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Tandem Group plc

Annual Report and Accounts2010

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Contents

Directors and advisers

BrandsBicycles Barrosa Boss BritishEagle CBR ClaudButler Dawes Dirty Elswick Falcon Holdsworth Optima Scorpion Townsend

Wheeled toys AngelinaBallerina* BenandHolly’s Ben10* LittleKingdom* BobtheBuilder* DoctorWho* FiremanSam* IntheNightGarden* IronMan2* MrMenLittleMiss* MoxieGirlz* PuppyinMyPocket* Skaight StarWars* TheSecretSaturdays* Thomas&Friends* TingaTingaTales* TootTootTrain Transformers* 3rd&Bird*

Golf BenSayers

Snooker & Pool PotBlack

Football training Kickmaster

Table sports PotBlack

Outdoor play Hedstrom HedstromG-Max HedstromEvergreen MrMenLittleMiss*

Plush FluffyGardens* Gogo’sCrazyBones* Goochicoo*

*Underlicence

Financial calendarAnnualGeneralMeeting 21June2010

Interimresultsfor6monthsto31July2010 October2010

Annualresultsforyearending31January2011 May2011

Directorsandadvisers insidefrontcoverBrands insidefrontcoverChairman’sstatement 1Businessreview 3Directors’report 4Corporategovernancestatement 7ReportoftheIndependentAuditor 8Consolidatedincomestatement 9

DirectorsGWaldron ChairmanMPJKeene FinanceDirectorSJGrant CommercialDirectorJSTMorris Non-ExecutiveDirectorAQBestwick Non-ExecutiveDirector

Company Secretary JCShears

Registered office 35TamesideDrive,CastleBromwich,Birmingham,B357AG

RegistrationRegisteredinEnglandNo.616818

Website www.tandemgroup.co.uk

Nominated Adviser and Broker CairnFinancialAdvisers38BowLane,London,EC4M9AY

Auditors GrantThorntonUKLLPEnterpriseHouse,115EdmundStreet,Birmingham,B32HJ

SolicitorsEvershedsLLP1RoyalStandardPlace,Nottingham,NG16FZ

Shoosmiths7thFloor,125ColmoreRoad,BirminghamB33SH

Registrars CapitaRegistrarsNorthernHouse,WoodsomePark,FenayBridge,Huddersfield,HD80LATelephone08716640300

Consolidatedstatementofcomprehensiveincome 9Consolidatedbalancesheet 10Consolidatedstatementofchangesinequity 11Consolidatedcashflowstatement 12Notestothefinancialstatements 13Fiveyearhistory 35CompanybalancesheetunderUKGAAP 36NotestotheUKGAAPfinancialstatements 37

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Chairman’s statement

I am pleased to present our results for the year ended31January2010.

Whenwestarted the financialyear inFebruary2009, tradingconditions were difficult in an uncertain economic climate.Retailers were unsure of demand and consequently werede-stockingsomeproductlinesandbuyingotherscautiously.The trend towards direct deliveries (“FOB” sales) to ourcustomersarrangedbyourHongKongoffice,whichexcludedistribution costs, continued. This has the effect of reducingrevenue for the same quantities sold. Despite these factors,wecontinuedtofollowourstrategyofmaintainingprofitability,to reduceborrowingsand tostrengthen thebalancesheet. Iamthereforepleasedtoreportthatrevenuefortheyearended31January2010increased1.5%to£35,678,000from£35,161,000intheprioryear.Therewasaprofitbeforegoodwillimpairmentand taxation of £1,023,000 compared to £1,018,000 last year.Profit after goodwill impairment and before taxation was£1,023,000(2009-£593,000).

Basic earnings per share was 17.67p per share comparedwith 5.34p last year, after adjusting for the share capitalreorganisationthattookplaceinSeptember2009.

The balance sheet continues to strengthen with cash lessinvoicefinanceliabilityasat31January2010being£1,190,000,animprovementof£1,658,000overthepreviousyear.

Wedonotproposetopayadividendbutwillkeepthepositionunderreview.

FurtherdetailsoftheoperationalactivitiescanbefoundintheBusinessreviewonpage3.

Share capital reorganisationThesharecapitalreorganisationwasapprovedbyshareholdersat a General Meeting held on 24 September 2009. Beforethe reorganisation the Company had approximately 17,500shareholders, a large proportion owning a small numberof shares that would be uneconomic to sell. As part of thereorganisationsmallshareholderswereable toreceivecashfortheirshareswithoutincurringdealingcosts.TheCompanywasalsoabletopurchase263,080ofitsownsharesandholdthem in treasury, taking the total shares held in treasury to519,080.Followingthereorganisationwehadfewerthan5,000shareholders. We estimate this will save nearly £50,000 perannuminadministrationcosts.

Wewillbesendingouta letter inMaytosmallshareholdersgiving them the chance to sell their shares without dealingcosts.

PensionsTheGroupoperates twopensionschemes thathavedefinedbenefit liabilities. Both of these schemes have no activemembersandareclosedtonewmembers.Despitethis,theseschemescontinuetoutilisecashresourcesandmanagementtime as government legislation and actuarial views change.During the year £191,000 was paid into the schemes toreduce thedeficits in the fundingandover£76,000waspaidout in government levies and administration costs. Despitea rise in the value of investments, changes in the Actuary’smortalityassumptionsanddiscountrateshaveincreasedthenetdeficitintheschemesfrom£964,000asat31January2009to£1,450,000asat31January2010.

EmployeesWe wish to thank all management and employees for theircontribution in increasing the Group’s profitability in difficulttimes.Theestablishedteamofmanagementandstaffhavetheskillsrequiredtotakethebusinessforward.

Inthelastfewmonthswehaveappointedtwonon-executiveDirectors. Their biographies are shown on page 4. SimonMorris brings a wealth of City experience in the mid-capcorporatemarketandwillnodoubtbeavaluablecontributor.Andy Bestwick is another excellent addition to the Board,bringing us experience in areas of product development,sourcing and sales which are very much allied to thoseofTandem.

Iwillnotbestandingforre-electionattheAGMtobeheldon21June2010.ImmediatelyfollowingtheAGM,MervynKeenewill be appointed non-executive Chairman of the Company.Mervyn has managed the Group for a number of years andhasbeenresponsiblefor leadingtheteamthathasdeliveredconsistent profitability over the last four years, with profitbefore tax and goodwill impairment of over a million poundsineachofthelastthreeyears.Inaddition,thebalancesheethas strengthened considerably with the profit eliminatingbankborrowingsat31January2010.At thesametimeSteveGrant,ourCommercialDirector,willbeappointedGroupChiefExecutiveandJimShears,currentlyGroupFinancialControllerand Company Secretary, will be appointed Group FinanceDirector. I am confident that these changes will continueto take the business forward and enable future growthanddevelopment.

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EU Customs issuesA number of European bicycle companies have receivednotificationfromtheEUCustomsauthoritiesthatGeneralisedSystemofPreferences(GSP)formsissuedbytheCambodiangovernmentbetween2007and2009wereinvalid.Theimpactof this is that it isallegeddutyshouldhavebeenpaidat thefull rate rather than the zero rate charged at the time of theimportation. We understand that those companies affectedare appealing against the notification. Although we havepurchased a significant number of bicycles from Cambodiawehavenotreceivedanynoticeto thiseffect. Ifwereceivesuchnotice,itistheBoard’sintentiontovigorouslydefendandappealagainstitaswebelievethereisnoliabilityandstronglyconsiderthatwehaveactedproperlyandingoodfaithatalltimes.

We have, however, received notification from HM Revenue& Customs affirming their intention to seek confirmationfrom the authorities in Indonesia and Bangladesh thatbicycles purchased from these countries and admitted tothe United Kingdom at a preferential rate of Customs dutywere manufactured there in accordance with the rules oforigin. Once again we consider that we have acted in goodfaithinrespectoftheseimports,inallcaseshavingreceivedpreferencecertificateswhichhavebeenissuedbytheproperauthorityineachexportingcountry.Overthelastthreeyearswehavebenefited froma reduction indutyofapproximately£3millionthroughGSPformsissuedbyforeigngovernments.

OutlookThe Group has traded well during a very difficult economicperiod. We have been and continue to be faced with verysignificant cost pressures in respect of US dollar volatility,increases in freight and raw material prices, shipping linedisruptions and Far East labour shortages. Sales for the12weeksto23April2010were24%uponthepreviousyear.Webelievethisgrowthisunlikelytocontinueintothesecondquarter as we received a large order for bicycles from anationalretailerinthecomparativeperiodlastyear.Wehavesecuredbusinessfromthesameretailerthisyearbutatlowervolumes.

Revenuefortheyearto31January2011iscurrentlyexpectedtobeslightlydownonthepreviousyearprincipallyduetothereductioninnationalretailersalesonbicyclesandcompetitionfrom new licences on sports, leisure and toys. Gross marginandprofitabilitywillalsobeunderpressureasaresultoftheissuesreferredtoabove.

In spite of very competitive market conditions, we haveover the last four years managed to maintain profitabilityand to strengthen our balance sheet. Current markets areparticularlychallengingbut theGroup isnowinaposition toactively explore opportunities for growth in our bicycles andaccessories and sports, leisure and toys businesses, bothorganicallyandbyacquisition.

In the year to 31 January 2010 the sports, leisure and toysbusiness was significantly more profitable than bicycles.However, although this sector can grow profits rapidly, thenature of character licences make it far more volatile. Bycontrast, the bicycle business, with our well establishedbrands,providesaplatformforsteadyprogression.WebelievethatthedevelopmentofbothbusinessesenhancestheabilityoftheGrouptoachievegrowthinthelongterm.

Further details about current trading and prospects arecontainedintheBusinessreviewonpage3.

Graham WaldronChairman28April2010

Chairman’s statement continued

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OperationsIn the second half of the year revenue was 2.4% downon the same period in the previous year. The gross marginpercentagewasinlinewiththecomparativeperiodlastyear.Withoverheadsinthesecondhalfdown3.3%operatingprofitbeforegoodwillimpairmentwas3.6%higher.

Revenue for the year ended 31 January 2010 increased1.5%to£35,678,000 from£35,161,000 lastyear.Grossmarginpercentage reduced due to a change in the mix betweendirect bulk deliveries and sales from our UK warehouses.Rising costs in Asia and the volatile US dollar also had anegative impactongrossmargin.Tocounter this,operatingexpenseswere14%downonthepreviousyear.Therewerereductions across most overhead categories, most notablyestablishmentcosts,withtheclosureofawarehousefacility.However, the Board recognised the need to continue topromote brand awareness and accordingly advertising andmarketingexpenditureincreasedoverthepreviousyear.

Thishasresultedinaprofitbeforegoodwill impairmentandtaxationof£1,023,000comparedto£1,018,000lastyear.Profitaftergoodwillimpairmentandbeforetaxationwas£1,023,000(2009-£593,000).

Bicycles and accessoriesRevenue in our bicycles and accessories businesses of£21,951,000was11.1%aheadoflastyear(2009-£19,763,000).The operating profit before management charges andgoodwillimpairmentwas£689,000(2009-£1,148,000).

Improved sales to national retailers increased revenue.A proportion of this business was shipped direct to ourcustomersfromouroverseasproductionsourcesandassuchhadlowermarginswithnodistributioncostsandminimalUKoverhead. Although our unit selling prices increased it wasnotpossibletorecoverthefullimpactofrisingcostsinAsiaandthevolatileUSdollarandasaconsequencemarginsinthebicyclebusinesseswerelower.

Unit sales to independent bicycle retailers were down onlast year but with customers moving to models with higherprice points, average selling price and therefore revenuein this sector was up. The Claud Butler and Dawes brandsincreasedrevenue.Salesoftraditionalbikeswithmudguards,paddedleatherlookseats,standsandbasketsforladieswereconsiderablyuponlastyear.

We continue to invest in marketing to support the brandsby attending bicycle events, trade fairs and supportingcustomerswithpromotionalliterature,pointofsalematerialsandequipment.Hitsonourwebsiteshaveincreasedasourbrands develop further. This is a positive sign in a highlycompetitivemarket.

The stock of bicycles as at 31 January 2010 was over 33%down on the previous year. This was primarily due to theshipping of the 2009 range ahead of the two week closurefor Chinese New Year which fell on 26 January 2009. Asthesegoodswere in transitprior to theyearendtheywereclassifiedasstock. In2010ChineseNewYearwas later,on14February2010,enablingshipmentof thenew2010 rangeafter31January2010.

Bicyclesrevenueforthe12weeksto23April2010was13%up on the previous year. We expect revenue to be behindlast year in the second quarter due to a reduction in sales

tonational retailersmentioned in theChairman’sstatement.However, increasing levels of demand from independentretailers combined with good weather during the summershouldhelptomitigatethisshortfall.

Sports, leisure and toysRevenue from our sports, leisure and toys business of£13,727,000was10.9%downonlastyear(2009-£15,398,000).Operating profit before management charges increased to£1,201,000(2009-£808,000).

ThedemiseofWoolworths,oneofourlargestcustomers,inlate 2008 and the continued trend towards direct deliveriesarrangedbyourHongKongoffice,whichexcludedistributioncosts,reducedtotalrevenue.SalesofBarbieandIntheNightGardenweredownonthesameperiodlastyearwhilstThomasand Friends revenue was up significantly. However, the bigsuccessoftheyearweretheBen10wheeledproductswhichwontheawardforBestLicensedToyorGamesRangeattheindustry’s Licensing Award ceremony in September 2009.Salesofthisrangeconsiderablyexceededexpectations.

Our continued product development and innovative designenabledustosustainourpositionasmarketleaderforlicensedwheeledtoys.Althoughthishelpedtomaintainmarginsinthesports, leisure and toys business, the main improvement toprofitabilitywasasaresultofoverheadsavings.TheincreasetowardsFOBsalesfacilitatedtheclosureofawarehouseandfurtherreducedexpensesintheUK.

Whilst our Ben Sayers golf business suffered fromrecessionary pressures and poor weather, we benefitedfrom a complete period of the integration within the MVbusinessreducingoverheadsfurther.Afocusonnewproductdevelopmentandstrongproductreviewshasledtoincreasedrevenuesforthe12weeksto23April2010.

Somelargenationalretailersaredevelopingtheirownbrandsrather than using well known licensed brands. They candesign and source these products themselves or buy themfromexperiencedcompaniessuchasus.Itisacredittoourproduct development and sourcing teams that we are ableto secure these sales ahead of the competition, albeit atlowermargins.

Thesuccessofoursports,leisureandtoysbusinessdependson securing licences that perform well, designing anddeveloping product and sourcing at competitive prices. Wehave experienced staff both in the UK and Hong Kong thatachievessuccessatthesetasks.

Wehavetakenonanumberofnewlicencesfor2010.Thesenew licences, particularly in wheeled toys, include MoxieGirlz, Iron Man 2, Star Wars and Doctor Who. Due to thenatureofthebusinesswearealreadycreatingproductsforthe2011rangesandhavesuccessfullysecuredlicencesforBen&Holly’sLittleKingdom,TingaTingaTalesandAngelinaBallerina.

Sports, leisure and toys revenue for the 12 weeks to23 April 2010 was 43% up on the previous year. Whilst thisis a promising start to the year, we anticipate that revenuemay fallbehind lastyear in thesecondhalfdue to thehighlevelsofsalesforBen10inthesameperiodoflastyearandcompetitionfromnewlicences.However,weareencouragedbythepotentialthatournewlicencesareshowing.

Business review

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Directors’ report

The Directors submit their annual report with the auditedfinancialstatementsfortheyearended31January2010.

Principal activityTheGroupisprincipallyengagedinthedesign,development,sourcinganddistributionofsportsandleisureequipment.TheChairman’sstatementandBusiness reviewonpages1 to3shouldbereadinconjunctionwiththisreport.

Results and dividendTheresultsfortheyearended31January2010aresetoutinthe consolidated income statement on page 9. No dividendhasbeenpaidordeclaredfortheyear(2009—£nil).

Significant shareholdersAs at 28 April 2010 the Directors have been notified of thefollowing interests representing 3% or more of the issuedordinary share capital. The percentage holdings exclude519,080sharesheldintreasury.

Ordinary Shares of25p %

MrABurgess 661,750 12.0JupiterAssetManagement 519,040 9.4BarclaysPLC 406,560 7.4MrMPJKeene 173,960 3.2MrRCLDavies 171,920 3.1

DirectorsThepresentDirectorsareasfollows:

G WaldronGraham was non-executive Chairman of Casket plc whichtheCompanyacquired in1993.HebecameChairmanof theGroupin1996.HeisChairmanofHeadlamGroupplcandwasformerlyanon-executiveDirectorofRylandGroupplc.

M P J KeeneMervyn joined theCompany in1989andbecameManagingDirector of the former Garden Leisure Division. He wasappointedGroupFinanceDirector in1993.He isaFellowoftheAssociationofCharteredCertifiedAccountants.

S J GrantSteve joined MV Sports & Leisure Limited from theaccountancyprofessionin1990becomingFinanceDirectorinthatyear.HewasappointedManagingDirectorofMVin1996.

J S T Morris (appointed 22 March 2010)Simon has worked in corporate finance for over 30 years,initially at Lazard Brothers and Dillon Read and later withMSB Corporate Finance and Smith & Williamson. He is anexperiencednon-executiveDirector.

A Q Bestwick (appointed 14 April 2010)Andy was formerly Managing Director of Gardman HoldingsLimited.Hehasconsiderableexperienceinproductdevelopment,sourcingandsupplychainmanagement,especially fromAsia,andsellingtonationalandindependentretailers.

TheinterestsoftheDirectorswhoservedduringtheyearandtheir immediate families (as defined by the Companies Act2006)inthesharesoftheCompanyareshownbelow:

Held beneficially and fully paid Restated 28April 31January 1February 2010 2010 2009 25pordinary25pordinary 25pordinary shares shares shares

GWaldron 58,400 58,400 58,400MPJKeene 173,960 173,960 144,000SJGrant 56,000 56,000 48,000

In accordance with the Articles of Association, G Waldron,whose service contract may be terminated by either partygiving6months’writtennotice,retiresattheAnnualGeneralMeetinganddoesnotofferhimselfforre-election.

InaccordancewiththeArticlesofAssociation,JSTMorrisandAQBestwick,whoseservicecontractsmaybeterminatedbyeitherpartygiving6months’writtennotice, retireat theAnnualGeneralMeetingandofferthemselvesforre-election.

DetailsoftheDirectors’shareoptionsaredisclosedinnote6.

Directors’ and officers’ liability insuranceDirectors’andofficers’liabilityinsurancehasbeenpurchasedbytheGroupduringtheyear.

Business reviewA review of the Group’s trading operations is contained intheBusinessreviewonpage3.Weproduceawidevarietyofdailykeyfiguresforallofourbusinessesthatenableustoidentify performance against budget and the previous year.Thekeyperformanceindicatorsareasfollows:

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2010 2010 2009 Actual Target Actual

Grossprofitmargin 27.1% 28.9% 31.2%Theratioofgrossprofittosalesexpressedasapercentage

Turnoverperemployee £357,000 £295,000 £320,000Thetotalofsalesinvoicedtocustomers,excludingvalueaddedtax,dividedbytheaveragenumberofemployeesduringtheperiod

Netoperatingexpenses%ofsales 23.7% 26.5% 28.0%Theratioofnetoperatingexpenses,beforegoodwillimpairmentandexceptionalitems,tothetotalofsalesinvoicedtocustomers,excludingvalueaddedtax,expressedasapercentage

Interestcover 12.8 7.2 7.6Theratioofoperatingprofitbeforegoodwillimpairmentandexceptionalitems,tonetinterestpayableonbankoverdraftsandinvoicefinancefacilities

Shareholders’return 14.6% 9.4% 10.7%Theratioofnetprofitfortheyearbeforegoodwillimpairmentandexceptionalitemstoshareholders’fundsatthestartoftheyearexpressedasapercentage

Adjustedearningspershare—pence 17.7 11.4 12.5Thenetprofitfortheyearbeforegoodwillimpairmentandexceptionalitemsdividedbytheweightedaveragenumberofordinarysharesinissueduringtheyear

Environmental policiesThe Board welcomes the government’s ‘Cycling England’,‘Cycling City, Cycling Towns’ and ‘Bikeability’ initiatives anditsongoingobjectivetoincreasetheNationalCycleNetworkthroughout thecountry.AsamajorsupplierofbicyclesandwheeledtoysintheUKwebelievethatwearecontributingtoasustainable transportstrategy, improving theenvironmentby providing an emission free transport alternative andencouragingbetterhealthandfitnessofthenation.

Corporate social responsibilityTheGrouphasaCorporateSocialResponsibilityCommittee(CSRC)whichmeetsregularly,withmembersfromeachoftheGroup’soperations,includingtheHongKongoffice.

TheCSRCisresponsibleforensuringthateachbusinessintheGroupoperatestothesamebroadguidelinesdefinedintheGrouppolicystatement issuedby theCSRC.Thisstatementdealswithhealthandsafety,employeewellbeing,theGroup’simpactontheenvironmentanditssocialresponsibility.

Every new or prospective supplier must satisfactorilycompleteanauditbeforebeingvalidatedbytheGroup.Followupauditsareundertakenona regularbasisoncesuppliersareaccepted.Withthebenefitsoflanguageandlocation,theGroup’sHongKongofficeisabletocontroltheauditsofthesuppliers in Asia. Other supplier audits are controlled fromtheUK.

TheGroupcontinuestobeengagedinanumberofprojects,in conjunction with stakeholders, to reduce carbon dioxideemissions,safelyandefficientlydisposeofwasteand,wherepossible,re-useandrecycleproductsandpackaging.

Employment policiesIt is the policy of the Group that there should be no unfairdiscrimination in considering applications for employment,including those from disabled persons. All employees aregiven equal opportunities for career development and

promotion. Health and safety committee meetings are heldwithintheoperatingbusinesses.

Thenecessityandimportanceofgoodcommunicationsandrelationswithallemployeesiswellrecognisedandacceptedthroughout the Group. Employees are kept fully aware ofmanagement policies applicable to their respective duties.TheDirectorsarecommittedtotheprincipleofemployeeandexecutiveshareparticipationasevidencedbytheexistenceof share option schemes. Options are granted under theseschemes in order that employees can participate in theGroup’sperformance.

Policy on payment of suppliersPayment terms with suppliers are agreed before contractsareplaced.ItistheGroup’scodetoabidebyagreedpaymentterms with suppliers. The trade creditors of the Group at31 January 2010 represent 39 days (2009 — 65 days) as aproportion of the total amount invoiced by suppliers duringtheyear.

Principal risks and uncertaintiesThemanagementofthebusinessandthenatureoftheGroup’sstrategyaresubject toanumberof risksanduncertainties.The Directors have set out below principal risks facingthebusiness:

SuppliersInordertoachievecompetitivelypricedproductstheGrouphasoutsourcedproduction,mainlytocountriesinAsia.Risksanduncertaintiesofthisstrategyincludemanagementissuesat the factories, the possibility of changes in import dutiesandshippingdelays.Wemanagethisriskbyhavinga localofficeinHongKongwithateamthatworkscloselywiththefactoriesandwedevelopcontingencyplansshouldtheneedarisetomakechanges.

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Directors’ report continued

Fluctuations in currency exchange ratesA significant amount of the Group’s purchases are made inUSdollars.AsaGroup,weare thereforeexposed to foreigncurrency fluctuations. The Group manages its foreignexchange risk with forward foreign exchange contracts andother financial instruments to reduce the exposure. If theseactivitiesdonotmitigatetheexposure,thentheresultsandthefinancialconditionoftheGroupmaybeadverselyimpacted.

LicencesAnumberoftheGroup’sbrandsareusedunderlicencefromgloballicensors.Thelicencesaregenerallyforbetweentwoand threeyears. If the licensesarenot renewed theGroupwould have to seek alternative licenses in order to avoid areductioninturnover.

CompetitionThe companies in the Group operate in highly competitivemarkets. As a result there is constant pressure on marginsand the additional risk of being unable to meet customer’sexpectations. Policies of supply chain management andproductdevelopmentareinplacetomitigatesuchrisks.

Volatility in financial markets may require further cash contribution to our pension fundThe Group has commitments under defined benefit pensionschemes.TheGroupisobligedtomakecontributionstotheschemes based on actuarial valuations, which in turn arebased on long-term assumptions. Volatility of the financialmarketscanaffectthevalueoftheassetsintheschemesandmayleadtoarequirementto increasethecashcontributedbytheGrouptotheschemes.IftheGroupisrequiredtomakesignificant additional contributions, the financial positionof the Group may be materially affected with a significantreductioninoperatingcashflows.Inturn,thismayadverselyimpactfuturedevelopmentsofthebusiness.

Financial risksThemainrisksarisingfromtheGroup’sfinancialinstrumentsare interest rate risk, liquidity risk, credit risk and foreigncurrency risk. The Board reviews and agrees policies formanaging each of these risks. A summary of these risks isdisclosedinnote16.

Statement of Directors’ responsibilitiesTheDirectorsareresponsibleforpreparingtheannualreportandfinancialstatements inaccordancewithapplicable lawandregulations.

Company law requires the Directors to prepare financialstatements for each financial year. Under that law theDirectorshavetopreparetheGroupfinancialstatements inaccordancewithInternationalFinancialReportingStandards(IFRS)asadoptedbytheEuropeanUnion,andtheDirectorshave elected to prepare Company financial statementsin accordance with United Kingdom Generally AcceptedAccountingPractice(UKGAAP).Thefinancialstatementsarerequired by law to give a true and fair view of the state ofaffairsoftheGroupandtheCompanyandoftheprofitorlossfor that period. In preparing these financial statements, theDirectorsarerequiredto:

l select suitable accounting policies and then apply themconsistently;

l makejudgementsandestimatesthatarereasonableandprudent;

l statewhetherapplicableaccountingstandardshavebeenfollowed,subjecttoanymaterialdeparturesdisclosedandexplainedinthefinancialstatements;

l prepare the financial statements on the going concernbasisunlessitisinappropriatetopresumethattheGroupandCompanywillcontinueinbusiness.

The Directors are responsible for keeping adequateaccountingrecords thatdisclosewithreasonableaccuracyat any time the financial position of the Group and theCompany and enable them to ensure that the financialstatements comply with the Companies Act 2006. They arealsoresponsibleforsafeguardingtheassetsoftheGroupandtheCompanyandhencefor takingreasonablestepsfor thepreventionanddetectionoffraudandotherirregularities.

InsofaraseachoftheDirectorsisaware:

l thereisnorelevantauditinformationofwhichtheGroup’sauditorsareunaware;and

l theDirectorshavetakenallstepsthattheyoughttohavetaken to make themselves aware of any relevant auditinformationandtoestablishthattheauditorsareawareofthatinformation.

The Directors are responsible for the maintenance andintegrityof thecorporateandfinancial information includedon the Group’s website. Legislation in the United Kingdomgoverning the preparation and dissemination of financialstatementsmaydifferfromlegislationinotherjurisdictions.

AuditorsA resolution to reappoint Grant Thornton UK LLP as theCompany’sauditorwillbeproposedattheforthcomingAnnualGeneralMeeting.

Annual General MeetingThenoticeoftheAnnualGeneralMeetingincludesResolutionNo.5proposedasspecialbusiness.ThisresolutionseekstheauthorityfromshareholdersfortheCompanytopurchaseitsownshares.TheCompanywouldonlyexercisetheauthorityif the effect of doing so would be to increase the earningspershareof the remainingshareholdersandbe in thebestinterestsofshareholdersgenerally.Inaddition,inexercisingsuchauthority, theCompanywouldcomplywiththecurrentguidelinesoftheABIandtheUKListingAuthority.

ByOrderoftheBoardJ C ShearsCompanySecretary28April2010

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Corporate governance statement

TheprincipalstepstakenbytheGrouparesetoutbelow.

The Company is controlled through the Board of Directorswhich comprises two executive Directors and threeindependentnon-executiveDirectors.Theservicecontractsof the twoexecutiveDirectorsmaybe terminatedbyeitherparty giving 12 months’ written notice. The remunerationand other emoluments of executive Directors and seniormanagersaredeterminedbytheRemunerationCommittee,ofwhichGWaldronandJSTMorrisaremembers.Executiveremunerationpackagesaresubjecttoanannualreviewandare designed to attract, motivate and retain Directors andseniormanagersofahighcalibre.

The Board has a formal schedule of matters reserved toit and meets monthly. It is responsible for overall Groupstrategy,acquisitionanddivestmentpolicy,approvalofmajorcapitalexpenditureprojectsandconsiderationofsignificantfinancingmatters. Itmonitors theexposure tokeybusinessrisks and reviews the strategic direction of its tradingbusinesses, their annual budgets, their progress towardsachievementof thosebudgetsandtheircapitalexpenditureprogrammes. The Board also considers environmental andemployee issues and key appointments. All Directors willsubmit themselves for re-electionat leastonceevery threeyears.

The Board has established three committees. The AuditCommittee meets as appropriate to review the Group’saccounting policies, reporting procedures and financialmatters,withtheFinanceDirectorandtheexternalauditorsin attendance. The Nominations Committee meets whenapplicabletoconsiderandrecommendtotheBoardchangesin the Board’s composition. The Remuneration Committeereviews the terms and conditions of employment of theDirectorsandseniormanagers.GWaldronandJSTMorrisare members of the Audit and Remuneration Committees.GWaldronandAQBestwickaremembersoftheNominationsCommittee. Independent external advice is taken whenappropriate.

The Group encourages two-way communication with bothits institutional and private investors and responds quicklyto all queries received verbally or in writing. The executiveDirectorsattendedmeetingswithinstitutionalshareholdersintheyearended31January2010.

The Group has a comprehensive system for reportingfinancial results to theBoard.Eachoperatingunitpreparesmonthly resultswithacomparisonagainstbudget.Towardsthe end of each financial year the operating units preparedetailedbudgetsforthefollowingyear.BudgetsandplansarereviewedbytheBoardbeforebeingformallyadopted.

Quality and integrity of personnel is regarded as vital tothe maintenance of the Group’s system of internal control.Due to the relativelysmallnumberofkeyemployeeswithinthe business, the Board has first hand knowledge of theirperformance.

Theexecutivemanagementhasdefinedthefinancialcontrolsand procedures with which each operating unit is requiredto comply. Key controls over major business risks includereviews against performance indicators and exceptionreporting. The operating units make regular assessmentsof the extent of their compliance with these controls andprocedures.

MuchoftheGroup’sfinancialandmanagementinformationisprocessedbyandstoredoncomputersystems.Accordingly,theGrouphasestablishedcontrolsandproceduresoverthesecurityofdataheldoncomputersystems.Also, theGrouphas put in place arrangements for computer processing tocontinueanddatatoberetainedintheeventofthecompletefailureoftheGroup’sowndataprocessingfacility.

Withasubstantialpartofpurchases inUSdollars,hedgingagainst foreign exchange fluctuations in this currency isrecognised by the Directors as a key responsibility. Theprudent use of various financial instruments minimisesvulnerability tothevolatilityof theUSdollar thatmayaffectthisnetexposure.

A number of the Group’s key functions, including treasury,taxation, and insurance, are dealt with centrally by theFinanceDirectorwhoreportstotheBoardonamonthlybasis.

TheGroupmeetsitsdaytodayworkingcapitalrequirementsthroughcertainoverdraft facilities.Thebank facilitieswererenewedinApril2010andtheGroupexpectstooperatewithinthe facilities currently agreed. Based on the Group’s plans,andaftermakingenquiries,theDirectorshaveareasonableexpectation that the Group has adequate resources tocontinue operations for the foreseeable future. For thisreason, the Directors continue to adopt the going concernbasisinpreparingthefinancialstatements.

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Report of the Independent AuditortothemembersofTandemGroupplc

Wehaveaudited the financialstatementsofTandemGroupplc for theyearended31January2010whichcomprise theconsolidated incomestatement, theconsolidatedstatementof comprehensive income, the consolidated balancesheet, the consolidated statement of changes in equity, theconsolidated cash flow statement, the Company balancesheetandtherelatednotes.ThefinancialreportingframeworkthathasbeenappliedinthepreparationoftheGroupfinancialstatements is applicable law and International FinancialReporting Standards (IFRSs) as adopted by the EuropeanUnion. The financial reporting framework that has beenapplied in the preparation of the parent Company financialstatementsisapplicablelawandUnitedKingdomAccountingStandards (UnitedKingdomGenerallyAcceptedAccountingPractice).

This report is made solely to the Company’s members,as a body, in accordance with Chapter 3 of Part 16 of theCompaniesAct2006.OurauditworkhasbeenundertakensothatwemightstatetotheCompany’smembersthosematterswearerequiredtostatetotheminanauditor’sreportandfornootherpurpose.Tothefullestextentpermittedbylaw,wedonotacceptorassumeresponsibilitytoanyoneotherthantheCompanyandtheCompany’smembersasabody,forourauditwork,forthisreport,orfortheopinionswehaveformed.

Respective responsibilities of Directors and auditorsAs explained more fully in the Directors’ ResponsibilitiesStatement set out on page 6 the Directors are responsibleforthepreparationofthefinancialstatementsandforbeingsatisfiedthattheygiveatrueandfairview.Ourresponsibilityis to audit the financial statements in accordance withapplicable lawand InternationalStandardsonAuditing (UKandIreland).ThosestandardsrequireustocomplywiththeAuditing Practices Board’s (APB’s) Ethical Standards forAuditors.

Scope of the audit of the financial statementsAdescriptionofthescopeofanauditoffinancialstatementsis provided on the APB’s website at www.frc.org.uk/apb/scope/UKNP.

Opinion on financial statementsInouropinion:

l the financial statements give a true and fair view of thestate of the Group’s and of the parent Company’s affairsasat31January2010andoftheGroup’sprofitfortheyearthenended;

l the Group financial statements have been properlyprepared in accordance with IFRS as adopted by theEuropeanUnion;

l the parent Company financial statements have beenproperly prepared in accordance with United KingdomGenerallyAcceptedAccountingPractice;and

l the financial statements have been prepared inaccordancewiththerequirementsoftheCompaniesAct2006.

Opinion on other matter prescribed by the Companies Act 2006InouropiniontheinformationgivenintheDirectors’Reportforthefinancialyearforwhichthefinancialstatementsarepreparedisconsistentwiththefinancialstatements.

Matters on which we are required to report by exceptionWehavenothingtoreportinrespectofthefollowingmatterswheretheCompaniesAct2006requiresustoreporttoyouif,inouropinion:

l adequateaccounting recordshavenotbeenkeptby theparent Company, or returns adequate for our audit havenotbeenreceivedfrombranchesnotvisitedbyus;or

l the parent Company financial statements are not inagreementwiththeaccountingrecordsandreturns;or

l certain disclosures of Directors’ remuneration specifiedbylawarenotmade;or

l wehavenotreceivedalltheinformationandexplanationswerequireforouraudit.

David WhiteSeniorStatutoryAuditorforandonbehalfofGrantThorntonUKLLPStatutoryAuditor,CharteredAccountantsBirmingham28April2010

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Consolidated income statement

Year ended 31 January 2010 Yearended31January2009 Before After Before After goodwill Goodwill goodwill goodwill Goodwill goodwill impairment impairment impairment impairment impairment impairment Note £’000 £’000 £’000 £’000 £’000 £’000

Revenue 3 35,678 — 35,678 35,161 — 35,161Costofsales (25,998) — (25,998) (24,193) — (24,193)

Gross profit 9,680 — 9,680 10,968 — 10,968Operatingexpenses 4 (8,463) (8,463) (9,842) (425) (10,267)

Operating profit 1,217 1,217 1,126 (425) 701Financecosts 5 (194) — (194) (173) — (173)Financeincome 5 — — — 65 — 65

Profit before taxation 1,023 — 1,023 1,018 (425) 593Taxexpense 7 (22) — (22) (278) — (278)

Net profit for the year 1,001 — 1,001 740 (425) 315

RestatedEarnings per share 8 Pence Pence

Basic 17.67 5.34

Diluted 17.67 5.31

Consolidated statement of comprehensive income

Year ended Yearended 31 January 31January 2010 2009 £’000 £’000

Profitfortheyear 1,001 315Othercomprehensiveincome:Foreignexchangedifferencesontranslationofoverseasassetssubsidiaries (250) 583Actuariallossonpensionschemes (578) (938)Movementinpensionschemes’deferredtaxprovision 136 191

Othercomprehensiveincomefortheyear (692) (164)

Totalcomprehensiveincomefortheyearattributabletoownersoftheparentcompany 309 151

Allfiguresrelatetocontinuingoperations.

Theaccompanyingnotesformanintegralpartofthesefinancialstatements.

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Consolidated balance sheetAt31January2010

At At 31 January 31January 2010 2009 Note £’000 £’000

Non current assetsGoodwill 9 2,236 2,236Property,plantandequipment 10 368 488Deferredtaxation 17 1,365 1,009

3,969 3,733

Current assetsInventories 11 4,991 7,583Tradeandotherreceivables 12 3,956 5,786Cashandcashequivalents 13 3,046 2,121

11,993 15,490

Total assets 15,962 19,223

Current liabilitiesTradeandotherpayables 14 (5,352) (8,536)Financialliabilities 15 (1,856) (2,589)Currenttaxliabilities (301) (276)

(7,509) (11,401)Non current liabilitiesPensionschemes’deficits 18 (1,450) (964)

Total liabilities (8,959) (12,365)

Net assets 7,003 6,858

EquitySharecapital 19 1,503 1,503Sharesheldintreasury (129) (64)Otherreserves 2,759 3,009Profitandlossaccount 2,870 2,410

Total equity 7,003 6,858

ThefinancialstatementswereapprovedbytheBoardon28April2010andsignedonitsbehalfby:

G Waldron M P J KeeneDirector Director

Theaccompanyingnotesformanintegralpartofthesefinancialstatements.

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Consolidated statement of changes in equity

Shares Share Capital Profit Share held in premium Merger redemption Translation and loss capital treasury account reserve reserve reserve account Total £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Balanceat1February2008 1,503 — 5,258 1,036 1,427 (37) (2,293) 6,894Share-basedpayments — — — — — — 16 16Sharebuyback — (64) — — — — (139) (203)Cancellationofsharepremiumaccount — — (5,258) — — — 5,258 —

Transactionswithowners — (64) (5,258) — — — 5,135 (187)Netprofitfortheyear — — — — — — 315 315Re-translationofoverseassubsidiaries — — — — — 583 — 583Netactuariallossonpensionschemes — — — — — — (747) (747)

Totalcomprehensiveincomeattributabletoownersoftheparentcompany — — — — — 583 (432) 151

Balanceat1February2009 1,503 (64) — 1,036 1,427 546 2,410 6,858Share-basedpayments — — — — — — 15 15Sharebuyback — (65) — — — — (114) (179)

Transactionswithowners — (65) — — — — (99) (164)Netprofitfortheyear — — — — — — 1,001 1,001Re-translationofoverseassubsidiaries — — — — — (250) — (250)Netactuariallossonpensionschemes — — — — — — (442) (442)

Totalcomprehensiveincomeattributabletoownersoftheparentcompany — — — — — (250) 559 309

Balance at 31 January 2010 1,503 (129) — 1,036 1,427 296 2,870 7,003

Themergerreservewascreatedasaresultofmergerreliefbeingclaimedinrespectofpreviousshareissues.

Otherreservesincludeacapitalredemptionreserveandatranslationreserve.Thesereservesarenon-distributable.

Theprofitandlossaccountincludesallcurrentandpriorperiodresultsandshare-basedpaymentsasdisclosedintheconsolidatedincomestatement.

Theaccompanyingnotesformanintegralpartofthesefinancialstatements.

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Year ended Yearended 31 January 31January 2010 2009 £’000 £’000

Cash flows from operating activitiesNetprofitfortheyear 1,001 315Adjustments:Depreciationofproperty,plantandequipment 132 186Goodwillimpairment — 425Lossonsaleofproperty,plantandequipment — 1Financecost 194 173Financeincome — (65)Taxationpaid (282) (133)Taxexpense 22 278Share-basedpayments 15 16Fairvalueadjustmentsofforwardcontracts 437 (394)

Net cash inflow from operating activities before movements in working capital 1,519 802Decrease/(increase)ininventories 2,592 (2,001)Decreaseintradeandotherreceivables 1,173 242(Decrease)/increaseintradeandotherpayables (3,095) 333

Cash generated/(utilised) from operations 2,189 (624)

Cash flows from investing activitiesPurchasesofproperty,plantandequipment (16) (168)Saleofproperty,plantandequipment — 8

Net cash used in investing activities (16) (160)

Cash flows from financing activities(Decrease)/increaseininvoicefinancing (733) 289Interestpaid (89) (147)Paymenttoacquireownshares (179) (203)

Net cash used in financing activities (1,001) (61)

Net increase/(decrease) in cash and cash equivalents 1,172 (845)Cash and cash equivalents at beginning of year 2,121 2,389Effectofforeignexchangeratechanges (247) 577

Cash and cash equivalents at end of year 3,046 2,121

Theaccompanyingnotesformanintegralpartofthesefinancialstatements.

Consolidated cash flow statement

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Notes to the financial statements

1. General informationTandem Group plc, a public limited Company isincorporated and domiciled in the United Kingdom. TheCompany acts as a holding Company of the Group. Theregistered office and principal place of business of theGroupisdisclosedontheDirectorsandadvisorspagetothesefinancialstatements.TheGroup’sprincipalactivityisdisclosedonpage4.

The financialstatements for theyearended31January2010 (including the comparatives for the year ended 31January2009)wereapprovedbytheBoardofDirectorson 28 April 2010. Under the security regulations act oftheEU,amendments to thefinancialstatementsarenotpermittedaftertheyhavebeenapproved.

TheGroupdoesnothaveanultimatecontrollingrelatedparty.

2. Accounting policiesBasis of preparationThe principal accounting policies of the Company areset out below and are consistent with those applied inthe2009financialstatementsexcept for theadoptionofIAS1PresentationofFinancialStatements(Revised2007)andIFRS8OperatingSegments.

TheadoptionofIAS1(Revised)2007doesnotaffectthefinancial position or profits of the Company, but givesrise to additional disclosures. The measurement andrecognition of the Company’s assets, liabilities, incomeand expenses is unchanged, however some items thatwere recognised directly in equity are now recognisedin other comprehensive income. IAS 1 (Revised) 2007affectsthepresentationofownerchangesinequityandintroduces a “Statement of Comprehensive Income”.IAS1 (Revised)2007requires, incertaincircumstances,presentation of a comparative balance sheet as at thebeginning of the first comparative period. Managementconsiderthatthisisnotnecessaryasthebalancesheetasat31January2008isthesameaspreviouslypublished.

The adoption of IFRS 8 Operating Segments has notaffected the identified operating segments. IFRS 8requiressegmentstobeidentifiedbasedontheinternalmanagement reporting information that is regularlyreviewed by the chief operating decision maker. In theprevious financialstatements,segmentswere identifiedby reference to the dominant source and nature of theCompany’srisksandreturns.

Overall considerationsThe consolidated financial statements have beenprepared using the measurement bases specified byIFRSforeachtypeofasset,liability,incomeandexpense.Themeasurementbasesaremorefullydescribedintheaccountingpoliciesbelow.

Allaccountingestimatesandassumptionsthatareusedinpreparingthefinancialstatementsareconsistentwiththe Group’s latest approved budget where applicable.Judgements are based on the information available ateach balance sheet date. Disclosure of the significant

accounting estimates and judgements can be found onpage17.

Basis of consolidationSubsidiaries are all entities over which the Group hasthepowertocontrolthefinancialandoperatingpolicies.TheGroupobtainsandexercisescontrol throughvotingrights. The consolidated financial statements of theGroupincorporatethefinancialstatementsoftheparentCompanyaswellasthoseentitiescontrolledbytheGroupbyfullconsolidation.

In addition, acquired subsidiaries are subject toapplication of the purchase method. This involves therevaluation at fair value of all identifiable assets andliabilities,includingcontingentliabilitiesofthesubsidiary,attheacquisitiondate,regardlessofwhetherornottheywererecordedintheconsolidatedfinancialstatementsofthesubsidiarypriortoacquisition.Oninitialrecognition,theassetsandliabilitiesofthesubsidiaryareincludedintheconsolidatedbalancesheetatthesefairvalues,whicharealsousedasthebasesforsubsequentmeasurementinaccordancewiththeGroupaccountingpolicies.Goodwillrepresents the excess of acquisition cost over the fairvalueoftheGroup’sshareoftheidentifiablenetassetsoftheacquiredsubsidiaryatthedateofacquisition.

Intra-Group balances and transactions, and anyunrealised gains or losses arising from intra-Grouptransactions,areeliminatedinpreparingtheconsolidatedfinancialstatements.

The Group has elected not to apply IFRS 3 ‘BusinessCombinations’ retrospectively to business combinationspriorto1February2006.

Foreign currencyThe Group’s consolidated financial statements arepresented in sterling (£), which is also the functionalcurrencyoftheparentCompany.

Foreign currency transactions are translated into thefunctional currency of the respective Group entity,using the exchange rates prevailing at the dates of thetransactions.Foreignexchangegainsandlossesresultingfrom the settlement of such transactions and from theremeasurementofmonetarybalancesheetitemsatyearend exchange rates are recognised in the consolidatedincomestatement.

In the Group’s financial statements, all items andtransactionsofGroupentitieswithafunctionalcurrencyother than sterling were translated into sterling uponconsolidation.Assetsandliabilitieshavebeentranslatedinto sterling at the closing rate at the balance sheetdate. Income and expenses have been translated intosterling at the average rates over the reporting period.Any differences arising from this procedure have beencharged or credited to the currency translation reserveinequity.Goodwillandfairvalueadjustmentsarisingonthe acquisition of a foreign entity have been treated asassetsand liabilitiesof theforeignentityandtranslatedintosterlingattheclosingrate.

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Notes to the financial statements

2. Accounting policies continuedTheGrouphastakenadvantageoftheexemptioninIFRS1andhasdeemedcumulativetranslationdifferencesforallforeignoperationstobe£nilatthedateoftransitiontoIFRS.Thegainorlossondisposaloftheseoperationsexcludestranslation differences that arose before the date oftransitiontoIFRSbutincludeslatertranslationdifferences.

Income recognitionRevenue is measured by reference to the fair valueof consideration receivable by the Group for goodssupplied and services provided, excluding VAT andtradediscounts.Revenueisrecogniseduponthesaleofgoods,performanceofservicesortransferofrisktothecustomer.Revenuefromthesaleofgoodsisrecognisedwhenallthefollowingconditionshavebeensatisfied:

l theGrouphastransferredtothebuyerthesignificantrisksandrewardsofownershipofthegoodswhichisgenerallywhentheyarereceivedbythecustomerattheagreedplaceofdelivery;

l the Group retains neither continuing managerialinvolvement to the degree usually associated withownershipnoreffectivecontroloverthegoodssold;

l theamountofrevenuecanbemeasuredreliably;l it isprobablethattheeconomicbenefitsassociated

withthetransactionwillflowtotheGroup;andl thecostsincurredortobeincurredinrespectofthe

transactioncanbemeasuredreliably.

GoodwillGoodwillrepresentstheexcessoftheacquisitioncostinabusinesscombinationoverthefairvalueoftheGroup’sshareoftheidentifiablenetassetsacquired.Goodwilliscarriedatcostlessaccumulatedimpairmentlossesandistestedannuallyforimpairmentasdescribedbelow.

ImpairmentTheGroup’sgoodwillandproperty,plantandequipmentissubjecttoimpairmenttesting.

For the purposes of assessing impairment, assetsare Grouped at the lowest levels for which there areseparately identifiable cash flows (cash-generatingunits). As a result, some assets are tested individuallyfor impairment and some are tested at cash-generatingunitlevel.Goodwillisallocatedtothosecash-generatingunits thatareexpected tobenefit fromsynergiesof therelated business combination and represent the lowestlevelwithintheGroupatwhichmanagementcontrolstherelatedcashflows.

Individualintangibleassetsorcash-generatingunitsthatincludegoodwillwithan indefiniteuseful lifeare testedfor impairment at least annually. All other individualassets or cash-generating units that include goodwillare tested for impairment whenever events or changesincircumstancesindicatethatthecarryingamountmaynotberecoverable.

An impairment loss is recognised for the amount bywhich the asset’s or cash-generating unit’s carrying

amountexceedsitsrecoverableamount.Therecoverableamount is the higher of fair value, reflecting marketconditions lesscosts tosellandvalue inuse,basedonaninternaldiscountedcashflowevaluation.Impairmentlosses recognised for cash-generating units, to whichgoodwillhasbeenallocated,arecredited initially to thecarrying amount of goodwill. Any remaining impairmentloss ischargedpro rata to theotherassets in thecashgeneratingunit.Withtheexceptionofgoodwill,allassetsare subsequently reassessed for indications that animpairment loss previously recognised may no longerexist.

Property, plant and equipmentProperty, plant and equipment is carried at acquisitioncost less subsequent depreciation and impairmentlosses. Depreciation is charged on these assets on astraight line basis over the estimated useful economiclife of each asset. Material residual value estimatesand useful economic lives are updated as required andat leastannually.Theuseful livesofproperty,plantandequipmentcanbesummarisedasfollows:

Shortleaseholdlandandbuildings LengthofleaseVehicles 3–4yearsPlantandmachinery 3–10years

InventoriesAll inventories and work in progress are stated at thelower of cost and net realisable value. Cost is basedon the first in first out method and, where appropriate,includesaproportionofrelatedoverheadexpenditure.

LeasesInaccordancewithIAS17(revised2003), theeconomicownershipofaleasedassetistransferredtothelesseeifthelesseebearssubstantiallyalltherisksandrewardsrelatedtotheownershipoftheleasedasset.Therelatedassetisrecognisedatthetimeofinceptionoftheleaseatthefairvalueoftheleasedassetor,iflower,thepresentvalueoftheleasepaymentsplusincidentalpayments,ifany,tobebornebythelessee.Acorrespondingamountis recognised as a finance leasing liability, irrespectiveofwhethersomeoftheseleasepaymentsarepayableinadvanceatthedateofinceptionofthelease.

All other leases are treated as operating leases.Paymentsonoperatingleaseagreementsarerecognisedasanexpenseonastraight-linebasis.Associatedcosts,such as maintenance and insurance, are expensed asincurred.TheGroupdoesnotactasalessor.

TaxationCurrent income tax assets or liabilities comprise thoseobligationsto,orclaimsfrom,fiscalauthoritiesrelatingtothecurrentorpriorreportingperiod,thatareunpaidatthebalancesheetdate.Theyarecalculatedaccordingtothetaxratesandtaxlawsapplicabletothefiscalperiodstowhichtheyrelate,basedonthetaxableprofitfortheyear.

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2. Accounting policies continuedDeferred income taxes are calculated using the liabilitymethod on temporary differences. This involves thecomparison of the carrying amounts of assets andliabilities in the consolidated financial statements withtheir respective tax bases. However, in accordancewith the rules set out in IAS 12, no deferred taxes arerecognisedontheinitialrecognitionofgoodwill,norontheinitial recognition of assets or liabilities unless acquiredinabusinesscombinationorinatransactionthataffectstax or accounting profit. This applies also to temporarydifferences associated with shares in subsidiaries ifreversalofthesetemporarydifferencescanbecontrolledbytheGroupanditisprobablethatreversalwillnotoccurintheforeseeablefuture.Inaddition,taxlossesavailabletobecarriedforwardaswellasotherincometaxcreditstotheGroupareassessedforrecognitionasdeferredtaxassets.Deferredtaxliabilitiesareprovidedforinfull.Deferredtaxassetsarerecognisedtotheextentthatitisprobablethattheywillbeabletobeoffsetagainstfuturetaxableincome.Deferredtaxassetsandliabilitiesarecalculated,withoutdiscounting,attaxratesthatareexpectedtoapplytotheirrespectiveperiodofrealisation,providedtheyareenactedorsubstantivelyenactedatthebalancesheetdate.

Most changes in deferred tax assets or liabilities arerecognised as a component of tax expense in theconsolidatedincomestatement.Onlychangesindeferredtaxassetsorliabilitiesthatrelatetoachangeinvalueofassetsorliabilitiesthatarechargeddirectlytoequityarechargedorcrediteddirectlytoequity.

Employee benefitsDefined contribution pension schemesPensionstoemployeesareprovidedthroughcontributionstoindividualpersonalpensionplans.Adefinedcontributionplan isapensionplanunderwhich theGrouppays fixedcontributionsintoanindependententity.TheGrouphasnolegalorconstructiveobligationstopayfurthercontributionsafterpaymentofthefixedcontribution.

The contributions recognised in respect of personalpension plans are expensed as they fall due. Liabilitiesand assets may be recognised if an underpayment orprepayment has occurred and are included in currentliabilitiesorcurrentassetsastheyarenormallyofashort-termnature.

Defined benefit pension schemesScheme assets are measured at fair values. Schemeliabilities are measured on an actuarial basis using theprojectedunitmethodandarediscountedatappropriatehigh quality corporate bond rates that have terms tomaturityapproximatingtothetermsoftherelatedliability.Appropriate adjustments are made for unrecognisedactuarial gains or losses and past service costs. Pastservicecostisrecognisedasanexpenseonastraight-linebasisovertheaverageperioduntilthebenefitsbecomevested.TotheextentthatbenefitsarealreadyvestedtheGrouprecognisespastservicecostimmediately.

Actuarial gains and losses are recognised immediately

intheconsolidatedstatementofcomprehensiveincome.The net surplus or deficit is presented in non currentassets or liabilities on the consolidated balance sheet.Therelateddeferredtaxisshownwithotherdeferredtaxbalances.AsurplusisrecognisedonlytotheextentthatitisrecoverablebytheGroup.

The current service cost, past service cost and costsfrom settlements and curtailments are charged tooperating expenses. Interest on the scheme liabilitiesandtheexpectedreturnonschemeassetsareincludedin finance costs or income in the consolidated incomestatement.Post-employmentbenefitsotherthanpensionsareaccountedforinthesameway.

Other employee benefitsShort-termemployeebenefits,includingholidayentitlement,are included in current pension and other employeeobligations at the undiscounted amount that the Groupexpectstopayasaresultoftheunusedentitlement.Otherlong-termemployeebenefitobligationsareaccountedforatthenetofthepresentvalueofthedefinedbenefitobligationandthefairvalueofschemeassetsatthebalancesheetdate.

Financial assetsThe Group’s financial assets include cash and cashequivalentsandtradeandotherreceivables.

Allfinancialassetsarerecognisedwhentheentitybecomesparty to the contractual provisions of an instrument. Allfinancialassetsare initiallyrecognisedat fairvalue,plustransaction costs, and are subsequently measured atamortisedcostusingtheeffectiveinterestrate.

Interest and other cash flows resulting from holdingfinancial assets are recognised in the consolidatedincome statement using the effective interest ratemethod,regardlessofhowtherelatedcarryingamountoffinancialassetsismeasured.

Trade receivables are provided against when objectiveevidence is received that the Group will not be ableto collect all amounts due to it in accordance with theoriginaltermsofthereceivables.Theamountofthewrite-downisdeterminedasthedifferencebetweentheasset’scarrying amount and the present value of estimatedfuturecashflows.

Forward foreign exchange contractsFromtimetotimetheGroupentersintoforwardcontractsforthepurchaseorsaleofforeigncurrencies.Theseareclassified as derivatives and carried at fair value in theconsolidated financial statements. Any re-measurementgains or losses are taken to the consolidated incomestatement.

Cash and cash equivalentsForthepurposesoftheconsolidatedcashflowstatement,cash and cash equivalents include cash at bank and inhand and short-term highly liquid investments such asbankdepositslessadvancesfrombanksrepayablewithinthreemonthsfromthedateofadvance.

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Notes to the financial statements

2. Accounting policies continuedEquityAn equity instrument is any contract that evidences aresidualinterestintheassetsofanentityafterdeductingallofitsliabilities.

Share capital is determined using the nominal value ofsharesthathavebeenissued.

The merger reserve was created as a result of mergerreliefbeingclaimedinrespectofpreviousshareissues.

Otherreservesincludeacapitalredemptionreserveandatranslationreserve.Thesereservesarenon-distributable.

Theprofitandlossaccountincludesallcurrentandpriorperiodresultsandshare-basedpaymentsasdisclosedintheconsolidatedincomestatement.

Share-based employee remunerationAll share-based payment arrangements granted after7November2002thathadnotvestedpriorto1February2006 are recognised in the consolidated financialstatements. The Group operates equity settled share-basedremunerationplansforitssenioremployees.

Allemployeeservicesreceivedinexchangeforthegrantofanyshare-basedremunerationaremeasuredat theirfairvalues.Theseareindirectlydeterminedbyreferencetothefairvalueoftheshareoptionsawarded.Theirvalueisappraisedatthegrantdateandexcludestheimpactofanynon-marketvestingconditions.

Allshare-basedremunerationisultimatelyrecognisedasanexpense in theconsolidated incomestatementwithacorrespondingcredittoreserves,netofdeferredtaxwhereapplicable. If vesting periods or other vesting conditionsapply, the expense is allocated over the vesting period,basedonthebestavailableestimateofthenumberofshareoptions expected to vest. Non-market vesting conditionsareincludedinassumptionsaboutthenumberofoptionsthat are expected to become exercisable. Estimates aresubsequently revised if there is any indication that thenumber of share options expected to vest differs frompreviousestimates.Noadjustmentismadetotheexpenserecognisedinpriorperiodsiffewershareoptionsultimatelyareexercisedthanoriginallyestimated.

Upon exercise of share options, the proceeds receivednetofanydirectlyattributabletransactioncostsuptothenominalvalueofthesharesissuedareallocatedtosharecapitalwithanyexcessbeingrecordedassharepremium.

Financial liabilitiesThe Group’s financial liabilities include trade and otherpayables, invoice finance and forward exchangecontracts.

Financial liabilities are recognised when the Groupbecomes a party to the contractual agreements of the

instrument.Allinterestrelatedchargesarerecognisedintheconsolidatedincomestatement.

Financechargesarechargedtotheconsolidatedincomestatement on an accruals basis using the effectiveinterestmethodandareaddedtothecarryingamountoftheinstrumenttotheextentthattheyarenotsettledintheperiodinwhichtheyarise.

Tradeandotherpayablesarerecognisedinitiallyattheirfairvalueandsubsequentlymeasuredatamortisedcostlesssettlementpayments.

InvoicefinanceliabilitiesarerecognisedatthetimetheGroupbecomesaparty to thecontractualprovisionsoftheinvoicefinanceagreement.

Forwardexchangecontractsareenteredintotomitigateexposure to foreign exchange fluctuations relating topurchasesmadeinforeigncurrencies,principallytheUSdollar. The Group’s policy is to reduce substantially therisk associated with purchases denominated in foreigncurrenciesbyusingforwardfixedratecurrencypurchasecontracts,takingintoaccountanyforeigncurrencycashflows. The foreign exchange contracts do not meetthe criteria for treatment as an effective hedge andaccordinglyanygainorlossisrecognisedimmediatelyintheconsolidatedincomestatement.

Other provisions, contingent liabilities and contingent assetsOtherprovisionsarerecognisedwhenpresentobligationswill probably lead to an outflow of economic resourcesfrom the Group and they can be estimated reliably.Timing or amount of the outflow may still be uncertain.Apresentobligationarisesfromthepresenceofalegalorconstructivecommitment thathasresulted frompastevents,forexample,legaldisputesoronerouscontracts.

Provisions are measured at the estimated expenditurerequired to settle the present obligation, based on themost reliable evidence available at the balance sheetdate, including the risks and uncertainties associatedwiththepresentobligation.Anyreimbursementexpectedtobereceivedinthecourseofsettlementofthepresentobligationisrecognised,ifvirtuallycertainasaseparateasset,notexceedingtheamountoftherelatedprovision.Where there are a number of similar obligations, thelikelihood that an outflow will be required in settlementisdeterminedbyconsideringtheclassofobligationsasawhole.Inaddition,long-termprovisionsarediscountedto their present values, where time value of money ismaterial.

Allprovisionsare reviewedateachbalancesheetdateandadjustedtoreflectthecurrentbestestimate.

In thosecaseswhere thepossibleoutflowofeconomicresourceasaresultofpresentobligationsisconsideredimprobableor remote,or theamount tobeprovided for

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cannotbemeasuredreliably,noliabilityisrecognisedintheconsolidatedbalancesheet.

Probable inflows of economic benefits to the Groupthatdonotyetmeet therecognitioncriteriaofanassetare considered contingent assets and therefore notrecognised.

Significant accounting estimates and judgementsCertain estimates and judgements need to be madeby the Directors of the Group which affect the resultsand position of the Group as reported in the financialstatements. Estimates and judgements are required if,for example, as at the reporting date not all liabilitieshave been settled and certain assets and liabilitiesare recorded at fair value which requires a number ofestimatesandassumptionstobemade.

Key areas of estimation uncertaintyImpairment of goodwillThe annual impairment assessment in respect ofgoodwill requires estimates of the value in use of cashgeneratingunitstowhichgoodwillhasbeenallocatedtobecalculated.Asaresult,estimatesoffuturecashflowsarerequired,togetherwithanappropriatediscountfactorforthepurposeofdeterminingthepresentvalueofthosecash flows. The basis of review of the carrying valueof goodwill is as detailed in note 9 to the consolidatedfinancialstatements.

Pension scheme valuationThe liabilities in respect of defined benefit pensionschemes are calculated by qualified actuaries andreviewed by the Group, but are necessarily based onsubjective assumptions. The principal uncertaintiesrelatetotheestimationofthelifeexpectanciesofschememembers, future investment yields and general marketconditionsforfactorssuchasinflationandinterestrates.Thespecificassumptionsadoptedaredisclosedindetailinnote18totheconsolidatedfinancialstatements.Profitsandlossesinrelationtochangesinactuarialassumptionsaretakendirectlytoreservesandthereforedonotimpacton the profitability of the business, but the changes doimpactonnetassets.

Inventory provisioningTheGroupreviewsthenetrealisablevalueofanddemandfor its inventoryonanongoingbasis toensure recordedinventory is stated at the lower of cost or net realisablevalue. Factors that could impact estimated demandand selling prices are the timing and success of futuretechnological innovations, competitor actions, supplierspricesandeconomictrends.Iftotalinventorylossesdiffer,the Group’s consolidated net income in the year wouldhave improvedordeclined,dependinguponwhether theactualresultswerebetterorworsethanexpected.

Bad debt provisionAteachreportingperiod,theDirectorsreviewoutstandingdebts and determine appropriate provision levels. Therecoveryofcertaindebtsisdependentontheindividualcircumstances of customers. As disclosed in note 12there are a number of debts which remain outstandingpast their due date, which the Directors believe to berecoverable.

Deferred tax assetsIn determining the deferred tax asset to be recognisedtheDirectorscarefullyreviewtherecoverabilityoftheseassetsonaprudentbasisandreachajudgementbasedonthebestavailableinformation.Estimatesandjudgementsused in thefinancialstatementsarebasedonhistoricalexperienceandotherassumptionsthattheDirectorsandmanagementconsiderreasonableandareconsistentwiththeGroup’slatestbudgetedforecastswhereapplicable.Judgements are based on the information available ateach balance sheet date. Although these estimates arebasedonthebestinformationavailabletotheDirectors,actualresultsmayultimatelydifferfromthoseestimates.

Key judgementsTheDirectors,donotconsidertheyhavehadtomakeanycritical judgements in applying the accounting policieswhicharedescribedabove.

Standards and interpretations not yet appliedThefollowingnewstandardsand interpretations,whichareyet tobecomemandatory,havenotbeenapplied intheGroup’sconsolidatedfinancialstatementsfortheyearended31January2010.

Effectiveforannualperiods:IFRS9 FinancialInstruments beginningonorafter1January2013IAS24(Revised2009) RelatedPartyDisclosures beginningonorafter1January2011IAS27(Revised2008) ConsolidatedandSeparateFinancialStatements beginningonorafter1July2009IAS39(Amendment) FinancialInstruments:Recognitionand beginningonorafter1July2009 Measurement—EligibleHedgedItemsIFRS3(Revised2008) BusinessCombinations beginningonorafter1July2009

Based on the current business model and accounting policies, the Group does not expect material impacts on theconsolidatedfinancialstatementswhenthestandardsbecomeeffective.

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Notes to the financial statements

3. Segmental reportingFormanagementpurposestheGroupisorganised intotwooperatingsegments.Therevenues,resultsandnetassetsforthesesegmentsareshownbelow:

Bicycles and Sports, leisure accessories and toys Total £’000 £’000 £’000

Year ended 31 January 2010Revenue 21,951 13,727 35,678

Segment result before management charges 689 1,201 1,890Management charges (564) (104) (668)

Segment result after goodwill impairment and management charges 125 1,097 1,222Unallocated corporate expenses (5)

Operating profit 1,217Finance costs (194)Finance income —

Profit before taxation 1,023Tax expense (22)

Net profit for the year 1,001

Segment assets 9,081 3,847 12,928

Unallocated assets 4,121

17,049Segment liabilities (5,468) (2,716) (8,184)

Unallocated liabilities (1,862)

(10,046)

Consolidated net assets 7,003

Capital additions 3 13 16

Depreciation and goodwill impairment 55 77 132

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3. Segmental reporting continued BicyclesandSports,leisure accessories andtoys Total £’000 £’000 £’000

Yearended31January2009Revenue 19,763 15,398 35,161

Segmentresultbeforegoodwillimpairment 1,148 808 1,956Goodwillimpairment (425) — (425)

Segmentresultaftergoodwillimpairment 723 808 1,531Unallocatedcorporateexpenses (830)

Operatingprofit 701Financecosts (173)Financeincome 65

Profitbeforetaxation 593Taxexpense (278)

Netprofitfortheyear 315

Segmentassets 12,123 4,227 16,350

Unallocatedassets 3,616

19,966Segmentliabilities (8,963) (2,625) (11,588)Unallocatedliabilities (1,520)

(13,108)

Consolidatednetassets 6,858

Capitaladditions 33 135 168

Depreciationandgoodwillimpairment 480 131 611

TheGroup’srevenuesandnoncurrentassetsaredividedintothefollowinggeographicalareas:

United Rest of Kingdom Europe the World Total £’000 £’000 £’000 £’000

Year ended 31 January 2010Revenue 33,939 1,504 235 35,678

Non current assets 3,955 — 14 3,969

Yearended31January2009Revenue 33,397 1,432 332 35,161

Noncurrentassets 3,702 — 31 3,733

Thereweretwocustomers(2009—two)whoserevenuesfromtransactionsamountedto10%ormoreoftheGroup’srevenue.

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16215 12/05/2009 Proof6

4. Operating expenses Year ended Yearended 31 January 31January 2010 2009 £’000 £’000

Distributioncosts 4,974 5,857Administrativeexpenses 3,489 3,985Goodwillimpairment — 425

Totaloperatingexpensesasshownintheconsolidatedincomestatement 8,463 10,267

Theoperatingexpensesdisclosedaboveincludethefollowingcharges:Employeebenefitsexpenses(note6) 3,950 4,081Depreciation 132 186Goodwillimpairment — 425Otherexpenses 4,381 5,575

Auditors’remunerationinthecapacityasauditorsoftheparentCompanywas£3,000(2009—£3,000)andinthecapacityasauditorsofthesubsidiarycompanieswas£58,000(2009—£59,000).Nonauditremunerationinrespectoftaxcomplianceservicestotalled£13,000(2009—£13,000).

5. Finance costs and finance income Year ended Yearended 31 January 31January 2010 2009 £’000 £’000

Finance costsInterestpayableonbankoverdraftsandinvoicefinancefacilities (95) (148)Expectedreturnonpensionschemeassetslessinterestonliabilities (99) (25)

Financecosts (194) (173)

Finance incomeExpectedreturnonpensionschemeassetslessinterestonliabilities — 65

6. Directors and employees remunerationEmployee benefits expenseExpenserecognisedforemployeebenefitsisanalysedbelow: Year ended Yearended 31 January 31January 2010 2009 £’000 £’000

Wagesandsalaries 3,390 3,474Socialsecuritycosts 341 378Share-basedemployeeremuneration 15 16Pensionschemecontributions—definedcontributionschemes 204 213

Financecosts 3,950 4,081

Number Number

Theaveragenumberofpeople(includingDirectors)employedbytheGroupduringtheyearwas: 100 110

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6. Directors and employees remuneration continuedDirectors’ remuneration Year ended 31 January 2010 Yearended Performance Benefits Pension 31January Salary/fees bonus in kind contributions Total 2009 £’000 £’000 £’000 £’000 £’000 £’000

GWaldron 50 — — — 50 50MPJKeene 89 102 3 82 276 270SJGrant 114 93 5 30 242 237

253 195 8 112 568 557

TheGroupconsidersthekeymanagementofthebusinesstobetheDirectorsofTandemGroupplc.DuringtheyearandinthepreviousyeartheGroupcontributedtodefinedcontributionpensionschemesforMPJKeeneandSJGrant.Therelatedshare-basedremunerationchargewas£8,000(2009—£8,000).

Share-based employee remunerationThefollowingoptionswereheldat31January2010undertheGroup’sshareoptionschemes:

Option price Granted Exercised Cancelled per25p 1February during during during 31 January ordinaryNumberofshares 2009 year year year 2010 share Exerciseperiod

2007 Employee Share Option Scheme DirectorsGWaldron — — — — — — —MPJKeene 86,400 — — — 86,400 78.91p 31/01/10–14/06/20SJGrant 83,200 — — — 83,200 78.91p 31/01/10–14/06/20Other employees 172,000 — — — 172,000 78.91p 31/01/10–14/06/20

1996 Approved Share Option Scheme DirectorsGWaldron — — — — — — —MPJKeene 15,200 — — — 15,200 71.88p 01/05/06–01/05/13 16,000 — — — 16,000 62.50p 26/09/09–26/06/16SJGrant 20,800 — — — 20,800 71.88p 01/05/06–01/05/13 16,000 — — — 16,000 62.50p 26/06/09–26/06/16Other employees 59,200 — — — 59,200 71.88p 01/05/06–01/05/13 41,600 — — — 41,600 62.50p 26/06/09–26/06/16

1996 Unapproved Share Option SchemeDirectorsGWaldron — — — — — — —MPJKeene 26,400 — — — 26,400 71.88p 01/05/06–01/05/10SJGrant 8,000 — — — 8,000 71.88p 01/05/06–01/05/10Other employees 21,600 — — — 21,600 71.88p 01/05/06–01/05/10

TheGrouphasthefollowingoutstandingshareoptionsandexerciseprices: 2010 2009 Remaining Remaining Exercise contractual Exercise contractual price life price life Number (pence) (years) Number (pence) (years)

Dateexercisable(optionlife):2006(upto2013)—Approved 95,200 71.88 3.2 95,200 71.88 4.22006(upto2010)—Unapproved 56,000 71.88 0.2 56,000 71.88 1.22009(upto2016) 73,600 62.50 6.4 73,600 62.50 7.42010(upto2020) 341,600 78.91 10.4 341,600 78.91 11.4

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6. Directors and employees remuneration continuedTheordinarysharemid-marketpriceon31January2010was80.5p (2009restated—47.7p).During theyear, thehighestmid-marketpricewas85.0p(2009restated—120.3p)andthelowestwas34.4p(2009restated—42.2p).Theweightedaverageexercisepriceoftheoptionsinissuewas74.9p(2009restated—74.9p).Theordinarysharemid-marketpricesfortheyearended31January2009havebeen restated for theshareconsolidationandsub-divisionwhichbecameunconditionalon24September2009.

ThefairvalueofoptionsgrantedwasdeterminedforIFRS2usingtheBlack–Scholesvaluationmodel.Significantinputsintothecalculationswere:

l exercisepricesof62.50p(2009restated–62.50p)to78.91p(2009restated–78.91p);l 36.3%(2009-36.3%)to48.0%(2009–48.0%)volatilitybasedonexpectedandhistoricalshareprice;l arisk-freeinterestrateof0.60%(2009–0.86%);l alloptionsareassumedtovestafterthreeandahalfyearsfromthedateofgrantoftheoptions;andl nodividends

In total£15,000 (2009—£16,000)ofshare-basedemployee remunerationexpensehasbeen included in theconsolidatedincomestatement.Noliabilitieswererecognisedduetoshare-basedtransactions.

7. Tax expenseThe relationship between the expected tax expense at 28% (2009 — 28%) and the actual tax income recognised in theconsolidatedincomestatementcanbereconciledasfollows:

Year ended Yearended 31 January 31January 2010 2009 £’000 % £’000 %

Profitbeforetaxation 1,023 593Taxrate 28% 28%

Expectedtaxexpense 286 28.0 166 28.0Expensesnotdeductiblefortaxpurposes 2 0.2 54 9.1Movementinunrecogniseddeferredtaxasset (198) (19.4) 29 4.9Effectofdifferingratesonoverseastaxation (68) (6.6) (26) (4.4)Effectofchangeintaxrate — — 55 9.3

Actualtaxexpense 22 2.2 278 46.9

Actualtaxexpensecomprises:Currenttaxexpense 242 200Deferredtax(credit)/charge (220) 78

22 278

Thereisnotaxexpenseorcreditinrelationtoshare-basedpaymentscreditedtoequity.At31January2010therearetradinglossesandloanrelationshipdeficitsofapproximately£14,164,000(2009—£13,854,000)availableforcarryforwardagainstfutureprofitsofthesametrade.

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8. Earnings per shareThecalculationofearningspershareisbasedonthenetprofitandordinarysharesinissueduringtheyearasfollows:

Restated Year ended Yearended 31 January 31January 2010 2009 £’000 £’000

Netprofitfortheyear—beforegoodwillimpairment 1,001 740

Netprofitfortheyear—aftergoodwillimpairment 1,001 315

Weightedaveragesharesinissueusedforbasicearningspershare 5,665,222 5,898,455Weightedaveragedilutivesharesunderoption — 28,400

Averagenumberofsharesusedfordilutedearningspershare 5,665,222 5,926,855

Pence Pence

Basicearningspershare—beforegoodwillimpairment 17.67 12.55Basicearningspershare—aftergoodwillimpairment 17.67 5.34

Dilutedearningspershare 17.67 5.31

Therewasnodilutiveeffectofsharesunderoptionfortheyearended31January2010becausetheoptionexercisepricesweregreaterthantheaveragemarketshareprice.Theweightedaveragesharesinissuefortheyearended31January2009havebeenrestatedfortheshareconsolidationandsub-divisionwhichbecameunconditionalon24September2009.

9. Goodwill Goodwill £’000

Gross carrying amount at 1 February 2008, 1 February 2009 and 31 January 2010 7,193

Impairment provisionsAt1February2008 4,532Providedintheyear 425

At1February2009 4,957Providedintheyear —

At 31 January 2010 4,957

Net book valueAt 31 January 2010 2,236

At31January2009 2,236

Goodwillaboverelatestothefollowingcashgeneratingunits: Goodwill on Carrying value acquisition of goodwill Date of acquisition £’000 £’000

PotBlackLimited 28September2000 1,906 965DawesCyclesLimited 26June2001 895 695BenSayersLimited 25February2002 715 576Others(fullyimpaired) 3,677 —

7,193 2,236

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Notes to the financial statements

24

9. Goodwill continuedGoodwillarisingonconsolidation,representingtheexcessofthefairvalueoftheconsiderationgivenoverthefairvalueoftheidentifiablenetassetsacquired,iscapitalisedandistestedannuallyforimpairment.

The key assumptions for each of the cash generating units include stable growth and profit margins, which have beendetermined based on past experience in this market. Internal and external market data has been used in setting theassumptions.Itisconsideredthatthisisthebestavailableinputforforecastingthismarket.

Therecoverableamountsweredeterminedbasedonavalue-in-usecalculation,coveringadetailedoneyearconservativeforecast,followedbyanextrapolationofexpectedcashflowoverthenextfouryearsatgrowthratesofbetween5.0%and7.5%,whichrepresentsaconservativelong-termaveragegrowthrate,followedbyyearfivecashflowsinperpetuity.Thegrowthrateuseddoesnotexceedthe long-termaveragegrowthforthemarket inwhichtheGroupoperates.Aforecastperiodoftenyearshasbeenusedrepresentingtheexpectedminimumperiodthatthebusinessmodelissustainableassumingnosignificantchangesinthebusiness.Thediscountrateusedis13.35%whichisconsideredtobesuitableforeachcashgeneratingunitastheyoperateinsimilarmarkets.

Goodwillandimpairmentpoliciesaredetailedinnote2totheseconsolidatedfinancialstatements.

10. Property, plant and equipment Short leasehold land Plant and and buildings Vehicles machinery Total £’000 £’000 £’000 £’000

Gross carrying amountAt1February2008 405 22 3,231 3,658Additions 32 — 136 168Disposals — — (1,309) (1,309)Foreignexchangeadjustments 15 — 29 44

At1February2009 452 22 2,087 2,561Additions — — 16 16Disposals — — (14) (14)Foreignexchangeadjustments (6) — (12) (18)

At 31 January 2010 446 22 2,077 2,545

DepreciationAt1February2008 256 22 2,870 3,148Providedintheyear 30 — 156 186Eliminatedondisposals — — (1,300) (1,300)Foreignexchangeadjustments 15 — 24 39

At1February2009 301 22 1,750 2,073Providedintheyear 25 — 107 132Eliminatedondisposals — — (14) (14)Foreignexchangeadjustments (4) — (10) (14)

At 31 January 2010 322 22 1,833 2,177

Net book amount at 31 January 2010 124 — 244 368

Netbookamountat31January2009 151 — 337 488

AllassetsstatedabovearesecuredbyafixedandfloatingchargeovertheassetsoftheGroup.

11. Inventories At At 31 January 31January 2010 2009 £’000 £’000

Finishedgoodsforresale 4,991 7,583

Costofsalesincludesmaterialcostsof£24,339,000(2009—£22,659,000)andothercostsof£1,659,000(2009—£1,534,000).

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12. Trade and other receivables At At 31 January 31January 2010 2009 £’000 £’000

Tradereceivables 3,569 4,832Prepaymentsandaccruedincome 294 319Otherreceivables 93 635

3,956 5,786

Trade and other receivables are usually due within 30 and 90 days and do not bear any effective interest rate. All tradereceivablesaresubjecttocreditriskexposure.However,theGroupdoesnotidentifyspecificconcentrationsofcreditriskwithregardstotradeandotherreceivablesastheamountsrecognisedresemblealargenumberofreceivablesfromvariouscustomers.

The fair value of these short-term financial assets is not individually determined as the carrying amount is a reasonableapproximationoffairvalue.

AlloftheGroup’stradeandotherreceivableshavebeenreviewedfor indicatorsof impairment.Certaintradereceivableswerefoundtobeimpairedandaccordinglyaprovisionof£115,000(2009—£369,000)hasbeenmade.Themovementintheprovisionforimpairmentlossescanbereconciledasfollows:

At At 31 January 31January 2010 2009 £’000 £’000

At1February 369 317Amountswrittenoff (84) (116)Impairmentloss 91 209Impairmentlossreversed (261) (41)

At31January 115 369

Someoftheunimpairedtradereceivableswerepastdueasatthereportingdate.Theageoftradereceivablesatthereportingdatewas:

At At 31 January 31January 2010 2009 £’000 £’000

Notpastdue 3,046 4,536Pastdue0–90days 517 276Pastdue91–180days 1 17Pastduemorethan180days 5 3

3,569 4,832

13. Cash and cash equivalents At At 31 January 31January 2010 2009 £’000 £’000

Cashandcashequivalentsperconsolidatedcashflowstatement 3,046 2,121

Cashandcashequivalentsconsistofcashatbankandinhand.Allcashatbankandinhandheldbysubsidiaryundertakings,areavailableforusebytheGroup.

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Notes to the financial statements

26

14. Trade and other payables At At 31 January 31January 2010 2009 £’000 £’000

Tradepayables 3,359 6,495Otherpayables 1,993 2,041

5,352 8,536

TheDirectorsconsider,duetotheirshortduration,thatthecarryingamountsrecognisedintheconsolidatedbalancesheettobeareasonableapproximationofthefairvalueoftradeandotherpayables.

15. Financial liabilities At At 31 January 31January 2010 2009 £’000 £’000

Invoicefinanceliability 1,856 2,589

16. Financial assets and liabilitiesThefinancialassetsoftheGroup,allofwhichfallduewithinoneyear,comprised:

At 31 January 2010 At31January2009 Assets Assets held at Assets heldat Assets fair value Loans not fairvalue Loans not through and within the through and withinthe profit or receiv- scope of profitor receiv- scopeof loss ables IAS 39 Total loss ables IAS39 Total £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Cashandcashequivalents:—Sterling — 247 — 247 — 1,731 — 1,731—USdollars — 2,804 — 2,804 — 349 — 349—Euro — (8) — (8) — 37 — 37—Others — 3 — 3 — 4 — 4

— 3,046 — 3,046 — 2,121 — 2,121Tradeandotherreceivables — 3,594 362 3,956 437 4,886 463 5,786Inventories — — 4,991 4,991 — — 7,583 7,583

Currentassets — 6,640 5,353 11,993 437 7,007 8,046 15,490

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16. Financial assets and liabilities continuedThefinancialliabilitiesoftheGroup,allofwhichfallduewithinoneyear,comprised:

At 31 January 2010 At31January2009 Other Other financial Liabilities financial Liabilities liabilities at not within liabilitiesat notwithin amortised the scope amortised thescope cost of IAS 39 Total cost ofIAS39 Total £’000 £’000 £’000 £’000 £’000 £’000

Tradeandotherpayables 4,146 1,206 5,352 7,128 1,408 8,536Invoicefinanceliability 1,856 — 1,856 2,589 — 2,589Currenttaxliability — 301 301 — 276 276

Currentliabilities 6,002 1,507 7,509 9,717 1,684 11,401

TheGroupisexposedthroughitsoperationstooneormoreofthefollowingfinancialrisks:

Interest rate riskTheGroup’sbankingandinvoicefinancefacilitiesaresubjecttovariableinterestrates.Asaresult,changesininterestratescouldhaveanimpactonthenetresultfortheyearandtoequity.Interestratesensitivitieshavenotbeenpresentedhereastheamountswouldnotbematerialtothefinancialstatements.

Liquidity riskLiquidity risk ismanagedcentrallyonaGroupbasis.Bankand invoice finance facilitiesareagreedatappropriate levelshavingregardtotheGroup’sforecastoperatingcashflowsandcapitalexpenditure.

Credit riskTheGroupfacescreditriskduetothecredit itextendstocustomers inthenormalcourseofbusiness.AllcustomersaresubjecttostrictcreditcheckingandacceptanceproceduresinordertominimisetherisktotheGroup.Creditlimitsareagreedandcloselymonitoredonalocallevel.

Foreign currency riskTheGroupusesforwardforeignexchangecontractstomitigateexchangerateexposurearisingfromforecastpurchasesinUSdollarsandothercurrencies.Allforwardexchangecontractsareconsideredbymanagementtobepartofeconomichedgearrangementsbuthavenotbeenformallydesignated.Thedecisiontohedgeisinfluencedbythesizeoftheexposure,thecertaintyofitarisingandtheexchangerateprevailingatthetime.

Thefairvaluesforthesecontractshavebeenestimatedusingrelevantmarketexchangeandinterestrates.

The Group’s US dollar forward contracts relate to cash flows that have been forecasted for 2011. At 31 January 2010, acumulativelossof£437,000(2009—gain£394,000)hasbeenrecordedintheconsolidatedincomestatementinrelationtotheseinstruments.Thereisnofairvalueadjustmentforforeignexchangecontractsheldat31January2010.

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28

17. Deferred taxationDeferredtaxationarisingfromtemporarydifferencesandunusedtaxlossescanbesummarisedasfollows:

31January Movement 31January Movement 31 January 2008 intheyear 2009 intheyear 2010 £’000 £’000 £’000 £’000 £’000

ProvidedPensionobligations (79) (191) (270) (136) (406)Acceleratedcapitalallowances (466) (222) (688) 191 (497)Short-termtemporarydifferences (48) 95 47 (54) (7)Unusedtaxlosses (303) 205 (98) (357) (455)

Total (896) (113) (1,009) (356) (1,365)

Presentedas:Deferredtaxasset (970) (39) (1,009) (356) (1,365)Deferredtaxliability 74 (74) — — —

Total (896) (113) (1,009) (356) (1,365)

UnprovidedAcceleratedcapitalallowances (19) (8) (27) (48) (75)Short-termtemporarydifferences — (22) (22) (26) (48)Unusedtaxlosses (3,738) 632 (3,106) 287 (2,819)Capitallosses (1,066) (800) (1,866) (292) (2,158)ACT (648) — (648) — (648)

Total (5,471) (198) (5,669) (79) (5,748)

A deferred tax asset has not been recognised in respect of certain trading losses, capital losses, excess managementexpensesandadvancecorporationtax(ACT)astheGroupdoesnotanticipatesufficienttaxabletradingprofits,capitalgains,utilisationofmanagementexpensesorrecoveryofACT,respectively,toarisewithintheforeseeablefuture.

18. Pension scheme arrangementsTheGroupoperatestwofundedpensionschemes,TheTandemGroupPensionPlanandTheCasketGroupRetirementandDeathBenefitScheme.Inaddition,subsidiarycompaniesoftheGroupcontributetootherdefinedcontributionschemesandindividualpensionplans.

The Tandem Group Pension PlanAcontributorypensionscheme, theTandemGroupPensionPlan,hastwosections.Oneprovidesbenefitsbasedonfinalpensionablesalary,theotherprovidesbenefitsbasedondefinedcontributions.Theschemeisclosedtonewmembers.

TheassetsoftheschemeareheldseparatelyfromthoseoftheGroup,beinginvestedwithmanagedfunds.

Contributions to the finalsalarysectionaredeterminedbyan independentqualifiedactuaryon thebasisof the triennialvaluationusingtheAttainedAgeMethod.

Thepresentvalueofthedefinedbenefitobligationsasatthebalancesheetdatesareasfollows:

2010 2009 2008 2007 2006 £’000 £’000 £’000 £’000 £’000

Presentvalueofdefinedbenefitobligationatthebeginningoftheyear 7,383 7,190 10,749 11,340 9,296Currentservicecost — — 14 39 33Contributions — — 2 5 5Interestcost 479 439 513 545 478Actuarialloss/(gain) 1,090 248 (1,227) (697) 1,945Benefitspaid (488) (494) (1,021) (483) (417)Paymentduetomembersfollowingbuyoutofnon-statutoryincreases — — (352) — —Pastservicesaving — — (1,488) — —

Present value of defined benefit obligation 31 January 8,464 7,383 7,190 10,749 11,340

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18. Pension scheme arrangements continuedFordeterminationofthepensionobligation,thefollowingactuarialassumptionswereused:

2010 2009 2008 2007 2006

Discountrate 5.60% 6.70% 6.30% 5.50% 4.90%Increaseinpensionablesalaries —%* —%* 3.60% 3.15% 2.75%Increaseinpensionsinpayment Up to 5.00% Upto5.00% Upto5.00% 5.00% 5.00%Increaseindeferredpensions 3.00% to 5.00% for all yearsInflationassumption 3.50% 3.30% 3.60% 3.15% 2.75%Mortalityassumptiontable PA92 (YOB MC) PA92(YOBMC) PA92(C=2010) PA92(C=2010) PA92(C=2010)

Theassetsheldforthedefinedbenefitobligationscanbereconciledfromtheopeningbalancetothebalancesheetdateasfollows:

2010 2009 2008 2007 2006 £’000 £’000 £’000 £’000 £’000

Fairvalueofschemeassetsatthebeginningoftheyear 6,736 8,161 9,202 9,139 8,041Expectedreturnonschemeassets 404 504 546 499 471Actuarialgain/(loss) 667 (1,541) (682) (77) 953Contributions 91 106 116 124 91Benefitspaid (488) (494) (1,021) (483) (417)

Fair value of scheme assets at 31 January 7,410 6,736 8,161 9,202 9,139

Thelong-termexpectedratesofreturnwere: 2010 2009 2008 2007 2006

Equities 7.4% 7.4% 7.6% 7.5% 7.5%Property 6.4% 6.4% 6.6% 6.5% —%Gilts 4.4% 4.4% 4.6% 4.5% 4.5%CorporateBonds 5.6% 6.7% 5.8% 5.5% —%Cashandother 4.0% 1.5% 5.5% 5.0% 4.5%

Thevalueofassetsintheschemewere: At At At At At 31 January 31January 31January 31January 31January 2010 2009 2008 2007 2006 £’000 £’000 £’000 £’000 £’000

Equities 3,471 3,168 3,677 4,346 3,263Property 809 699 873 981 —Gilts 2,150 2,012 2,686 2,910 5,839CorporateBonds 802 683 900 960 —Cashandother 178 174 25 5 37

Total fair value of assets 7,410 6,736 8,161 9,202 9,139

* Therearenomemberswhosebenefitsarelinkedtosalaries

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18. Pension scheme arrangements continuedThereconciliationofmovementsintheyearwereasfollows:

2010 2009 2008 2007 2006 £’000 £’000 £’000 £’000 £’000

(Deficit)/surplusatthebeginningoftheyear (647) 971 (1,547) (2,201) (1,255)Movement in year:Currentservicecost — — (14) (39) (33)Contributions 91 106 114 119 86Finance(cost)/income (75) 65 33 (46) (7)Actuarial(loss)/gain (423) (1,789) 545 620 (992)Paymentduetomembersfollowingbuyoutofnon-statutoryincreases — — 352 — —Pastservicesaving — — 1,488 — —

(Deficit)/surplus at 31 January (1,054) (647) 971 (1,547) (2,201)Related deferred tax asset/(liability) 295 181 (272) 464 660

Net (deficit)/surplus at 31 January (759) (466) 699 (1,083) (1,541)

2010 2009 2008 2007 2006

History of experience gains and lossesDifferencebetweentheactualandexpectedreturnonschemeassetsAmount(£’000) 667 (1,541) (682) (77) 953Percentageofschemeassets 9.0% (22.9)% (8.4)% (0.8)% 10.4%ExperiencelossesonschemeliabilitiesAmount(£’000) 1 (542) (539) — (447)Percentageofschemeliabilities —% 7.3% 7.5% —% 3.9%Total amount recognised in the consolidatedstatement of comprehensive incomeAmount(£’000) (423) (1,789) 545 620 (992)Percentageofthepresentvalueoftheschemeliabilities (5.0)% (24.2)% 7.6% 5.8% (8.7)%

Theexpectedcontributionsintheyearending31January2011are£92,000.

The Casket Group Retirement and Death Benefit SchemePriorto1995,CasketPlcoperatedadefinedbenefitspensionscheme.On31May1995proceedingscommencedtowindupthisscheme.On1June1995anewdefinedcontributionschemecommenced.Currentemployeesatthattimehadanamounttransferredtoindividualaccountsinthenewscheme.Formeremployeeshadtheirdeferredbenefitstransferredtobepayableoutofacontingencyfund.

Thepresentvalueofthedefinedbenefitobligationsasatthebalancesheetdatesareasfollows:

2010 2009 2008 2007 2006 £’000 £’000 £’000 £’000 £’000

Presentvalueofdefinedbenefitobligationatthebeginningoftheyear 1,737 2,171 2,223 2,304 2,077Interestcost 113 135 121 112 108Actuarialloss/(gain) 391 (511) (124) (168) 155Benefitspaid (101) (58) (49) (25) (36)

Present value of defined benefit obligation 31 January 2,140 1,737 2,171 2,223 2,304

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18. Pension scheme arrangements continuedFordeterminationofthepensionobligation,thefollowingactuarialassumptionswereused:

2010 2009 2008 2007 2006

Discountrate 5.60% 6.70% 6.30% 5.50% 4.90%Increaseinpensionsinpayment 3.50% 3.30% 3.60% 3.15% 2.75%Increaseinpensionablesalaries* —% —% —% —% —%Increaseindeferredpensions 3.50% 3.30% 3.60% 3.15% 2.75%Inflationassumption 3.50% 3.30% 3.60% 3.15% 2.75%Mortalityassumptiontable PA92 (YOB MC)PA92(YOBMC) PA92(C=2010) PA92(C=2010) PA92(C=2010)

Theassetsheldforthedefinedbenefitobligationscanbereconciledfromtheopeningbalancetothebalancesheetdateasfollows:

2010 2009 2008 2007 2006 £’000 £’000 £’000 £’000 £’000

Fairvalueofschemeassetsatthebeginningoftheyear 1,420 1,625 1,633 1,468 1,164Expectedreturnonschemeassets 89 110 109 99 84Actuarialgain/(loss) 236 (367) (169) (10) 153Contributions 100 110 101 101 103Benefitspaid (101) (58) (49) (25) (36)

Fair value of scheme assets at 31 January 1,744 1,420 1,625 1,633 1,468

Thelong-termexpectedratesofreturnwere:

2010 2009 2008 2007 2006

Equities 7.4% 7.4% 7.6% 7.5% 7.5%Property 6.4% 6.4% 6.6% 6.5% —%Gilts 4.4% 4.4% 4.6% 4.5% 4.5%Corporatebonds 5.6% 6.7% —% —% —%Cashandother 4.0% 1.5% 5.5% 5.0% 4.5%

Thevalueofassetsintheschemewere: At At At At At 31 January 31January 31January 31January 31January 2010 2009 2008 2007 2006 £’000 £’000 £’000 £’000 £’000

Equities 104 810 952 977 883Property 44 183 207 244 216Gilts 1,014 377 422 394 356Corporatebonds 496 — — — —Cashandother 86 50 44 18 13

Total fair value of assets 1,744 1,420 1,625 1,633 1,468

Thereconciliationofmovementsintheyearwereasfollows:

2010 2009 2008 2007 2006 £’000 £’000 £’000 £’000 £’000

Deficitatthebeginningoftheyear (317) (546) (590) (836) (913)Movement in year:Contributions 100 110 101 101 103Otherfinancecost (24) (25) (12) (13) (24)Actuarial(loss)/gain (155) 144 (45) 158 (2)

Deficit at 31 January (396) (317) (546) (590) (836)Related deferred tax asset 111 89 153 177 251

Net deficit at 31 January (285) (228) (393) (413) (585)

* Therearenomemberswhosebenefitsarelinkedtosalaries.

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Notes to the financial statements

18. Pension scheme arrangements continued 2010 2009 2008 2007 2006

History of experience gains and lossesDifferencebetweentheactualandexpectedreturnonschemeassetsAmount(£’000) 236 (367) (169) (10) 153Percentageofschemeassets 13.5% (25.8)% (10.4)% (0.6)% 10.4%Experiencegains/(losses)onschemeliabilitiesAmount(£’000) — 351 — 103 175Percentageofschemeliabilities —% 20.2% —% 4.6% 7.6%Total amount recognised in the consolidated statement of comprehensive incomeAmount(£’000) (155) 144 (45) 158 (2)Percentageofthepresentvalueoftheschemeliabilities (7.2)% 8.3% (2.1)% 7.1% (0.1)%

Theexpectedcontributionsintheyearending31January2011are£101,000.

Group pension scheme deficit 2010 2009 2008 2007 2006 £’000 £’000 £’000 £’000 £’000

(Deficit)/surplusTheTandemGroupPensionPlan (1,054) (647) 971 (1,547) (2,201)TheCasketGroupRetirementandDeathBenefitScheme (396) (317) (546) (590) (836)

(1,450) (964) 425 (2,137) (3,037)Related deferred tax asset/(liability)TheTandemGroupPensionPlan 295 181 (272) 464 660TheCasketGroupRetirementandDeathBenefitScheme 111 89 153 177 251

(1,044) (694) 306 (1,496) (2,126)

Theamountsrecognisedintheconsolidatedstatementofcomprehensive incomeintheyearended31January2010arealossof£309,000inrespectoftheTandemGroupPensionplanandalossof£133,000inrespectoftheCasketGroupRetirementandDeathBenefitScheme.ThenetcumulativeactuarialgaintakendirectlytotheconsolidatedstatementofcomprehensiveincomesincethedateoftransitiontoIFRSon1February2006is£751,000intotalinrespectofbothschemes.

DeferredtaxliabilitiesandassetshavebeenrecognisedinrespectofthesurplusesanddeficitsontheTandemandCasketschemestotheextentthatitisbelievedprobablethatabenefitwillarise.

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19. Equity Number of Shares £’000

AuthorisedAt1February2008and1February2009—ordinaryshares4peach 51,875,000 2,07524September2009Consolidationandsub-division (43,575,000) —

At31January2010—ordinaryshares25peach 8,300,000 2,075Non-voting “A” ordinary shares of 1p eachAt1February2007,1February2008and31January2009 125,000,000 1,250

Total authorised share capital at 31 January 2010 133,300,000 3,325

Allotted, called up and fully paidAt1February2008—ordinaryshares4peach 37,584,412 1,50320August2008Sharebuyback (1,600,000) (64)

At1February2009—ordinaryshares4peach 35,984,412 1,43924September2009Consolidationandsub-division (30,226,932) —25September2009Sharebuyback (263,080) (65)

At 31 January 2010 — ordinary shares 25p each 5,494,400 1,374

DuringtheyeartheGrouppurchased263,080ofitsordinarysharesandheldthemastreasuryshares.Followingthepurchasetherewereatotalof519,080sharesheldintreasury.

20. Financial commitmentsThetotalchargefortheyearforoperatingleaserentalsinrespectoflandandbuildingswas£607,000(2009-£793,000)andforotheroperatingleaseswas£213,000(2009-£213,000).

At 31 January At31January 2010 2009 Land and Landand buildings Other buildings OtherOperating lease commitments £’000 £’000 £’000 £’000

Totalfutureminimumpaymentsunderoperatingleases:Within1year 691 186 728 155Within2to5years 2,344 242 2,587 293Morethan5years 420 — 876 —

3,455 428 4,191 448

Totalfutureminimumleasecommitmentsinclude£514,000inrespectofpremisesatPinchbeck,Spalding,previouslyoccupiedbytheGroup’sformerGardenLeisureDivision,whichhavebeensubletatanequivalentannualrental.

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21. Related partiesTheonlyrelatedpartiesaretheDirectors.TransactionswiththeDirectorsaredisclosedinnote6.

22. Contingent assets and liabilitiesTheGrouphadnocontingentliabilitiesat31January2010or31January2009.

23. Capital management policies and proceduresTheGroup’scapitalmanagementobjectivesare:

l ToensuretheGroup’sabilitytocontinueasagoingconcern;andl Toprovideanadequatereturntoshareholders

Inordertomaintainoradjustthecapitalstructure,theGroupmayadoptanumberofapproachestomeettheseobjectives.TheprincipalinstrumentswhichareusedtomeettheGroup’sworkingcapitalrequirementsareequity,bankoverdraftsandinvoicefinancearrangements.

Notes to the financial statements

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IFRS IFRS IFRS IFRS UKGAAP 2010 2009 2008 2007 2006 £’000 £’000 £’000 £’000 £’000

Revenue 35,678 35,161 34,878 33,785 42,760Costofsales (25,998) (24,193) (23,753) (23,196) (30,819)

Gross profit 9,680 10,968 11,125 10,616 11,941Operatingexpenses (8,463) (9,842) (9,757) (9,696) (13,097)Goodwillimpairment — (425) (16) — (640)

Operating profit 1,217 701 1,352 920 (1,796)Financecosts (194) (173) (280) (271) (361)Financeincome — 65 33 — —

Profit before taxation 1,023 593 1,105 649 (2,157)Taxexpense (22) (278) — 297 (152)

Net profit for the year 1,001 315 1,105 946 (2,309)

TheFiveyearhistorydoesnotformpartoftheauditedfinancialstatements.

Five year history

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2010 2009 Note £’000 £’000

Fixed assetsIntangibleassets 4 585 680Investments 4 1,909 1,909Tangibleassets 5 2 1

2,496 2,590Current assetsDebtors 6 4,902 4,435Cashatbankandinhand 2,733 2,289

7,635 6,724Creditors—amountsfallingduewithinoneyear 7 (5,094) (5,282)

Net current assets 2,541 1,442

Total assets less current liabilities and net assets before pension scheme deficit 5,037 4,032Netpensionschemedeficit 13 (759) (466)

Net assets after pension scheme deficit 4,278 3,566

Capital and reservesCalledupsharecapital 9 1,503 1,503Sharesheldintreasury 10 (129) (64)Mergerreserve 10 1,036 1,036Capitalredemptionreserve 10 1,427 1,427Profitandlossaccount 10 441 (336)

Shareholders’ funds 4,278 3,566

ThefinancialstatementswereapprovedbytheBoardofDirectorson28April2010.

G Waldron M P J KeeneDirector Director

Theaccompanyingnotesonpages38to45formpartoftheseUKGAAPfinancialstatements.

Company balance sheet under UK GAAPAt31January2010

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Notes to the UK GAAP financial statements

1. Accounting policiesBasis of preparationThe financialstatementshavebeenpreparedunder thehistorical cost convention and in accordance with UKaccountingstandards.

The principal accounting policies of the Company aresetoutbelowwhichhaveremainedunchangedfromthepreviousyear.

InvestmentsInvestments in the Company are included at cost lessamounts written off. Where the consideration for theacquisition of a subsidiary undertaking includes sharesin the Company to which the provisions of sections 612and613oftheCompaniesAct2006apply,costrepresentsthenominalvalueofsharesissuedtogetherwiththefairvalueofanyadditionalconsiderationgivenandcosts.

GoodwillGoodwillarisingonacquisitions,representingtheexcessof the fairvalueof theconsiderationgivenover the fairvalue of the identifiable assets acquired, is capitalisedwithinfixedassetsandamortisedonastraightlinebasisover20years.Itisconsideredthatthebusinessestowhichthegoodwill relateswillgenerateprofits indefinitelybuta 20 year amortisation period has been prudently used.Goodwill impairment reviews have been conducted inboththecurrentandcomparativeperiods.

Negative goodwill is amortised over the lives of theidentifiableassetstowhichitrelates.

Tangible fixed assetsTangible fixed assets are held at cost unless the valueisimpairedatwhichpointtheyarecarriedatthehigherof net realisable value or the present value of futurecash flows arising from that asset. On all other assets,depreciationisprovidedonastraightlinebasistowriteofftheassetsovertheireconomiclivesasfollows:

Plantandmachinery 3–10years

Foreign exchangeTransactions in foreign currencies are translated at theraterulingonthedateofthetransaction.Wheremonetaryassetsandliabilitiesexistinforeigncurrencies,theyaretranslatedintosterlingattheexchangeratesrulingatthebalancesheetdate.Differencesonexchangeare takendirectlytotheprofitandlossaccount.

Financial instrumentsThe Company’s financial instrument comprises cash.The Company does not trade in financial instruments.All financial assets are recognised when the Companybecomes a party to the contractual provisions of theinstrument.

Deferred taxationDeferred tax is recognised on all timing differenceswherethetransactionsoreventsthatgivetheCompanyanobligationtopaymoretaxinthefuture,orarighttopaylesstaxinthefuture,haveoccurredbythebalancesheetdate.Deferredtaxassetsarerecognisedwhenitismorelikelythannotthattheywillberecovered.Deferredtaxismeasured using rates of tax that have been enacted orsubstantivelyenactedbythebalancesheetdate.

Pension costsRetirementbenefitstoemployeesarefundedbycontributionsfrom the Company and employees. Payments to theCompany’spensionplans,whicharefinanciallyseparateandindependentfromtheCompany,aremadeinaccordancewithperiodic calculations by independent consulting actuaries.Thecostsof funding theplansareaccounted forover theperiodcoveringtheemployees’service.

Thedifferencebetweenthefairvaluesoftheassetsheldin the Company’s defined benefit pension scheme andthe scheme’s liabilities measured on an actuarial basisusing the projected unit method are recognised in theCompany’sbalancesheetasapensionschemeassetorliability as appropriate, adjusted for deferred taxation.Thecarryingvalueofanyresultingpensionschemeassetis restricted to the extent that the Company is able torecoverthesurpluseitherthroughreducedcontributionsinthefutureorthroughrefundsfromthescheme.

ChangesinthedefinedbenefitpensionschemeassetorliabilityarisingfromfactorsotherthancashcontributionbytheGrouparechargedtotheprofitandlossaccountorthestatementoftotalrecognisedgainsandlossesinaccordancewithFRS17‘Retirementbenefits’.

Forfurtherpensioninformationseenote13.

Share-based employee remuneration All share-based payment arrangements granted after 7November2002thathadnotvestedpriorto1February2006arerecognisedinthefinancialstatements.TheCompanyoperatesequitysettledshare-basedremunerationplansforitssenioremployees.

Allemployeeservicesreceivedinexchangeforthegrantofanyshare-basedremunerationaremeasuredat theirfairvalues.Theseareindirectlydeterminedbyreferencetothefairvalueoftheshareoptionsawarded.Theirvalueisappraisedatthegrantdateandexcludestheimpactofanynon-marketvestingconditions.

All share-based remuneration is ultimately recognisedas an expense in the profit and loss account with acorrespondingcredittoreserves,netofdeferredtaxwhereapplicable. If vesting periods or other vesting conditionsapply, the expense is allocated over the vesting period,basedonthebestavailableestimateofthenumberofshareoptions expected to vest. Non-market vesting conditionsareincludedinassumptionsaboutthenumberofoptionsthat are expected to become exercisable. Estimates aresubsequently revised, if there is any indication that thenumber of share options expected to vest differs frompreviousestimates.Noadjustmentismadetotheexpenserecognisedinpriorperiodsiffewershareoptionsultimatelyareexercisedthanoriginallyestimated.

Upon exercise of share options, the proceeds receivednet of any directly attributable transaction costs up tothe nominal value of the shares issued are allocated toshare capital with any excess being recorded as sharepremium.

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Notes to the UK GAAP financial statements

2. Profit for the financial yearTheCompanyhastakenadvantageofsection408oftheCompaniesAct2006andhasnotincludeditsownprofitandlossaccountinthesefinancialstatements.TheCompany’sprofitfortheyearwas£884,000(2009—loss£1,114,000).

Auditors’remunerationincurredbytheCompanyduringtheyearforauditservicestotalled£3,000(2009—£3,000),andfortaxcomplianceservicestotalled£1,000(2009—£1,000).

3. Directors and employees remunerationExpenserecognisedforemployeebenefitsisanalysedbelow: Year ended Yearended 31 January 31January 2010 2009 £’000 £’000

Wagesandsalaries 347 342Benefits 4 4Socialsecuritycosts 43 41Share-basedemployeeremuneration 15 16Pensionschemecontributions—definedcontributionscheme 106 92

515 495

Number Number

TheaveragenumberofpersonsemployedbytheCompanyduringtheyearwas: 3 3

DuringtheyearandinthepreviousyeartheCompanycontributedtoadefinedcontributionpensionschemeforMPJKeene.AnanalysisofDirectors’remunerationisshowninnote6totheconsolidatedfinancialstatements.

4. Intangible fixed assets and investments Unlisted investments in subsidiary Negative undertakings Goodwill goodwill £’000 £’000 £’000

CostAt 1 February 2009 and 31 January 2010 5,866 2,506 (197)

Amortisation and impairment provisionsAt1February2009 3,957 1,826 (197)Amortisationprovidedintheyear — 95 —

At 31 January 2010 3,957 1,921 (197)

Net book valueAt 31 January 2010 1,909 585 —

At31January2009 1,909 680 —

TheprincipalwhollyownedsubsidiaryundertakingsoftheCompanyattheyearendarelistedbelow.M.V.Sports(HongKong)LimitedwasincorporatedinandoperatesinHongKong.TheothercompanieswereincorporatedinandoperateintheUnitedKingdom.

Design, development, sourcing and distribution of:FalconCyclesLimited BicyclesandbicycleaccessoriesDawesCyclesLimited* BicyclesandbicycleaccessoriesMVSportsGroupPlc* Sports,snookerandpool,outdoorplay,toyand leisureproductsM.V.Sports(HongKong)Limited Sports,snookerandpool,outdoorplay,toyand leisureproducts

* Denotes100%ofissuedordinaryshares.

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5. Tangible fixed assets Plant and machinery £’000

CostAt1February2009 21Additions 2

At31January2010 23

DepreciationAt1February2009 20Providedintheyear 1

At31January2010 21

Net book valueAt 31 January 2010 2

At31January2009 1

6. Debtors 2010 2009Amounts due within one year £’000 £’000

Amountsduefromsubsidiaryundertakings 4,838 4,344Otherdebtors 6 8Othertaxation 49 75Prepaymentsandaccruedincome 9 8

4,902 4,435

7. Creditors — amounts falling due within one year 2010 2009 £’000 £’000

Tradecreditors 99 76Amountsduetosubsidiaryundertakings 4,692 4,783Taxationandsocialsecuritycosts 8 16Othercreditors 156 133Accruals 139 274

5,094 5,282

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Notes to the UK GAAP financial statements

8. Deferred taxation 2010 2009 £’000 £’000

Atthebeginningoftheyear 181 (74)Originationandreversaloftimingdifferences 114 255

At 31 January 295 181

Not Not Provided Provided Provided Provided 2010 2010 2009 2009 £’000 £’000 £’000 £’000

Acceleratedcapitalallowances — (4) — (5)Short-termtimingdifferences — (16) — (16)Losses — (43) — (167)Excessmanagementexpenses — (690) — (690)Capitallosses — (774) — (774)Advancecorporationtax(ACT) — (51) — (51)Pensions 295 — 181 —

295 (1,578) 181 (1,703)

A deferred tax asset has not been recognised in respect of certain trading losses, capital losses, excess managementexpenses and ACT as the Company does not anticipate sufficient taxable trading profits, capital gains, utilisation ofmanagementexpensesorrecoveryofACTrespectively,toarisewithintheforeseeablefuture.

9. Called up share capital Number of Shares £’000

AuthorisedAt1February2008and1February2009—ordinaryshares4peach 51,875,000 2,07524September2009Consolidationandsub-division (43,575,000) —

At31January2010—ordinaryshares25peach 8,300,000 2,075At1February2007,1February2008and31January2009 125,000,000 1,250

Total authorised share capital at 31 January 2010 133,300,000 3,325

Allotted, called up and fully paidAt1February2008—ordinaryshares4peach 37,584,412 1,50320August2008Sharebuyback (1,600,000) (64)

At1February2009—ordinaryshares4peach 35,984,412 1,43924September2009Consolidationandsub-division (30,226,932) —25September2009Sharebuyback (263,080) (65)

At 31 January 2010 — ordinary shares 25p each 5,494,400 1,374

DuringtheyeartheGrouppurchased263,080ofitsordinarysharesandheldthemastreasuryshares.Followingthepurchasetherewereatotalof519,080sharesheldintreasury.

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9. Called up share capital continuedShare optionsThefollowingoptionswereheldat31January2010undertheGroup’sshareoptionschemes:

Option price Granted Exercised Cancelled per25p 1February during during during 31 January ordinaryNumberofshares 2009 year year year 2010 share ExercisePeriod

2007 Employee Share Option Scheme DirectorsGWaldron — — — — — — —MPJKeene 86,400 — — — 86,400 78.91p 31/01/10–14/06/20SJGrant 83,200 — — — 83,200 78.91p 31/01/10–14/06/20Other employees 172,000 — — — 172,000 78.91p 31/01/10–14/06/20

1996 Approved Share Option Scheme DirectorsGWaldron — — — — — — —MPJKeene 15,200 — — — 15,200 71.88p 01/05/06–01/05/13 16,000 — — — 16,000 62.50p 26/09/09–26/06/16SJGrant 20,800 — — — 20,800 71.88p 01/05/06–01/05/13 16,000 — — — 16,000 62.50p 26/06/09–26/06/16Other employees 59,200 — — — 59,200 71.88p 01/05/06–01/05/13 41,600 — — — 41,600 62.50p 26/06/09–26/06/16

1996 Unapproved Share Option SchemeDirectorsGWaldron — — — — — — —MPJKeene 26,400 — — — 26,400 71.88p 01/05/06–01/05/10SJGrant 8,000 — — — 8,000 71.88p 01/05/06–01/05/10Other employees 21,600 — — — 21,600 71.88p 01/05/06–01/05/10

TheGrouphasthefollowingoutstandingshareoptionsandexerciseprices:

2010 2009 Remaining Remaining Exercise contractual Exercise contractual price life price life Number (pence) (years) Number (pence) (years)

Dateexercisable(optionlife):2006(upto2013)—Approved 95,200 71.88 3.2 95,200 71.88 4.22006(upto2010)—Unapproved 56,000 71.88 0.2 56,000 71.88 1.22009(upto2016) 73,600 62.50 6.4 73,600 62.50 7.42010(upto2020) 341,600 78.91 10.4 341,600 78.91 11.4

Theordinarysharemid-marketpriceon31January2010was80.5p (2009restated—47.7p).During theyear, thehighestmid-marketpricewas85.0p(2009restated—120.3p)andthelowestwas34.4p(2009restated—42.2p).Theweightedaverageexercisepriceoftheoptionsinissuewas74.9p(2009restated—74.9p).Theordinarysharemid-marketpricesfortheyearended31January2009havebeen restated for theshareconsolidationandsub-divisionwhichbecameunconditionalon24September2009.

ThefairvalueofoptionsgrantedwasdeterminedforIFRS2usingtheBlack–Scholesvaluationmodel.Significantinputsintothecalculationswere:

l exercisepricesof62.50p(2009restated—62.50p)to78.91p(2009restated—78.91p);l 36.3%(2009-36.3%)to48.0%(2009—48.0%)volatilitybasedonexpectedandhistoricalshareprice;l arisk-freeinterestrateof0.60%(2009—0.86%);l alloptionsareassumedtovestafterthreeandahalfyearsfromthedateofgrantoftheoptions;andl nodividends

In total£15,000 (2009—£16,000)ofshare-basedemployee remunerationexpensehasbeen included in theconsolidatedincomestatement.Noliabilitieswererecognisedduetoshare-basedtransactions.

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Notes to the UK GAAP financial statements

10. Statement of movements on reserves Capital Profit Shares held Merger redemption and loss in treasury reserve reserve account Total £’000 £’000 £’000 £’000 £’000

Balanceat1February2009 (64) 1,036 1,427 (336) 2,063Profitfortheyear — — — 884 884Netactuariallossonpensionscheme — — — (309) (309)Sharebuyback (65) — — (114) (179)Share-basedpayments — — — 15 15Transferofintercompanyimpairmentprovisions — — — 301 301

Balance at 31 January 2010 (129) 1,036 1,427 441 2,775

The intercompany impairment provisions relate to balances receivable and payable between wholly owned subsidiarycompanies.Accordingly,theprovisionshavebeentransferredtothesubsidiariestowhichtheimpairmentsrelate.

11. Contingent liabilitiesAcrossguaranteeexistsbetweenallcompanies in theGroup forallamountspayable toHSBCBankPlc.ThemaximumpotentialliabilitytotheCompanyatyearendwas£nil(2009—£168,000).

12. Capital commitmentsTherewerenocapitalcommitmentsat31January2010orat31January2009.

13. Pension arrangementsThe Tandem Group Pension PlanAcontributorypensionscheme, theTandemGroupPensionPlan,hastwosections.Oneprovidesbenefitsbasedonfinalpensionablesalary,theotherprovidesbenefitsbasedondefinedcontributions.Theschemeisclosedtonewmembers.

TheassetsoftheschemeareheldseparatelyfromthoseoftheGroup,beinginvestedwithmanagedfunds.

Contributions to the finalsalarysectionaredeterminedbyan independentqualifiedactuaryon thebasisof the triennialvaluationusingtheAttainedAgeMethod.

Thepresentvalueofthedefinedbenefitobligationsasatthebalancesheetdatesareasfollows:

2010 2009 2008 2007 2006 £’000 £’000 £’000 £’000 £’000

Presentvalueofdefinedbenefitobligationatthebeginningoftheyear 7,383 7,190 10,749 11,340 9,296Currentservicecost — — 14 39 33Contributions — — 2 5 5Interestcost 479 439 513 545 478Actuarialloss/(gain) 1,090 248 (1,227) (697) 1,945Benefitspaid (488) (494) (1,021) (483) (417)Paymentduetomembersfollowingbuyoutofnon-statutoryincreases — — (352) — —Pastservicesaving — — (1,488) — —

Present value of defined benefit obligation 31 January 8,464 7,383 7,190 10,749 11,340

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13. Pension arrangements continuedFordeterminationofthepensionobligation,thefollowingactuarialassumptionswereused:

2010 2009 2008 2007 2006

Discountrate 5.60% 6.70% 6.30% 5.50% 4.90%Increaseinpensionablesalaries —%* —%* 3.60% 3.15% 2.75%Increaseinpensionsinpayment Up to 5.00% Upto5.00% Upto5.00% 5.00% 5.00%Increaseindeferredpensions 3.00% to 5.00% for all yearsInflationassumption 3.50% 3.30% 3.60% 3.15% 2.75%Mortalityassumptiontable PA92 (YOB MC)PA92(YOBMC) PA92(C=2010) PA92(C=2010) PA92(C=2010)

Theassetsheldforthedefinedbenefitobligationscanbereconciledfromtheopeningbalancetothebalancesheetdateasfollows:

2010 2009 2008 2007 2006 £’000 £’000 £’000 £’000 £’000

Fairvalueofschemeassetsatthebeginningoftheyear 6,736 8,161 9,202 9,139 8,041Expectedreturnonschemeassets 404 504 546 499 471Actuarialgain/(loss) 667 (1,541) (682) (77) 953Contributions 91 106 116 124 91Benefitspaid (488) (494) (1,021) (483) (417)

Fair value of scheme assets at 31 January 7,410 6,736 8,161 9,202 9,139

Thelong-termexpectedratesofreturnwere:

2010 2009 2008 2007 2006

Equities 7.4% 7.4% 7.6% 7.5% 7.5%Property 6.4% 6.4% 6.6% 6.5% —%Gilts 4.4% 4.4% 4.6% 4.5% 4.5%CorporateBonds 5.6% 6.7% 5.8% 5.5% —%Cashandother 4.0% 1.5% 5.5% 5.0% 4.5%

Thevalueofassetsintheschemewere: At At At At At 31 January 31January 31January 31January 31January 2010 2009 2008 2007 2006 £’000 £’000 £’000 £’000 £’000

Equities 3,471 3,168 3,677 4,346 3,263Property 809 699 873 981 —Gilts 2,150 2,012 2,686 2,910 5,839CorporateBonds 802 683 900 960 —Cashandother 178 174 25 5 37

Total fair value of assets 7,410 6,736 8,161 9,202 9,139

*Therearenomemberswhosebenefitsarelinkedtosalaries.

44

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13. Pension arrangements continuedThereconciliationofmovementsintheyearwereasfollows:

2010 2009 2008 2007 2006 £’000 £’000 £’000 £’000 £’000

(Deficit)/surplusatthebeginningoftheyear (647) 971 (1,547) (2,201) (1,255)Movement in year:Currentservicecost — — (14) (39) (33)Contributions 91 106 114 119 86Finance(cost)/income (75) 65 33 (46) (7)Actuarial(loss)/gain (423) (1,789) 545 620 (992)Paymentduetomembersfollowingbuyoutofnon-statutoryincreases — — 352 — —Pastservicesaving — — 1,488 — —

(Deficit)/surplus at 31 January (1,054) (647) 971 (1,547) (2,201)Related deferred tax asset/(liability) 295 181 (272) 464 660

Net (deficit)/surplus at 31 January (759) (466) 699 (1,083) (1,541)

2010 2009 2008 2007 2006

History of experience gains and lossesDifference between the actual and expected return on scheme assetsAmount(£’000) 667 (1,541) (682) (77) 953Percentageofschemeassets 9.0% (22.9)% (8.4)% (0.8)% 10.4%Experience losses on scheme liabilitiesAmount(£’000) 1 (542) (539) — (447)Percentageofschemeliabilities —% 7.3% 7.5% —% 3.9%Total amount recognisedAmount(£’000) (423) (1,789) 545 620 (992)Percentageofthepresentvalueoftheschemeliabilities (5.0)% (24.2)% 7.6% 5.8% (8.7)%

Theexpectedcontributionsintheyearending31January2011are£92,000.

14. Related party transactionsTransactionsbetweenGroupcompanieshavenotbeendisclosedinaccordancewiththeexemptionconferredbyFRS8.

Notes to the UK GAAP financial statements

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17722 06/05/2010 Proof5

17722 06/05/2010 Proof5

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