Half Yearly Report

RNS Number : 0370O

Tandem Group PLC

30 September 2019

 

Tandem Group plc

Half Yearly Report

for the six months ended

30 June 2019

CHAIRMAN'S STATEMENT

Results

Trading performance improved in the six months to 30 June 2019 with Group revenue increasing by approximately 27% to £16,029,000 compared to £12,670,000 in the six months to 30 June 2018. 

There was an increase in gross profit from £3,779,000 to £4,911,000.  Gross profit margin also increased to 30.6% compared to 29.8% in the prior period.  We continue to work hard to maintain our profit margins.

Operating expenses increased from £3,997,000 to £4,331,000 in the six months to 30 June 2019 broadly as a result of the increased revenue.

Operating profit was £580,000 compared to an operating loss of £218,000 in the six months to 30 June 2018.  There were no exceptional costs incurred during the period (six months ended 30 June 2018 - £45,000).

Finance costs were significantly higher at £210,000 in the six months to 30 June 2019.  This compared to £85,000 in the prior period.  There was a fair value charge for foreign currency derivative contracts of £54,000 compared to a credit of £55,000 in the prior period.  This is shown in non-underlying items.  Non-underlying items also included finance costs of £85,000 in respect of the pension schemes against £60,000 in the six months to 30 June 2018.

The profit before taxation after non-underlying items for the period was £370,000 compared to a loss of £348,000 in the six month period to 30 June 2018.

There was a tax charge of £215,000 during the period compared to £8,000 in the prior period.  This reflected the increased level of business undertaken from our Far East operations.

Net profit for the period was £155,000 compared to a loss £356,000 in the six months to 30 June 2018.

Basic earnings per share in the six months to 30 June 2019 was 3.1 pence per share compared to a loss of 7.1 pence per share in the prior period.

Net assets at 30 June 2019 increased to £12,446,000 against £10,625,000 at 30 June 2018.

Cash and cash equivalents were £3,740,000 at 30 June 2019 which compared to £957,000 at 30 June 2018.  The timing of creditor payments, utilisation of invoice finance facilities and ongoing careful management of inventories helped to improve this position.

There was a 43% reduction in net debt from £3,508,000 at 30 June 2018 to £2,006,000 at 30 June 2019.

Trading update and outlook

As we reported in our AGM Statement on 27 June 2019, it has been an encouraging year so far for the Group with significant revenue and profitability growth over the prior year period.

Our licensed properties including LOL Surprise!, Peppa Pig and Paw Patrol have continued to perform strongly since the half year.  Our new Disney licences, including Spider-Man and, most notably, Toy Story and Frozen, have also performed well.  Disney Princess is ahead of the prior year.  We remain enthusiastic about the cinema release of Frozen 2 in November 2019 which should bring further growth.

As previously reported, the majority of our own brands including Kickmaster, U-Move and Wired are ahead of the prior year.  Hedstrom has continued to perform very well with significant growth since 30 June over the corresponding period.

Our investment into the Ben Sayers brand delivered double digit growth in the first half of the year which has improved further still going into the second half.

Performance from our bicycles brands remains mixed.  Our Squish lightweight junior range continues to be significantly up against the same period in the prior year.  We reported that Squish had been a particular success story at the half year, gaining market share and greater consumer brand awareness.  This has been sustained in the second half and Squish is now recognised as a leading supplier to the lightweight junior cycle market.

Other independent bicycle dealer (IBD) sales from our Dawes and Claud Butler brands continue to be more challenging against a backdrop of declining traditional IBD customers following closures of a number of retailers coupled with falling consumer bicycle demand, particularly in the leisure market.  We remain focussed on maintaining a strong and compelling offering to our IBD customers, despite these significant headwinds.

National retailer bicycle sales, from our Falcon, Boss, Townsend, Elswick and Zombie brands, which were tracking at similar levels to last year as at June 2019, have weakened slightly in the period since due to strong August 2018 comparatives.

Our online and direct-to-consumer activities continue to progress in a number of product areas albeit hampered by reduced gazebo revenue from a major online platform, the mixed August weather and overall economic environment.  As we previously stated, the retail climate has been increasingly challenging for certain product groups. 

Notwithstanding this, we are very pleased with the growth from our flagship website, Garden Comforts (www.garden-camping.com), which has shown significant growth this year.  In addition, it has been a strong summer period for our mobility business, Pro Rider Mobility (www.proridermobility.com).

The improvements that we previously reported ranging from refinements in search engine optimisation and more focussed 'pay per click' advertising to an enriched website/mobile shopping experience and a more responsive customer service function have helped to grow certain channels.

The potential threats on the horizon that we previously alluded to remain in place.  Whilst we shouldn't seek to 'blame' Brexit, we remain cautious as to the impact that it will have, should it materialise soon, with potentially uncertain future import duty rates and with regards to consumer spending which is discretionary for the type of products that we supply. 

Weak sterling, and therefore a correspondingly stronger US dollar, is also likely to effect the cost of future imports.

We previously stated that the longevity and success of most licences is limited and transient.  Whilst we continue to seek new, exciting and profitable properties there is no guarantee of this.

Despite these threats we look forward to the rest of the year with some confidence and expect to deliver a satisfactory result to our stakeholders for the full year.

Dividend

Due to the strong performance of the Company in the first half of the year we are declaring an interim dividend of 1.56p per share (2018 - 1.42p per share) payable on or about 11 November 2019.  This represents an increase of 10% over the prior year.  We will continue to review our dividend strategy and pay a progressive dividend where profits permit.  The ex-dividend date will be 10 October 2019 and the record date 11 October 2019.  

Board change

We have announced the appointment of Mark Taylor as a non executive director of the Company who joins with effect from 1 October.

Mark served as a Partner with Grant Thornton for 19 years and has considerable experience in the areas of corporate transactions, governance as well as audit and financial reporting.

In addition, Mark brings a wealth of pensions knowledge and is currently Chairman of the Grant Thornton Pensions Fund.

Investor presentation

A presentation for investors has been posted on the Company's website and may be found here.  This sets out detailed information about the Group for existing, new and potential investors.  Investors are encouraged to contact the Company with any questions about the business by telephone, using the website or by emailing our dedicated shareholder email address [e-mail].

Shareholder benefits

We have added a facility for shareholders to benefit from an exclusive 10% discount code on our garden, home and leisure websites www.garden-camping.com, www.athomecomforts.co.uk and www.proriderleisure.com by entering the discount code "SH10" on the checkout page.

Mervyn Keene

Chairman

30 September 2019
 

CONDENSED CONSOLIDATED INCOME STATEMENT

For the 6 months ended 30 June 2019

		6 months ended 30 June 2019 Unaudited				6 months ended 30 June 2018 Unaudited				Year ended 31 December 2018 Audited
	Note	Before non-underlying items £'000	Non-underlying items £'000	After non-underlying items £'000		Before non-underlying items £'000	Non-underlying items £'000	After non-underlying items £'000		Before non-underlying items £'000		Non-underlying items £'000	After non-underlying items £'000
Revenue		16,029	-	16,029		12,670	-	12,670		32,511		-	32,511
Cost of sales		(11,118)	-	(11,118)		(8,891)	-	(8,891)		(22,262)		-	(22,262)
Gross profit		4,911	-	4,911		3,779	-	3,779		10,249		-	10,249
Operating expenses		(4,331)	-	(4,331)		(3,997)	-	(3,997)		(8,002)		-	(8,002)
Operating profit/(loss) before exceptional items		580	-	580		(218)	-	(218)		2,247		-	2,247
Exceptional items		-	-	-		-	(45)	(45)		-		(218)	(218)
Operating profit/(loss) after exceptional items		580	-	580		(218)	(45)	(263)		2,247		(218)	2,029
Finance costs		(71)	(139)	(210)		(80)	(5)	(85)		(166)		9	(157)
Profit/(loss) before taxation		509	(139)	370		(298)	(50)	(348)		2,081		(209)	1,872
Tax expense		(215)	-	(215)		(8)	-	(8)		(195)		(55)	(250)
Net profit/(loss) for the period		294	(139)	155		(306)	(50)	(356)		1,886		(264)	1,622
				Pence				Pence					Pence
Earnings/(loss) per share
Basic	2			3.1				(7.1)					32.3
Diluted	2			3.0				(7.0)					32.1

All figures relate to continuing operations.

 

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME      

For the 6 months ended 30 June 2019

	6 months ended 30 June 2019	6 months ended 30 June 2018	Year ended 31 December 2018
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
Profit/(loss) for the period	155	(356)	1,622
Other comprehensive income:
Items that will be reclassified subsequently to profit and loss: Foreign exchange differences on translation of overseas subsidiaries	13	45	102
Items that will not be reclassified subsequently to profit or loss:
Actuarial loss on pension schemes	-	-	(222)
Movement in pension schemes' deferred tax provision	-	-	37
Other comprehensive income for the period	13	45	(83)
Total comprehensive income attributable to equity shareholders of Tandem Group plc	168	(311)	1,539

All figures relate to continuing operations.

 

CONDENSED CONSOLIDATED BALANCE SHEET

As at 30 June 2019

		At 30 June 2019	At 30 June 2018	At 31 December 2018
		Unaudited	Unaudited	Audited
		£'000	£'000	£'000
Non current assets
Intangible fixed assets		5,574	5,588	5,580
Property, plant and equipment		3,458	3,532	3,480
Deferred taxation		1,776	1,800	1,776
		10,808	10,920	10,836
Current assets
Inventories		5,735	6,164	4,250
Trade and other receivables		7,123	5,572	4,397
Derivative financial asset held at fair value		-	-	54
Cash and cash equivalents		3,740	957	4,847
		16,598	12,693	13,548
Total assets		27,406	23,613	23,384
Current liabilities
Trade and other payables		(6,240)	(5,655)	(4,266)
Other liabilities		(4,736)	(3,048)	(3,542)
Current tax liabilities		(304)	(68)	(143)
		(11,280)	(8,771)	(7,951)
Non current liabilities Other payables		-	(1)	-
Other liabilities		(1,010)	(1,417)	(1,198)
Pension schemes' deficits		(2,670)	(2,799)	(2,827)
		(3,680)	(4,217)	(4,025)
Total liabilities		(14,960)	(12,988)	(11,976)
Net assets		12,446	10,625	12,408
Equity
Share capital		1,503	1,503	1,503
Shares held in treasury		(247)	(247)	(247)
Share premium		286	286	286
Other reserves		3,657	3,587	3,644
Profit and loss account		7,247	5,496	7,222
Total equity		12,446	10,625	12,408

CONDENSED Consolidated statement of changes in equity

As at 30 June 2019

		Share capital		Shares held in treasury	Share premium		Merger reserve	Capital redemption reserve	Revaluation reserve	Translation reserve	Profit and loss account		Total
		£'000		£'000	£'000		£'000	£'000	£'000	£'000	£'000		£'000
At 1 January 2018		1,503		(247)	286		1,036	1,427	530	549	5,984		11,068
Net loss for the period		-		-	-		-	-	-	-	(356)		(356)
Retranslation of overseas subsidiaries		-		-	-		-	-	-	45	-		45
Total comprehensive income for period attributable to equity shareholders		-		-	-		-	-	-	45	(356)		(311)
Share based payments		-		-	-		-	-	-	-	6		6
Dividends paid		-		-	-		-	-	-	-	(138)		(138)
Total transactions with owners		-		-	-		-	-	-	45	(488)		(443)
At 30 June 2018		1,503		(247)	286		1,036	1,427	530	594	5,496		10,625
Net profit for the period		-		-	-		-	-	-	-	1,978		1,978
Retranslation of overseas subsidiaries		-		-	-		-	-	-	57	-		57
Net actuarial loss on pension schemes		-		-	-		-	-	-	-	(185)		(185)
Total comprehensive income for period attributable to equity shareholders		-		-	-		-	-	-	57	1,793		1,850
Share based payments		-		-	-		-	-	-	-	5		5
Dividends paid		-		-	-		-	-	-	-	(72)		(72)
Total transactions with owners		-		-	-		-	-	-	57	1,726		1,783
At 1 January 2019		1,503		(247)	286		1,036	1,427	530	651	7,222		12,408
Net profit for the period		-		-	-		-	-	-	-	155		155
Retranslation of overseas subsidiaries		-		-	-		-	-	-	13	-		13
Total comprehensive income for period attributable to equity shareholders		-		-	-		-	-	-	13	155		168
Share based payments		-		-	-		-	-	-	-	15		15
Dividends paid		-		-	-		-	-	-	-	(145)		(145)
Total transactions with owners		-		-	-		-	-	-	13	25		38
At 30 June 2019		1,503		(247)	286		1,036	1,427	530	664	7,247		12,446

 

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

For the 6 months ended 30 June 2019

		At 30 June 2019	At 30 June 2018	At 31 December 2018
		Unaudited	Unaudited	Audited
		£'000	£'000	£'000

Cash flows from operating activities
Profit/(loss) for the period	155	(356)	1,622
Adjustments:
Depreciation of property, plant and equipment	69	73	139
Amortisation of intangible fixed assets	11	10	41
Profit on sale of property, plant and equipment	(1)	-	(5)
Contributions to defined benefit pension schemes	(219)	(189)	(423)
Finance costs	210	85	157
Tax expense	215	8	250
Share based payments	15	6	11
Net cash flow from operating activities before movements in working capital	455	(363)	1,792
Change in inventories	(1,485)	(2,163)	(407)
Change in trade and other receivables	(2,726)	(1,033)	142
Change in trade and other payables	1,977	1,343	111
Cash flows from operations	(1,779)	(2,216)	1,638
Interest paid	(96)	(80)	(166)
Tax paid	(54)	(47)	(153)
Net cash flow from operating activities	(1,929)	(2,343)	1,319
Cash flows from investing activities
Purchase of intangible fixed assets	(5)	(1)	(24)
Purchase of property, plant and equipment	(48)	(56)	(70)
Sale of property, plant and equipment	1	1	6
Net cash flow from investing activities	(52)	(56)	(88)
Cash flows from financing activities
Loan repayments	(203)	(204)	(408)
Finance lease repayments	(12)	(13)	(27)
Movement in invoice financing	1,221	(190)	303
Dividends paid	(145)	(138)	(210)
Net cash flow from financing activities	861	(545)	(342)
Net change in cash and cash equivalents	(1,120)	(2,944)	889
Cash and cash equivalents at beginning of period	4,847	3,856	3,856
Effect of foreign exchange rate changes	13	45	102
Cash and cash equivalents at end of period	3,740	957	4,847

 

NOTES TO THE HALF YEARLY REPORT

1   General information

Tandem Group plc is a public limited company incorporated and domiciled in the United Kingdom with its shares listed on AIM, the market of that name operated by the London Stock Exchange.

The principal activity of the Group is the design, development, distribution and retail of sports, leisure and mobility equipment.

The ultimate parent company of the Group is Tandem Group plc whose principal place of business and registered office address is 35 Tameside Drive, Castle Bromwich, Birmingham,
B35 7AG.

The interim financial statements for the period ended 30 June 2019 (including the comparatives for the period ended 30 June 2018 and the year ended 31 December 2018) were approved by the Board of Directors on 30 September 2019.  Under the Security Regulations Act of the European Union ("EU"), amendments to the financial statements are not permitted after they have been approved.

The financial information set out in this interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.  The Group's statutory financial statements for the year ended 31 December 2018, prepared under International Financial Reporting Standards ("IFRS"), have been filed with the Registrar of Companies.  The auditor's report on those financial statements was unqualified and did not contain statements under Sections 498(2) and 498(3) of the Companies Act 2006.

This interim financial information has been prepared using the accounting policies set out in the Group's 2018 statutory accounts.  Copies of the annual statutory accounts and the interim report may be obtained by writing to the Company Secretary of Tandem Group plc, 35 Tameside Drive, Castle Bromwich, Birmingham, B35 7AG and can be found on the Company's website at www.tandemgroup.co.uk.

The net retirement benefit obligation recognised at 30 June 2019 is based on the actuarial valuation under IAS19 at 31 December 2018 updated for movements in net defined benefit pension income and contributions paid during the half year period.  A full valuation for IAS19 financial reporting purposes will be carried out for incorporation in the audited financial statements for the year ending 31 December 2019.
 

2   earnings per share

The calculation of earnings per share is based on the net result and ordinary shares in issue during the period as follows:

	6 months ended 30 June 2019	6 months ended 30 June 2018	Year ended 31 December 2018
	£'000	£'000	£'000
Profit/(loss) for the period	155	(356)	1,622
	Number	Number	Number
Weighted average shares in issue used for basic earnings per share	5,026,091	5,026,091	5,026,091
Weighted average dilutive shares under option	92,590	27,968	25,005
Average number of shares used for diluted earnings per share	5,118,681	5,054,059	5,051,096
	Pence	Pence	Pence
Basic earnings/(loss) per share	3.1	(7.1)	32.3
Diluted earnings/(loss) per share	3.0	(7.0)	32.1

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 (MAR).

Enquiries:

Tandem Group plc

Steve Grant, Chief Executive

Jim Shears, Group Finance Director and Company Secretary

Telephone [phone]

Nominated Adviser & Broker

Cairn Advisers LLP

Tony Rawlinson

James Caithie

Telephone [phone]

 

END

 

 

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