governance
27
Manganese Bronze Holdings PLC
Directors’ remuneration report
The report has been approved by the Board and signed on its behalf
by the Chairman of the Remuneration Committee. A resolution to
approve this report will be proposed at the Company’s Annual
General Meeting to be held on 13 May 2009.
This report has been prepared in accordance with the Directors’
Remuneration Report Regulations 2002 (“DRRR”), which set out
statutory requirements for the disclosure of directors’ remuneration.
DRRR requires the auditor to report to the Company’s shareholders
on certain parts of the directors’ remuneration report and to state
whether, in their opinion, those parts of the report have been
properly prepared in accordance with the Companies Acts.
The report has therefore been divided into separate sections
for audited and unaudited information.
Information not subject to audit
Remuneration Committee and advisers
The Remuneration Committee (“the Committee”) determines
on behalf of the Board the Company’s policy on the remuneration
and terms of engagement of the executive directors and
senior executives.
The Committee comprises certain of the non-executive directors
of the Company. The members of the Remuneration Committee
during the year were:
Christopher Ross (Chairman)
Tim Melville-Ross
Andrew Walker
Sheng Yue Gui
The Committee members have no personal financial interest,
other than as shareholders, in the matters to be decided. They
have no conflicts of interest arising from cross-directorships with
the executive directors nor from being involved in the day-to-day
business of the Company. They do not participate in any bonus,
share option or pension arrangements.
The Committee operates under clear written terms of reference,
confirms that its constitution and operation comply with the
principles set out in the Combined Code on Corporate Governance,
and has applied the principles in section 1 of the Code throughout
the year.
The Committee used the external services of Hewitt New Bridge
Street Consultants as its principal external adviser during the
period under review on matters of executive directors’ remuneration.
The Committee will also, as necessary, consult with the
Chief Executive.
Activities of the Remuneration Committee
The Committee meets on average three times during the year and
reported its material findings to the next scheduled Board meeting.
The principal business of these meetings was as follows:
• April:
1. Following the alignment of the Company’s year end with
that of our Chinese joint venture, Shanghai LTI, and our
joint venture partner, Geely, the approval of bonuses for
the five-month period from August to December 2007,
this being the period by which the financial year ended
31 July 2007 was extended; and
2. Approval of the Remuneration Committee report and
any other relevant Annual General Meeting business.
• July:
The approval of awards under the Long-Term Incentive Plan
(LTIP) 2004.
• December:
1. Salary reviews for executive directors with reference
to an external salary benchmarking review; and
2. Designing a bonus structure for 2009 geared to
incentivising the executive cardre in the light of the
current challenging trading conditions.
Remuneration policy
Main principles
The Manganese Bronze Holdings PLC group of companies
(“the Group”) operates in a highly competitive environment. For the
Group to continue to compete successfully, it is essential that the
level of remuneration and benefits offered achieve the objectives
of attracting, retaining, motivating and rewarding the necessary
high calibre of individuals at all levels across the Group.
The Group therefore sets out to provide competitive remuneration
to all its employees, appropriate to the business environment in
the market in which it operates. To achieve this, the remuneration
package is based upon the following principles:
• total rewards should be set to provide a fair and attractive
remuneration package;
• appropriate elements of the remuneration package should
be designed to reinforce the link between performance
and reward; and
• executive directors’ incentives should be aligned with the
interests of shareholders.
The remuneration strategy is designed to be in line with the
Company’s fundamental values of fairness, competitiveness
and equity and also to support the Group’s corporate strategy.
A cohesive reward structure, consistently applied and with links
to corporate performance, is seen as critical in ensuring attainment
of the Company’s strategic goals. Manganese Bronze Holdings PLC
28
Management and governance
Directors’ remuneration report continued
The Group also seeks to align the interests of shareholders with
those of executive directors and senior employees by giving the
latter opportunities and encouragement to build up a shareholding
interest in the Company through the 2004 and 2007 Long-Term
Incentive Plans.
Remuneration of executive directors
Elements of remuneration
The executive directors’ total remuneration currently consists of:
• fixed elements, comprising basic salary, benefits and
pensions; and
• performance-related elements comprising performance-related
bonus and long-term performance arrangements satisfied by
share options.
Each of the above elements of remuneration is explained below.
Basic salary
As a general principle, basic annual salaries for executive
directors and key senior executives are reviewed annually or when
a material change of responsibility occurs. The level of salary
is determined with reference to individual performance and is
benchmarked against data from selected quoted companies of
a similar size primarily from the engineering sector. Due account
is also taken of the responsibilities, skills and experience required
to fulfill the executive’s role within the Company.
In response to the Company’s current trading position, from the
beginning of February 2009, all employees (including executive
and non-executive directors) have agreed a 10% reduction in
salary. This position will be reviewed at the half-year. A scheme
has been put in place for employees to earn back this reduction
in the event of the Group’s cash generation exceeding expectations.
In view of the aforementioned, the Remuneration Committee
resolved not to award any salary increases to executive directors
from 1 January 2009 but agreed that the position would be
reviewed at the half year.
Benefits in kind
These principally comprise car benefits, income replacement, life
assurance and membership of the Group’s healthcare insurance
scheme. These benefits do not form part of pensionable earnings.
Performance-related cash bonuses
Each year, the Committee reviews the structure of the discretionary
bonus scheme to ensure that it continues to incentivise executives
to deliver growth in pre-tax profit (“PBT”) excluding exceptional
items and profit contribution from Shanghai LTI. Bonus payments
are non-pensionable and are paid in the ratio 2/3rd cash to 1/3rd
shares in line with the Group’s share retention guidelines.
The bonus structure for 2008 was the same as for the 2006/07
financial period. The entry point to the scheme was £5 million
and the maximum PBT qualifying for bonus purposes was
£8 million. No bonuses were paid, first, because these targets
were not met and, second, because the Remuneration Committee
concluded that, in the light of the current challenging trading
conditions which are expected to persist throughout 2009,
it should not exercise its powers to make discretionary
bonus payments.
Share options and long-term incentive plans
The Remuneration Committee believes that it is appropriate to
operate share incentive schemes to encourage executive directors
and senior employees to meet the Group’s long-term strategic
and financial objectives set by the Board.
1. Unapproved share option scheme
This scheme was approved by shareholders in 1997 and expired
in 2007 as a consequence of which no further options may
be granted. No options were granted to or exercised by directors
under this scheme during the year and none were outstanding
as at the year end. Employees held options over 54,197 shares
under the scheme.
2. Long-Term Incentive Plan (LTIP) 2004
Under the 2004 LTIP , the Remuneration Committee may make
annual grants of conditional awards over shares worth up to 100%
of basic salary to participants. It is the Committee’s current policy
that participation in the LTIP will be limited to executive directors.
LTIP awards will only vest if a challenging performance condition
is met. The current performance condition requires the Company’s
total shareholder return (“TSR”) to outperform that of its peers
in the FTSE Fledgling index. If the Company’s TSR is at the 95th
percentile when compared to the TSRs of the comparator group,
100% of the award will vest. If at the 50th percentile, 25% of the
award shall vest. A sliding scale applies for performance between
these targets.
The Committee believes that this performance condition is
appropriate as it provides a genuine incentive to the executive
directors to maximise shareholder returns. The extent to which
the performance condition is met for each award will be confirmed
by the Committee in consultation with external advisers.
3. Long-Term Incentive Plan (LTIP) 2007
In 2007, the Remuneration Committee, with the assistance of
Hewitt New Bridge Street Consultants, conducted a review of all
aspects of director remuneration, with particular focus on long-term
incentive provision. This work was carried out in light of the joint
venture agreement with Geely Automobile Holdings Limited as
well as the recruitment of a new Chief Executive.
After detailed consideration, taking into account both the
preferences of investors and competitive market practice, the
Company sought shareholder approval for the new Manganese
Bronze Long-Term Incentive Plan 2007 (the “Plan”) under which
share-based incentive awards can be granted.
In order to maximise the incentive impact of the Plan for
management and with regard to the fact that the major benefits
of the joint venture arrangement will flow through in approximately
four years’ time, the Remuneration Committee decided that, rather
than granting smaller annual awards, a single larger award should Management and governance
29
Manganese Bronze Holdings PLC
be granted to incentivise management over this four-year period
(i.e. the period to December 2012). Awards will normally vest
on the fifth anniversary of the date of grant to the extent that
challenging performance conditions have been met and provided
that the participant is still employed in the Company’s group.
Following approval of the Plan at the Annual General Meeting held
on 27 November 2007, awards over shares worth no more than
800% and 500% of base salary were granted (respectively) to the
Chief Executive and the executive directors. A lower base salary
percentage limit was applied to other individuals. The performance
conditions will be based on the Company’s Profit before Tax (“PBT”)
over a period of between four and six years and TSR performance
over a fixed period of five years. The weighting between the PBT
and TSR elements of the performance conditions is 75/25 in
favour of PBT, as PBT is felt to be the key measure of the extent
to which the Company’s strategy is a success.
The PBT condition will provide that awards begin to vest when
PBT reaches £15 million, and that part of the award subject to
the PBT condition will vest in full when PBT reaches or exceeds
£50 million. For these purposes, PBT will be defined to include
profits generated in China through the joint venture, provided that
at least 80% of the net profits generated in China are, or will be,
remittable. These are considered by the Remuneration Committee
to represent stretching PBT targets over a six year horizon
(particularly as the published PBT for the year ended 31 July
2006 was only £3.8 million so the threshold together represents
a four-fold increase and the stretch gives a 13-fold increase).
The Remuneration Committee is generally opposed to the concept
of re-testing but, in the circumstances, considers it to be in the
interests of shareholders to provide an incentive (through the early
release of shares) to capitalise on the benefits of the joint venture
earlier and, therefore, will allow early release of the shares vesting
under the PBT element only to the extent that the six-year targets
can be achieved earlier (but not prior to the fourth anniversary
of the award).
The TSR condition will measure the Company’s TSR performance
against the TSR performance of those companies comprised in
a comparator group consisting of the constituents (as at the date
of grant) of the FTSE Small Cap Index (excluding investment trusts)
over a five-year performance period. The TSR condition will provide
that awards begin to vest if the Company’s TSR is ranked at the
median compared to the comparator group (top 50%) and the
entire award will vest at upper decile (top 10%). However, the TSR
condition will not be deemed to be satisfied at all unless and until
the Company achieves real growth in earnings per share over the
five-year performance period.
Directors’ pension provision
Mark Fryer and Peter Shillcock participate in the Manganese Bronze
Account Plus Pension Scheme, a defined contribution arrangement,
which provides pensions and other benefits within limits prescribed
by HMRC. The Company contributes 14% of basic salary. There
are no pension arrangements in place for other directors and
no change took place in Mark Fryer’s or Peter Shillcock’s pension
arrangements during the year. The Company contributes 14%
of basic salary to John Russell’s personal pension plan.
Remuneration policy for non-executive directors
The remuneration of the Chairman is determined by the Board
after recommendations made by the other members of the
Remuneration Committee. The remuneration of the four other
non-executive directors is determined by the Board within the
parameters set by the articles of association. The non-executives
do not participate in any bonus, share option or pension
arrangements, neither do they receive any benefits in kind.
In response to the Company’s current trading position, from the
beginning of February 2009, along with all other employees,
the non-executive directors have agreed a 10% reduction in salary.
This position will be reviewed at the half-year.
Service agreements
The three executive directors have rolling service agreements
with the Company. These provide for 12 months’ notice on either
side, save in the case of Peter Shillcock who may terminate his
service agreement with the Company by giving three
months’ notice.
In the event that the Company serves notice to terminate the
contract of any executive director, the Company may make a
payment in lieu of notice, but is not obliged to do so. Such
payments are restricted to the unexpired portion of the duration
of the executive’s employment or entitlement to notice. Mr Russell’s
contract contains a provision requiring him to use all reasonable
endeavours to mitigate any loss he may suffer, and consequently
any compensation to which he would be entitled, during his
unexpired notice period.
The dates of the contracts are as follows:
John Russell 4 September 2007
Mark Fryer 15 October 2002
Peter Shillcock 18 September 2002
Non-executive appointments
Non-executive directors are appointed for a specified term,
being an initial period to the next Annual General Meeting
after appointment and, subject to reappointment at that meeting,
for a further period ending with the Annual General Meeting
no more than three years thereafter. Subsequent appointment
will be subject to endorsement by the Board and the approval
of shareholders. On termination, no compensation is payable
other than the outstanding six months of fees.
The following are the non-executive directors and the dates they
joined the Board:
Tim Melville-Ross 1 March 2000
Christopher Ross 22 June 1995
Andrew Walker 1 August 2003
Lawrence Ang 25 September 2007
Sheng Gui 25 September 2007 Manganese Bronze Holdings PLC
30
Management and governance
Directors’ remuneration report continued
Total shareholder return (TSR)
Under Statutory Instrument 2002 Number 1986, we are required
to show the TSR over five years in graphical form against a broad
equity index. Below is a graph showing the TSR on an annual
basis over the five-year period to 31 December 2008. The
comparable indices selected are the FTSE Industrial Engineering
Index, which is a broadly-based index of shareholder return.
INFORMATION SUBJECT TO AUDIT
Directors’ remuneration
Total for
Value of 12 months to Total for
Basic Benefits 31 Dec 2008 17 months to
salary/fees (Note 1) Bonuses (Note 2) 31 Dec 2007
££ £ £ £
Executive
John Russell 280,000 1,432 – 281,432 351,003
Mark Fryer 190,000 8,929 – 198,929 355,958
Peter Shillcock 190,000 10,868 – 200,868 421,685
Non executive
Tim Melville-Ross 80,000 –– 80,000 98,333
Christopher Ross 40,000 –– 40,000 68,292
Andrew Walker 35,000 –– 35,000 44,583
Lawrence Ang –– – – 6,661
Sheng Gui –– – – 6,661
Total 815,000 21,229 – 836,229 1,353,176
Notes:
1 Benefits represent amounts assessable to income tax in respect of the benefits provided.
2 Totals exclude pension contributions made by the Company.
1,500
1,200
900
600
300
0
100
31-Jul-02 31-Jul-03 31-Jul-04 31-Jul-05 31-Jul-06 31-Dec-07 31-Dec-06 31-Dec-08
Total shareholder return Source: Datastream
This graph shows the value, by 31 December 2008, of £100 invested in Manganese Bronze on 31 July 2008 compared with the value of £100 invested in
the FTSE Industrial Engineering Index. The other points plotted are the values at intervening financial year ends and a middle value at 31 December 2006.
Total shareholder return is calculated on a monthly basis.
Manganese Bronze Holdings plc
FTSE Industrial Engineering Index
The Remuneration Committee reviews regularly the comparator
group used for the Group’s long-term incentive arrangements to
ensure that it remains relevant to the its strategy and accordingly
aligns executives with shareholders. Management and governance
31
Manganese Bronze Holdings PLC
Directors’ share options
Directors’ share options – options outstanding
Market Aggregate
Option Movements during Date price at gain on
Option price the period Earliest/latest award exercise exercise
granted £ 1/1/08 Lapsed Exercised 31/12/08 exercise date exercised ££
John Russell 12/12/07
†
Nil cost 384,764 –– 384,764 27/11/12
option
Mark Fryer 22/11/05* Nil cost 89,447 2,952 86,495 – 5/8/08 3.3425 289,110
option
31/1/07* Nil cost 23,466 –– 23,466 31/7/09
option
12/12/07
†
Nil cost 163,181 –– 163,181 27/11/12
option
Peter Shillcock 22/11/05* Nil cost 76,441 2,523 73,918 – 5/8/08 3.3425 247,071
option
31/1/07* Nil cost 22,684 –– 22,684 31/7/09
option
12/12/07
†
Nil cost 163,181 –– 163,181 27/11/12
option
* 2004 Long Term Incentive Plan.
† 2007 Long Term Incentive Plan.
At 31 December 2008 the closing mid-market price of the Company’s shares was 66.75p. During the period under review, the Company’s
closing mid-market share price ranged between a low of 48p and a high of 569p.
Pensions
The following table shows details of the pension contributions paid on behalf of the directors by the Company. With the exception
of John Russell, whose pension contributions were paid into a personal pension plan, all contributions were paid into the Group’s
Inland Revenue approved occupational defined contribution pension scheme. No pension contributions were made to other directors.
Total for Total for
12 months to 17 months to
31 Dec 2008 31 Dec 2007
£ £
John Russell 39,200 32,667
Mark Fryer 26,600 29,358
Peter Shillcock 26,600 26,854
Total 92,400 88,879
Christopher Ross
Chairman Remuneration Committee
4 March 2009 Manganese Bronze Holdings PLC
32
Financial statements
Independent auditors’ report to the members
of Manganese Bronze Holdings PLC
We have audited the Group and parent company financial statements (the “financial statements”) of Manganese Bronze Holdings PLC for
the year ended 31 December 2008 which comprise the Group and parent company income statements, the Group and parent company
statement of recognised income and expense, the Group and parent company balance sheets, the Group and parent company cash flow
statements and the related notes 1 to 51. These financial statements have been prepared under the accounting policies set out therein.
We have also audited the information in the directors’ remuneration report that is described as having been audited.
This report is made solely to the Company’s members, as a body, in accordance with section 235 of the Companies Act 1985. 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 auditors’
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the Annual Report, the directors’ remuneration report and the financial statements in accordance
with applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union are set out in the statement
of directors’ responsibilities.
Our responsibility is to audit the financial statements and the part of the directors’ remuneration report to be audited in accordance with
relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true and fair view and whether the financial statements and
the part of the directors’ remuneration report to be audited have been properly prepared in accordance with the Companies Act 1985 and,
as regards the Group financial statements, Article 4 of the IAS Regulation. We also report to you whether in our opinion the information
given in the directors’ report is consistent with the financial statements. The information given in the directors’ report includes that specific
information presented in the operating and financial review and sustainable development report that is cross referred from the business
review section of the directors’ report.
In addition we report to you if, in our opinion, the Company has not kept proper accounting records, if we have not received all the
information and explanations we require for our audit, or if information specified by law regarding directors’ remuneration and other
transactions is not disclosed.
We review whether the corporate governance statement reflects the Company’s compliance with the nine provisions of the 2006 Combined
Code specified for our review by the Listing Rules of the Financial Services Authority, and we report if it does not. We are not required
to consider whether the Board’s statements on internal control cover all risks and controls, or form an opinion on the effectiveness
of the Group’s corporate governance procedures or its risk and control procedures.
We read the other information contained in the Annual Report as described in the contents section and consider whether it is consistent
with the audited financial statements. The other information comprises only the Chairman’s statement, the Chief Executive’s statement,
the business review, sustainable development report, directors’ report, the corporate governance statement and the unaudited part of the
directors’ remuneration report. We consider the implications for our report if we become aware of any apparent misstatements or material
inconsistencies with the financial statements. Our responsibilities do not extend to any further information outside the Annual Report. Financial statements
33
Manganese Bronze Holdings PLC
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board.
An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements and the
part of the directors’ remuneration report to be audited. It also includes an assessment of the significant estimates and judgements made
by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Group’s and
Company’s circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to
provide us with sufficient evidence to give reasonable assurance that the financial statements and the part of the directors’ remuneration
report to be audited are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion
we also evaluated the overall adequacy of the presentation of information in the financial statements and the part of the directors’
remuneration report to be audited.
Opinion
In our opinion:
• the financial statements give a true and fair view, in accordance with IFRSs as adopted by the European Union, of the state of the
Group’s and the parent company’s affairs as at 31 December 2008 and of the Group’s loss and the parent company’s profit for the year
then ended;
• the financial statements and the part of the directors’ remuneration report to be audited have been properly prepared in accordance with
the Companies Act 1985 and, as regards the Group financial statements, Article 4 of the IAS Regulation; and
• the information given in the directors’ report is consistent with the financial statements.
Separate opinion in relation to IFRSs
As explained in Note 2 to the Group financial statements, the Group in addition to complying with its legal obligations to comply with IFRSs
as adopted by the European Union, has also complied with the IFRSs as issued by the International Accounting Standards Board.
In our opinion the Group financial statements give a true and fair view, in accordance with IFRSs, of the state of the Group’s and the parent
company’s affairs as at 31 December 2008 and of the Group’s loss and the parent company’s profit for the year then ended.
Deloitte LLP
Chartered Accountants and Registered Auditors
Birmingham, United Kingdom
4 March 2009 Manganese Bronze Holdings PLC
34
Financial statements
Consolidated income statement
for the year ended 31 December 2008
Year ended Year ended Year ended
31 Dec 2008 31 Dec 2008 31 Dec 2008
Before exceptional Exceptional costs After exceptional 17 months ended
costs (note 7) costs 31 Dec 2007
Notes £000 £000 £000 £000
Continuing operations
Revenue 6 77,242 – 77,242 144,494
Cost of sales (71,365) (6,244) (77,609) (123,940)
Gross (loss)/profit 5,877 (6,244) (367) 20,554
Distribution costs (4,582) – (4,582) (5,543)
Administrative expenses (6,081) (1,834) (7,915) (9,398)
Share of results of joint ventures (578) – (578) (38)
Operating (loss)/profit 8 (5,364) (8,078) (13,442) 5,575
Investment revenues 11 113 – 113 428
Finance costs 12 (911) – (911) (1,076)
(Loss)/profit before tax (6,162) (8,078) (14,240) 4,927
Tax 13 526 1,392 1,918 (1,551)
(Loss)/profit for the period (5,636) (6,686) (12,322) 3,376
Attributable to:
Equity holders of the parent (12,322) 3,384
Minority interests – (8)
(12,322) 3,376
(Loss)/earnings per share
Pence Pence
From continuing operations
Basic 15 (49.30) 15.89
Diluted 15 (49.30) 15.86
The accompanying notes form an integral part of these financial statements.
Consolidated statement of recognised income and expense
for the year ended 31 December 2008
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
Notes £000 £000
(Loss)/profit for the period (12,322) 3,376
Gains on cash flow hedges 505 44
Exchange differences on translation of foreign operations 845 (269)
Actuarial gain/(loss) on defined benefit pension scheme 34 1,659 (706)
Tax on items taken direct to equity (606) 198
Total recognised income and expense for the period (9,919) 2,643
Attributable to:
Equity holders of the parent (9,919) 2,651
Minority interests – (8)
(9,919) 2,643 Financial statements
35
Manganese Bronze Holdings PLC
Consolidated balance sheet
as at 31 December 2008
As at As at
31 Dec 2008 31 Dec 2007
Notes £000 £000
Non-current assets
Goodwill 16 – 1,678
Other intangible assets 17 1,458 1,941
Property, plant and equipment 18 12,615 17,001
Investment in joint ventures 19 15,417 15,996
Deferred tax asset 20 1,909 1,297
Total non-current assets 31,399 37,913
Current assets
Inventories 21 19,440 16,299
Trade and other receivables 22 5,713 5,199
Cash and cash equivalents 22 1,263 10,330
Derivative financial instruments 24 852 –
Total current assets 27,268 31,828
Total assets 58,667 69,741
Current liabilities
Trade and other payables 26 16,813 15,281
Current tax liabilities – 575
Obligations under finance leases 25 – 123
Borrowings 23 8,428 7,042
Provisions 27 3,401 2,652
Total current liabilities 28,642 25,673
Non-current liabilities
Retirement benefit obligations 34 1,555 4,096
Provisions 27 1,030 1,801
Preference shares 28 641 641
Total non-current liabilities 3,226 6,538
Total liabilities 31,868 32,211
Net assets 26,799 37,530
Equity
Share capital 29 6,281 6,241
Share premium account 30 17,903 17,903
Capital redemption reserve 30 916 916
Employee Share Ownership Plan (ESOP) reserve 30 (47) (108)
Hedging and translation reserves 30 1,120 (230)
Retained earnings 30 626 12,808
Equity attributable to equity holders of the parent 26,799 37,530
Total equity 26,799 37,530
Approved by the Board
John Russell Mark Fryer
Group Chief Executive Group Finance and Business Development Director
4 March 2009
The accompanying notes form an integral part of this consolidated balance sheet. Manganese Bronze Holdings PLC
36
Financial statements
Consolidated cash flow statement
for the year ended 31 December 2008
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
Notes £000 £000
Operating activities
Operating (loss)/profit from continuing operations (13,442) 5,575
Adjustments for:
Share of losses of joint ventures 578 38
Depreciation of property, plant and equipment 2,808 4,839
Impairment loss on property, plant and equipment 1,500 –
Amortisation of intangible assets 476 621
Impairment loss on intangible assets 358 –
Impairment of goodwill 1,834 –
Loss/(gain) on disposal of property, plant and equipment 19 (43)
Charge for share-based payments 253 149
(Decrease)/increase in provisions (30) 388
Operating cash flows before movement in working capital (5,646) 11,567
(Increase)/decrease in inventories (2,561) 1,262
(Increase)/decrease in receivables (240) 2,708
Increase/(decrease) in payables 1,377 (4,847)
Contribution to defined benefit pension scheme 34 (1,200) (1,700)
Cash (used in)/generated by operations (8,270) 8,990
Income taxes received – 41
Interest paid (592) (660)
Net cash (used in)/from operating activities (8,862) 8,371
Investing activities
Interest received 113 428
Proceeds on disposal of property, plant and equipment 703 544
Purchases of intangible assets (249) (1,096)
Purchases of property, plant and equipment (664) (3,636)
Acquisition of investment in joint ventures 19 (389) (1,395)
Investment in subsidiary (43) (533)
Net cash used in investing activities (529) (5,688)
Financing activities
Dividends paid (939) (2,059)
Repayments of obligations under finance leases (123) (832)
Purchase of own shares – (395)
Proceeds on issue of shares – 636
Decrease in bank overdrafts – (521)
Increase/(decrease) in stocking loan 1,386 (2,108)
Net cash from/(used in) financing activities 324 (5,279)
Net decrease in cash and cash equivalents (9,067) (2,596)
Cash and cash equivalents at beginning of period 10,330 12,927
Effect of foreign exchange rates – (1)
Cash and cash equivalents at end of period 1,263 10,330
The accompanying notes form an integral part of this consolidated cash flow statement. Financial statements
37
Manganese Bronze Holdings PLC
Notes to the consolidated financial statements
1 General information
Manganese Bronze Holdings PLC is a company incorporated in the UK under the Companies Act 1985. The address of the registered office
is given on page 16. The nature of the Group’s operations and its principle activities are set out in note 6 and in the business review on
pages 8 to 11.
These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which
the Group operates. Foreign operations are included in accordance with the policies set out in note 3.
2 Adoption of new and revised standards
In the current year, the Group has adopted IFRS 7 Financial Instruments: Disclosures which is effective for annual reporting periods
beginning on or after 1 January 2007, and the related amendment to IAS 1 Presentation of Financial Statements. The impact of the
adoption of IFRS 7 and the changes to IAS 1 has been to expand the disclosures provided in these financial statements regarding the
Group’s financial instruments and management of capital (see note 35).
Six interpretations issued by the International Financial Reporting Interpretations Committee are effective for the current period. These are:
IFRIC 7 Applying the Restatement Approach under IAS 29, Financial Reporting in Hyperinflationary Economies; IFRIC 8 Scope of IFRS 2;
IFRIC 9 Reassessment of Embedded Derivatives; IFRIC 10 Interim Financial Reporting and Impairment; IFRIC 11 IFRS 2 – Group and
Treasury Share Transactions; and IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their
Interaction. The adoption of these interpretations has not led to any changes in the Group’s accounting policies.
At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these
financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):
IFRS 1 (amended)/IAS 27 (amended) Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate
IFRS 2 (amended) Share-based Payment – Vesting Conditions and Cancellations
IFRS 3 (revised 2008) Business Combinations
IFRS 8 Operating segments
IAS 1 (revised 2007) Presentation of Financial Statements
IAS 23 (revised 2007) Borrowing Costs
IAS 27 (revised 2008) Consolidated and Separate Financial Statements
IAS 32 (amended)/IAS 1 (amended) Puttable Financial Instruments and Obligations Arising on Liquidation
IFRIC 12 Service Concession Arrangements
IFRIC 13 Customer Loyalty Programmes
IFRIC 15 Agreements for the Construction of Real Estate
IFRIC 16 Hedges of a Net Investment in a Foreign Operation
The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the
financial statements of the Group except for additional segment disclosures when IFRS 8 comes into effect for periods commencing on
or after 1 January 2009. Manganese Bronze Holdings PLC
38
Financial statements
Notes to the consolidated financial statements continued
3 Significant accounting policies
Basis of accounting
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs). The financial
statements have also been prepared in accordance with IFRSs adopted by the European Union and therefore the Group financial statements
comply with Article 4 of the EU IAS Regulation.
The financial statements have been prepared on the historic cost basis, except for the revaluation of certain properties and financial
instruments. The principle accounting policies adopted are set out below.
Basis of preparation
A detailed consideration of going concern, risks and uncertainties in provided in the Chief Executive’s statement on pages 5 to 7
and in the business review on pages 8 to 11.
Current economic conditions create uncertainty particularly over the level of demand for the Group’s products. For these reasons, a
sensitivity analysis has been performed on the Group’s forecasts and projections, to take account of reasonably possible changes in trading
performance. This analysis shows that the Group will be able to operate within the level of its borrowing facilities. As a consequence,
and after making relevant other enquiries, the directors have a reasonable expectation that the Company and the Group have adequate
resources to continue in operational existence for the foreseeable future. Accordingly, the Board has continued to adopt the going concern
basis in preparing the financial statements.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 December each year. Control is achieved where the Company has the power to govern the strategic
direction, the assets, and the financial and operating policies of an investee entity so as to obtain benefits from its activities.
Minority interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity therein. Minority interests
consist of the amount of those interests at the date of the original business combination (see below) and the minority’s share of changes in
equity since the date of the combination. Losses applicable to the minority in excess of the minority’s interest in the subsidiary’s equity are
allocated against the interests of the Group except to the extent that the minority has a binding obligation and is able to make an additional
investment to cover the losses.
The results of subsidiaries acquired or disposed of during the period are included in the consolidated income statement from the effective
date of acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with
those used by the Group.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
Business combinations
The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the
fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange
for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and
contingent liabilities are recognised at their fair value at the acquisition date, except for non-current assets (or disposal groups) that are
classified as held for resale in accordance with IFRS 5 “Non-Current Assets Held for Sale and Discontinued Operations”, which are recognised
and measured at fair value less costs to sell.
Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business
combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised.
If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities
exceeds the cost of the business combination, the excess is recognised immediately in profit or loss.
The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value of the assets,
liabilities and contingent liabilities recognised. Financial statements
39
Manganese Bronze Holdings PLC
3 Significant accounting policies continued
Investment in joint ventures
Joint ventures are those enterprises over whose activities the Group has joint control, established by contractual agreement. The consolidated
financial statements include the Group’s share of total recognised income and expense of joint ventures on an equity accounted basis,
from the date of acquisition of an investment until the date of disposal of such investment. Investments in joint ventures are carried in the
balance sheet at cost as adjusted by post-investment changes in the Group’s share of the net assets of the joint venture. Losses of joint
ventures in excess of the Group’s interest in those joint ventures are not recognised.
Non-current assets held for sale
Non-current assets (and disposal groups) classified as held for sale are measured at the lower of carrying amount and fair value less
costs to sell.
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction
rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal
group) is available for immediate sale in its present condition. Management must be committed to the sale which should be expected
to qualify for recognition as a completed sale within one year from the date of classification.
Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable
assets and liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition. Goodwill is initially recognised as an
asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill which is recognised as an asset
is reviewed for impairment annually. Any impairment is recognised immediately in profit or loss and is not subsequently reversed.
On disposal of a subsidiary, associate or jointly controlled entity, the attributable amount of goodwill is included in the determination
of the profit or loss on disposal.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services
provided in the normal course of business, net of discounts, VAT and other sales-related taxes. Sales of goods and services are recognised
when the goods are delivered or service is provided in accordance with the terms and conditions of sale.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which
is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net
carrying amount.
Exceptional items
Exceptional items are those items of income and expenditure that by reference to the Group are material in size and unusual in nature
or incidence, that, in the judgement of the directors, should be disclosed separately on the face of the financial statements to ensure both
that the reader has a proper understanding of the Group’s financial performance and that there is comparability of financial performance
between periods.
Items of income or expense that are considered by the directors for designation as exceptional items include, but are not limited to,
such items as warranty recall costs, restructuring costs, write-downs or impairments of current and non-current assets, and gains or losses
on disposal of businesses, investments or individual assets.
Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership
to the lessee. All other leases are classified as operating leases.
The Group as lessor
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Manganese Bronze Holdings PLC
40
Financial statements
Notes to the consolidated financial statements continued
3 Significant accounting policies continued
The Group as lessee
Assets held under finance leases are recognised as assets of the Group in accordance with the Group’s accounting policy for the
appropriate asset category, or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease.
The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned
between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the
liability. Finance charges are charged directly against income.
Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease.
Foreign currencies
For the purpose of the consolidated financial statements, the results and financial position of each Group company are expressed in pounds
sterling, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s functional currency
(foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary
assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date.
In order to hedge its exposure to certain foreign exchange risks, the Group enters into forward contracts (see below for details of the Group’s
accounting policies in respect of such derivative financial instruments).
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated at
exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period,
unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used.
Exchange differences arising, if any, are classified as equity and transferred to the Group’s translation reserve. Such translation differences
are recognised as income or as expenses in the period in which the operation is disposed of.
Goodwill and fair value adjustments arising on the acquisitions of a foreign entity are treated as assets and liabilities of the foreign entity
and translated at the closing rate.
Operating profit
Operating profit is stated after charging restructuring costs and after the share of results of associates but before investment income and
finance costs.
Retirement benefit costs
For defined contribution retirement benefit schemes the amount charged as an expense in respect of pension costs and other post-
retirement benefits is the contributions payable in the period. They are included as part of staff costs. Differences between contributions
payable in the period and contributions actually paid are shown as either accruals or prepayments.
Defined benefit schemes are funded, with the assets of the scheme held separately from those of the Group, in trustee-administered funds.
Pension scheme assets are measured at fair value and liabilities are measured on an actuarial basis using the Projected Unit Credit Method
and discounted at a rate equivalent to the current rate of return on a high-quality corporate bond of equivalent currency and term to the
scheme liabilities. The actuarial valuations are obtained at least triennially and are updated at each balance sheet date. Actuarial gains and
losses are recognised in full in the period in which they occur. They are recognised outside profit or loss and presented in the statement of
recognised income and expense.
Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on a straight-line
basis over the average period until the benefits become vested.
The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as adjusted
for unrecognised past service cost, and as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited
to past service cost, plus the present value of available refunds and reductions in future contributions to the scheme. Financial statements
41
Manganese Bronze Holdings PLC
3 Significant accounting policies continued
Taxation
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 period. 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 periods 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 balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance
sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be
utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from
the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit
nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests
in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet 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 when there is a legally enforceable right to set off current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and
liabilities on a net basis.
Property, plant and equipment
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance
sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. For land and buildings
acquired prior to 31 July 2003, the Group has elected to use the revaluation at that date as deemed cost on transition to IFRSs.
Plant and equipment are stated at cost less accumulated depreciation and any subsequent accumulated impairment losses.
Depreciation is charged so as to write off the cost of assets, other than land, over their estimated useful lives, using the straight-line method.
The estimated useful lives, which are periodically reviewed by the directors, are:
1) Freehold buildings – 20 to 50 years as advised by members of the Royal Institution of Chartered Surveyors;
2) Long leasehold buildings – the lower of 50 years as advised by members of the Royal Institution of Chartered Surveyors or the period
of the lease;
3) Short leasehold buildings – the lower of the period of the lease, or five to ten years; and
4) Plant and equipment, including motor vehicles – three to fifteen years.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter,
over the term of the relevant lease.
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in income. Manganese Bronze Holdings PLC
42
Financial statements
Notes to the consolidated financial statements continued
3 Significant accounting policies continued
Internally generated intangible assets – research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
An internally generated intangible asset arising from the Group’s product development is recognised only if all of the following conditions
are met:
1) An asset is created that can be identified;
2) It is probable that the asset created will generate future economic benefits; and
3) The development cost of the asset can be measured reliably.
Internally generated intangible assets are amortised on a straight-line basis over the expected life of the product to which they relate,
normally between five and ten years. Where no internally generated intangible asset can be recognised, development expenditure is
recognised as an expense in the period in which it is incurred.
Other intangible assets
Other intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses. The cost of intangible assets
acquired in a business combination is the fair value at acquisition date. The cost of separately acquired intangible assets, including the
cost of licensing vehicles for use as taxis and computer software costs, comprises the purchase price and any directly attributable costs of
preparing the asset for use. Amortisation begins when as asset is available for use and is calculated on a straight-line basis to allocate the
cost over the estimated useful life, normally five to ten years.
Impairment of tangible and intangible assets excluding goodwill
At each balance sheet 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). Recoverable amount is the higher of fair value less costs to sell and value
in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash
flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount
of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately,
unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised
estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset (cash-generating unit) in prior periods. A reversal of an impairment loss
is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the
impairment loss is treated as a revaluation increase.
Inventories
Inventories are stated at the lower of cost and net realisable value on a first-in-first-out basis. Cost comprises direct materials and,
where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location
and condition. Included within inventories, are finished vehicles held by Group and also non-Group dealers, which are financed through
a stocking loan facility. The related stocking loan liability is included within bank borrowings.
Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing,
selling and distribution. Financial statements
43
Manganese Bronze Holdings PLC
3 Significant accounting policies continued
Financial instruments
Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group becomes a party to the contractual
provisions of the instrument.
Financial assets
Financial assets are recognised and derecognised on a trade date where the purchase or sale of a financial asset is under a contract whose
terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value,
plus transaction costs.
Trade and other receivables
Trade and other receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the
effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is
objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset’s carrying amount
and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.
Investments
Investments are measured at cost, including transaction costs, less any impairment loss recognised to reflect irrecoverable amounts.
An impairment loss is recognised in profit or loss when there is objective evidence that the asset is impaired, and is measured as the
difference between the investment’s carrying amount and the present value of estimated future cash flows discounted at the effective
interest rate computed at initial recognition. Impairment losses are reversed in subsequent periods when an increase in the investment’s
recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to the restriction that
the carrying amount of the investment at the date the impairment is reversed shall not exceed what the amortised cost would have been
had the impairment not been recognised.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each balance sheet 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 of the investment have been impaired.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily
convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the
financial asset and substantially all of the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor
retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained
interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards
of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised
borrowing for the proceeds received.
Financial liabilities and equity
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.
Bank borrowings
Interest-bearing bank loans, stocking loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges,
including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accrual basis in profit or loss using
the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period
in which they arise. Manganese Bronze Holdings PLC
44
Financial statements
Notes to the consolidated financial statements continued
3 Significant accounting policies continued
Other financial liabilities
Other financial liabilities, including trade payables, accruals, and other creditors, are initially measured at fair value net of transaction costs.
Other financial liabilities are subsequently measured at amortised cost, using the effective interest rate method.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
Derivative financial instruments and hedge accounting
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Group
uses foreign exchange forward contracts to hedge its foreign currency exposure. The Group does not use derivative financial instruments
for speculative purposes. For a forward foreign exchange contract to be treated as a hedge the instrument must be related to actual foreign
currency assets or liabilities or to a probable commitment. It must involve the same currency or similar currencies as the hedged item and
must also reduce the risk of foreign exchange movements on the Group’s operations.
Changes in the fair value of derivative financial instruments that are designated and effective as hedges of future cash flows are recognised
directly in equity and the ineffective portion is recognised immediately in the income statement. If the cash flow hedge of a firm commitment
or forecasted transaction results in the recognition of an asset or a liability, then, at the time the asset is recognised, the associated gains
or losses on the derivative that had previously been recognised in equity are included in the initial measurement of the asset or liability.
For hedges that do not result in the recognition of an asset or liability, amounts deferred in equity are recognised in the income statement
in the same period in which the hedged item affects net profit or loss.
Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the income statement
as they arise.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge
accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in equity is retained in equity until the forecast
transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred
to net profit or loss for the period.
Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and
characteristics are not closely related to those of host contracts and the host contracts are not carried at fair value, with gains or losses
reported in the income statement.
Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be
required to settle that obligation. Provisions are measured at the directors’ best estimate of the expenditure required to settle the obligation
at the balance sheet date, and are discounted to present value where the effect is material.
Share-based payments
The Group has applied the requirements of IFRS 2 “Share-based Payment”. In accordance with the transitional provisions, IFRS 2 has been
applied to all grants of equity instruments after 7 November 2002 that were unvested at 1 January 2005.
The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair
value (excluding the effect of the non market-based vesting conditions) at the date of grant.The fair value determined at the grant date
of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate
of shares that will eventually vest and adjusted for the effect of non market-based vesting conditions.
Fair value is measured by the use of the Black Scholes model. The expected life used in the model has been adjusted, based on
management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations. Financial statements
45
Manganese Bronze Holdings PLC
4 Critical accounting judgements and key sources of estimated uncertainty
Critical judgements in applying the Group’s accounting policies
In the process of applying the Group’s accounting policies, which are described in note 3, management has made the following judgements
that have the most significant effect on the amounts recognised in the financial statements (apart from those involving estimations, which
are dealt with below).
Warranty provision
In quantifying the outstanding liability as at the balance sheet date for future vehicle warranty costs, and amounts that may be recoverable
from suppliers under supplier warranty agreements, management has made a judgement that historical trends in warranty costs over the
three-year warranty life cycle will continue, and that amounts recoverable from suppliers as a percentage of total warranty costs will remain
in line with that experienced during the year ended 31 December 2008.
In quantifying the outstanding liability as at the balance sheet date for product recall costs, included in the warranty provision, management
has made its best estimate of the probable costs to complete the product actions based on costs incurred from the commencement of the
recall to 31 December 2008.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant
risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period, are discussed below.
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating unit (“CGU”) to which the
goodwill has been allocated. The value in use calculation requires the entity to estimate future cash flows expected to arise from the CGU
and a suitable discount rate in order to calculate present values.
As the level of revenue expected to be generated by the CGU to which the goodwill has been allocated has declined due to the current
market environment, the value in use of the CGU is negative, and an impairment loss of £1,834,000 has, therefore, been recognised
in the year. The carrying amount of goodwill at the balance sheet date was nil (2007: £1,678,000). Details of the impairment calculation
are provided in note 16.
Impairment of other assets
Impairment reviews for other assets requires an estimate of the value in use and/or realisable value based on an estimation of future cash
flows expected to arise from each asset being tested.
Defined benefit pension scheme
The assets and liabilities of the Group’s defined benefit pension scheme, in which members have ceased to accrue additional pensionable
service but benefits continue to be linked to salary or Limited Price Indexation, are valued by independent actuaries. The actuarial valuation
involves making assumptions about discount rates, expected rates of return, future salary increases, inflation, and mortality rates. Due to
the long-term nature of the scheme, such estimates are subject to significant uncertainty. The net pension liability at the balance sheet date
was £1,555,000 (2007: £4,096,000). Further details are given in note 34. Manganese Bronze Holdings PLC
46
Financial statements
Notes to the consolidated financial statements continued
5 Revenue
An analysis of the Group’s revenue is as follows:
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
Notes £000 £000
Continuing operations
Sale of goods 75,112 140,666
Rendering of services 2,130 3,828
77,242 144,494
Investment income 11 113 428
Total revenue from continuing operations 77,355 144,922
Total revenue 77,355 144,922
6 Business and geographical segments
Business segments
For management purposes, the Group is currently organised into three operating divisions – vehicle sales, vehicle services, and Shanghai
LTI. These divisions are the basis on which the Group reports its primary segment information.
Principle activities are as follows:
The vehicle sales segment includes the design, development, manufacture, and retailing of new purpose-built taxis, along with the sale
of used vehicles taken in part exchange, parts, and vehicle maintenance.
The vehicle services segment comprises taxi finance and the US-based taxi servicing and advertising business.
The Shanghai LTI (SLTI) segment is the joint venture based in Shanghai, China, which assembles the London Taxi under license from
the Group (see note 19).
Segmental information about these businesses is presented below:
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
£000 £000
Revenue
Vehicle sales 75,401 142,200
Vehicle services 1,841 2,294
Continuing operations 77,242 144,494
Total Group 77,242 144,494
Result
Vehicle sales (10,358) 5,062
Vehicle services (2,506) 551
SLTI (578) (38)
Total operating (loss)/profit from continuing operations (13,442) 5,575
Investment revenues 113 428
Finance costs (911) (1,076)
(Loss)/profit before tax (14,240) 4,927
Tax 1,918 (1,551)
(Loss)/profit after tax (12,322) 3,376
Head office costs have been allocated to segments based on operating loss (2007: operating profit). Financial statements
47
Manganese Bronze Holdings PLC
6 Business and geographical segments continued
Other information
Capital additions – Capital additions –
property, plant and equipment other intangibles
Year ended 17 months ended Year ended 17 months ended
31 Dec 2008 31 Dec 2007 31 Dec 2008 31 Dec 2007
£000 £000 £000 £000
Vehicle sales 583 3,827 249 1,096
Vehicle services 81 91 – –
Total Group 664 3,918 249 1,096
Depreciation and amortisation Impairment losses recognised in income
Year ended 17 months ended Year ended 17 months ended
31 Dec 2008 31 Dec 2007 31 Dec 2008 31 Dec 2007
£000 £000 £000 £000
Vehicle sales 3,008 4,973 498 –
Vehicle services 276 449 3,194 –
Corporate – 38 – –
Total Group 3,284 5,460 3,692 –
All the above relate to continuing operations.
Balance sheet
Total assets Total liabilities Net assets/(liabilities)
As at As at As at As at As at As at
31 Dec 2008 31 Dec 2007 31 Dec 2008 31 Dec 2007 31 Dec 2008 31 Dec 2007
£000 £000 £000 £000 £000 £000
Vehicle sales 39,722 38,090 19,866 18,607 19,856 19,483
Vehicle services 1,912 4,069 598 466 1,314 3,603
SLTI 15,417 15,988 – – 15,417 15,988
Total segment 57,051 58,147 20,464 19,073 36,587 39,074
Unallocated corporate 353 1,264 2,976 5,973 (2,623) (4,709)
Net (debt)/funds 1,263 10,330 8,428 7,165 (7,165) 3,165
Total Group 58,667 69,741 31,868 32,211 26,799 37,530
All the above relate to continuing operations. Manganese Bronze Holdings PLC
48
Financial statements
Notes to the consolidated financial statements continued
6 Business and geographical segments continued
Geographical segments
The Group’s operations are located in England, the United States of America, and China.
The following table provides an analysis of the Group’s sales by geographical market, irrespective of the origin of the goods/services:
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
£000 £000
United Kingdom 73,019 143,081
Rest of Europe 256 462
North America 912 382
Asia 702 371
Rest of world 2,353 198
77,242 144,494
All the above relate to continuing operations.
The following is an analysis of the carrying amount of segment net assets, and additions to property, plant and equipment and intangible
assets, analysed by the geographic area in which the assets are located:
Additions to property, plant & equipment
Carrying amount of segment net assets and other intangible assets
As at As at Year ended 17 months ended
31 Dec 2008 31 Dec 2007 31 Dec 2008 31 Dec 2007
£000 £000 £000 £000
United Kingdom 19,940 19,426 832 4,923
North America 1,230 3,660 81 91
China 15,417 15,988 – –
36,587 39,074 913 5,014
7 Exceptional items
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
Note £000 £000
Cost of sales
TX4 recall costs a) (3,765) –
Redundancy and severance pay (376) –
Impairment loss on property, plant and equipment (see note 18) (1,500) –
Impairment loss on intangible assets (see note 17) (358) –
Used vehicle stock write-down (245) –
(6,244) –
Administrative expenses
Impairment of goodwill (see note 16) (1,834) –
(8,078) –
a) On 26 September 2008, the Group announced a product recall, following 12 under-bonnet fires in early production models of the TX4
taxi. The product actions include modifications to the emission control equipment, the heat management system and under-bonnet
insulation. The estimated cost of the recall and other related costs of £3,765,000 has been expensed in the year. The Group is in
discussions with its insurers, relevant suppliers, and other third parties to establish liability and opportunities for recovery of these costs.
Based on the current status of discussions, no amounts have been recorded as receivable as at 31 December 2008.
Following advice from the Group’s lawyers, no provision has been made for any compensation or consequential loss claims from drivers
as the directors believe that payment of claims by the Group is not probable.
The tax effect of exceptional items for the year ended 31 December 2008 was a credit of £1,392,000 (17 months to 31 December
2007: nil). Financial statements
49
Manganese Bronze Holdings PLC
8 Operating (loss)/profit for the period
Operating (loss)/profit for the period has been arrived at after charging (crediting):
Continuing operations
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
£000 £000
Net foreign exchange losses 1,066 113
Research and development costs 580 916
Depreciation of property, plant and equipment 2,808 4,839
Impairment of property, plant and equipment (see note 18) 1,500 –
Loss/(gain) on disposal of property, plant and equipment 19 (43)
Amortisation of intangible assets 476 621
Impairment of goodwill (see note 16) 1,834 –
Impairment of other intangible assets (see note 17) 358 –
Cost of inventories recognised as expense 49,065 86,016
Write downs of inventories recognised as an expense
– including exceptional costs of £245,000 (17 months ended 31 December 2007: nil) 412 49
Staff costs (see note 10) 17,144 24,699
9 Auditors’ remuneration
The analysis of auditors’ remuneration is as follows:
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
£000 £000
Fees payable to the Company’s auditors for the audit of:
The Company’s annual accounts 17 25
The Company’s subsidiaries pursuant to legislation 53 76
Total audit fees 70 101
Fees payable to the Company’s auditors for other services to the Group:
Tax services 26 74
Recruitment and remuneration services 7 6
Corporate financial services (i) – 80
Total non-audit fees 33 160
103 261
i) These fees related to working capital and other public and private reporting associated with the Chinese joint venture, and are included
in the balance sheet as part of the cost of investment in joint ventures (note 19). Manganese Bronze Holdings PLC
50
Financial statements
Notes to the consolidated financial statements continued
10 Staff costs
The average number of employees (including executive directors) was:
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
Number Number
Administration and staff 198 202
Production 225 274
423 476
Their aggregate remuneration comprised:
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
£000 £000
Wages and salaries 15,039 21,602
Social security costs 1,537 2,501
Other pension costs (note 34) 568 596
17,144 24,699
11 Investment revenues
Investment revenues comprise entirely of interest on bank deposits of continuing operations.
12 Finance costs
Continuing operations
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
Notes £000 £000
Interest payable on:
Stocking loan 23 523 532
Bank overdrafts and loans 14 7
Finance contracts 3 42
Preference share dividends 53 79
Net interest payable on pension liability 34 318 416
911 1,076 Financial statements
51
Manganese Bronze Holdings PLC
13 Tax
Continuing operations
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
£000 £000
Current tax:
UK corporation tax (640) 579
Adjustments relating to prior periods 62 (502)
Deferred tax (note 20)
Origination and reversal of timing differences (1,377) 1,533
Adjustments relating to prior periods 37 (59)
Total tax (credit)/charge (1,918) 1,551
UK corporation tax is calculated at 28.5% (17 months ended 31 December 2007: 30%) of the estimated assessable (loss)/profit for the
period. Taxation for other jurisdictions is calculated at the rate prevailing in the respective jurisdictions.
The (credit)/charge for the period can be reconciled to the (loss)/profit per the income statement as follows:
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
£000 £000
(Loss)/profit before tax
Continuing operations (14,240) 4,927
Tax at the UK corporation tax rate of 28.5% (17 months ended 31 December 2007: 30%) (4,058) 1,478
Adjustment in respect of prior periods 99 (561)
Tax effect of expenses that are not deductible in determining taxable profit 683 190
Tax effect of deferred tax rate differences (6) 60
Tax effect of UK losses not recognised as a deferred tax asset 676 –
Tax effect of losses on overseas subsidiary and joint venture not recognised as a deferred tax asset 688 384
Tax (credit)/charge for current period (1,918) 1,551
In addition to the amount (credited)/charged to the income statement, deferred tax relating to share-based payments amounting to
£126,000 (17 months ended 31 December 2007: £829,000 credit), gains on cash flow hedges amounting to £141,000 (17 months
ended 31 December 2007: nil), and actuarial gains/losses amounting to £464,000 (17 months ended 31 December 2007: £198,000
credit) have been charged directly to equity.
14 Dividends
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
£000 £000
Amounts recognised as distributions to equity holders in the period:
Final dividend for the period ended 31 December 2007 of 1.5p (year ended 31 July 2006: 3p) per share (374) (566)
Special dividend for the period ended 31 December 2007 of nil (year ended 31 July 2006: 1p) per share – (189)
Interim dividend for the year ended 31 December 2008 of 2.25p
(period ended 31 December 2007: 2.25p) per share (565) (432)
Second interim dividend for the year ended 31 December 2008 of nil
(period ended 31 December 2007: 3.5p) per share – (872)
(939) (2,059)
Proposed final divided for the year ended 31 December 2008 of nil
(period ended 31 December 2007: 1.5p) per share – (375) Manganese Bronze Holdings PLC
52
Financial statements
Notes to the consolidated financial statements continued
15 (Loss)/earnings per ordinary share
The calculation of the basic and diluted earnings per share is based on the following data:
(Loss)/earnings
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
£000 £000
(Loss)/earnings for the purposes of basic and diluted earnings per share being net (loss)/profit
attributed to equity holders of the parent (12,322) 3,384
Number of shares
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
Number Number
Weighted average number of ordinary shares for the purposes of basic earnings per share 24,995,507 21,297,135
Effect of dilutive potential ordinary shares:
Share options 19,235 36,309
Weighted average number of ordinary shares for the purposes of diluted earnings per share 25,014,742 21,333,444
The denominators used in the calculation of (loss)/earnings per share are the same as above for both basic and diluted (loss)/earnings
per share from continuing operations.
From continuing operations
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
Number Number
Earnings from continuing operations for the purpose of basic and diluted earnings per share (12,322) 3,384
Pence Pence
Basic (49.30) 15.89
Diluted (49.30) 15.86
As continuing operations were loss-making, diluted loss per share equals basic loss per share.
16 Goodwill
£000
Cost:
At 1 August 2006 1,396
Additions 373
Exchange differences (91)
At 1 January 2008 1,678
Additions 43
Exchange differences 113
At 31 December 2008 1,834
Accumulated impairment losses:
At 1 August 2006 and 1 January 2008 –
Impairment losses for the year (1,834)
At 31 December 2008 (1,834)
Carrying amount:
At 31 December 2007 1,678
At 31 December 2008 – Financial statements
53
Manganese Bronze Holdings PLC
16 Goodwill continued
The Group’s goodwill arose initially on the acquisition of 86% of the issued share capital of London Taxis North America Holdings
Incorporated (LTNAH). In August 2007, the Group increased its investment in LTNAH to 98% at a cost of £373,000.
During the year, the Group further increased its investment in LTNAH to 99% at a cost of £43,000.
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs) that are expected to benefit
from that business combination. The carrying amount of goodwill has been allocated to the cash generating unit of LTNAH, within the
vehicle services segment.
The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired.
The recoverable amounts of the CGU are determined from value in use calculations, based on a discounted cash flow forecast incorporating
the most recent approved financial budgets extrapolated to 2016. The rate used to discount the forecast cash flow is the Group’s weighted
average cost of capital of 7.73 per cent.
As the level of advertising revenue expected to be generated by the CGU has declined due to the current market environment, the value
in use of the CGU is negative, and an impairment loss of £1,834,000 has, therefore, been recognised in the year.
17 Other intangible assets
Development
costs (note (i)) Licences Total
Notes £000 £000 £000
Cost:
At 1 August 2006 1,064 46 1,110
Additions 1,006 90 1,096
Transfers in from tangible assets (ii) 1,044 – 1,044
Exchange differences (26) (3) (29)
At 1 January 2008 3,088 133 3,221
Additions (iii) 249 – 249
Exchange differences 141 16 157
At 31 December 2008 3,478 149 3,627
Accumulated amortisation and impairment:
At 1 August 2006 660 2 662
Charge for the period 585 36 621
Exchange differences (3) – (3)
At 1 January 2008 1,242 38 1,280
Charge for the year 451 25 476
Impairment losses (iv) 326 32 358
Exchange differences 48 7 55
At 31 December 2008 2,067 102 2,169
Carrying amount:
At 31 December 2007 1,846 95 1,941
At 31 December 2008 1,411 47 1,458
i) The net book value of development costs comprises of TX4 £1,162,000 (2007: £1,572,000), low emission TX4 £249,000 (2007: nil)
and the vehicle for the US market nil (2007: £274,000).
ii) The transfers in from tangible assets in the 17-month period ended 31 December 2007 of £1,044,000 relate to TX4 test and
development vehicles, which were held within plant and equipment at 31 July 2006 when they were assets under construction.
iii) The development cost additions during the year of £249,000 relate to development costs of a low emission derivative of the TX4.
iv) Development costs of £326,000 and licences costs of £32,000 have been fully impaired during the year following an impairment
review of the LTNAH cash generating unit. Manganese Bronze Holdings PLC
54
Financial statements
Notes to the consolidated financial statements continued
18 Property, plant and equipment
Freehold Long Short
land and leasehold leasehold Plant and
buildings buildings buildings equipment Total
Notes £000 £000 £000 £000 £000
Cost:
At 1 August 2006 550 4,850 298 44,280 49,978
Additions – – – 3,918 3,918
Disposals – – – (3,534) (3,534)
Transfers out to intangible assets (i) – – – (1,044) (1,044)
Exchange differences – – – (156) (156)
At 1 January 2008 550 4,850 298 43,464 49,162
Additions (ii) – – – 664 664
Disposals (ii) – – – (997) (997)
Transfers out to inventory (iii) – – – (1,154) (1,154)
Exchange differences – – – 721 721
At 31 December 2008 550 4,850 298 42,698 48,396
Accumulated depreciation and impairment:
At 1 August 2006 54 235 143 29,938 30,370
Charge for the period 26 137 33 4,643 4,839
Disposals – – – (3,033) (3,033)
Exchange differences – – – (15) (15)
At 1 January 2008 80 372 176 31,533 32,161
Charge for the year 18 97 24 2,669 2,808
Impairment loss (iii) & (iv) – – – 1,500 1,500
Disposals (ii) – – – (275) (275)
Transfers out to inventory (iii) – – – (658) (658)
Exchange differences – – – 245 245
At 31 December 2008 98 469 200 35,014 35,781
Carrying amount:
At 31 December 2007 470 4,478 122 11,931 17,001
At 31 December 2008 452 4,381 98 7,684 12,615
i) The transfers out to intangible assets in the 17-month period ended 31 December 2007 of £1,044,000 relate to TX4 test and
development vehicles, which were classified as intangible assets on completion of the test and development programme.
ii) During the year the Group spent £664,000 on other plant and equipment. The Group also disposed of certain of its plant and
equipment with carrying amounts of £722,000 for proceeds of £703,000.
iii) The transfers out to inventory in the year relate to the fleet of taxis owned by the Group’s London dealership. Following a downturn
in fleet rentals, and a drop in used vehicle values, an impairment loss of £498,000 has been recognised in the year, reducing the net
book value of the fleet to current market value. These vehicles have been transferred to inventory, at a net book value of £496,000,
for subsequent sale as used vehicles.
iv) Following an impairment review of the LTNAH cash generating unit (see note 16), and a reduction in used vehicle values, an
impairment loss of £1,002,000 has been recognised in the year on the LTNAH vehicle fleet, reducing its value to current market value.
v) After the balance sheet date, the freehold property in Broughton Street, Manchester, and long leasehold property in Brewery Road,
London, with respective carrying amounts of £452,000 and £4,381,000, have been pledged to secure ongoing borrowings of the Group
(see note 23). On behalf of HSBC bank plc, these properties were valued in October 2008 by DTZ, independent valuers, on the basis of
market value, at £670,000 and £3,250,000 respectively. As the valuation of the long leasehold property in London is below its carrying
value an impairment review has been undertaken of the cash generating unit (“CGU”) which occupies the property, the Group’s London
dealership, and, as the value in use of the CGU is in excess of the carrying value of the property, no impairment arose in the year.
v) At 31 December 2008, the Group had no contractual commitments for the acquisition of property, plant and equipment
(2007: £397,000). Financial statements
55
Manganese Bronze Holdings PLC
19 Investment in joint ventures
£000
At 1 August 2006
Cost 16,034
Share of loss (38)
At 31 December 2007 15,996
Share of loss (579)
At 31 December 2008 15,417
In the 17-month period ended 31 December 2007, the Group finalised the establishment of a joint venture with Chinese car manufacturer
Geely Automobile Holdings Limited (Geely) and Shanghai Maple Automobile Company Limited (Maple), to produce the London taxi,
a limousine and two large saloon cars in Shanghai. The joint venture company, Shanghai LTI Automobile Company Limited (SLTI),
was incorporated in the People’s Republic of China on 15 June 2007.
The parties to the joint venture are the Group, holding 48% of the share capital of SLTI, and Geely and Maple, who hold 51% and
1% respectively.
The Group is accounting for its investment on an equity basis, with the total cost of £16,034,000 comprising of shares of £14,250,000,
and transaction costs of £1,784,000, of which cash costs of £389,000 were incurring in the year (17 months ended 31 December 2007:
£1,395,000).
20 Deferred tax
The elements of deferred tax assets included in non-current assets are as follows:
As at As at
31 Dec 2008 31 Dec 2007
£000 £000
Accelerated tax depreciation 1,433 (145)
Other short-term timing differences 14 15
Retirement benefit obligations 435 1,147
Share-based payments 27 280
1,909 1,297
At the balance sheet date the Group has unused tax losses of £2,407,000 (2007: nil) available for offset against future taxable profits.
No deferred tax asset has been recognised in respect of these losses due to the unpredictability of future taxable profit streams.
21 Inventories
As at As at
31 Dec 2008 31 Dec 2007
£000 £000
Raw materials 3,711 3,329
Work in progress 2,032 1,914
Finished goods 13,697 11,056
19,440 16,299
Finished goods with a carrying amount of £8,161,000 (2007: £6,398,000) are pledged as security for the Group’s stocking loan facility
(see note 23). Manganese Bronze Holdings PLC
56
Financial statements
Notes to the consolidated financial statements continued
22 Other financial assets
Trade and other receivables
As at As at
31 Dec 2008 31 Dec 2007
£000 £000
Trade receivables 3,510 3,005
Allowance for doubtful debts (89) (105)
3,421 2,900
Other debtors 950 1,149
Prepayments 1,342 1,150
5,713 5,199
The average credit period taken on sale of goods is 14 days. Trade and other receivables are non-interest bearing. An allowance has been
made for estimated irrecoverable amounts from the sale of goods, determined by reference to past default experience and knowledge of
specific customers’ financial circumstances.
Included in the Group’s trade receivable balances are debtors with a carrying value of £373,000 (2007: £399,000) which are past due
at the reporting date for which the Group has not provided as there has not been a significant change in credit quality and the amounts are
still considered recoverable. The average age of these receivables is 63 days (2007: 69 days).
Ageing of past due but not impaired receivables
As at As at
31 Dec 2008 31 Dec 2007
£000 £000
30-60 days 161 139
60-90 days 203 235
90-120 days 9 7
120+ days – 18
Total 373 399
Movement in the allowance for doubtful debts
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
£000 £000
Balance at the beginning of the period 105 177
Impairment losses recognised 136 175
Amounts written off as uncollectible (22) (159)
Amounts recovered during the period (130) (88)
Balance at the end of the period 89 105
In determining the recoverability of trade receivables the Group considers any change in the credit quality of the trade receivable from the
date the credit was initially granted up to the reporting date. The credit risk on trade receivables is limited as the majority of revenue
transactions are settled immediately and are, therefore, not on a credit basis.
The directors consider that the carrying amount of trade and other receivables approximates to their fair value. Financial statements
57
Manganese Bronze Holdings PLC
22 Other financial assets continued
Cash and cash equivalents
As at As at
31 Dec 2008 31 Dec 2007
£000 £000
Cash at banks and in hand 1,263 1,570
Short-term deposits – 8,760
1,263 10,330
Cash at banks and in hand do not attract interest. Short-term deposits are overnight money market deposits. Interest is received at the
prevailing market rate.
The fair value of cash and cash equivalents is not materially different from their book value.
Other financial assets are expected to mature within three months of the balance sheet date.
23 Borrowings
As at As at
31 Dec 2008 31 Dec 2007
Currency £000 £000
Stocking loan Sterling 8,428 7,042
8,428 7,042
All borrowings are repayable on demand or within one year.
Other principle features of the Group’s borrowings are as follows:
i) The Group’s overdraft facility of £2.5m (2007: £2.5m) is provided by HSBC Bank plc and, as at the balance sheet date, attracted
interest at a rate of 2.7% (2007: 1%) above the bank’s sterling base rate. This facility is repayable on demand and, at the balance sheet
date, was unsecured. After the balance sheet date the overdraft facility has been secured by a debenture comprising fixed and floating
charges over all the Group’s assets and undertakings, and first legal mortgage over the Group’s freehold property in Broughton Street,
Manchester, and long leasehold property in Brewery Road, London.
ii) The Group’s stocking loan facility of £13.0m (2007: £13.4m) is provided by the Lloyds Banking Group PLC and attracts interest linked
to the Finance House Base Rate. The stocking loan is secured on the vehicles within finished goods.
At 31 December 2008 the Group had available £8.4m (2007: £8.9m) of undrawn committed borrowing facilities in respect of which all
conditions precedent had been met. Of this amount £4.6m (2007: £6.4m) relates to the undrawn element of the stocking loan facility,
which can only be drawn down provided the Group has suitable taxis to offer as security.
The weighted average interest rates paid were as follows:
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
% %
Bank overdrafts 5.75 6.19
Stocking loans 6.81 6.51
The directors consider that the carrying amount of borrowings approximate to their fair value. Manganese Bronze Holdings PLC
58
Financial statements
Notes to the consolidated financial statements continued
24 Derivative financial instruments
Derivatives that are designated and effective as hedging instruments carried at fair value.
As at As at
31 Dec 2008 31 Dec 2007
£000 £000
Forward foreign currency contracts 852 –
The fair value of currency derivatives that are designated and effective as cash flow hedges has been deferred in equity.
Further details of derivative financial instruments are provided in note 35.
25 Obligations under finance leases
Minimum lease payments Present value of minimum lease payments
As at As at As at As at
31 Dec 2008 31 Dec 2007 31 Dec 2008 31 Dec 2007
£000 £000 £000 £000
Sterling denominated leases
Amounts payable under finance leases:
Within one year – 129 – 123
In the second to fifth years inclusive – – – –
– 129 – 123
Less future finance charges – 6
Present value of lease obligations – 123
Less amount due for settlement within 12 months
(shown under current liabilities) – 123
Amount due for settlement after 12 months – –
At the balance sheet date the Group had no obligations under finance leases.
26 Other financial liabilities
Trade and other payables
As at As at
31 Dec 2008 31 Dec 2007
£000 £000
Trade creditors 12,030 11,233
Social security, payroll and other taxes 2,345 718
Deferred/contingent consideration – 45
Other creditors 1,032 862
Accruals 1,406 2,423
Amounts due for settlement within 12 months (shown within current liabilities) 16,813 15,281
Trade creditors principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade
purchases is 65 days (2007: 51 days). For most suppliers no interest is charged on the trade payables if payment is made within the
pre-agreed credit terms, thereafter, interest may be charged on the outstanding balances at various interest rates.
The directors consider that the carrying amount of trade and other payables approximates to their fair value.
Other financial liabilities are expected to mature within three months of the balance sheet date. Financial statements
59
Manganese Bronze Holdings PLC
27 Provisions
Warranty
£000
At 31 December 2007 4,453
Charge to profit and loss account 6,808
Exchange adjustment 8
Utilised in the period (6,838)
At 31 December 2008 4,431
Included in current liabilities 3,401
Included in non-current liabilities 1,030
4,431
The warranty provision represents management’s best estimate of the Group’s liability under three-year or 100,000 mile (whichever occurs
sooner) warranties granted on new vehicles sold, based on past experience and known product improvements. The charge to profit and loss
account in the period includes £3,765,000 relating to the recall of TX4s announced on 26 September 2008.
It is expected that the majority of this expenditure will be incurred in the next year and that all will be incurred within three years of the
balance sheet date.
28 Preference shares
Number £000
8.25% cumulative preference shares of £1 each
Authorised 684,165 684
Issued and fully paid:
At 31 December 2007 640,959 641
Preference shares repurchased 258 –
At 31 December 2008 640,701 641
Preference shares are irredeemable and carry no voting rights.
29 Share capital
Number £000
Ordinary shares of 25p each
Authorised 26,256,692 6,564
Allotted, called up and fully paid:
At 31 December 2007 24,961,921 6,241
Issued during the period 160,413 40
At 31 December 2008 25,122,334 6,281
During the year 160,413 ordinary shares with a nominal value of 25p were allotted to satisfy executive share options. Manganese Bronze Holdings PLC
60
Financial statements
Notes to the consolidated financial statements continued
30 Reconciliation of movements in equity
Attributable to equity holders of the parent
Issued Other
share Retained reserves Minority
capital earnings (see below) interests Total
£000 £000 £000 £000 £000
At 1 August 2006 4,759 11,168 5,542 8 21,477
Recognised income and expense
for the period – 2,920 (269) (8) 2,643
Dividends paid – (2,059) – – (2,059)
Purchase of own shares – – (395) – (395)
Shares issued 1,482 – 12,984 – 14,466
Share options exercised – – 420 – 420
Credit to equity for share-based payments – 149 – – 149
Tax on items taken direct to equity – 829 – – 829
Transfer to retained earnings – (199) 199 – –
At 1 January 2008 6,241 12,808 18,481 – 37,530
Recognised income and expense
for the year – (11,269) 1,350 – (9,919)
Dividends paid – (939) – – (939)
Shares issued 40 – (40) – –
Credit to equity for share-based payments – 253 – – 253
Tax on items taken direct to equity – (126) – – (126)
Transfer to retained earnings – (101) 101 – –
At 31 December 2008 6,281 626 19,892 – 26,799
Other reserves
Share Capital Hedging and Total
premium redemption ESOP translation other
account reserve reserve reserves reserves
£000 £000 £000 £000 £000
At 1 August 2006 4,919 916 (332) 39 5,542
Exchange differences on translation
of foreign operations – – – (269) (269)
Purchase of own shares – – (395) – (395)
Shares issued 12,984 – – – 12,984
Share options exercised – – 420 – 420
Transfer to retained earnings – – 199 – 199
At 1 January 2008 17,903 916 (108) (230) 18,481
Gains on cash flow hedges – – – 505 505
Exchange differences on translation
of foreign operations – – – 845 845
Shares issued – – (40) – (40)
Transfer to retained earnings – – 101 – 101
At 31 December 2008 17,903 916 (47) 1,120 19,892
Nature and purpose of other reserves
Share premium account
This reserve records the consideration premium for shares issued at a value that exceeds their nominal value.
Capital redemption reserve
This reserve represents the nominal value of the Company’s own shares repurchased for cancellation.
ESOP reserve
This reserve represents the cost of shares in Manganese Bronze Holdings PLC purchased in the market and held by the Manganese Bronze
Holdings PLC Employee Benefit Trust to satisfy options under the Group’s share options schemes (see note 34). Financial statements
61
Manganese Bronze Holdings PLC
30 Reconciliation of movements in equity continued
Hedging reserve
This reserve represents the cumulative portion of gains and losses on hedging instruments deemed effective in cash flow hedges.
The cumulative deferred gain or loss on the hedging instrument is recognised in profit or loss only when the hedged transaction impacts
the profit or loss, consistent with the applicable accounting policy.
Translation reserve
Exchange differences relating to the translation of the net assets of the Group’s foreign operations, which relate to subsidiaries only,
from their functional currency into the parent’s functional currency, being sterling, are recognised directly in the translation reserve.
31 Contingent liabilities
a) Certain subsidiaries provide warranties and sometimes extended warranties in respect of their products. The directors review the position
regularly and consider that appropriate provisions have been made to cover known and expected costs likely to arise under these
warranties.
b) Following advice from the Group’s lawyers, no provision has been made for any compensation or consequential loss claims from drivers
as the directors believe that payment of claims by the Group is not probable (see note 7).
32 Operating lease arrangements
The Group as lessee
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
£000 £000
Minimum lease payments under operating leases recognised as an expense in the period 1,080 1,415
At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating
leases which fall due as follows:
As at As at
31 Dec 2008 31 Dec 2007
£000 £000
Within one year 1,012 897
In the second to fifth years inclusive 1,201 1,337
After five years 6,409 5,170
8,622 7,404
The Group has entered into commercial leases on certain land and buildings, motor vehicles and items of plant and equipment. Land and
building leases are generally subject to periodic rent reviews. Some leases have renewal options. These are at the option of the Group,
sometimes subject to a minimum notice period. In some cases rent escalations are set out in the lease contract. There are no material
contingent rents payable. No significant restrictions are placed on the Group by entering into these leases.
33 Share-based payments
Share option scheme
The Company has a share option scheme for executive directors and senior managers. Options are exercisable at a price equal to the market
price of the Company’s shares on the date of the grant. The vesting period is three years. If the options remain unexercised after a period
of ten years from the date of the grant, the options expire. Options are forfeited if the employee leaves the Group before the options vest,
although options may be exercisable for a certain period of time in defined good leaver cases or with the consent of the Remuneration
Committee. The performance requirements associated with share options are disclosed in the directors’ remuneration report on pages 28
and 29. Manganese Bronze Holdings PLC
62
Financial statements
Notes to the consolidated financial statements continued
33 Share-based payments continued
Details of the share options outstanding during the period are as follows:
12 months to 31 Dec 2008 17 months to 31 Dec 2007
Number of Weighted average Number of Weighted average
share options exercise price (p) share options exercise price (p)
Outstanding at the beginning of the period 65,463 303.5 480,700 166.2
Granted during the period – – 15,728 639.2
Exercised during the period – – (419,965) 157.4
Expired during the period (11,227) 305.0 (11,000) 360.5
Outstanding at the end of the period 54,236 303.1 65,463 303.5
Exercisable at the end of the period – –
The options outstanding at the end of the period had a weighted average exercise price of 303.1p, an exercise price range from 197.3p
to 639.2p, and a weighted average remaining contractual life of 7.5 years. During the period ended 31 December 2008, no options were
granted. During the period ended 31 December 2007, options were granted on 31 January 2007 with an aggregate estimated fair value
of £46,000.
The inputs into the Black-Scholes model are as follows:
12 months to 17 months to
31 Dec 2008 31 Dec 2007
Weighted average share price 639.2p 639.2p
Weighted average exercise price 639.2p 639.2p
Expected volatility 51.0% 51.0%
Expected life 5 years 5 years
Risk free rate 5.24% 5.24%
Expected dividends 1.25% 1.25%
Expected volatility was determined by calculating the historic volatility of the Group’s share price over the last five years. As there is a
three-year period before share options vest and the options have a maximum life of ten years the expected life used in the model is
five years, being management’s best estimate taking into account the effects of non-transferability, exercise restrictions, and behavioural
considerations.
The Group recognised total expenses of £27,000 (17 months ended 31 December 2007: £34,000) related to share option equity-settled
share-based payment transactions during the period.
Long-Term Incentive Plan (LTIP)
The Company has a long-term incentive plan for executive directors under which awards are granted at no cost. Details of this LTIP
are disclosed in the directors’ remuneration report on pages 28 and 29.
Details of the LTIPs outstanding during the period are as follows:
12 months to 17 months to
31 Dec 2008 31 Dec 2007
Number of Number of
share options share options
Outstanding at the beginning of the period 1,330,037 294,722
Granted during the period – 1,164,149
Exercised during the period (160,413) –
Expired during the period (46,700) –
Forfeited during the period – 128,834
Outstanding at the end of the period 1,122,924 1,330,037
The weighted average share price at the date of exercise for LTIP equity-settled options exercised during the year was 334.25p.
The Group recognised total expenses of £226,000 (17 months ended 31 December 2007: £115,000) related to LTIP equity-settled
share-based payment transactions during the period. Financial statements
63
Manganese Bronze Holdings PLC
34 Retirement benefit schemes
The Group operates a defined contribution pension plan (Account Plus) which is open to employees of Group companies, and a defined
benefit scheme (Manganese Bronze Group Pension Scheme) in which members have ceased to accrue additional pensionable service
but benefits continue to be linked to salary or Limited Price Indexation (LPI). Under the projected unit method the current service cost
will increase as members approach retirement.
Defined contribution scheme (Account Plus)
The assets of the scheme are held separately from those of the Group under the control of the trustees.
The total cost charged to income for Account Plus for the period was £568,000 (17 months ended 31 December 2007: £596,000).
As at 31 December 2008, contributions of £52,000 (2007: £55,000) due in respect of the current reporting period had not been paid
over to the scheme.
Defined benefit scheme (Manganese Bronze Group Pension Scheme)
The valuation position of the Group’s defined benefit pension scheme (Manganese Bronze Group Pension Scheme), which was closed in
1995, was assessed at 31 December 2008 by a qualified independent actuary using a set of assumptions which are commensurate with
the guidance given under IAS 19. Although the scheme primarily provides defined benefits, it also has a small defined contribution section.
Contributions of £1.2m (17 months ended 31 December 2007: £1.7m) were paid into the scheme during the period. No contributions
were paid into the defined contribution section of the scheme.
Valuation at
31 Dec 2008 31 Dec 2007
Key assumptions used:
Discount rate 6.2% 5.6%
Expected return on scheme assets 4.7% 5.7%
Salary increases 2.7% 4.0%
Inflation 2.7% 3.5%
Mortality rates:
Pre-retirement PA92 C2006 PA92 C2006
with medium with medium
cohort adjustment cohort adjustment
Post-retirement: Deferreds PA92 C2015 PA92 C2015
with medium with medium
cohort adjustment cohort adjustment
Pensioners PA92 C2006 PA92 C2006
with medium with medium
cohort adjustment cohort adjustment
The rates of increase of pensions in payment were allowed for at the rates set out in the scheme rules, which range between nil and 5%.
Amounts recognised in income in respect of the defined benefit scheme are as follows:
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
£000 £000
Current service cost – –
Interest cost (1,859) (2,380)
Expected return on scheme assets 1,541 1,964
Past service costs – –
Net charge to income (318) (416)
The total net charge for the period has been included within finance costs in the consolidated income statement.
Actuarial gains and losses have been reported in the statement of recognised income and expense. The cumulative amount of actuarial
gains and losses recognised in the statement of recognised income and expense since the adoption of IFRSs is a gain of £733,000
(2007: £926,000 loss). Manganese Bronze Holdings PLC
64
Financial statements
Notes to the consolidated financial statements continued
34 Retirement benefit schemes continued
The amount included in the balance sheet arising from the Group’s obligations in respect of the defined benefit scheme is as follows:
As at As at
31 Dec 2008 31 Dec 2007
£000 £000
Present value of defined benefit obligations (30,947) (34,074)
Fair value of scheme assets 29,392 29,978
Deficit in scheme recognised as a liability in the balance sheet (1,555) (4,096)
Movements in the present value of defined benefit obligations were as follows:
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
£000 £000
At the beginning of the period 34,074 33,474
Interest cost 1,859 2,380
Actuarial (gains)/losses (3,207) 709
Benefits paid (1,779) (2,489)
At the end of the period 30,947 34,074
Movements in the fair value of the scheme assets were as follows:
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
£000 £000
At the beginning of the period 29,978 28,800
Expected return on assets 1,541 1,964
Actuarial (losses)/gains (1,548) 3
Employer contributions 1,200 1,700
Benefits paid (1,779) (2,489)
At the end of the period 29,392 29,978
The analysis of the scheme assets and the expected rate of return at the balance sheet date was as follows:
Expected return Fair value of assets
As at As at As at As at
31 Dec 2008 31 Dec 2007 31 Dec 2008 31 Dec 2007
% % £000 £000
Equities 6.7 7.9 9,808 9,767
Gilts 3.7 4.6 19,369 19,487
Cash 3.7 4.6 215 724
29,392 29,978
The expected rate of return on each asset class has been determined on the basis of market expectations for the rate of return on each asset
class over the life of the related obligation, at the balance sheet date. Financial statements
65
Manganese Bronze Holdings PLC
34 Retirement benefit schemes continued
The five-year history of experience adjustments is as follows:
2008 2007 2006 2005 2004
£000 £000 £000 £000 £000
Present value of defined
benefit obligations (30,947) (34,074) (33,474) (33,073) (29,831)
Fair value of scheme assets 29,392 29,978 28,800 26,898 23,461
Deficit in the scheme (1,555) (4,096) (4,674) (6,175) (6,370)
Experience adjustments on
scheme liabilities
Amount (£000) 498 34 (34) 790 972
Percentage of scheme liabilities (%) 1.6 0.1 (0.1) 2.4 3.3
Experience adjustments on
scheme assets
Amount (£000) (1,548) 3 745 2,215 111
Percentage of scheme assets (%) (5.3) 0.0 2.6 8.2 0.5
35 Financial instruments
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the return
to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of debt, which includes
the borrowings disclosed in note 23, cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued
capital, reserves, and retained earnings as disclosed in notes 29 and 30.
Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the
basis on which income and expense are recognised, in respect of each class of financial asset, financial liability and equity instrument are
disclosed in note 3 to the financial statements.
Financial risk management objectives
Treasury policy seeks to reduce the risks arising from the currency and maturity of the Group’s financial instruments. The main risks arising
from the Group’s financial instruments are currency risk, interest rate risk and liquidity risk. Speculation, including the use of complex
financial derivative products, is not part of the Group’s treasury activities. Financial instruments are sterling denominated where possible.
Material foreign currency commitments are hedged for up to 12 months ahead using forward contracts. Borrowings and, where they arise,
deposits are fixed for periods of up to one year. The functional currency of the Group is sterling.
Foreign currency risk management
The Group undertakes certain transactions denominated in foreign currencies, resulting in exposure to exchange rate fluctuations.
Exchange rate exposures are managed within approved policy parameters utilising forward foreign exchange contracts.
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:
Liabilities Assets
As at As at As at As at
31 Dec 2008 31 Dec 2007 31 Dec 2008 31 Dec 2007
£000 £000 £000 £000
Euro 2,809 1,947 651 1,150
US dollar 5,096 3,410 5,604 3,648 Manganese Bronze Holdings PLC
66
Financial statements
Notes to the consolidated financial statements continued
35 Financial instruments continued
Foreign currency sensitivity analysis
The Group is mainly exposed to the currency of Europe (euro currency) and the United States of America (US dollar currency).
The following table details the Group’s sensitivity to a 10% increase and decrease in sterling against the relevant foreign currencies.
The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period
end for a 10% change in the foreign currency rates. The sensitivity analysis includes loans to foreign operations within the Group where the
denomination of the loan is in a currency other than the currency of the lender or borrower. A positive number below indicates an increase
in profit and other equity where sterling strengthens 10% against the relevant currency. For a 10% weakening of sterling against the
relevant currency, there would be an equal and opposite impact on the profit and other equity, and the balances would be negative.
Euro impact US dollar impact
As at As at As at As at
31 Dec 2008 31 Dec 2007 31 Dec 2008 31 Dec 2007
£000 £000 £000 £000
Profit or loss 196 72 7 3
Other equity – – (53) (24)
In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk as the year end exposure represents
a point in time and does not reflect the total exposure during the year.
Forward foreign exchange contracts
The Group utilises currency derivatives to hedge significant future transactions and cash flows. The Group’s main currency exposure is to
the euro, a consequence of the purchase of taxi components. Forward contracts are used to hedge this exposure. The following table details
the forward foreign currency contracts outstanding as at 31 December 2008 (2007: nil):
Outstanding contracts
Average Foreign currency Contract value Fair value
exchange rate €000 £000 £000
Cash flow hedges
Buy euros
Less than three months 1.25 2,250 1,800 347
Three to six months 1.28 1,500 1,172 255
Six to nine months 1.28 1,500 1,175 250
852
The Group has entered into contracts to purchase components denominated in euros from European based suppliers. The Group has
entered into forward foreign exchange contracts (for terms not exceeding 12 months) to hedge the exchange rate risk arising from these
anticipated future purchases, which are designated as cash flow hedges.
As at 31 December 2008, the aggregate amount of gains under forward foreign exchange contracts deferred in the hedging reserve
relating to these anticipated future purchase transactions is £505,000 (2007: nil). It is anticipated that the purchases will take place
during the first nine months of the next financial year at which stage the amount deferred in equity will be included in the carrying amount
of the components. It is anticipated that the components will be converted into inventory and sold within six months after purchase at
which stage the amount deferred in equity will impact profit or loss. Financial statements
67
Manganese Bronze Holdings PLC
35 Financial instruments continued
Interest rate risk management
The Group is exposed to interest rate risk as entities within the Group borrow funds. The Group seeks to minimise interest rate risk
by minimising overall borrowing requirements.
Interest rate sensitivity analysis
The sensitivity analysis below has been determined based on the exposure to interest rates on borrowings at the balance sheet date.
The analysis is prepared assuming the amount of liability outstanding at the balance sheet date was outstanding for the whole year.
A 1% increase or decrease is used when reporting interest rate risk.
If interest rates had been 1% higher/lower and all variables were held constant, the Group’s loss for the year ended 31 December 2008
would increase/decrease by £84,000 (17 months ended 31 December 2007: profit would decrease/increase by £100,000). This is mainly
attributable to the Group’s exposure to interest rates on the stocking loan facility.
The Group’s sensitivity to interest rates has increased during the current period mainly due to a higher utilisation of funding facilities.
Credit risk management
The Group’s principal financial assets are bank deposits and trade receivables.The credit risk on trade receivables is limited as the majority
of revenue transactions are settled immediately and are, therefore, not on a credit basis. The credit risk on liquid funds and derivative
financial instruments is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating
agencies. These ratings are closely monitored.
The carrying amount of financial assets recorded in the financial statements, which is net of impairment losses, represents the Group’s
maximum exposure to credit risk as no collateral of other credit enhancements are held.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the board of directors. The Group manages liquidity risk by maintaining
adequate banking facilities and by continuously monitoring forecast and actual cash flows. Included in note 23 is a description of additional
undrawn facilities that the Group has at its disposal to further reduce liquidity risk.
36 Events after the balance sheet date
There are no non-adjusting events after the balance sheet date.
37 Related party transactions
Trading transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not
disclosed in this note. During the year, the Group had no trading transactions with related parties.
Remuneration of key management personnel
The remuneration of the directors, who are the key management personnel of the Group, is set out below in aggregate for each of the
categories specified in IAS 24 “Related Party Disclosures”. Further information about the remuneration of individual directors is provided
in the audited part of the directors’ remuneration report on pages 30 and 31.
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
£000 £000
Short-term employee benefits 836 1,353
Post-employment benefits 92 89
928 1,442 Manganese Bronze Holdings PLC
68
Financial statements
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
Notes £000 £000
Continuing operations
Operating income
Management charges 2,500 5,250
Dividends from subsidiaries 1,250 –
3,750 5,250
Administrative expenses (1,969) (3,000)
Operating profit 39 1,781 2,250
Investment revenues 41 399 989
Finance costs 42 (555) (979)
Profit before tax 1,625 2,260
Tax 43 (174) (861)
Net profit attributable to ordinary shareholders of parent 1,451 1,399
The accompanying notes form an integral part of this Company income statement.
Company income statement
for the year ended 31 December 2008
Company statement of recognised income and expense
for the year ended 31 December 2008
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
£000 £000
Net profit for the period 1,451 1,399
Actuarial gain/(loss) on defined benefit pension scheme 1,659 (706)
Tax on items taken direct to equity (606) 198
Recognised income and expense for the period 2,504 891 Financial statements
69
Manganese Bronze Holdings PLC
As at As at
31 Dec 2008 31 Dec 2007
Notes £000 £000
Non-current assets
Property, plant and equipment 44 – –
Investment in subsidiaries 45 4,705 4,705
Investment in joint ventures 19 16,034 16,034
Deferred tax asset 46 500 1,474
Total non-current assets 21,239 22,213
Current assets
Trade and other receivables 47 16,839 14,695
Cash and cash equivalents 47 58 9,014
Total current assets 16,897 23,709
Total assets 38,136 45,922
Current liabilities
Trade and other payables 49 2,689 3,180
Borrowings 48 203 7,884
Total current liabilities 2,892 11,064
Non-current liabilities
Retirement benefit obligation 1,555 4,096
Preference shares 641 641
Total non-current liabilities 2,196 4,737
Total liabilities 5,088 15,801
Net assets 33,048 30,121
Equity
Share capital 29 6,281 6,241
Share premium account 50 17,903 17,903
Capital redemption reserve 50 916 916
ESOP reserve 50 (47) (108)
Hedging and translation reserves 50 965 (129)
Retained earnings 50 7,030 5,298
Equity attributable to equity holders of the parent 33,048 30,121
Approved by the Board
John Russell Mark Fryer
Group Chief Executive Group Finance and Business Development Director
4 March 2009
The accompanying notes form an integral part of this Company balance sheet.
Company balance sheet
as at 31 December 2008 Manganese Bronze Holdings PLC
70
Financial statements
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
Notes £000 £000
Operating activities
Operating profit from continuing operations 1,781 2,250
Adjustments for:
Depreciation of property, plant and equipment – 38
Charge for share-based payments 253 149
Decrease in provisions – (1)
Operating cash flows before movement in working capital 2,034 2,436
Increase in receivables (841) (3,672)
(Decrease)/increase in payables (102) 196
Contribution to defined benefit pension scheme 34 (1,200) (1,700)
Cash used by operations (109) (2,740)
Interest paid (237) (563)
Net cash used in operating activities (346) (3,303)
Investing activities
Interest received 399 989
Acquisition of investment in joint ventures 19 (389) (1,395)
Net cash from/(used in) investing activities 10 (406)
Financing activities
Dividends paid (939) (2,059)
Purchase of own shares – (395)
Proceeds on issue of shares – 636
(Decrease)/increase in bank overdrafts (7,681) 1,621
Net cash used in financing activities (8,620) (197)
Net decrease in cash and cash equivalents (8,956) (3,906)
Cash and cash equivalents at beginning of period 9,014 12,920
Cash and cash equivalents at end of period 58 9,014
The accompanying notes form an integral part of this Company cash flow statement.
Company cash flow statement
for the year ended 31 December 2008 Financial statements
71
Manganese Bronze Holdings PLC
38 Significant accounting policies
The separate financial statements of the Company are presented as required by the Companies Act 1985. As permitted by that Act,
the separate financial statements have been prepared in accordance with International Financial Reporting Standards.
The financial statements have been prepared on the historic cost basis.The principle accounting policies adopted are the same as those
set out in note 3 to the consolidated financial statements.
39 Operating profit
Operating profit for the period has been arrived at after charging:
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
£000 £000
Depreciation of property, plant and equipment – 38
Staff costs (see note 40) 726 1,131
The auditors’ remuneration for audit and other services is disclosed in note 9 to the consolidated financial statements.
40 Staff costs
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
Number Number
Average number of employees (including executive directors) 2 2
Their aggregate remuneration comprised:
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
£000 £000
Wages and salaries 500 758
Social security costs 139 307
Other pension costs (note 34) 87 66
726 1,131
Further information about the remuneration of individual directors is provided in the audited part of the directors’ remuneration report
on pages 30 and 31.
41 Investment revenues
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
£000 £000
Interest on bank deposits 113 423
Inter-Group interest received 286 566
399 989
Notes to the Company financial statements Manganese Bronze Holdings PLC
72
Financial statements
42 Finance costs
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
Notes £000 £000
Interest payable on:
Bank overdrafts and loans 14 8
Inter-Group loans 170 476
Preference share dividends 53 79
Net interest on pension liability 34 318 416
555 979
43 Tax
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
£000 £000
Current tax:
UK corporation tax (211) (169)
Adjustments relating to prior periods 1 1,037
Deferred tax (note 46)
Origination and reversal of timing differences 384 21
Adjustments relating to prior periods – (28)
Total tax charge 174 861
UK corporation tax is calculated at 28.5% (17 months ended 31 December 2007: 30%) of the estimated assessable profit for the period.
The charge for the period can be reconciled to the profit per the income statement as follows:
Year ended 17 months ended
31 Dec 2008 31 Dec 2007
£000 £000
Profit before tax 1,625 2,260
Corporation tax thereon at 28.5% (17 months ended 31 December 2007: 30%) 463 678
Adjustment in respect of prior periods 2 (7)
Tax effect of expenses that are not deductible in determining taxable profits (286) 119
Tax effect of deferred tax rate differences (5) 71
Tax charge for current period 174 861
In addition to the amount charged to the income statement, deferred tax relating to share based payments amounting to £126,000
(17 months ended 31 December 2007: £829,000 credit) and to actuarial gains/losses on the defined benefit pension scheme amounting
to £464,000 (17 months ended 31 December 2007: £198,000 credit) have been charged directly to equity.
Notes to the Company financial statements continued Financial statements
73
Manganese Bronze Holdings PLC
44 Property, plant and equipment
£000
Cost:
At 1 August 2006 245
Disposals (64)
At 1 January 2008 181
At 31 December 2008 181
Depreciation:
At 1 August 2006 207
Charge for the period 38
Disposals (64)
At 1 January 2008 181
At 31 December 2008 181
Carrying amount:
At 31 December 2007 –
At 31 December 2008 –
45 Investment in subsidiaries
£000
Cost:
At 1 August 2006, 1 January 2008 and 31 December 2008 8,501
Cumulative impairment:
At 1 August 2006, 1 January 2008 and 31 December 2008 3,796
Carrying amount:
At 31 December 2007 and 31 December 2008 4,705
Details of the Company’s principal subsidiaries at 31 December 2008 are as follows:
Company Country of incorporation Holding %
LTI Limited England 100%
Manganese Bronze Services Limited England 100%
Manganese Bronze Property Services Limited England 100%
London Taxis North America Holdings Incorporated United States of America 99%
Investments are valued at cost less cumulative impairment. Manganese Bronze Holdings PLC
74
Financial statements
46 Deferred tax
The elements of deferred tax assets included in non-current assets are as follows:
As at As at
31 Dec 2008 31 Dec 2007
£000 £000
Accelerated tax depreciation 34 43
Other short-term timing differences 4 4
Retirement benefit obligations 435 1,147
Share-based payments 27 280
500 1,474
47 Other financial assets
Trade and other receivables
As at As at
31 Dec 2008 31 Dec 2007
£000 £000
Amounts owed by subsidiary undertakings 16,566 14,449
Corporation tax recoverable 211 169
Other debtors – 17
Prepayments 62 60
16,839 14,695
All trade and other receivables are considered to be current and are, therefore, not impaired.
The directors consider that the carrying amount of trade and other receivables approximates to their fair value.
Cash and cash equivalents
These comprise of cash held by the Company and short-term bank deposits. The fair value of cash and cash equivalents is not materially
different from their book value.
Other financial assets are expected to mature within three months of the balance sheet date.
48 Borrowings
This comprises of a bank overdraft that forms part of the Group’s overdraft facility which is provided by HSBC Bank PLC (see note 23).
49 Other financial liabilities
Trade and other payables
As at As at
31 Dec 2008 31 Dec 2007
£000 £000
Amounts owed to subsidiary undertakings 1,425 1,425
Social security, payroll and other taxes 201 424
Other creditors 964 665
Accruals 99 666
2,689 3,180
The directors consider that the carrying amount of trade and other payables approximates to their fair value.
Other financial liabilities are expected to mature within three months of the balance sheet date.
Notes to the Company financial statements continued Financial statements
75
Manganese Bronze Holdings PLC
50 Reconciliation of movements in equity
Issued Share Capital ESOP
share premium redemption reserve Hedging and Retained
capital account reserve reserves translation earnings Total
£000 £000 £000 £000 £000 £000 £000
At 1 August 2006 4,759 4,919 916 (332) – 5,687 15,949
Recognised income and expense
for the period – – – – – 891 891
Dividends paid – – – – – (2,059) (2,059)
Currency translation differences – – – – (129) – (129)
Purchase of own shares – – – (395) – – (395)
Shares issued 1,482 12,984 – – – – 14,466
Share options exercised – – – 420 – – 420
Credit to equity for share-based payments – – – – – 149 149
Tax on items taken direct to equity – – – – – 829 829
Transfer to retained earnings – – – 199 – (199) –
At 1 January 2008 6,241 17,903 916 (108) (129) 5,298 30,121
Recognised income and expense
for the year – – – – – 2,504 2,504
Dividends paid – – – – – (939) (939)
Currency translation differences – – – – 1,094 – 1,094
Shares issued 40 – – (40) – – –
Credit to equity for share-based payments – – – – – 253 253
Tax on items taken direct to equity – – – – – 15 15
Transfer to retained earnings – – – 101 – (101) –
At 31 December 2008 6,281 17,903 916 (47) 965 7,030 33,048
51 Financial instruments
The exposure to risk arising from the Company’s financial instruments and its capital risk and financial risk management are in line with
those of the Group (see note 35). Manganese Bronze Holdings PLC
76
Financial statements
Year ended Year ended Year ended 17 months to Year ended
31 Jul 2004 31 Jul 2005 31 Jul 2006 31 Dec 2007 31 Dec 2008
£000 £000 £000 £000 £000
Revenue 86,712 87,598 83,824 144,494 77,242
Operating profit/(loss) before
exceptional items (1,275) 2,532 3,236 5,575 (5,364)
Exceptional items 3,882 (105) 790 – (8,078)
Profit/(loss) on ordinary activities
before finance charge 2,607 2,427 4,026 5,575 (13,442)
Finance charge – net (1,006) (473) (356) (648) (798)
Profit/(loss) on ordinary activities
before tax 1,601 1,954 3,670 4,927 (14,240)
Tax (charge)/credit (233) 94 (920) (1,551) 1,918
Profit/(loss) after tax before
minority interest 1,368 2,048 2,750 3,376 (12,322)
Minority interests – 22 86 8 –
Profit/(loss) for the period 1,368 2,070 2,836 3,384 (12,322)
Capital expenditure on tangible assets 7,815 3,023 6,385 3,918 664
Net assets 18,352 19,677 21,477 37,530 26,799
Net funds/(debt) (1,734) 3,307 2,581 3,165 (7,165)
% % % % %
Gearing 9.4 ––– 26.7
Pence Pence Pence Pence Pence
Earnings/(loss)
per ordinary share Basic 7.42 10.97 15.02 15.89 (49.30)
Diluted 7.34 10.87 14.94 15.86 (49.30)
Dividends per
ordinary share Interim 1.00 1.00 2.00 2.25 2.25
2nd interim – – – 3.50 –
Final 2.00 3.00 3.00 1.50 –
Special – – 1.00 – –
Total 3.00 4.00 6.00 7.25 2.25
Units Units Units Units Units
New vehicle sales UK 2,271 2,412 2,388 4,147 1,951
Export 223 109 92 52 173
Total 2,494 2,521 2,480 4,199 2,124
All amounts disclosed are stated on the basis of IFRS.
Under UK GAAP employer pension contributions to the defined benefit scheme were charged to the income statement. Under IFRS
the defined benefit pension scheme deficit is shown as a liability within the balance sheet, with contributions reducing this liability.
Annual employer contributions are as follows:
Year ended Year ended Year ended 17 months to Year ended
31 Jul 2004 31 Jul 2005 31 Jul 2006 31 Dec 2007 31 Dec 2008
£000 £000 £000 £000 £000
Defined benefit pension scheme contributions 1,325 1,222 1,200 1,700 1,200
Consolidated five-year statistics Financial statements
77
Manganese Bronze Holdings PLC
Manganese Bronze Holdings PLC
Holyhead Road
Coventry
CV5 8JJ
United Kingdom
Tel +44 (0) 2476 572000
Fax +44 (0) 2476 572001
London Taxis International
Manufacture of the London taxi
Peter Shillcock +44(0) 2476 572000
London Taxis International – Export
Export sales of the London taxi
Mathew Cheyne +44(0) 2476 572000
London Taxis North America Holdings Inc
US taxi services and advertising
Larry Lewandowski +1 773 663 4223
Shanghai LTI
Assembly of the London taxi
Gang Wei +86 13661620609
Mann & Overton London
Taxi sales
Peter Rigden +44(0) 20 7700 0888
Mann & Overton Birmingham
Taxi sales
John Loakes +44(0) 121 322 0700
Mann & Overton Leeds
Taxi sales
Andrew Shaw +44(0) 113 388 8600
Mann & Overton Manchester
Taxi sales
Andrew Shaw +44(0) 161 831 3434
London Taxi Finance
Finance for taxi purchase
Customer services +44(0) 870 850 5007
Designed and produced by 85FOUR
Printed in England
Group contacts Manganese Bronze Holdings PLC Annual Report 2008
Manganese Bronze Holdings PLC
Holyhead Road
Coventry
CV5 8JJ
United Kingdom
Telephone +44 (0) 2476 572000
Fax +44 (0) 2476 572001
www.manganese.com