Interim Results

Tandem Group PLC 06 October 2006 Chairman's interim statement For the six months ended 31 July 2006 the Group incurred a loss after goodwill amortisation, exceptional items and taxation of £207,000 compared to a loss last year of £399,000. Operating profit before goodwill amortisation and taxation was £15,000 compared to a loss of £123,000 for the same period last year. Turnover was £16,143,000 compared to £22,373,000 last year. The biggest factor in the reduced turnover was the loss of sales of the outdoor play and snooker and pool products previously sold by Pot Black. No dividend is proposed. Cycles We have the brands of Falcon, Dawes, Claud Butler, Shogun, Tourismo, British Eagle and Optima. Production in the UK ceased in June 2006 with all bicycles now being specified and designed in the UK and manufactured abroad. Exceptional costs of £198,000 were incurred in closing the production facilities but going forward significant overhead and working capital savings will be made. Turnover was down in the six months compared to last year due to reduced sales to national retailers where margins are lower. Good progress has been made elsewhere in increasing the customer base with more potential to come. Sports, leisure and toys MV Sports Group distributes a range of products featuring high profile brand and character licences including Barbie, Groovy Chick, Bang on the Door Baby, Thomas the Tank Engine, Bob the Builder and a range of football training equipment under the Kickmaster brand. Turnover from the UK operation was down on last year with increased competition against some of our longer established licences and cautious buying from national retailers. Following the trend of retailers buying closer to the manufacturing units, turnover from our Hong Kong operation increased over last year. Sales of Thomas the Tank Engine and Bob the Builder performed well, exceeding last year. Selections by national retailers for the important autumn/winter season are greater than last year but buying commitments being made remain guarded. Snooker, pool and outdoor play products from the Pot Black range have been redesigned by the product development team at MV. Customer reaction has been good and it is expected that these product ranges should make a useful contribution in the future, particularly the outdoor play in the spring/summer of 2007. Golf equipment Turnover at Ben Sayers, our smallest business, was down on the previous year following the decision to withdraw from low margin business with a national retailer. Sales to independent retailers and export were up on last year and the customer base continues to expand. Summary We reminded shareholders in the annual report issued in May 2006 that profits for the Group have historically been concentrated in the second half of the year. This year will be no exception. All businesses in the Group are working on initiatives to improve profitability. Now that the problems encountered at our Pot Black business are behind us we expect that the level of profitability in the second half will return to a more acceptable level. Graham Waldron Chairman 6 October 2006 Consolidated profit and loss statement 6 months to 6 months to Year ended 31 July 31 July 31 January 2006 2005 2006 Unaudited Unaudited Audited £'000 £'000 £'000 Turnover Continuing operations 16,143 22,373 42,760 -------- -------- -------- Operating profit/(loss) before goodwill amortisation and impairment 15 (123) (1,156) Goodwill amortisation and impairment (92) (103) (640) -------- -------- -------- Operating loss (77) (226) (1,796) Finance charges (130) (173) (361) -------- -------- -------- Loss on ordinary activities before taxation (207) (399) (2,157) Tax on profit on ordinary activities - - (152) -------- -------- -------- Loss for the financial year transferred from reserves (207) (399) (2,309) -------- -------- -------- Loss per share Basic and diluted (0.55) (1.06) (6.14) Consolidated balance sheet 31 July 2006 31 July 2005 31 January 2006 Unaudited Unaudited Audited £'000 £'000 £'000 Fixed assets Intangible assets 2,585 3,214 2,677 Tangible assets 480 796 563 -------- -------- -------- 3,065 4,010 3,240 -------- -------- -------- Current assets Stocks 5,577 7,698 5,664 Debtors 7,728 9,037 5,527 Cash at bank 1,421 2,397 2,426 -------- -------- -------- 14,726 19,132 13,617 -------- -------- -------- Creditors - amounts falling due within one year (12,285) (15,337) (11,076) -------- -------- -------- Net current assets 2,441 3,795 2,541 -------- -------- -------- Net assets before pension schemes' deficits 5,506 7,805 5,781 Pension schemes' deficits (2,742) - (2,839) -------- -------- -------- Net assets 2,764 7,805 2,942 -------- -------- -------- Capital and reserves Called up share capital 1,503 1,503 1,503 Share premium account 5,258 5,258 5,258 Merger reserve 1,036 1,036 1,036 Other reserves 1,426 1,449 1,426 Profit and loss account (6,459) (1,441) (6,281) -------- -------- -------- Equity shareholders' funds 2,764 7,805 2,942 -------- -------- -------- Consolidated cash flow statement 6 months to 6 months to Year ended 31 July 31 July 1 January 2006 2005 2006 Unaudited Unaudited Audited £'000 £'000 £'000 Notes Net cash (outflow)/inflow from operating activities 5 (871) 748 1,046 -------- -------- -------- Returns on investments and servicing of finance Finance charges paid (130) (171) (358) Interest element of hire purchase rentals - (2) (3) -------- -------- -------- Net cash outflow from returns on investments and servicing of finance (130) (173) (361) -------- -------- -------- Taxation - - (43) -------- -------- -------- Capital expenditure Purchase of tangible fixed assets (34) (83) (119) Sale of tangible fixed assets 30 47 49 -------- -------- ------- Net cash outflow from capital expenditure (4) (36) (70) -------- -------- -------- Net cash (outflow)/inflow before financing (1,005) 539 572 -------- -------- -------- Financing Repayments of amounts borrowed - (980) (980) Capital element of hire purchase rentals - (17) (21) -------- -------- -------- Net cash outflow from financing - (997) (1,001) -------- -------- -------- Decrease in cash 6 (1,005) (458) (429) -------- -------- -------- Notes to the interim report 1 Basis of preparation The interim financial statements have been prepared using accounting policies stated in the Group's report and accounts for the year ended 31 January 2006 and are unaudited. The summary of results for the year ended 31 January 2006 does not constitute full financial statements within the meaning of the Companies Act 1985. The report and full financial statements for that period have been filed with the Registrar of Companies and contain an unqualified audit report. 2 Exceptional items Operating profit is after charging exceptional items totalling £198,000 for the 6 months to 31 July 2006, £600,000 for the 6 months to 31 July 2005 and £1,382,000 for the year ended 31 January 2006. 3 Earnings per share The calculation of earnings per share is based on the net profit and ordinary shares in issue during the period as follows: 6 months to 6 months to Year ended 31 July 31 July 1 January 2006 2005 2006 £'000 £'000 £'000 Basic and diluted earnings per share Loss for the period (207) (399) (2,309) --------- --------- --------- Weighted average number of ordinary shares in issue during the period 37,584,412 37,584,412 37,584,412 --------- --------- --------- FRS 14 requires presentation of diluted earnings per share ('EPS') when a company could be called upon to issue shares that would decrease net profit or increase net loss per share. For a loss making company with outstanding share options, net loss per share would only be increased by the exercise of out-of-the-money options. Since it seems inappropriate to assume that option holders would act irrationally and there are no other diluting future share issues, diluted EPS equals basic EPS. 4 Movement in equity shareholders' funds 6 months to 6 months to Year ended 31 July 31 July 1 January 2006 2005 2006 £'000 £'000 £'000 Loss for the period (207) (399) (2,309) Re-translation of overseas subsidiaries 29 26 38 Net actuarial loss on pension schemes including related tax asset - - (910) -------- -------- -------- (178) (373) (3,181) Opening equity shareholders' funds 2,942 8,178 6,123 -------- -------- -------- Closing equity shareholders' funds 2,764 7,805 2,942 -------- -------- -------- 5 Reconciliation of operating loss to net cash (outflow)/inflow from operating activities 6 months ended 6 months ended Year ended 31 July 2006 31 July 2005 31 January 2006 £'000 £'000 £'000 Operating loss (77) (226) (1,796) Depreciation charges 83 166 307 Provision for amortisation/ impairment of goodwill 92 103 640 Loss/(profit) on sale of tangible fixed assets 4 (7) 119 Decrease in stocks 87 796 2,830 (Increase)/decrease in debtors (2,201) (1,306) 2,095 Increase/(decrease) in creditors 1,141 1,222 (3,024) Adjustment for pension funding - - (125) -------- -------- -------- Net cash (outflow)/inflow from operating activities (871) 748 1,046 -------- -------- -------- 6 Reconciliation of net cash outflow to movement in net funds 6 months ended 6 months ended Year ended 31 July 2006 31 July 2005 31 January 2006 £'000 £'000 £'000 Decrease in cash (1,005) (458) (429) Cash to repay finance leases and hire purchase contracts - 17 21 Loan repayments - 980 980 -------- -------- -------- Changes in net funds resulting from cash flows (1,005) 539 572 Net funds at beginning of period 2,425 1,853 1,853 -------- -------- -------- Net funds at end of period 1,420 2,392 2,425 -------- -------- -------- This information is provided by RNS The company news service from the London Stock Exchange

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