Audited results for the year ended 31 March 2015

23 June 2015

Hayward Tyler Group plc

("Hayward Tyler", the "Company" or "Group")

Audited consolidated results for the year ended 31 March 2015

The Board of Hayward Tyler (AIM:HAYT), the specialist engineering group, is pleased to announce its audited consolidated results for the year ended 31 March 2015. A copy of the audited accounts will be available for download from the Company's website, www.haywardtyler.com, from 8 July 2015.

Financial Highlights

§ Revenue growth up 13% to £48.6 million (FY2014: £43.2 million);

§ Adjusted profit before tax(1) up 17% to £4.7 million (FY2014: £4.0 million);

§ Profit before tax up 15% to £4.4 million (FY2014: £3.8 million);

§ Adjusted earnings per share(2) up 16% to 7.50 pence (FY2014: 6.44 pence);

§ Earnings per share up 39% to 6.98 pence (FY2014: 5.02 pence);

§ Interim dividend paid of 0.525 pence per share and final dividend proposed of 0.79 pence per share;

§ Net cash from operating activities up to £4.0 million (FY2014: £3.2 million);

§ Net debt down to £7.9 million (FY2014: £8.3 million), representing a net debt to EBITDA* ratio of 1.2:1 (FY2014: 1.5:1); and

§ Order intake at £41.7 million (FY2014: £46.0 million).

Business Highlights

§ Hayward Tyler awarded a £3.5 million grant from the Regional Growth Fund and a £1.15 million grant for training and development from the Civil Nuclear Sharing in Growth programme to support the Company's growth plans over the mid to long-term;

§ £3.0 million loan note programme initiated to complement the grant funding and investment into the Luton Centre of Excellence;

§ £2.8 million invested into the Luton Centre of Excellence in year (FY2014: £nil); and

§ Headroom under bank borrowing facilities increased by 55% to £5.9 million.

Ewan Lloyd-Baker, CEO of Hayward Tyler, commented:

"As the Group celebrates its 200th anniversary year, I am delighted to be reporting our strongest set of results since listing with an increase in both Original Equipment and Aftermarket revenues. In the year under review, significant progress has been made across the Group, not least at our main UK design and manufacturing facility in Luton where works on our Centre of Excellence are now well underway that will result in a near doubling of capacity. The Board is further encouraged by the series of key contract wins, together with partnerships, that have been signed and are being progressed since the year-end across our key geographic regions and end markets. The Board is pleased to propose a final dividend of 0.79 pence per share for the year ended 31 March 2015."

Notes

(1) Adjusted for the fair value of forex derivatives of £0.29m (FY2014: adjusted for the fair value of forex derivatives of £(0.04m), non-trading costs of £0.22m and the impact of the change in UK corporation tax rate of £0.46m)

(2) Adjusted for the fair value of forex derivatives, net of related tax of £0.23m (FY2014: adjusted for the fair value of forex derivatives, net of related tax of £(0.03m), non-trading costs of £0.22m and the impact of the change in UK corporation tax rate of £0.46m)

(3)EBITDA represents earnings before interest, tax, depreciation and amortisation

About Hayward Tyler Group plc

Hayward Tyler Group plc is a market leader in the design, manufacture and service of performance-critical motors and pumps across the energy sector. Core markets for the group include: power generation - both conventional and nuclear; oil & gas exploration - both topside and subsea; and the chemical/industrials sector. With facilities in China, India, UK and USA, the Group has a proven reputation for providing innovative, reliable technological solutions built on a heritage stretching back over 200 years. www.haywardtyler.com

Enquiries:

Chairman's Statement

Dear Shareholder

I am delighted to report on another successful year in the performance of your Company and I would like to take this opportunity to thank the Executive Directors and all the team, on your behalf, for the outstanding performance.

Results Overview

The Group continued to make strong progress in the year with revenue rising to £48.6 million (FY2014: £43.2 million). That generated an operating profit of £5.3 million (FY2014: £4.7 million), representing a return on revenue of 11.0% (2014: 10.8%), and a profit after tax significantly higher at £3.1 million (FY2014: £2.3 million). Fully diluted earnings per share were 6.98 pence (FY2014: 5.02 pence).

See the Chief Executive's Business Review and the Financial Review.

Dividend

We have previously stated that we will adopt a progressive dividend policy to which end we increased the interim dividend by 5% to 0.525 pence per ordinary share, paid in February 2015. Subject to shareholder approval, we will pay a final dividend of 0.79 pence per share, an increase of just over 5% on prior year, on 28 August 2015 to shareholders on the register on 14 August 2015 (ex-dividend date: 13 August 2015).

200 Years of Engineering Excellence

For the past 200 years, Hayward Tyler has been meeting and exceeding customer expectations and we have built a global reputation for industry-leading innovation, quality, and reliability. For example, we designed and built the world's first electric submersible motor back in 1908 and ever since we have shown the way, developing world-beating fully-certified technology that now drives a wide range of performance-critical applications in the fields of power, oil and gas exploration and the industrial sector.

As reported elsewhere in these financial statements, this has been another successful year of growth and we look forward with confidence as we lay the foundations for the future with the development of the Luton Centre of Excellence.

Centre of Excellence

During the year we kicked-off development of the centre. This project is key to our growth prospects and encompasses research and development, training and development, and expansion of the Luton facility footprint by around 40%. Key to funding the development has been the award of government grants to Hayward Tyler Limited and extended borrowing arrangements in the year. The Board's thanks goes out to the various teams that have helped to secure our future through these arrangements.

Further details of the Centre of Excellence are set out in the Chief Executive's Business Review and the Financial Review.

Expanding our Global Reach

As shareholders know, we currently operate out of China, India, UK and USA, which provides us with a global footprint to sell all around the world. In FY2015, we continued to sell a significant proportion of our products and services overseas with 88% of revenue generated from non-UK based customers. During the year under review we opened a new sales office in Shanghai, China, to complement our existing service and overhaul facility in Kunshan. The Shanghai presence is allowing the Group to better access and serve the Chinese energy, power and chemical markets.

Corporate Governance

I set out my review of governance in Corporate Governance.

Outlook

The expansion of the Group's production capabilities, coupled with the strengthening of our balance sheet, puts Hayward Tyler in an increasingly well-placed position to capture significant opportunities across our chosen markets and to achieve the Board's growth ambitions. The Board remains confident in the prospects for the business.

Yours faithfully,

John May

Non-Executive Chairman

22 June 2015

Chief Executive's Business Review

A Brief History

There are not very many companies in the UK, let alone the world, that can say they are 200 years young and therefore before I discuss the events of the past 12 months I want to take a moment to reflect on what is a major milestone in the history of this great business.

Given all the current focus and attention in the media about balancing the UK economy between the financial sector and the manufacturing sector, it is somewhat ironic that the origins of Hayward Tyler can be traced back to the Howard family that also founded Lloyds Bank in 1765. It was Joseph Bramah, however, who established the business in 1815 focused on the fluid applications that have formed the bedrock of Hayward Tyler to this day.

Notable achievements over the last two centuries include the pioneering development of the submersible electric motor, the glandless boiler circulating pump ("BCP") and a subsea fluid-filled electric motor capable of operating at depths of 3,000 metres. These developments enabled Hayward Tyler to supply glandless pumps to the world's first civil nuclear power station in the UK in 1956, establish the largest installed base of over 2,300 BCPs worldwide and deliver 2.75MW subsea motors to enhance oil extraction from the North Sea.

For all the technological innovation and market penetration, the latter decades of the twentieth century saw Hayward Tyler affected by underinvestment by former owners. In 2010 the business was reversed into an AIM listed PLC, which allowed the business to begin its journey of regeneration.

Recent Improvements

Indeed, the last four years have been transformational and now provide not just the Luton business but also the entire Group with an exceptionally strong platform on which to continue building.

Our entire workforce, now numbering 199 in Luton alone and 345 altogether, have been involved in the turnaround and I'd therefore like to thank everyone for their patience and fortitude whilst we have been through some particularly 'heavy lifting'. In particular, however, I would like to thank Dave Murray, Mike Williams and Martin Clocherty, who have led and sustained the transformation of Hayward Tyler Luton and are now supporting the next stage of the Group's development and growth.

Performance Review

So, with this behind us let us now turn our attention to the financial year ended 31 March 2015. We set ourselves a number of priorities over 12 months ago and it is therefore encouraging to report that we have been successful in delivering against our plans. This has been no mean feat, particularly at our main Luton facility where output has increased despite the extensive demolition and building works under way. The creation of a world-class Centre of Excellence is a feature and theme that will be re-visited frequently across this document and over the coming months. It is very exciting to be a part of this for two reasons; firstly, it enhances our capabilities by improving our efficiencies and increasing our capacity and secondly, because it takes a great 200 year old business into the next generation, ensuring that it has a strong and bright future. For a Company that has re-found its 'mojo' the opportunities for our employees, our customers, our suppliers and wider stakeholders are significant and we can look to the future with increasing confidence and excitement.

Global Expansion

We have a global footprint with operations based in Kunshan (China), Delhi (India), East Kilbride and Luton (both UK), and Vermont (USA). In addition, we opened a sales office in Shanghai (China) in January 2015. For reporting purposes, however, we split our business into two segments, Original Equipment ("OE") and Aftermarket ("AM"). Hayward Tyler East Kilbride, Luton and Vermont contribute to the OE business and Hayward Tyler Kunshan, Delhi, Luton and Vermont form the AM business. Both parts of the business showed an increase in revenues of 13% over the previous year.

In revenue terms, the USA was our biggest single geographical market accounting for 24% (FY2014: 25%) of total sales reflecting our strong domestic business there. The Far East was the next largest market accounting for 23% of revenues (FY2014: 16%) underpinned by China and South Korea. Domestic UK revenues increased slightly to 12% (FY2014: 9%) and South Africa performed strongly with 7% of revenues (FY2014: 6%), driven by sales of BCP spares. European revenues were down to 8% (FY2014: 17%) as a result of lower oil and gas revenues whilst revenues derived from India were 4% (FY2014: 4%), reflecting the previously poor economic environment and uncertainty prior to the Indian general election.

From a market sector perspective Power remained our largest market representing 59% of revenue (FY2014: 51%), driven by world-wide sales of new units and aftermarket services. The next largest market was nuclear with 20% of revenue (FY2014: 16%) as a result of sales to KHNP. Oil and gas was lower at 8% of revenue (FY2014: 18%) whilst other markets, including industrial, chemical and renewables, represented 13% (FY2014: 15%).

Overall the diversity of our markets and broad geographical coverage provides the Group with a significant degree of resilience to adverse market fluctuations in any single market.

Operating Profit Margin Improvement

As highlighted at the time of our interim results, we anticipated a strong performance in 2H2015 and this helped increase the gross profit margin for the Group to 35.1%, marginally above our target, and significantly ahead of the performance in the first half of the year. Likewise the operating profit margin improved in 2H2015 thus driving the full year performance up to 11.0% (FY2014: 10.8%), which is in our KPI target range of 10-15%. We anticipate that this second half performance is sustainable and will therefore help underpin the margin expectations in the current year.

Looking at the performance in greater detail, gross profit margins of the AM business typically fall in the range of 45-50% dependent on the mix of business. The result in FY2015 was no different with a gross profit margin of 47%, which was down from 50% in FY2014 but in line with expectation. The gross profit margin of the OE business improved from 14% in 1H2015 to 23% in 2H2015, thus providing an overall gross margin of 18% for FY2015.

The OE gross profit margin represents an increase on the margin in FY2014 of 14% and it was achieved despite the disappointment in 1H2015 of a loss making contract by our US business. Since then we have undertaken a number of significant steps to strengthen our US business. These steps included conducting a root and branch review of our contract acceptance process, restructuring the reporting lines, appointing a new President and undertaking a Mega 5S event, jargon for improving workplace organisation through standards and discipline, which involved the entire workforce. To put this into perspective, the activity included all 95 employees, supported by 4 employees from the UK, who over the course of 2 days set to work clearing out 15 tons of scrap, 4 tons of trash, applying 45 gallons of paint and using 20 gallons of cleaning solution to ensure that the shop was thoroughly sorted, set and shined. Further workplace management practices are now in place to ensure that the changes made are standardised and sustained.

Centre of Excellence

Regarding developments in the UK, supported by the Regional Growth Fund and the subsequent secured loan note programme, the Centre of Excellence represents very much the future of Hayward Tyler: its investment into research and development, training and development, as well as the expansion of the facility.

During 2H2015 the preparation of the site continued at pace against a backdrop of increasing output, which involved the demolition of 8 redundant buildings and replacement of an old cooling tower, a relic from the 1950s, by a state of the art cooling system. Inside the existing main building 14 machines were scrapped or removed and the flow-lines revised in preparation for new plant, machinery and capacity planning requirements.

In specific terms, the Centre of Excellence will deliver:

§ Our most advanced facility for specialist motor manufacture in the world;

§ Integrated single process flow-lines for engineering, production, assembly and test control of stators and rotors;

§ An extended, fit for purpose facility (for subsea and nuclear sectors) with dedicated clean assembly areas and test pits;

§ An environment for extending the continuous improvement philosophy; and

§ Greater capabilities for the design and manufacture of our performance critical motors and pumps.

In addition, we anticipate that the optimised flow-lines will enhance throughput to reduce leadtimes significantly, reduce takt time (a term often used in manufacturing to describe the average production time to match the required customer demand) and increase the number of stock turns supported by internally developed leading business software planning tools. Having embarked on the planning of this project back in 2013 it was, therefore, particularly encouraging to have signed a global production alliance with FMC Technologies (see Markets). For a global company like FMC, the market leader in subsea systems, to choose Hayward Tyler for its "best-in-class manufacturing capability" is truly a glowing endorsement of the progress that we've made and for our further potential.

Across the Group we were also able to celebrate for the first time all of our facilities achieving ISO 9001 accreditation and our Scottish facility has also retained its ISO 14001 accreditation. Significantly, from January 2013 through to February 2015, four audits of this business' ISO 9001 and ISO 14001 management systems were conducted without a single non-conformance being raised.

Order Intake

Order intake for the year was £41.7 million, giving an order book at 31 March 2015 of £21.6 million. This intake was 1.0x historical revenues, marginally less than our KPI target of 1.1x but with the shortfall reflecting more of a timing issue than a softening in our chosen markets. The largest order received in the year related to the replacement of nuclear parts for South Korea's KHNP at two of its reactors, Hayward Tyler having provided the original equipment during the 1980s. Valued at over USD10 million, this order skewed the metrics increasing the nuclear share of overall order intake for the year to 32% (FY2014: 15%) and the AM share to 69% (FY2014: 64%). Power remained the dominant segment at 54% of order intake (FY2014: 57%) with oil and gas right down at 2% of the total (FY2014: 12%). The situation in the oil and gas sector has improved for Hayward Tyler since the year-end and it is anticipated that this sector is likely to return to the levels seen in FY2014. Despite the lower oil price the strong drivers underpinning demand for our subsea and submersible motors mean that we are still aiming for this market segment to account for 20-30% of our revenues over the medium term. In geographical terms, the single largest market segment was the USA reflecting the growing nature of the business followed by China, South Africa, South Korea and the UK.

The Future

Our achievements over the last three to four years have been significant and there is more hard work to come to secure our place amongst the elite. However, given strong order intake in the first two months of FY2016 of £9.8 million and with our team's unrelenting enthusiasm and drive, I've no doubt we can do that. Looking further afield we are ambitious to identify businesses that share similar characteristics to Hayward Tyler to buy, build and grow to generate further shareholder value.

At last but by no means least, I'd like to welcome Steve Robins as Managing Director of Hayward Tyler Luton and Mike Turmelle as President of Hayward Tyler Vermont. These are great times to be part of the Hayward Tyler team.

With thanks and best wishes to all our employees and wider stakeholders, Happy 200th Birthday.

Ewan Lloyd-Baker

Chief Executive Officer

22 June 2015

Financial Review

Introduction

I am pleased to report increased revenues and increased profitability.

Basis of Reporting

The Group financial statements in this report have been prepared in accordance with International Financial Reporting Standards ("IFRSs").

Trading Operating Results

Revenue for the year was up by 13% to £48.6 million (FY2014: £43.2 million) driven by growth in revenues from both the OE and AM. Gross profit margin was ahead of our target KPI level at 35.1% but lower than prior year (FY2014: 37.7%) as a result of the performance of the US OE business in the first half of the year and marginally lower margins from the AM. Operating charges in the year of £11.7 million (FY2014: £11.6 million) included net costs incurred on the Regional Growth Fund ("RGF") programme of £0.5 million (FY2014: £nil) (see RGF below). Taking these elements together delivered an increased profit before tax of £4.4 million (FY2014: £3.8 million). EBITDA (earnings before interest, tax, depreciation and amortisation) for the year was up 14% at £6.4 million (FY2014: £5.5 million).

The Group is exposed to the US Dollar through its operating business in the USA and from UK exports to China. On a constant exchange rate1 basis revenue and profit before tax in FY2014 would have been lower by £0.3 million and £0.1 million respectively.

1 constant exchange rate is calculated by rebasing prior year figures at current year rates

Finance Charges

Finance costs in the year were £0.7 million (FY2014: £0.9 million). These costs represent underlying interest payable of £0.5 million (FY2014: £0.6 million), amortisation of arrangement fees over the life of the loans to which they relate of £0.1 million (FY2014: £0.2 million) and finance costs of pensions £0.1 million (FY2014: £0.1 million). In addition, the fair value of derivatives was a loss of £0.3 million (FY2014: gain of £41,000), driven by the mark-to-market of foreign exchange hedging instruments that were outstanding at 31 March 2015, which have an average exchange rate of GBP1:USD1.56 compared to a year-end rate of GBP1:USD1.48.

Tax

There was a tax charge for the year of £1.2 million (FY2014: £1.5 million), which represents an effective tax charge of 28% (FY2014: 40%) made-up of tax payable on profits in the USA and China of £0.7 million (FY2014: £0.8 million) and a non-cash deferred tax charge on profits generated in the UK of £0.5 million (FY2014: £0.7 million).

Net Profit

The total profit for the year was £3.1 million (FY2014: £2.3 million), which delivered a fully diluted earnings per share up 39% at 6.98 pence (FY2014: 5.02 pence).

Dividends

The Group paid its interim dividend of 0.525 pence per share in February 2015 at a total cost of £0.2 million.

RGF

The Luton business was awarded a £3.5 million grant from the RGF programme during the first half of the year. Net costs incurred on the programme of £0.5 million (FY2014: £nil) represented costs of £0.8 million, which mainly related to research, development and training, offset by grant income of £0.3 million. In the consolidated statement of financial position at 31 March 2015, the grant receivable and the deferred income in respect of the programme have been recorded as an other debtor of £2.1 million and an other creditor of £3.2 million respectively, each analysed between current and non-current. As at 31 March 2015 the Luton business has received grant income as cash of £1.4 million.

Further details of the accounting treatment of the RGF programme are given in note 2.24 to these financial statements.

Working Capital

Working capital increased from prior year-end to 31 March 2015 mainly as a result of trade receivables relating to unusually high revenues in March 2015 of over £7.5 million. The majority of these receivables were collected over the subsequent two months. In spite of higher working capital, year-end headroom (cash plus undrawn facilities) was very strong at £5.9 million (FY2014: £3.8 million). Details of cash, borrowings and related interest rates are given in notes 22 and 28 to the financial statements.

Funding

In March 2014 we announced that we had secured £14.2 million of new banking and borrowing facilities. During FY2015 we arranged a USD2.0 million working capital facility for our US business together with the additional facilities to complement the grant funding of the Luton Centre of Excellence. These additional facilities include:

§ A £2.4 million increase to the £5.0 million UK revolving credit facility;

§ A £1.0 million increase to a £1.0 million equipment finance line to help fund the acquisition of new plant and equipment; and

§ A £3.0 million loan note programme to help fund the extension of the Luton facility. An initial £1.635 million was drawn from the programme in January 2015 with the balance expected to be drawn before the end of summer 2015.

We have established a strong relationship that with our banking partner, RBS, over the last 18 months or so and, in addition, have been able to access the UK Export Finance schemes to support exporters. That assurance, together with the above facilities, provides us with the confidence to take the Group forward.

Borrowings

Net debt was reduced from £8.3 million at 31 March 2014 to £7.9 million at 31 March 2015 in spite of the 13% growth in revenue and the investment in the Centre of Excellence mainly as a result of operational inflows offset by capital expenditure. This reduction helped to improve the ratio of net debt to EBITDA from 1.5:1 at 31 March 2014 to 1.2:1 at 31 March 2015.

At 31 March 2015 net debt comprised:

§ Term borrowings of £6.0 million (FY2014: £5.8 million);

§ Finance leases of £0.7 million (FY2014: £0.5 million); and

§ Drawings under revolving credit facilities of £2.9 million (FY2014: £3.8 million) offset by cash £1.7 million (FY2014: £1.7 million).

Pensions

Within the UK, the Group operates a defined benefit plan, with benefits linked to final salary, and a defined contribution plan ("DCP"). With effect from 1 June 2003 the defined benefit plan was closed to future service accruals and new UK employees offered membership of the DCP.

A full actuarial valuation of the defined benefit plan is produced every three years (the last one being as at 1 January 2014) and a valuation is prepared at each period end for the purposes of the report and accounts by independent qualified actuaries. The net obligation has reduced significantly in the year to £0.2 million at 31 March 2015 (FY2014: £1.5 million) mainly due to the increase in the value of the plan assets.

Details of pensions and employee obligations are given in note 27 to the financial statements.

Statement of Financial Position

Total equity increased by £4.2 million to £15.4 million as a result of profit for the year of £3.1 million, the impact of exchange differences on translating foreign operations of £0.7 million and the reduction in the pension deficit net of deferred tax of £1.0m offset by the payment of dividends in the year of £0.6 million. This increase in net assets reflects the investment in the fixed assets associated with the Luton Centre of Excellence of £2.8 million (FY2014: £nil).

Nick Flanagan

Chief Financial Officer

22 June 2015

Statement of Financial Position

Consolidated Income Statement

Consolidated Statement of Comprehensive Income

The accompanying accounting policies and notes form part of these financial statements

Consolidated Statement of Changes in Equity

Company Statement of Changes in Equity

Cash Flow Statement

Notes to the Financial Statements

1. General information

Hayward Tyler Group PLC is incorporated and resident in the Isle of Man. The Company's registered office is Peregrine Corporate Services Limited, Burleigh Manor, Peel Road, Douglas, Isle of Man, IM1 5EP. The Company's principal place of business is 1 Kimpton Road, Luton, UK, LU1 3LD. Hayward Tyler Group PLC's shares are listed on the Alternative Investment Market (AIM).

Hayward Tyler Group PLC is the ultimate parent company of the Group and its consolidated financial statements are presented in Pounds Sterling (£), which is its functional currency. These consolidated financial statements have been approved for issue by the Board of Directors on 22 June 2015. The Directors have recommended a final dividend of 0.79 pence per share.

Established in the UK in 1815, Hayward Tyler designs, manufactures and services a comprehensive range of fluid filled electric motors and pumps. These units are custom designed to meet the most demanding of applications and environments. Focused on the power generation (conventional and nuclear), oil and gas (topside and deep subsea) and industrial markets, Hayward Tyler is a market leader in its technology solutions. Furthermore, Hayward Tyler supplies and services a range of mission critical motors and pumps for the Royal Navy submarine fleet in the UK. Hayward Tyler also undertakes service, overhaul and upgrading of third-party motor and pump equipment across all sectors.

In addition to the head office in Luton (England), Hayward Tyler has manufacturing and service support facilities in Kunshan (China), Delhi (India), East Kilbride (Scotland) and Vermont (USA). These facilities and staff provide cover 24 hours 7 days a week for maintenance, overhaul and repair.

2. Summary of significant accounting policies

2.1 Going concern

The consolidated financial statements have been prepared on a going concern basis. The Directors have taken note of the guidance issued by The Financial Reporting Council on Going Concern Assessments in determining that this is the appropriate basis of preparation of the financial statements and have considered a number of factors.

After making due enquiry, and having considered the Group's budget for the coming year and its projections through to 2018 together with its banking and borrowing arrangements, the Directors confirm that they have a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Company continues to adopt the going concern basis of accounting in preparing the financial statements for the period ended 31 March 2015.

2.2 Basis of preparationThe consolidated financial statements for the year ended 31 March 2015 have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Isle of Man Companies Act 1931-2006. The financial statements have been prepared under the historical cost basis for the purposes of inclusion in this document with the exception of some financial instruments which are carried at fair value (see note 30) and freehold properties which are held at revalued amounts (see note 18). The accounting policies set out below have been consistently applied to all the periods presented. In accordance with the exemption by the Isle of Man Companies Act 2006 no separate income statement or Statement of Comprehensive Income is presented for the Company.

The financial information set out in this report does not constitute the Company's statutory accounts for the years ended 31 March 2015 or 2014 but is derived from the 2015 accounts. Statutory accounts for 2014 have been delivered to the Registrar of Companies and those for 2015 will be delivered in due course. The auditor has reported on those accounts; its report was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report and (iii) did not contain a statement under section 498(2) or section 498(3) of the Companies Act 2006.

2.3 Basis of consolidationThe Group financial statements consolidate those of the Company and all of its subsidiary undertakings drawn up to 31 March 2015. Subsidiaries are entities over which the Group has the power to control the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date on which control ceases.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

2.4 Business combinationsFor business combinations occurring since 1 January 2010, the requirements of IFRS 3R have been applied. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred and the equity interests issued by the Group, which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred.

The Group recognises identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have been previously recognised in the acquiree's financial statements prior to the acquisition. Assets acquired and liabilities assumed are measured at their acquisition-date fair values.

Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum of (a) fair value of consideration transferred, (b) the recognised amount of any non-controlling interest in the acquiree and (c) acquisition-date fair value of any existing equity interest in the acquiree, over the acquisition-date fair values of identifiable net assets. If the fair values of identifiable net assets exceed the sum calculated above, the excess amount (i.e. gain on a bargain purchase) is recognised in profit or loss immediately.

2.5 Trading and non-trading

The consolidated income statement reports the results for the year under the headings Trading and Non-trading. Trading represents the underlying performance of Hayward Tyler together with head office costs. Non-trading represents non-recurring items, which include finance costs and deferred tax charge.

There are no Non-trading items in the current year. Non-trading in the prior year represented non-recurring items, which included re-banking costs of £0.2 million and a deferred tax charge, which represented the impact on the deferred tax asset of the reduction in the enacted UK corporation tax rate from 23% to 20% of £0.5 million.

2.6 Segmental reporting

In identifying its operating segments, management follows the Group's service lines, which represent the main products and services provided by the Group. The activities undertaken by the original equipment manufacturing segment ("OE") includes the design and manufacture of motors and pumps. The aftermarket segment ("AM") provides a comprehensive range of aftermarket services and spares supporting the Group's own product range as well as those of other original equipment manufacturers. Each of these operating segments is managed separately as they require different resources and have a different customer base, including sales and marketing approach. All inter-segment transfers are carried out at arm's length prices.

The measurement policies the Group uses for segment reporting under IFRS 8 are the same as those used in its financial statements, except that:

§ post-employment benefit expenses;

§ site modernisation costs and associated grant income;

§ expenses relating to share-based payments;

§ research costs relating to new business activities; and

§ unallocated central costs

are not included in arriving at the operating profit of the operating segments. In addition, corporate assets which are not directly attributable to the business activities of any operating segment are not allocated to a segment. There have been no changes from prior periods in the measurement methods used to determine reported segment profit or loss.

2.7 Foreign currency translation

The consolidated financial statements are presented in Pounds Sterling, which is the Company's functional currency.

(a) Functional and presentation currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the "functional currency"). In the Group's financial statements, all assets, liabilities and transactions of the Group entities, with a functional currency other than the Pound Sterling (the Group's presentation currency) are translated into Pounds Sterling upon consolidation. The functional currencies of the entities in the Group have remained unchanged during the reporting period.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency of the respective Group entity using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

Non-monetary items measured at historical cost are translated using the exchange rates at the date of the transaction (not retranslated). Non-monetary items measured at fair value are translated using the exchange rates at the date when fair value was determined.

(c) Foreign subsidiaries

The assets and liabilities in the financial statements of foreign subsidiaries and related goodwill are translated at the rate of exchange ruling at the reporting date. Income and expenses are translated at the average rate. The exchange differences arising from the retranslation of the opening net investment in subsidiaries are recognised in other comprehensive income and accumulated in the "Foreign Currency Translation Reserve" in equity. On disposal of a foreign operation the cumulative translation differences are reclassified from equity to profit or loss when the gain or loss on disposal is recognised.

2.8 Property, plant and equipment

Land held for use in production or administration is stated at historical cost. As land is considered to have an unlimited useful life, related carrying amounts are not depreciated. Buildings for use in production or administration are initially recognised at acquisition cost and subsequently measured using the cost model, cost less accumulated depreciation and impairment losses.

Property and equipment held under finance leases are capitalised and included in property, plant and equipment. Such assets are depreciated straight line basis over their expected useful lives (determined by reference to comparable owned assets) or over the term of the lease, if shorter. Buildings are stated at cost or revaluation less depreciation and impairment losses. Equipment, furniture and fittings are stated at cost less depreciation and impairment losses. Depreciation is provided at rates calculated to write off the cost or revaluation of fixed assets, less their estimated residual value, over their expected useful lives. The following useful lives are applied:

Buildings - 25 years

Plant and machinery - 5-10 years

Fixtures and fittings - 3-5 years

Short leasehold improvements - over period of lease

Material residual value estimates and estimates of the useful life are updated as required, but at least annually, whether or not the asset is revalued.

Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised in profit or loss within "other income" or "other expenses".

2.9 Leased assets

The economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards related to the ownership of the leased asset. The related asset is then recognised at the inception of the lease at the fair value of the leased asset or, if lower, the present value of the lease payments plus incidental payments, if any. A corresponding amount is recognised as a finance leasing liability. Leases of land and buildings are classified separately and are split into a land and a building element, in accordance with the relative fair values of the leasehold interests at the date the asset is recognised initially.

Depreciation methods and useful lives for assets held under finance lease agreements correspond to those applied to comparable assets which are legally owned by the Group. The corresponding finance leasing liability is reduced by lease payments, less finance charges, which are expensed as part of finance costs.

The interest element of leasing payments represents a constant proportion of the capital balance outstanding and is charged to profit or loss over the period of the lease.

All other leases are treated as operating leases. Payments on operating lease agreements are recognised as an expense on a straight-line basis over the lease term. Associated costs, such as maintenance and insurance, are expensed as incurred.

2.10 Goodwill

Goodwill represents the future economic benefits arising from a business combination that

are not individually identified and separately recognised. Goodwill is carried at cost less

accumulated impairment losses. Goodwill is considered to have an indefinite useful life. Refer to Note 2.12 for a description of impairment testing procedures.

2.11 Other intangible assets

Other intangible assets include capitalised development costs used in respect of the development of new pump and motor technology and product and process development. They are accounted for using the cost model whereby capitalised costs are amortised on a straight-line basis over their estimated useful life. Management assess the useful life of group intangible assets to be in the range of five to ten years.

Costs that are directly attributable to the development phase of technology are recognised as an intangible asset, provided they meet the following recognition requirements:

§ completion of the intangible asset to the development phase is technically feasible, so that it will be available for use or sale;

§ the Group intends to complete the intangible asset and use or sell it;

§ the Group has the ability to use or sell the intangible asset;

§ the intangible asset will generate probable future economic benefits. Among other things, this requires that there be a market for the output from the intangible asset or for the intangible asset itself, or, if it is to be used internally, the asset will be used in generating such benefits;

§ there are adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

§ the expenditure attributable to the intangible asset during its development can be measured reliably.

Development costs not meeting these criteria for capitalisation are expensed as incurred.

Directly attributable costs include employee costs incurred on the development along with an appropriate portion of relevant overheads. Development costs recognised as an intangible asset are subject to the same subsequent measurement method. However, until completion of the development project, the assets are subject to impairment testing only as described below in the note on impairments.

2.12 Impairment testing of goodwill, other intangible assets and property, plant and equipment

For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Goodwill is allocated to those cash-generating units that are expected to benefit from synergies of a related business combination and represent the lowest level within the Group at which management monitors goodwill. Cash-generating units to which goodwill has been allocated (determined by the Group's management as equivalent to its operating segments) are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the asset's (or cash-generating unit's) carrying amount exceeds its recoverable amount, which is the higher of fair value less costs of disposal and value-in-use. To determine the value-in-use, management estimates expected future cash flows from each cash-generating unit and determines a suitable discount rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures are directly linked to the Group's latest approved budget, adjusted as necessary to exclude the effects of future reorganisations and asset enhancements. Discount factors are determined individually for each cash-generating unit and reflect current market assessments of the time value of money and asset-specific risk factors.

Impairment losses for cash-generating units reduce first the carrying amount of any goodwill allocated to that cash-generating unit. Any remaining impairment loss is charged pro rata to the other assets in the cash-generating unit. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. An impairment loss is reversed if the asset's or cash-generating unit's recoverable amount exceeds its carrying amount.

2.13 Investments

Investments in undertakings are recorded at fair value of consideration paid less impairment.

2.14 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost comprises the direct purchase price, including all expenses directly attributable to the manufacturing process as well as suitable portions of related production overheads, based on normal operating capacity. Costs are assigned using the first in, first out cost formula. Net realisable value is the estimated selling price in the ordinary course of business less applicable variable selling expenses.

2.15 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, together with other

short-term, highly liquid investments maturing within 90 days from the date of acquisition that

are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

2.16 Equity, reserves and dividend payments

Share capital represents the nominal value of shares that have been issued.

Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.

The foreign currency translation reserve represents differences arising on the retranslation of net investments in overseas subsidiary undertakings, based on the rate of exchange ruling at the balance sheet date.

The merger reserve of £14.5 million includes £9.9 million arising as a result of the acquisition of Southbank in January 2010. The merger reserve represents the difference between the nominal value of the share capital issued by Hayward Tyler Group PLC and its fair value at 20 January 2010, the date of the acquisition.

The reverse acquisition reserve arises as a result of the method of accounting for the acquisition of Southbank by Hayward Tyler Group PLC. In accordance with IFRS 3 Business Combinations (Revised 2008) the acquisition has been accounted for as a reverse acquisition.

Retained earnings include all current and prior period retained profits.

Dividend distributions payable to equity shareholders are included in "other liabilities" when the dividends have been approved in a general meeting prior to the reporting date.

Treasury Stock

On 28 January 2014 the Company purchased 419,204 of its own shares at 65 pence per share. The costs of purchasing own shares held by the Company are shown as a deduction against equity.

2.17 Taxation

Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not recognised in other comprehensive income or directly in equity.

Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred income taxes are calculated using the liability method.

Deferred tax assets are recognised to the extent that it is probable that the underlying tax loss or deductible temporary difference will be utilised against future taxable income. This is assessed based on the Group's forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit.

Deferred tax liabilities are generally recognised in full, although IAS 12 'Income Taxes' specifies limited exemptions. As a result of these exemptions the Group does not recognise deferred tax on temporary differences relating to goodwill, or to its investments in subsidiaries.

2.18 Post-employment benefits

The Group provides post-employment benefits through defined benefit plans as well as various defined contribution plans.

A defined contribution plan is a pension plan under which the Group pays fixed contributions into an independent entity. The Group has no legal or constructive obligations to pay further contributions after its payment of the fixed contribution. The contributions are recognised as an employee benefit expense when they are due.

Plans that do not meet the definition of a defined contribution plan are defined benefit plans. Under the Group's defined benefit plans, the amount of pension benefit that an employee will receive on retirement is defined by reference to the employee's length of service and final salary. The legal obligation for any benefits remains with the Group, even if plan assets for funding the defined benefit plan have been set aside. Plan assets may include assets specifically designated to a long-term benefit fund as well as qualifying insurance policies.

The liability recognised in the statement of financial position for defined benefit plans is the present value of the defined benefit obligation (DBO) at the reporting date less the fair value of plan assets.

Management estimates the DBO annually with the assistance of independent actuaries. This is based on standard rates of inflation, salary growth rate and mortality. Discount factors are determined close to each year-end by reference to high quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related pension liability.

Service cost on the Group's defined benefit plan is included in employee benefits expense. Employee contributions, all of which are independent of the number of years of service, are treated as a reduction of service cost. Net interest expense on the net defined benefit liability is included in finance costs. Gains and losses resulting from remeasurements of the net defined benefit liability are included in other comprehensive income.

2.19 Provisions, contingent liabilities and contingent assets

Provisions are recognised when present obligations as a result of a past event will probably lead to an outflow of economic resources from the Group and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. A present obligation arises from the presence of a legal or constructive commitment that has resulted from past events, for example, product warranties granted to a customer, legal disputes or onerous contracts.

Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. Provisions are discounted to their present values, where the time value of money is material.

Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision.

No liability is recognised if an outflow of economic resources as a result of present obligations is not probable. Such situations are disclosed as contingent liabilities unless the outflow of resources is remote.

2.20 Revenue recognition

Revenue comprises revenue from the sale of goods and the rendering of services.

Revenue is measured at the fair value of consideration received or receivable and represents amounts obtained through trading activities, net of value added tax and trade discounts. The Group applies the revenue recognition criteria set out below to each separately identifiable component of the sales or service transaction in order to reflect the substance of the transaction. The consideration received from these transactions is allocated to the separately identifiable component by taking into account the relative fair value of each component.

Revenue is recognised when the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity, the costs incurred or to be incurred can be measured reliably, and when the criteria for each of the Group's different activities has been met. These activity-specific recognition criteria are based on the goods or solutions provided to the customer and the contract conditions in each case, and are described below.

(a) Original equipment manufacture

The Group provides pumps and motors specifically customised to each customer. These contracts specify a fixed price for the development and installation of pumps and motors.

When the outcome can be assessed reliably, contract revenue and associated costs are recognised as revenue and expenses respectively by reference to the stage of completion of the contract activity at the reporting date. Revenue is measured at the fair value of consideration received or receivable in relation to that activity.

When the Group cannot measure the outcome of a contract reliably, revenue is recognised only to the extent of the contract costs incurred and to the extent that such costs are recoverable. Contract costs are recognised in the period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the total expected loss is recognised immediately in profit or loss.

The stage of completion of any contract is assessed by management by taking into consideration all information available at the reporting date. The percentage of completion is calculated by comparing costs incurred to date with the total estimated costs of the contract.

The gross amount due from customers for contract work is presented as an asset within "trade and other receivables" for all contracts in progress for which costs incurred plus recognised profits (less recognised losses) exceeds progress billings. The gross amount due to customers for contract work is presented as a liability within "trade and other payables" for all contracts in progress for which progress billings exceed costs incurred plus recognised profits (less losses).

(b) Aftermarket

Revenue comprises the sale of spare parts and other aftermarket services, which is recognised when the Group has transferred to the buyer the significant risks and rewards of ownership of the goods and services supplied. Significant risks and rewards are generally considered to be transferred to the buyer when the customer has taken undisputed delivery of the goods and services.

(c) Interest income

Interest income is recorded on an accrual basis using the effective interest method.

2.21 Operating expenses

Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of their origin. Expenditure for warranties is recognised and charged against the associated provision when the related revenue is recognised.

2.22 Borrowing costs

Borrowing costs primarily comprise interest on the Group's borrowings. Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, are capitalised as part of the cost of that asset when it is probable that they will result in future

economic benefits and the costs can be measured reliably. All other borrowing costs are expensed in the period in which they are incurred and reported within "finance costs".

2.23 Financial instruments

Financial assets and liabilities are recognised on the Group's Statement of Financial Position when the Group becomes a party to the contractual provisions of the instrument.

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire or when the financial asset and all substantial risks and rewards are transferred.

A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.

Financial assets and financial liabilities are measured initially at fair value plus transactions costs, except for financial assets and financial liabilities carried at fair value through profit or loss, which are measured initially at fair value.

Financial assets and financial liabilities are measured subsequently as described below.

Financial assets

For the purpose of subsequent measurement, financial assets are classified into the following categories upon initial recognition loans and receivables.

The category determines subsequent measurement and whether any resulting income and expense is recognised in profit or loss or in other comprehensive income.

All financial assets except for those at fair value through profit or loss are subject to review for impairment at least at each reporting date. Financial assets are impaired when there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets, which are described below.

All income and expenses relating to financial assets that are recognised in profit or loss are presented within "finance costs" or "finance income", except for impairment of trade receivables, which is presented within "other expenses".

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition these are measured at amortised cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents and trade and most other receivables fall into this category of financial instruments.

Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty will default. Receivables that are not considered to be individually impaired are reviewed for impairment in groups, which are determined by reference to the industry and region of a counterparty and other available features of shared credit risk characteristics. The impairment loss is then based on recent historical counterparty default rates for each identified group.

Financial liabilities

The Group's financial liabilities include borrowings, trade and other payables and derivative financial instruments.

Financial liabilities other than derivatives are measured subsequently at amortised cost using the effective interest method, except for financial liabilities held for trading or designated at fair value through profit or loss, that are carried subsequently at fair value with gains or losses recognised in profit or loss.

All interest-related charges and, if applicable, changes in an instrument's fair value that are reported in profit or loss are included within "finance costs" or "finance income".

Derivative financial instruments

Derivatives are financial assets or financial liabilities classified as held for trading and recorded at fair value through profit and loss.

Due to certain customer contracts being settled in foreign currencies, the Group enters into forward exchange contracts and swaps in order to reduce the exposure to foreign currency risk.

2.24 Government Grants

During the year ended 31 March 2015 Hayward Tyler Limited, based in Luton, UK, was awarded a £3.5 million grant from the Regional Growth Fund. The accounting treatment for the grant is set out below.

A government grant is recognised only when there is reasonable assurance that (a) the Group will comply with any conditions attached to the grant and (b) the grant will be received.

A grant is recognised as income in the income statement over the period necessary to match it with the expense, to which it relates, on a systematic basis. For reporting purposes the grant income is deducted from the related expense. A grant relating to assets is presented as deferred income in the consolidated statement of financial position, and released over the life of the asset in line with depreciation.

In the year ended 31 March 2015 the Group has concluded that there is reasonable assurance that it will be able to comply with the Regional Growth Fund ("RGF") grant conditions. The grant is conditional upon the Luton manufacturing facility achieving a job target of 231 full time jobs at the Luton facility by 2024 and defraying a £21.6m on eligible spending by 2020. This eligible spending relates to the extension to the existing factory, plant and machinery, training, and research and development. Failure to hit either target could result in the repayment of part of the grant to the Department of Business Innovation and Skills. Accordingly, at inception of the grant the Group recognised a receivable for the full grant amount of £3.5 million, presented as a long term other debtor, and a deferred income liability of £3.5 million, presented as a long term other creditor. Subsequently in the year ended 31 March 2015, the receivable was reduced to £2.1m by £1.4m of grant income received as cash by the Company. Also in the year ended 31 March 2015, the deferred income liability was reduced to £3.2 million by £0.3 million of grant income that is recognised in the consolidated interim income statement. This grant income is included in operating charges as a deduction from related research, development and training expenses of £0.8 million.

In addition to the RGF programme, Hayward Tyler Limited is participating in the UK government's Civil Nuclear Sharing in Growth ("CNSiG") programme. This programme, which is given in-kind, provides training and development with a value of £1.15 million to bring the business' entire workforce to NVQ level 3 and above. The associated 'Fit for Nuclear' accreditation is focused on ensuring that Hayward Tyler is firmly positioned as a key supplier in the UK domestic supply chain for nuclear new build. During the current year £602,413 was received as an in-kind payment that will be utilised by the CNSiG programme to fund training and development in the following 12 months. The payment is included in other creditors on the statement of financial position.

3 Changes in accounting policies

New and revised standards that are effective for annual periods beginning on or after 1 January 2014

A number of new and revised standards are effective for annual periods beginning on or after 1 January 2014. Information on these new standards is presented below.

IFRIC 21 'Levies'

IFRIC 21 clarifies that:

• the obligating event that gives rise to the liability is the activity that triggers the payment of

the levy, as identified by the government's legislation. If this activity arises on a specific date

within an accounting period then the entire obligation is recognised on that date

• the same recognition principles apply in the annual and interim financial statements.

IFRIC 21 has no material effect on the annual financial statements but affects the allocation of

the cost of certain property taxes between interim periods. The Group's past practice was to

spread the cost of property taxes payable annually over the year, resulting in the recognition of a prepayment at interim reporting dates. The application of IFRIC 21 requires the Group to

recognise the entire obligation as an expense at the beginning of the reporting period, which is the date specified in the relevant legislation.

IFRIC 21 has been applied retrospectively in accordance with its transitional provisions and

had no material effect on the consolidated financial statements for any period presented.

Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32)

These amendments clarify the application of certain offsetting criteria in IAS 32, including:

• the meaning of 'currently has a legally enforceable right of set-off'

• that some gross settlement mechanisms may be considered equivalent to net settlement.

The amendments have been applied retrospectively in accordance with their transitional

provisions. As the Group does not currently present any of its financial assets and financial

liabilities on a net basis using the provisions of IAS 32, these amendments had no material effect on the consolidated financial statements for any period presented.

Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36)

These amendments clarify that an entity is required to disclose the recoverable amount of an

asset (or cash generating unit) whenever an impairment loss has been recognised or reversed in the period. In addition, they introduce several new disclosures required to be made when the recoverable amount of impaired assets is based on fair value less costs of disposal, including:

• additional information about fair value measurement including the applicable level of the

fair value hierarchy, and a description of any valuation techniques used and key assumptions

made

• the discount rates used if fair value less costs of disposal is measured using a present value

technique.

The amendments have been applied retrospectively in accordance with their transitional

provisions.

Standards, amendments and interpretation to existing standards that are not yet effective and have not been adopted early by the Group

At the date of authorisation of these financial statements, certain new standards, and amendments to existing standards have been published by the IASB that are not yet effective, and have not been adopted early by the Group. Information on those expected to be relevant to the Group's financial statements is provided below.

Management anticipates that all relevant pronouncements will be adopted in the Group's accounting policies for the first period beginning after the effective date of the pronouncement. New standards, interpretations and amendments not either adopted or listed below are not expected to have a material impact on the Group's financial statements.

IFRS 9 Financial Instruments (effective from 1 January 2015)

The IASB aims to replace IAS 39 Financial Instruments: Recognition and Measurement in its entirety. The replacement standard (IFRS 9) is being issued in phases. To date, the chapters dealing with recognition, classification, measurement and derecognition of financial assets and liabilities have been issued. These chapters are effective for annual periods beginning 1 January 2015. Further chapters dealing with impairment methodology and hedge accounting are still being developed.

The Group's management have yet to assess the impact of IFRS 9 on these consolidated

financial statements. The new standard is required to be applied for annual reporting periods

beginning on or after 1 January 2018.

IFRS 15 'Revenue from Contracts with Customers'

IFRS 15 presents new requirements for the recognition of revenue, replacing IAS 18 'Revenue', IAS 11 'Construction Contracts', and several revenue-related Interpretations. The new standard establishes a control-based revenue recognition model and provides additional guidance in many areas not covered in detail under existing IFRSs, including how to account for arrangements with multiple performance obligations, variable pricing, customer refund rights, supplier repurchase options, and other common complexities.

IFRS 15 is effective for reporting periods beginning on or after 1 January 2017. The Group's

management have not yet assessed the impact of IFRS 15 on these consolidated financial

statements.

Amendments to IFRS 11 Joint Arrangements

These amendments provide guidance on the accounting for acquisitions of interests in joint

operations constituting a business. The amendments require all such transactions to be accounted for using the principles on business combinations accounting in IFRS 3 'Business Combinations' and other IFRSs except where those principles conflict with IFRS 11. Acquisitions of interests in joint ventures are not impacted by this new guidance.

Accordingly, if adopted today, these amendments would not have a material impact on the consolidated financial statements.

The amendments are effective for reporting periods beginning on or after 1 January 2016.

4 Significant management judgements in applying accounting policies

The following are significant management judgements in applying accounting policies of the Group that have the most effect on the financial statements.

Internally generated development costs

Management monitors progress of internal research and development projects by using a project management system. Significant judgement is required in distinguishing research from the development phase. Development costs are recognised as an asset when all the criteria are met, whereas research costs are expensed as incurred.

To distinguish any research-type project phase from the development phase, it is the Group's accounting policy to also require a detailed forecast of sales or cost savings expected to be generated by the intangible asset. The forecast is incorporated into the Group's overall budget forecast as the capitalisation of development costs commences. This ensures that managerial accounting, impairment testing procedures and accounting for internally-generated intangible assets is based on the same data.

The Group's management also monitors whether the recognition requirements for development costs continue to be met and an assessment made of its recoverability. This is necessary as the economic success of any product development is uncertain and may be subject to future technical problems after the time of recognition.

Revenue recognition - original equipment manufacture

The stage of completion of a contract is assessed by management taking into consideration all information available at the reporting date. In this process management carries out significant judgements about milestones, actual work performed and the estimated costs to complete the work. Further information on the Group's accounting policy for contracts is in note 2.20.

Deferred tax assets

The assessment of the probability of future taxable income in which deferred tax assets can be utilised is based on the Group's latest approved budget forecast, which is adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or credit. The tax rules in the numerous jurisdictions in which the Group operates are also carefully taken into consideration. If a positive forecast of taxable income indicates the probable use of a deferred tax asset, especially when it can be utilised without a time limit,

that deferred tax asset is usually recognised in full. The recognition of deferred tax assets that are subject to certain legal or economic limits or uncertainties is assessed individually by management based on the specific facts and circumstances.

Leases

In applying the classification of leases in IAS 17, management considers its leases of equipment as finance lease arrangements. In some cases, the lease transaction is not always conclusive, and management uses judgement in determining whether the lease is a finance lease arrangement that transfers substantially all the risks and rewards incidental to ownership.

5 Estimation uncertainty

When preparing financial statements management undertakes a number of judgements, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses.

The actual results may differ from the judgements, estimates and assumptions made by management, and will seldom equal the estimated results.

Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different.

Original equipment revenue

The stage of completion of any contract is assessed by management by taking into consideration all information available at the reporting date. In this process management formulates estimates regarding actual work performed and the estimated costs to complete the work.

Deferred tax asset - refer to note 21

The extent to which deferred tax assets can be recognised is based on an assessment of the probability that future taxable income will be available against which the deductible temporary differences and tax loss carry-forwards can be utilised. In addition, significant judgement is required in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions.

Defined benefit pension liability - refer to note 27

Management estimates the defined benefit pension liability annually with the assistance of independent actuaries; however, the actual outcome may vary due to estimation uncertainties. The estimate of its defined benefit pension gross liability of £14.1 million (FY2014: £13.1 million) is based on standard rates of inflation and mortality. The estimate does not include anticipation of future salary increases, as there are no members with benefits related to future salary progression. Discount factors are determined close to each period end by reference to high quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms of the related pension liability. Estimation uncertainties exist particularly with regard to medical cost trends, which may vary significantly in future appraisals of the Group's defined benefit pension obligations. The value of the defined benefit pension liability at 31 March 2015 was £0.2 million (FY2014: £1.5 million).

Provisions - refer to note 25

The amount recognised for warranties for which customers are covered for the cost of repairs is estimated based on management's past experience, current knowledge and future expectation that defects may arise. The value of warranty provisions at 31 March 2015 was £0.6 million (FY2014: £0.4 million).

Goodwill - refer to note 15

Management carry out impairment tests at each reporting date and indicate present values of future cash flows in respect of both the OE and AM divisions are far in excess of the carrying values of the associated assets including goodwill such that management considers the likelihood of any impairment arriving to be remote.

6 Segment information

Management currently identifies the Group's two service lines, OE and AM, as operating segments. The activities undertaken by the OE segment include the manufacture of pumps and motors. The activities of the AM division include the servicing of, and provision of spares for, a wide range of pumps and motors.

Segment information can be analysed as follows for the reporting periods under review:

The Group's revenues from external customers and its non-current assets (other than goodwill and deferred tax assets) are divided into the following geographical areas:

Revenues from external customers in the Group's domicile, United Kingdom, as well as its major market, the USA, have been identified on the basis of the customers' geographical location. Non-current assets are allocated based on their physical location.

No customer represented greater than 10% of Group revenue in the year to 31 March 2015 or in the year to 31 March 2014.

The totals presented for the Group's operating segments reconcile to the entity's key financial figures as presented in its financial statements as follows:

Segment total assets can be reconciled to Group assets as follows:

\* The revenue figures presented in the tables above for the year to 31 March 2014 have been restated from those presented in the prior year financial statements to amend the value of revenues disclosed from external customers and other segments. The amendment does not change the total segment revenues for the year to 31 March 2014.

7 Operating profit

Operating profit is stated after charging:

Foreign currency exchange differences relate to realised losses on receipts and payments together with an unrealised loss arising on the retranslation of net current assets.

8 Employee remuneration

Employee benefits expense

The employee benefit expense during the year was as follows:

The average numbers of employees during the year were as follows:

Key management personnel

Key management of the Group are members of the Board of Directors in Hayward Tyler Group PLC.

Remuneration in respect of the Directors including employer's national insurance cost was as follows:

The amounts set out above include remuneration in respect of the highest paid Director as follows:

None of the Directors participate in the Group's defined benefit plan. Details of related party transactions are given in note 31 to the financial statements.

9 EBITDA

Earnings before interest, tax, depreciation and amortisation are as follows:

10 Finance costs

11 Income tax expense

(a) Analysis of total tax charge

(b) Reconciliation of profit before tax total to tax charge

The relationship between the expected tax expense based on the domestic effective tax rate of Hayward Tyler Group PLC at 21% (FY2014: 23%) and the reported tax expense in the income statement is set out below, which also shows the major components of tax expense:

Note 21 provides information on the entity's deferred tax assets and liabilities, including the amounts recognised directly in the income statement.

12 Income tax asset/(liability)

13 Earnings per share

The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year.

The calculation of diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares and the post-tax effect of dividends and/or interest, on the assumed conversion of all dilutive options and other dilutive potential ordinary shares.

Dividends

An interim dividend of 0.525 pence per ordinary share was declared during the year representing a total of £238,913 (FY2014: £227,536).

14 Dividends

A final dividend of 0.79 pence per share payable on 28 August 2015 is proposed subject to shareholder approval.

15 Goodwill

The net carrying amount of goodwill can be analysed as follows:

Impairment testing

For the purpose of annual impairment testing, goodwill is allocated to the operating segments expected to benefit from the synergies of the business combinations in which the goodwill rises, as follows:

The recoverable amount of each segment was determined based on value-in-use calculations,

covering a detailed three-year forecast, followed by an extrapolation of expected cash flows for the remaining useful lives using a declining growth rate determined by management.

The key assumptions used in the calculations were:

§ the forecast operating cash flows for the next five years and a terminal value of such flows based on approved budgets and plans. These budgets and plans are based on past performance, current orders, future order pipeline and expectations for the market development of the CGU, taking into account the current economic climate and forecast assumptions (both internal and external where appropriate) around the relevant product markets;

§ an estimate of the long-term growth rate for the CGU representing management's best estimate of future long-term growth in the respective divisions, taking into account both internal and external projections for the markets in which they operate. The growth rate used for the first five years was 10% which has been based on a review of historic growth rates over the last one to five years. The terminal growth rate used was 2%, which is based on the UK's long-term consumer price index growth rate; and

§ a discount rate of 9.68% was used to discount future cash flows and reflects management's estimate of the weighted average cost of capital of the Group.

Impairment test are carried out at each reporting date and indicate present values of future cash flows in respect of both the OE and AM divisions are far in excess of the carrying values of the associated assets including goodwill such that management considers the likelihood of any impairment arising to be remote.

16 Other intangible assets

The Group's other intangible assets comprise solely internally generated development costs (see note 2.11). The net carrying amounts for the reporting periods under review can be analysed as follows:

The amortisation charge for the year is included within operating charges and disclosed in note 7.

The main material asset included above is the development of subsea motor which has a carrying value of £444,990 at 31 March 2015.

17 Investments

The Company had the following investments in subsidiary undertakings:

The Company owns more than 20% of the following companies: