Interim Results

Tanfield Group PLC
30 September 2004


                                Tanfield Group Plc


                                   Interim Results

                     for the six months ended 30 June 2004

Tanfield Group Plc ('Tanfield') the technical solutions and manufacturing group,
is pleased to announce its interim results for the six months ended 30 June
2004. The Directors also take this opportunity to outline the continuing
strategy of Tanfield and developments within the business as it moves from being
a sub-contract business with a short horizon order book to being a business
focussed on delivered assemblies with longer term visibility of earnings, higher
margins and a higher degree of lock in with customers and partners.

Summary of Key Developments:

Ongoing divestment of lower margin business

In line with the strategy outlined in the announcement of the end of year
results in March the Group is continuing to exit the supply of automotive
components. This has involved an exceptional write off of £1.64 million in the
interim results. The turnover from this business has been replaced by higher
added value assembly and sub assembly solution contracts elsewhere within the
Group.

Growth in order book

The Group's order book at the end of the period was over double the size that it
was at the same time last year. The value of a number of existing contracts has
increased and the Group has been successful in winning new business during the
period.

Health Sector

The contract that was announced on 21 April 2004 in respect of goods for the
National Health Service has risen from a minimum value of £0.9 million in the
first year to £ 2.25 million. A five year single source supply agreement has
been signed. It is expected that the contract size will increase over the next
four years. Deliveries on this contract have commenced.

Defence Sector

Tanfield has been nominated as single supplier to a major customer who has been
awarded a contract with the US Defence Department. The prototype phase of this
contract will be worth £0.5 million in 2005 and is expected to increase
substantially from 2006 thus driving a major step change in the overall size of
our business. The Directors anticipate that the contract will run for at least
10 years.

In addition, the contract that was announced on 7 April 2004 in respect of goods
for the defence sector has risen in contracted minimum value from £1.63 million
to £3.4 million. Production commenced in June 2004 and is expected to continue
until July 2005. Tanfield has also won a new contract from this customer worth a
minimum of £1.4 million, which is expected to commence in November 2004.

The Group has been successful in winning further orders valued at over £1
million per annum over three years for a range of assemblies for several new
fighting vehicles.

Industrial Vehicle Sector

A customer in the industrial vehicles sector has increased their build rate
resulting in an increase in scheduled annual business to Tanfield Group from
£1.2 million to £2.5 million per annum. Tanfield Group has also won a contract
in a further outsourcing project for this customer starting in January 2005.

Another division of this customer has nominated Tanfield Group as their global
supplier of an assembled telelift basket. The schedule on this contract runs to
2008 and currently has an annual value of over £2.5 million. Deliveries of this
product have begun.

Power Generation Sector

The Group has won a contract to supply fabricated power generation assemblies to
a UK multi national company. This is a five year contract with an annual value
of at least £2 million. Tanfield is currently dealing with further enquiries
from this company.

Acquisition

The Directors are in the final stages of completing the legal documentation
relating to the proposed acquisition, which was referred to in the announcement
released by the Company on 31 August 2004, and it is expected that a further
announcement will be made in the near future.

Other developments

The interim results for the six months ended 30 June 2004 reflect a business,
which has been successfully in transition. The Group has only been in existence
in its current form for nine months and great progress has been made. The growth
strategy has involved a major training and recruitment programme and a
sacrificing of margin during the period to bring on new contracts. The number of
people employed by us has grown from 160 to 230 during the period, in line with
the order book and sales growth of the business. The business is currently
trading well and in line with expectations.

Chairman's Comment:

Commenting on this announcement, Jon Pither, Chairman of Tanfield said:

'The growth in the order book and developments in Tanfield over recent periods
provide a solid base for growth of the enlarged business.'


Roy Stanley, CEO

30 September 2004
TANFIELD GROUP PLC

CONSOLIDATED PROFIT AND LOSS ACCOUNT

For the six months ended 30th June 2004

                  Note                  Unaudited             Unaudited                 Audited
                                   6 months ended              6 months         15 months ended 
                                     30 June 2004   ended 31 March 2003        31 December 2003
                                                £                     £                       £

TURNOVER                                5,099,812             2,022,896               2,854,037
Cost of                                (2,048,032)           (2,976,445)             (3,855,248)
sales

Gross
profit/(loss)                           3,051,780              (953,549)             (1,001,211)
                                         --------              --------                --------
-Exceptional
administrative
expenses -
lease exit
costs                                    (482,190)                    -                       -
-Exceptional
administrative
expenses -
impairment of
fixed assets                           (1,160,370)                    -              (1,869,001)
Other
administrative
expenses                               (3,624,232)           (3,157,134)             (4,008,557)
                                         --------              --------                --------
Total
administrative
expenses                               (5,266,792)           (3,157,134)             (5,877,558)
Other
operating
income                                          -                25,046                       -

OPERATING LOSS                         (2,215,012)           (4,085,637)             (6,878,769)

Interest
receivable and
similar income                             15,216                 1,914                  36,275
Interest
payable and
similar
charges                                  (355,156)              (49,767)               (145,799)

LOSS ON
ORDINARY
ACTIVITIES
BEFORE
TAXATION                               (2,554,952)           (4,133,490)             (6,988,293)

Tax on loss on                                  -                     -                       -
ordinary
activities

LOSS ON
ORDINARY
ACTIVITIES
AFTER TAXATION                         (2,554,952)           (4,133,490)              (6,988,293)

Equity                                          -                     -                        -
minority
interest

RETAINED LOSS
FOR THE
FINANCIAL
YEAR/PERIOD
WITHDRAWN FROM
RESERVES                               (2,554,952)           (4,133,490)              (6,988,293)


Basic loss per
ordinary
shares              3                       (4.14p)             (27.01p)                 (45.08p)


All activities derived from continuing operations.


TANFIELD GROUP PLC

CONSOLIDATED BALANCE SHEET

As at 30th June 2004

                                     Unaudited       Unaudited           Audited
                                  30 June 2004   31 March 2003  31 December 2003
                                             £              £                  £
FIXED ASSETS

Intangible assets                    4,425,751       692,937         4,556,411
Tangible assets                      1,415,801     1,390,325         2,962,325

                                     5,841,552     2,083,262         7,518,736

CURRENT ASSETS

Stocks                                 769,277       192,788           779,000
Debtors                              1,946,436       588,867         1,228,057
Cash at bank and in hand             3,188,503       930,251         3,171,604

                                     5,904,215     1,711,906         5,178,661
CREDITORS: amounts falling
due within one year                (10,665,328)     (988,372)       (8,554,196)

NET CURRENT (LIABILITIES) /
ASSETS                              (4,761,167)      723,534        (3,375,535)

TOTAL ASSETS LESS CURRENT
LIABILITIES                          1,080,385     2,806,796         4,143,201

CREDITORS: amounts falling
due after more than one year        (3,102,781)   (1,007,751)       (3,417,895)

PROVISION FOR LIABILITIES
AND CHARGES                           (351,019)            -          (543,769)

                                    (2,373,415)    1,799,045           181,537

CAPITAL AND RESERVES

Called up share capital                617,347       153,021           617,347
Shares to be issued                    298,706       555,469           298,706
Other reserve                          111,150       111,150           111,150
Share premium account               12,528,605    12,416,999        12,528,605
Merger reserve                       1,533,740       615,614         1,533,740
Profit and loss account            (17,462,963)  (12,053,208)      (14,908,011)

TOTAL EQUITY SHAREHOLDERS'
(DEFICIT) / FUNDS                   (2,373,415)    1,799,045           181,537


TANFIELD GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30th June 2004


                  Note                  Unaudited             Unaudited                 Audited
                                   6 months ended              6 months         15 months ended 
                                     30 June 2004   ended 31 March 2003        31 December 2003
                                                £                     £                       £

Net cash
outflow from
operating
activities   4                          (757,133)            (1,687,421)             (2,009,152)

Returns on
investments
and
servicing                              (339,939)                (47,853)               (109,524)
of finance

Taxation                                      -                  24,679                  24,679

Acquisitions
and                                           -                       -              (2,328,817)
disposals

Capital
expenditure
&
financial                               184,751                (168,864)               (155,483)
investment

Cash outflow
before
financing                              (912,321)             (1,879,459)             (4,578,297)

Financing                              (483,090)               (176,024)              1,309,989

Decrease in
cash in the
period                               (1,395,411)             (2,055,483)             (3,268,308)



NOTES

1. Basis of preparation

The financial statements for the six months ended 30 June 2004 have been neither
audited nor reviewed, nor have the financial statements for the six months ended
31 March 2003. They have been prepared on a consistent basis using accounting
policies set out in the Tanfield Group Plc statutory accounts for the period
ended 31 December 2003.

The figures for the 15 months ended 31 December 2003 do not constitute statutory
accounts within the meaning of Section 240 of the Companies Act and have been
delivered to the Registrar of Companies. The auditors have reported on those
accounts and that report was unqualified and did not contain a statement under
Section 237(2) or Section 237(3) of the Companies Act 1985; it did however
contain an explanatory paragraph.

2. Taxation

The tax charge in the period is based on the anticipated effective rate of tax
for the year ended 31 December 2004.

3. Loss per ordinary share

Loss per share has been calculated using weighted average number of shares in
issue during the relevant financial periods.


                  Note                  Unaudited             Unaudited                 Audited
                                   6 months ended              6 months         15 months ended 
                                     30 June 2004   ended 30 March 2003        31 December 2003
                                                £                     £                       £

Weighted
average
number                                 61,734,716            15,302,104              15,501,846
of shares

Loss on
ordinary
activities
after
taxation                                 2,554,953            4,133,490               6,988,292
(£)



4. Net cash outflow from operating activities


                  Note                  Unaudited             Unaudited                 Audited
                                   6 months ended              6 months         15 months ended 
                                     30 June 2004   ended 30 March 2003        31 December 2003
                                                £                     £                       £


Operating                             (2,215,012)           (4,085,637)              (6,878,768)
loss
Depreciation
on tangible
fixed assets                             237,936             1,118,729                  753,424
Impairment
of
tangible                               1,160,370                     -                1,196,934
fixed
assets
Amortisation
of
intangible                               154,791               158,584                   11,270
fixed assets
Impairment
of
intangible                                     -                     -                  672,067
fixed assets
Loss on
disposal of
tangible
fixed                                          -                     -                  488,951
assets
(Decrease)/
Inc
rease in                                (192,750)                    -                  309,769
provisions
Decrease/
(Incr
ease) in                                   9,723               326,591                  326,797
stocks
Decrease/
(Incr
ease) in                                (743,831)            4,091,167                4,606,657
debtors
(Decrease)/
Inc
rease in                                 831,640            (3,296,855)              (3,496,253)
creditors

Net cash
outflow from
operating
activities                              (757,133)           (1,687,421)             (2,009,152)


Copies of this report are being forwarded to all shareholders and holders of the
2009 8.5% Convertible Loan Stock and further copies are available from the
Company's Registered Office at Comeleon House, North Tanfield Industrial Estate,
Tanfield Lea, Co Durham. DH9 9NX.



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