Final Results for the year ending 31 December 2012

RNS Number : 0996I

Tanfield Group PLC

28 June 2013

 



For immediate release

28 June 2013

The Tanfield Group Plc

("Tanfield", "Group", or "the Company")

Final Results for the year ending 31 December 2012

Tanfield Group Plc, a leading manufacturer of aerial work platforms, announces its final results for the year ending 31 December 2012. The audited financial statements are being posted to shareholders and are available on the Company website at www.tanfieldgroup.com.

Summary

·     Recovery in key markets for aerial lifts continues

·     Demand outstripping capability to supply

·   Gross margins increased to 41% (2011: 37%)

·   Supply chain challenges and working capital constraining speed of recovery

·   Discussions on sale of Snorkel division on-going

Jon Pither, Chairman of Tanfield, said:

" As we predicted, global demand for aerial work platforms continued to grow significantly throughout 2012, pricing has improved and margins increased. Customers remain engaged in fleet replacement programmes after ageing their fleets during the economic downturn. However, the extended cash-to-cash cycle of key markets in the Asia-Pacific region, combined with supply chain constraints put additional strain on our working capital, so we reined in production during the final quarter in order to rebalance inventory and maintain  cash . "

For further information:

The Tanfield Group Plc                                                                     0845 155 7755

Darren Kell / Charles Brooks

WH Ireland                                                                                            020 7220 1666

James Joyce / Nick Field, Nominated Adviser                   

Seb Wykeham / Ruari McGirr, Broking                                  

Buchanan                                                                                               020 7466 5000

Charles Ryland / Helen Greenwood      

www.buchanan.uk.com 

FINANCIAL AND BUSINESS REVIEW

Financial highlights

Key performance indicators			2012	2011	change
Continuing operations			£000's	£000's	%
Revenue			45,072	48,305	(6.7)
Gross margin on materials1			41%	37%	4.0
EBITDA(before impairments, associates & disposals)			(13,535)	(13,397)	(1.0)
Cash			2,198	3,463	(36.5)
Headcount (Average no.)			506	469	7.9
1 Source: management accounts

CHAIRMAN'S STATEMENT

As we predicted, global demand for aerial work platforms continued to grow significantly throughout 2012. We were able to capitalise on this returning market after successfully raising £11m, net of costs, in March 2012, via a share placing. In the ensuing six months we achieved monthly incremental gains in output and sales, leading to our first break-even month since 2008.

However, the extended cash-to-cash cycle of key markets in the Asia-Pacific region, combined with supply chain constraints put additional strain on our working capital, so we reined in production during the final quarter in order to rebalance inventory and maintain cash.

Global demand for our Snorkel range of aerial lifts remains strong, pricing has improved and margins increased. Customers remain engaged in fleet replacement programmes after ageing their fleets during the economic downturn.  We continue to increase our distribution channels in key markets, including both Latin America and North America. Scandinavia and Japan remained particularly buoyant markets.

I would like to thank all of our employees for their efforts this year, particularly in achieving our first break-even month in October. I look forward to working with you all in 2013.

CHIEF EXECUTIVE'S REVIEW

Summary

The fleet replacement initiatives we first saw in 2011 continued into 2012, as equipment rental and plant hire companies revitalised ageing fleets of aerial work platforms. We significantly strengthened our supply chain during 2012 and achieved our first month of profitability since 2008.

However cash constraints in the final quarter meant that we lost some momentum and losses for the year reached £14.5m.

Powered Access & Engineering: Turnover of £45.1m (2011: £48.3m)

Demand grew for powered access products in 2012, outstripping our capability to supply. We continued to plan for the future with the development of two exciting new products that we introduced in April 2013. Tanfield sells the Snorkel brand of aerial work platforms through a global network of independent distributors. In 2012 we appointed new distributors in Germany, France, Brazil, Colombia; as well as more re-sellers in North America.

Zero Emission Vehicles

Smith Electric Vehicles US Corp ("SEVUS"), in which Tanfield retains a 24 per cent holding, successfully raised $40m in February 2012 to continue its development. However, the company withdrew its planned Initial Public Offering on Nasdaq in September 2012. SEVUS continues to progress, winning new customers in North America, Europe and Asia. We remain supportive of the SEVUS management strategy, which we believe will ultimately deliver a significant  return on our investment.

Outlook

We expect global demand for aerial work platforms will continue to grow during 2013 and beyond, although there remains some level of economic uncertainty in the key markets of North America and the Eurozone.

In order to fully exploit the significant opportunities available in 2013 - and to return to sustainable profitability - Tanfield requires additional working capital, beyond the £2.1m placing in April 2013.

Tanfield is not proposing to pay a dividend for the period.

As outlined in our announcements of 20 February 2013 and 15 April 2013, The Board has received a substantial number of approaches from credible parties interested in purchasing our Powered Access division and the Snorkel brand.

Due to the strength of this interest, in April 2013 the Board of Directors appointed an M&A advisory firm to further explore and manage this process to optimise value for shareholders. Further announcements will be made in due course.

FINANCE DIRECTOR'S REPORT

The Revenue for the year of £45.1m (2011 £48.3m) reflected the difficulty in responding to the improved market conditions owing to the constraints imposed by supply chain capacity and working capital constraints in 2012.

As in 2011, the cost base has been held as low as possible without damaging the overall group infrastructure, and, in spite of the lower turnover in the year, the business reported a similar Loss before Tax investment and associate of £15.3m (2011 £15.1m).   Expenses in all categories were very similar to 2011 and improved performance is dependent upon increased volumes.

Reassessment of the company's holding in Smith Electric Corp.

During the year, Tanfield's holding in Smith Electric Corp was diluted by successive fundraisings.  In addition, Tanfield's influence at board level has reduced, following the appointment of further non-executive directors.  As a result, Tanfield's holding can no longer be considered that of an associate.  It is therefore now treated as an investment.   As such, it is now being held at the lower of cost and realisable value.  Whilst the realisable value of a private company is difficult to estimate, all valuation discussions in relation to recent fundraisings by Smith Electric use valuation ranges well in excess of £1.3m which is the recorded cost of the investment. The investment is valued at cost, £1.3m.

Loss from continuing operations after impairments

The Loss from Operations in the period was £15.3m (2011 £15.2m).  This was a trading loss reflecting low sales volumes given the constraints to revenue.

Finance income

The interest cost in the period of £127k (2011: £286k) was lower owing to higher cash balances in the period and interest income £146k (on deferred consideration of £220k (2011: £470k)) was lower as 2011 benefited from interest on deferred consideration relating to the Smith sale.

Taxation

In spite of the consolidated losses, a tax charge of £79k arose in a specific fiscal jurisdiction (Japan) in the period (2011 £186k).  There is no brought forward deferred tax asset, and none was recognised in the period resulting in no adjustment to deferred tax, consistent with 2011.

Loss from continuing operations

Given the above, Loss from continued operations was £14.5m, (2011 £16.5), the most significant differences between 2012 and 2011 being the reassessment of the holding in Smith Electric Vehicles.

Total comprehensive income for the year

The total comprehensive income for the year was a loss of £15.5m, (2011 £15.7m), after a £1.0m charge (2011 £0.7m income) relating to currency translation differences.

Earnings per share

Loss per share from continuing operations was 12.0 pence (2011: Loss 17.5 pence).  No dividend has been declared. (2011: nil)

Cash

At 31 December 2012, the Group had cash of £2.2m (2011: £3.5m).  Although the business reported a loss of 14.5m in the period, the cash used was £1.3m.  The difference was funded by issuing ordinary shares, (£13.4m net, of which £2m was loaned to Smith) and £1.9m from working capital.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2012
				2012	2011
				£000's	£000's
Continuing operations
Revenue				45,072	48,305
Changes in inventories of finished goods and WIP				2,889	(2,848)
Raw materials and consumables used				(34,243)	(33,250)
Staff costs				(18,760)	(17,143)
Depreciation and amortisation expense				(1,739)	(1,595)
Other operating expenses				(8,493)	(8,461)
Loss from continuing operations before impairments				(15,274)	(14,992)
Impairment of receivables				-	(250)
Loss from continuing operations after impairments				(15,274)	(15,242)
Finance expense				(127)	(286)
Finance income				146	470
Net finance income				19	184
Loss from continuing operations before tax, investment and associate				(15,255)	(15,058)
Reassessment of carrying value of associate				-	(1,280)
Reassessment of carrying value of investment				1,280	-
One off costs directly associated with Smiths investment				(470)	-
Loss before taxation				(14,445)	(16,338)
Taxation				(79)	(186)
Loss for the year from continuing operations				(14,524)	(16,524)
Discontinued operations
Profit on disposal of operations				-	173
Loss for the year				(14,524)	(16,351)
Other comprehensive income, net of tax:
Currency translation differences				(958)	694
Total comprehensive income for the year				(15,482)	(15,657)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2012
				2012	2011
				£000's	£000's
Loss for the year attributable to:
Owners of the parent
From continuing operations				(14,543)	(16,510)
From discontinued operations				-	173
				(14,543)	(16,337)
Non-controlling interest
From continuing operations				19	(14)
Loss for the year				(14,524)	(16,351)
Total comprehensive income for the year attributable to:
Owners of the parent				(15,501)	(15,643)
Non-controlling interest				19	(14)
Total comprehensive income for the year				(15,482)	(15,657)
Loss per share
Loss per share from continuing operations
Basic (p)				(12.0)	(17.5)
Diluted (p)				(12.0)	(17.5)
Loss per share from discontinued operations
Basic (p)				-	0.2
Diluted (p)				-	0.2
CONSOLIDATED BALANCE SHEET (Company registration number 04061965)
AS AT 31 DECEMBER 2012
		2012	2011
		£000's	£000's
Non current assets
Intangible assets		3,940	5,023
Property, plant and equipment		2,885	3,324
Non current Investment		1,280	-
		8,105	8,347
Current assets
Inventories		22,869	21,495
Trade and other receivables		9,063	10,753
Current Investments		474	498
Deferred consideration		339	341
Cash and cash equivalents		2,198	3,463
		34,943	36,550
Total assets		43,048	44,897
Current liabilities
Trade and other payables		13,398	13,034
Provisions		577	621
Tax liabilities		15	189
Obligations under finance leases		70	60
		14,060	13,904
Non-current liabilities
Obligations under finance leases		137	208
Deferred tax liabilities		375	375
		512	583
Total liabilities		14,572	14,487
Equity
Share capital		6,450	4,728
Share premium		14,823	3,097
Share option reserve		1,885	1,785
Special reserve		66,837	66,837
Merger reserve		1,534	1,534
Translation reserve		11,168	12,126
Retained earnings		(74,223)	(59,680)
Equity attributable to the owners of the parent		28,474	30,427
Non controlling interests		2	(17)
Total equity		28,476	30,410
Total equity and total liabilities		43,048	44,897

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2012

Attributable to the owners of the parent Share capital Share premium Share option reserve Merger reserve Special reservea Translation reserve Retained earnings Non-controlling interests Total £000's £000's £000's £000's £000's £000's £000's £000's £000's Balance at 1 January 2011 4,704 827 1,764 1,534 66,837 11,432 (42,611) (3) 44,484 Comprehensive income Loss for the year - - - - - (16,337) (14) (16,351) Other comprehensive income    Currency translation differences - - - - - (57) - - (57) Total other comprehensive income for the year - - - - - (57) - - (57) Total comprehensive income for the year - - - - - (57) (16,337) (14) (16,408) Transactions with owners in their capacity as owners:-    Issue of shares to settle deferred consideration 23 2,270 - - - 751 (751) - 2,293    Share based payments 1 - 21 - - - 19 - 41 At 31 December 2011 4,728 3,097 1,785 1,534 66,837 12,126 (59,680) (17) 30,410 Comprehensive income Loss for the year - - - - - - (14,543) 19 (14,524) Other comprehensive income    Currency translation differences - - - - - (958) - - (958) Total other comprehensive income for the year - - - - - (958) - - (958) Total comprehensive income for the year - - - - - (958) (14,543) 19 (15,482) Transactions with owners in their capacity as owners:-    Issuance of new shares 1,721 11,726 - - - - - - 13,447    Share based payments 1 - 100 - - - - - 101 At 31 December 2012 6,450 14,823 1,885 1,534 66,837 11,168 (74,223) 2 28,476

CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2012
	2012	2011
	£000's	£000's
Continuing and discontinuing operations
Loss before interest and taxation	(14,464)	(16,349)
Depreciation and amortization	1,739	1,595
Loss on deferred consideration currency fluctuations	99	337
Loss on disposal of fixed assets	43	128
Profit on disposal of operations	-	(173)
Impairment of receivables	-	250
Gain on reassessment of carrying value of investment	(1,280)	-
Loss on reassessment of carrying value of associate	-	1,280
Operating cash flows before movements in working capital	(13,863)	(12,932)
Decrease (increase) in receivables	3,239	(310)
Increase in payables	788	1,537
(Decrease) increase in provisions	(44)	349
(Increase) decrease in inventories	(2,105)	3,910
Net cash (used in) operations	(11,985)	(7,446)
Interest paid	(127)	(286)
Income taxes paid	(222)	(60)
Net cash used in operating activities	(12,334)	(7,792)
Cash flow from Investing Activities
Purchase of property, plant and equipment	(310)	(390)
Receipt of deferred consideration	-	7,756
Purchase of investments	(49)	(76)
Purchase of intangible fixed assets	(57)	(232)
Loan to Smith Electric Vehicles US Corp	(1,935)	-
Interest received	131	453
Net cash (used in) from investing activities	(2,220)	7,511
Cash flow from financing activities
Proceeds from issuance of ordinary shares net of costs	13,447	-
New obligations under finance leases in the period	-	274
Repayments of obligations under finance leases	(61)	(202)
Net cash from financing activities	13,386	72
Effect of exchange rate changes on cash and cash equivalents	(97)	35
Net (decrease) in cash and cash equivalents	(1,265)	(174)
Cash and cash equivalents at the start of year	3,463	3,637
Cash and cash equivalents at the end of the year	2,198	3,463

1.  Basis of preparation

The results announcement has been prepared under the historical cost convention on a going concern basis and in accordance with the recognition and measurement principles of International Financial Reporting Standards and IFRIC interpretations as adopted by the EU ("IFRS").

The  announcement has been prepared on the basis of the same accounting policies as published in the audited financial statements of the Group for the year ended 31 December 2012.

The information in this  statement has been extracted from the accounts for the year ended 31 December 2012 and as such, does not contain all the information required to be disclosed in accordance with the International financing reports standards ("IFRS").

2. Audited Financial Statements

The financial information set out above does not constitute the Group's statutory accounts for the years ended 31 December 2012 or 2011 within the meaning of s435 of the Companies Act 2006 but is derived from those accounts. Statutory accounts for 2011 have been delivered to the registrar of companies, and those for 2012 will be delivered in due course. The auditors have reported on those accounts; their report was (i) unqualified, and (ii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006 in respect of the accounts for 2012 or 2011. Without qualifying their report for the year ended 31 December 2012, the auditors drew attention by way of emphasis to going concern.  The results for the year ended 31 December 2012 were approved and authorised for issue by the Board of Directors on 27 June 2013 and are audited.

The information contained in this announcement has been approved and authorised for issue by the Board of Directors.

3. Loss per share
Basic loss per share is calculated by dividing the loss attributable to equity shareholders by the weighted average number of shares in issue during the period. In calculating the dilution per share, share options outstanding and other potential ordinary shares have been taken into account where the impact of these is dilutive.  The average share price during the year was 44.55p (2011: 39.66p).
Number of shares			2012	2011
			No.	No.
			000's	000's
Weighted average number of ordinary shares for the purposes of basic earnings per share			121,202	94,339
Effect of dilutive potential ordinary shares from share options			2,736	140
Weighted average number of ordinary shares for the purposes of diluted earnings per share			123,938	94,479
Earnings
			2012	2011
From continuing and discontinuing operations			£000's	£000's
Earnings for the purposes of basic earning per share being net profit attributable to owners of the parent			(14,543)	(16,337)
Potential dilutive ordinary shares from share options			-	-
Earnings for the purposes of diluted earnings per share			(14,543)	(16,337)
			2012	2011
From continuing operations			£000's	£000's
Earnings for the purposes of basic earning per share being net profit attributable to owners of the parent			(14,543)	(16,337)
Profit on disposal of discontinued operations			-	(173)
Loss for the purposes of earnings per share from continuing operations			(14,543)	(16,510)
Adjustment for one off items:
Reassessment of carrying value of associate			-	1,280
Reassessment of carrying value of investment			(1,280)	-
One off costs directly associated with Smiths IPO			470	-
Impairment of receivables			-	250
Loss for the purposes of earnings per share before one off items			(15,353)	(14,980)
			2012	2011
Loss per share from continuing and discontinued operations
Basic (p)			(12.0)	(17.3)
Diluted (p)a			(12.0)	(17.3)
Loss per share from continuing operations
Basic (p)			(12.0)	(17.5)
Diluted (p)a			(12.0)	(17.5)
Loss per share from continuing operations before one off items
Basic (p)			(12.7)	(15.9)
Diluted (p)a			(12.7)	(15.9)
Loss per share from discontinued operations
Basic (p)			-	0.2
Diluted (p)a			-	0.2
aIAS33 defines dilution as a reduction in earnings per share or an increase in loss per share resulting from the assumption that options are exercised. As the potential dilutive ordinary shares from share options reduce the loss per share these share are omitted from the dilutive loss per share calculation.
4.  Segmental analysis Operating segments For management purposes, the Group is currently organised into two continuing operating divisions - Powered Access Platforms and other operations. These divisions are the basis on which the Group reports its segment information. Principal activities are as follows: Powered Access Platforms:  design and manufacture of powered access equipment Other: design and manufacture of engineering parts and the group holding company Intra-group revenue generated from the sale of products and services is agreed between the relevant business. Operating results by line of business 2012 2011 Revenue Loss Revenue Loss £000's £000's £000's £000's Powered Access Platforms 41,026 (14,583) 44,247 (14,353) Other 4,046 (691) 4,058 (889) Segment revenue / loss 45,072 (15,274) 48,305 (15,242) Finance income 146 470 Finance costs (127) (286) Loss from continuing operations before tax and associate (15,255) (15,058) Reassessment of carrying value of associate - (1,280) Reassessment of carrying value of investment 1,280 - One off costs directly associated with Smiths IPO (470) - Taxation (79) (186) Loss for the year from continuing operations (14,524) (16,524) Profit on disposal of operations - 173 Loss for the year from continuing and discontinued operations (14,524) (16,351) Note: The £32m loan forgiveness in 2012 given to Powered Access from Other is excluded from the above summary. Assets and liabilities by operating segment1 2012 2011 £000's £000's Assets Powered Access Platforms 35,340 39,373 Investment in Smiths Electric Vehicles US incorporated 1,280 - Loan to Smiths Electric Vehicles US incorporated 1,852 - Other 2,039 1,720 Cash and cash equivalents2 2,198 3,463 Total segment assets 42,709 44,556 Current tax assets - - Deferred consideration 339 341 Total assets 43,048 44,897 Liabilities Powered Access Platforms (11,908) (11,706) Other (2,262) (2,207) Total segment liabilities (14,170) (13,913) Current tax liabilities (15) (189) Deferred tax liabilities (375) (375) Retirement benefit obligations (12) (10) Total liabilities (14,572) (14,487) 1 Intercompany loans have been omitted from the asset and liabilities by line of business summary.  2 Cash and cash equivalents have been omitted from the assets and liabilities by line of business summary

 

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