Interim Results

RNS Number : 3867G

Tandem Group PLC

22 October 2008

 



Tandem Group plc

Chairman's interim statement

Six months ended 31 July 2008 

The Group increased profit before tax by 34.6% to £451,000 for the six months ended 31 July 2008, compared to £335,000 in the same period last year. Group revenue decreased by 0.2% from £18,052,000 to £18,020,000. No dividend is proposed.

BICYCLES AND ACCESSORIES

Revenue in our bicycles and accessories businesses of £10,141,000 was 2.9% ahead of last year (2007: £9,859,000). Considering the poor weather and the uncertain economic climate this was an encouraging result. With the increased sales and tight control of margins and overheads, the operating profit increased 7.7% to £605,000 (2007: £562,000).

The Group continues to be a leading supplier of cycles in the UK with its brands including Claud Butler, Dawes, Falcon, Optima, British Eagle and Townsend.

A new range of BMX bikes under the Dirty brand was successfully launched to the trade in September.

SPORTS, LEISURE AND TOYS

Revenue from our sports, leisure and toys businesses was 3.8% down on last year at £7,879,000 (2007: £8,193,000). Operating profit increased by 85.7% to £234,000 (2007: £126,000).

Sales volumes were ahead of last year, but direct deliveries to our customers arranged by our Hong Kong office eliminated certain charges which would have been included in revenue.

Encouraging levels of sales have been achieved from new licences such as Ben 10 and In The Night Garden.

SUMMARY

Continuing firm control of cash flow resulted in finance costs reducing by 45.1% to £95,000 (2007: £173,000).

Cancellation of the parent company's share premium account was completed on 18 August 2008. This enabled the Company to purchase 1,600,000 of its own shares on 20 August 2008. A proforma summarised consolidated balance sheet showing the effects of these transactions is shown on page 9 of this interim report.

It is difficult to accurately forecast future trading in the current economic climate. A large amount of the Group's purchases are paid for in US dollars. The current rate of exchange is approximately 17% below this time last year. Increases in raw material and labour costs in Asia, alongside the additional currency expense, means that we will need to achieve higher prices to maintain our margins.

The Board would like to thank all management and employees for their contribution in increasing the Group's profitability in very difficult times. The established team of management and staff are fully aware of the challenges ahead and are working hard to continue the progress that the Group has made.

Graham Waldron

Chairman

22 October 2008

Tandem Group plc

Unaudited consolidated income statement

Six months ended 31 July 2008

		Note		6 months ended 31 July  2008			6 months ended 31 July  2007		Year ended 31 January 2008
					£'000		£'000		£'000
Revenue					18,020		18,052		34,878
Cost of sales					(12,285)		(12,586)		(23,753)
Gross profit					5,735		5,466		11,125
Distribution expenses					(3,158)		(3,091)		(6,021)
Administrative expenses					(2,031)		(1,869)		(3,752)
Operating profit					546		506		1,352
Finance costs					(95)		(173)		(280)
Finance income					-		2		33
Profit before taxation					451		335		1,105
Tax expense					(46)		(1)		-
Net profit for the period					405		334		1,105
					Pence		Pence		Pence
Earnings per share
Basic		3			1.08		0.89		2.94
Diluted		3			1.06		0.89		2.91

All figures relate to continuing operations.

Tandem Group plc

Unaudited consolidated balance sheet

Six months ended 31 July 2008

		Note		At 31 July 2008		At 31 July 2007		At 31 January 2008
				£'000		£'000		£'000
Non current assets
Goodwill				2,661		2,677		2,661
Property, plant and equipment				543		522		510
Deferred taxation				955		1,167		970
Pension scheme surplus				308		-		264
				4,467		4,366		4,405
Current assets
Inventories				6,131		5,994		5,582
Trade and other receivables				7,870		7,929		5,556
Cash and cash equivalents				2,815		2,357		2,389
				16,816		16,280		13,527
Total assets				21,283		20,646		17,932
Current liabilities
Trade and other payables				(9,600)		(8,829)		(7,792)
Financial liabilities				(3,372)		(4,194)		(2,300)
Current tax liabilities				(401)		(352)		(326)
				(13,373)		(13,375)		(10,418)
Non current liabilities
Pension scheme deficit				(502)		(1,457)		(546)
Deferred taxation				(74)		-		(74)
				(576)		(1,457)		(620)
Total liabilities				(13,949)		(14,832)		(11,038)
Net assets				7,334		5,814		6,894
Equity
Share capital		4		1,503		1,503		1,503
Share premium		4		5,258		5,258		5,258
Other reserves		4		2,452		2,455		2,426
Profit and loss account		4		(1,879)		(3,402)		(2,293)
Total equity				7,334		5,814		6,894

Tandem Group plc

Unaudited consolidated statement of recognised income and expense

Six months ended 31 July 2008

		6 months ended 31 July  2008			6 months ended 31 July  2007		Year ended 31 January 2008
			£'000		£'000		£'000
Foreign exchange differences on translation of overseas subsidiaries			26		24		(5)
Actuarial gain on pension schemes			-		595		1,281
Movement in pension schemes' deferred tax provision			-		(204)		(562)
Net income recognised directly in equity			26		415		714
Net profit for the period			405		334		1,105
Total recognised income and expense			431		749		1,819

Tandem Group plc

Unaudited consolidated cash flow statement

Six months ended 31 July 2008

		6 months ended 31 July 2008		6 months ended 31 July 2007		Year ended 31 January 2008
		£'000		£'000		£'000
Cash flows from operating activities
Net profit for the period		405		334		1,105
Adjustments:
Depreciation of property, plant and equipment		96		59		152
Goodwill impairment		-		-		16
(Profit)/loss on sale of property, plant and equipment		(2)		1		(11)
Finance costs		95		173		280
Finance income		-		(2)		(33)
Tax expense		46		1		-
Taxation paid		(14)		(18)		(89)
Share based payments		9		3		13
Fair value adjustments of forward contracts		-		78		(42)
Net cash inflow from operating activities before movements in working capital		635		629		1,391
(Increase)/decrease in inventories		(549)		(318)		94
Increase in trade and other receivables		(2,299)		(2,511)		(225)
Increase in trade and other payables		1,744		2,655		1,203
Cash (utilised)/generated from operations		(469)		455		2,463
Cash flows from investing activities
Purchases of property, plant and equipment		(133)		(180)		(259)
Sale of property, plant and equipment		6		1		11
Net cash used in investing activities		(127)		(179)		(248)
Cash flows from financing activities
Increase/(decrease) in invoice financing		1,072		1,659		(115)
Interest paid		(76)		(154)		(257)
Net cash from/(used in) financing activities		996		1,505		(372)
Net increase in cash and cash equivalents		400		1,781		1,843
Cash and cash equivalents at beginning of period		2,389		551		551
Effect of foreign exchange rate changes		26		25		(5)
Cash and cash equivalents at end of period		2,815		2,357		2,389

Tandem Group plc

Notes to the interim report

Six months ended 31 July 2008 

1    general information

Tandem Group plc is a public limited company incorporated and domiciled in the United Kingdom with its shares listed on the Alternative Investment Market of the London Stock Exchange.

The principal activity of the Group is the manufacture and distribution of sports and leisure 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 31 July 2008 (including the comparatives for the periods ended 31 July 2007 and 31 January 2008) were approved by the board of directors on 22 October 2008. 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 240 of the Companies Act 1985. The Group's statutory financial statements for the year ended 31 January 2008, 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 Section 237(2) of the Companies Act 1985.

This interim financial information has been prepared using the accounting policies set out in the Group's 2008 statutory accounts. Copies of the annual statutory accounts and the interim report may be obtained by writing to 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 31 July 2008 is based on the actuarial valuation under IAS19 at 31 January 2008 updated for movements in net defined benefit pension income and contributions paid during the half year period. The deferred tax effect of movements in the net retirement benefit obligation has also been recognised in the half year. A full valuation for IAS19 financial reporting purposes will be carried out for incorporation in the audited financial statements for the year ending 31 January 2009.

2    segmental reporting

For management purposes the Group is organised into two operating segments. The revenues and net results for these segments are shown below:

		Bicycles  and  accessories		Sports,  leisure and  toys		Total
		£'000		£'000		£'000
6 months to 31 July 2008
Revenue		10,141		7,879		18,020
Segment result		605		234		839
Unallocated corporate expenses						(293)
Operating profit						546
Finance costs						(95)
Finance income						-
Result for the period before taxation						451
Tax expense						(46)
Net result for the period						405
6 months to 31 July 2007
Revenue		9,859		8,193		18,052
Segment result		562		126		688
Unallocated corporate expenses						(182)
Operating profit						506
Finance costs						(173)
Finance income						2
Result for the period before taxation						335
Tax expense						(1)
Net result for the period						334
Year ended 31 January 2008
Revenue		18,675		16,203		34,878
Segment result		1,176		800		1,976
Unallocated corporate expenses						(624)
Operating profit						1,352
Finance costs						(280)
Finance income						33
Result for the period before taxation						1,105
Tax income						-
Net result for the period						1,105

3    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 31 July  2008		6 months ended 31 July  2007		Year ended 31 January 2008
		£'000		£'000		£'000
Net profit for the period		405		334		1,105
Weighted average shares in issue used for basic earnings per share		37,584,412		37,584,412		37,584,412
Weighted average dilutive shares under option		3,540,000		460,000		2,834,726
Number of shares that would have been issued at fair value		(2,854,770)		(402,450)		(2,415,422)
Average number of shares used for diluted earnings per share		38,269,642		37,641,962		38,003,716
		Pence		Pence		Pence
Basic earnings per share		1.08		0.89		2.94
Diluted earnings per share		1.06		0.89		2.91

4    RECONCILIATION OF MOVEMENTS IN CAPITAL AND RESERVES

		Share capital		Share premium account		Other reserves		Profit and loss account		Total
		£'000		£'000		£'000		£'000		£'000
At 1 February 2007		1,503		5,258		2,431		(4,130)		5,062
Total recognised income and expense		-		-		24		725		749
Share based payments		-		-		-		3		3
At 31 July 2007		1,503		5,258		2,455		(3,402)		5,814
Total recognised income and expense		-		-		(29)		1,099		1,070
Share based payments		-		-		-		10		10
At 31 January 2008		1,503		5,258		2,426		(2,293)		6,894
Total recognised income and expense		-		-		26		405		431
Share based payments		-		-		-		9		9
At 31 July 2008		1,503		5,258		2,452		(1,879)		7,334

5    POST BALANCE SHEET EVENTS

The Company obtained shareholder approval to cancel its share premium account at an Extraordinary General Meeting held on 21 July 2008. Implementation of the cancellation was subject to approval of the High Court which was confirmed and effective on 18 August 2008. Following this approval, on 20 August 2008, the Company purchased 1,600,000 of its own shares at a price of 12.7 pence and transferred them into treasury.

A proforma summarised consolidated balance sheet is set out below to illustrate the effects of the share cancellation and the purchase of own shares as if it had occurred at 31 July 2008:

PROFORMA SUMMARISED CONSOLIDATED BALANCE SHEET AT 31 JULY 2008
		Proforma		Adjustments		At 31 July 2008 as reported
		£'000		£'000		£'000
Non current assets		4,467		-		4,467
Current assets		16,613		203		16,816
Total assets		21,080		203		21,283
Current liabilities		(13,373)		-		(13,373)
Non current liabilities		(576)		-		(576)
Total liabilities		(13,949)		-		(13,949)
Net assets		7,131		203		7,334
Equity
Share capital		1,503		-		1,503
Shares held in treasury		(203)		203		-
Share premium		-		5,258		5,258
Other reserves		2,452		-		2,452
Profit and loss account		3,379		(5,258)		(1,879)
Total equity		7,131		203		7,334

For further information contact:

Tandem Group plc                                                       Mervyn Keene           01733 211399

KBC Peel Hunt Ltd (Nominated Adviser and Broker)    David Anderson        020 7418 8900

                                                                                      Deon Veltdman

 

END

 

 

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