Interim Results
Tanfield Group PLC
25 September 2006
The Tanfield Group Plc
Interim Results
Six months to 30 June 2006
Tanfield Group is pleased to announce its unaudited interim results for the 6
month period to June 2006, and also takes the opportunity to comment on recent
trading performance and future prospects.
Highlights:
Financial
•Turnover increased by almost 60% against H1 2005
•Significant pre-tax profit increase against H1 2005
•Net current assets quadrupled against year end 2005
•High organic growth in both key divisions
•Net assets doubled against year end 2005
•Gross profit margin maintained
Business
•Increase in rate of order intake
•Increase in acceptance of new electric vehicles.
•Restructuring of business divisions.
•Public sector assisted funding programme for fleet demonstration
vehicles.
•Board changes
•New assembly facility
Chairman's Statement
The financial results for the six months to June 2006 demonstrate how the Group
is building strongly on its improved performance in 2005, with an exceptional
level of growth and maintained profitability.
Turnover for the six months grew by almost 60% to £16.5m from £10.4m in the
equivalent period in 2005. This is almost entirely organic growth from
continuing operations. The acquisition during this period (see UpRight below)
was completed on June 9th 2006 and had limited impact on sales figures.
The highest growth area was the Zero Emission Vehicle division, where turnover
for the six month period was £8.8m, against a full year figure in 2005 of £9.6m.
For the Powered Access segment, turnover rose to £3.1m in the 6 months to June,
against a full year figure in 2005 of £4.4m.
The increase in turnover has been achieved while maintaining gross profit at
54%, (55% in the first 6 months of 2005). Profit before tax was £1.94m before
restructuring costs, after goodwill write-off and depreciation, compared with
£0.19m in the first half of 2005 and £1.69m for the full year ending December
31st 2005.
The balance sheet reflects the full impact of the acquisition of the Powered
Access Division of Upright International Manufacturing Limited. The acquisition
was structured as an Asset Purchased Agreement.
The assets purchased were current assets such as stock, WIP and debtors. The
increases in those balances since December 31st 2005 largely result from the
acquisition that took place at the end of the period. The net assets at the end
of the period were £23.2m (£11.7m as at December 31st 2005). Net Current Assets
were £12.3m (£2.5m at December 31st 2005).
At June 30th 2006, the company had £0.6m of cash balances while utilising only
£0.7m of the £4m Group Banking facility. This headroom will be required to
support the growth forecast. The gearing at June 30th was 9.2% (19.7% at
December 31st 2005). Interest Cover at June 30th was 16 times (1.7 times at June
2005).
Trading Update:
Restructuring
To reflect the changes in the operational activities of certain areas of the
business and maximise the synergies that exist within these areas, the Group is
restructuring its activities into two specific business divisions, namely Zero
Emission Specialist Vehicles and Powered Access equipment.
The Zero Emission Specialist Vehicles division will incorporate all of the
Group's vehicle operations: Smith Electric Vehicles, Norquip, Jumbotugs and the
SEV service network. The lead brand in this division will be Smith Electric
Vehicles.
The Powered Access division will encompass the operations of Aerial Access,
along with the newly-acquired UpRight Powered Access. The lead brand will be
UpRight.
This strategy will allow us to focus on and invest in building on the strong
brand equity that already exists in the customer bases for these lead brands,
while also clearly defining the two main operational areas of the Group.
The Group's existing Engineering Division will increasingly become the key
supplier to the two divisions and their sub-brands. We are already seeing a
significant increase in the percentage of throughput from engineering destined
for the group's OEM operations.
The acquisition of Upright brought Tanfield access to a supply chain utilising
high volume supply from low cost regions. The Group will seek to exploit this in
conjunction with the flexibility provided by its Engineering Division.
Zero Emission Specialist Vehicles
I am pleased to report continued growth in both the order book for this division
and indeed greater market awareness and demand. The market drivers for the
adoption of these products are stronger than ever.
This, allied to a further rise in oil pricing and the implementation of further
congestion and pollution charging, is creating significant interest in the
division's product portfolio.
Throughout the first six months of the year we have delivered vehicles to the
airport, delivery and waste collection sectors, plus the public sector. These
vehicles are all based on our Faraday platform, which has proved tremendously
successful and has been well received by the end users.
Engineering and project work is progressing well on the complimentary products
to Faraday, namely Edison our 3.5t electric van platform and Newton our 7.5t
electric truck.
These products will utilise the Faraday drive line technology but be packaged
into body shells sourced from the volume commercial vehicle sector. The first
products from this new generation of vehicles will be delivered to TNT Express
and TNT Logistics and will be launched in October 2006.
The adoption of these 'donor' vehicle products, with the efficient integration
methods we have developed, will allow us to considerably increase the build
rate, in order to satisfy market demand.
The natural environment for an electric vehicle is one where the vehicle starts
and ends its day at a depot location where it can be re-charged; and where it
does less than 120 miles per day, often with a multitude of start-stops for
deliveries.
Internet shopping and grocery delivery companies; food distribution; parcel,
mail and logistics companies; and waste collection and recycling companies all
operate significant fleets that fall within these parameters.
We have received orders from or are in negotiations with most of the major fleet
operators such as Sainsbury's, TNT, and Enterprise plc, all of whom recognise
the efficacy and compelling financial case for the use of zero emission vehicles
within a closed urban environment.
The airport sector globally is aware of the impact of its 'in-air' activities on
the environment and is therefore highly motivated to minimise emissions on
ground-based operations. We are experiencing significant order intake and
enquiries for the Group's traditional airport product range; plus a high level
of interest in utilising the Smith platform for all manner of aviation ground
support vehicles
Growth in service and maintenance activity continues in line with the increased
output in vehicles as well as new projects won to maintain vehicles within the
dairy sector. The implementation phase of the Dairy Crest contract is now
complete and this has expanded the number of our mobile service engineers to
over 130 and the Group's service depot locations to 17.
The Directors believe that this increased coverage will be invaluable in our
efforts to win further new fleet sales of electric vehicles, as it gives
tremendous confidence to existing and future electric vehicle purchasers that a
significant infrastructure is in place to support and maintain their vehicles.
Tanfield is experiencing a high degree of interest in its zero emission products
from companies and organisations overseas and is therefore considering carefully
its options with regard to the potential for leveraging the Group's products
into other markets.
Fleet Demonstration Funding Programme
I am please to advise that we have structured an agreement with Cenex, a
public-private partnership established to develop and encourage the adoption of
low carbon technologies in the automotive sector, for the full funding of a
demonstration fleet of 30 zero emission commercial vehicles. These vehicles will
be used to seed the fleets of end users with significant potential volume
requirements, to demonstrate the efficacy of electric commercial vehicles. This
is a rolling programme that will be transitioned in to new vehicles as and when
end users purchase the demonstration vehicles. This programme will significantly
increase our demonstration fleet effectiveness and accelerate the sales process.
Powered Access
I am pleased to report that the acquisition of UpRight was completed on June 9th
2006 and has had a twofold positive impact. It has directly impacted on sales
figures while also trebling the number of sales outlets for the Group's existing
Aerial Access brand.
UpRight is the third most recognised brand in powered access equipment globally
and it is this significant brand equity that has allowed us to quickly develop
the market for its products. The products are well recognised as market leaders
and are complimentary to the existing Aerial Access products currently offered
by the Group.
We have strengthened and reinvigorated distribution channels for the product
range. Allied to the growth the Group had already achieved for Aerial Access
distribution channels, this means there is a ready route to market for the
combined powered access offering.
The sales and marketing function has been strengthened and we have commenced the
first stage in an aggressive sales plan to grow the business.
As an example, the UpRight brand was recently re-launched in Spain, with new
distributors and new sales management, and within the first week of operation we
received orders from Spain in excess of £0.5m.
The acquisition and our plans for the business have been very well received by
the market and this has allowed us to tap into significant latent demand for
product. Additionally, we have been able to cross-sell other Group products into
and through the UpRight distribution base.
Order intake has accelerated throughout the first months of ownership to the
point where we are now experiencing a level four times that of the UpRight
business at point of acquisition.
Our strategy is to reintroduce several of the historic product models and expand
the range offered to the market - as well as offering derivative products and
offering certain Aerial Access products under the UpRight brand.
We have also taken over the production of UpRight equipment at the vendor's
facility in Ireland. This allows us to manage the transition of the production
lines from Ireland to the North East of England. This process also allows us to
manage and control the production of existing orders. It is testament to the
capability of our operational team that we have been able to more than double
throughput at this facility within three weeks of gaining control.
Tanfield Centre
We have signed a lease on a new 250,000 sq foot dedicated assembly facility -
'Tanfield Centre' - close to the Group's existing facilities. To offset the cost
of establishing this factory we have negotiated a rent-free period of 15 months
and have been offered a £1.95 million grant from the local Regional Development
Agency. The new facility will become the main site for the final assembly of all
Group products, including those manufactured under the UpRight brand. This will
provide scalability of its operations and allow us to deliver further rapid
growth.
Board Changes
It is with pleasure that I announce two Board changes. The Board has appointed
Darren Kell as Chief Executive of the Group and Brendan Campbell as Operations
Director of the Group.
Over recent months, a number of senior management appointments have been made
within the Group and its divisions. This means that there is now in place an
experienced and enthusiastic team to manage and lead this dynamic and rapidly
growing business. There is clear succession planning and strength in depth.
Summary
Following another period of significant growth and the successful organic
profitable growth of the core businesses, we are now embarking upon a new phase
in the Group's development.
The sectors in which we operate are exciting and dynamic and offer us tremendous
potential for further profitable growth.
The acquisition of the UpRight business puts us firmly in the front ranks of the
fast-growing powered access market and widens our opportunities globally through
our operations in Japan and USA.
Our new production facility will allow us to fulfil market demand for the
Group's products and operate more efficiently.
I would like to take this opportunity to thank all of our people for their
efforts over the past six months and for the continuing support of all our
stakeholders.
Roy Stanley,
Chairman
Tanfield Group PLC
Consolidated Income Statement
For six months ending 30th June 2006
Notes Unaudited Unaudited Audited
6 months 6 months Year ended
to 30th to 30th 31
June 2006 June 2005 December 2005
£000's £000's £000's
Revenue 16,494 10,443 22,431
Other operating income - - 42
Changes in inventories of
finished goods and WIP 2,593 1,392 1,983
Raw materials and consumables
used (10,184) (6,031) (9,111)
Reversal of previously
impaired assets - - 69
Staff costs (5,385) (4,489) (9,049)
Depreciation and amortisation
expense 173 (269) 475
Other operating expenses (1,622) (574) (4,729)
Restructuring costs (211)
Profit from operations 1,858 472 2,109
Finance costs (126) (280) (109)
Net Profit for Year 1,732 192 2,000
Income tax expense 2 - - (344)
Profit for the
year from
continuing
operations 1,732 192 1,656
Discontinued operations
Loss for
period from
discontinued
operations - - 37
Net profit for
the year 1,732 192 1,694
Earnings per share
From continuing operations
Basic 4 0.80p 0.13p 1.00p
Diluted 0.78p 0.12p 0.97p
From continuing and
discontinued operations
Basic 0.80p 0.13p 1.03p
Diluted 0.78p 0.12p 0.99p
Tanfield Group PLC
Consolidated Balance Sheet
As at 30th June 2006 Unaudited Audited
30th June 2006 2005
£000's £000's
ASSETS
Non Current Assets
Property, Plant and Equipment 4,113 4,015
Goodwill 5,143 5,143
Intangible Assets 4,183 3,213
------------ --------
13,440 12,371
------------ --------
Current Assets
Inventories 14,307 4,377
Trade and Other Receivables 8,191 5,701
Cash and Cash Equivalents 595 1,478
------------ --------
23,092 11,555
------------ --------
------------ --------
TOTAL ASSETS 36,532 23,927
============ ========
LIABILITIES
Current liabilities
Trade and Other Payables 7,957 5,511
Tax Liabilities 299 299
Obligations Under Finance Leases 366 631
Bank Loans and Overdrafts 695 1,048
Other Creditors 1,432 1,583
Provisions - -
------------ --------
10,749 9,072
------------ --------
Non Current Liabilities
Bank Loans 1,022 1,392
Other Creditors 198 212
Deferred Tax Liability 45 45
Obligations Under Finance Leases 653 723
Convertible Loan Notes 69 69
Provisions 615 661
------------ --------
2,602 3,101
------------ --------
------------ --------
TOTAL LIABILITIES 13,351 12,173
------------ --------
Equity
Share Capital 2,421 1,905
Share Premium Account 10,690 1,509
Share option reserve 308 308
Loan Stock Equity Reserve 6 6
Merger Reserve 1,534 1,534
Capital Reduction Reserve 7,228 7,228
Profit And Loss Account 994 (737)
------------ --------
Total Equity 23,181 11,753
------------ --------
------------ --------
Total Equity & Liabilities 36,532 23,926
============ ========
Tanfield Group Plc
Consolidated Cash Flow Statement
For the six months ending 30th June 2006
Unaudited Unaudited Audited
6 months 6 months Year
to 30th to 30th Ended 31
June 2006 June 2005 December
2005
Note £000's £000's £000's
Operating Activities
Cash used in operations 6 (2,324) (2,355) (1,990)
Interest paid (126) (558) (207)
Tax paid - - -
Net Cash from Operating activities (2,450) (2,912) (2,197)
Investing Activities
Acquisitions (6,523) (329) (324)
Purchase of property,plant and
equipment (548) (1,681) (2,562)
Proceeds from sale of property, plant
and equipment
Purchase of intangible fixed assets - - (1,488)
Interest received - 98 98
Net cash used in investing activities (7,071) (1,912) (4,276)
Financing Activities
Issue of ordinary share capital 9,696 5,323 6,886
Repayment of bank loans (331) 686 742
Capital element of finance leases (335) (244) (121)
Net cash used in financing 9,030 5,766 7,507
Net Increase/(Decrease) in Cash
and Cash Equivalents (491) 941 1,034
Cash and cash Equivalents at
beginning of Year 960 (74) (74)
Cash and Cash equivalents at end
of the year 469 866 960
Tanfield Group PLC
Consolidated Statement of Changes in Equity
For the six month period ended 30th June 2006
Attributable to equity holders of the company
Share Share Share Capital Loan Merger Profit Total
capital Option Premium Reduction Stock Reserve and Loss Equity
Reserve Reserve Reserve Account
£000's £000's £000's £000's £000's £000's £000's £000's
Balance at 1
January 2006 1,905 308 1,509 7,228 6 1,534 (737) 11,753
- prior period - -
adjustments
- as restated 1,905 308 1,509 7,228 6 1,534 (737) 11,753
Exercise of
share options 15 - 14 - - - 30
Net gains/(losses) not recognised -
in the income statement
Issue of new share capital 500 9,166 - - - 9,666
Capital Reduction - - - - -
Conversion of convertible loan - - - - - - -
notes
Shares issued for consideration - - - - - -
Net profit for the year - - - - 1,732 1,732
Dividends
Balance at 30 June 2006 2,421 308 10,690 7,228 6 1,534 994 23,181
For the six month period ended 30th June 2005
Attributable to equity holders of the company
Share Share Share Capital Loan Merger Profit Total
capital Option Premium Reduction Stock Reserve and Loss Equity
Reserve Reserve Reserve Account
£000's £000's £000's £000's £000's £000's £000's £000's
Balance at 1
January 2005 1,328 410 18,632 - 170 1,534 (20,717) 1,356
- prior period adjustments 78 78
- as restated 1,328 410 18,632 - 170 1,534 (20,639) 1,434
Exercise of share options 7 (136) - - - 248 118
Net gains/(losses) not recognised -
in the income statement
Issue of new
share capital 275 5,089 - - - 5,364
Capital Reduction - - - - -
Conversion of convertible loan
notes 200 1,581 - (163) - - 1,618
Shares issued for consideration 9 81 - - - 90
Net profit for the year - - - - 192 192
Dividends
Balance at 30 June 2005 1,819 273 25,383 - 6 1,534 (20,199) 8,816
NOTES
1. Basis of preparation
The financial statements for the six months ended 30 June 2006 have been neither
audited nor reviewed, nor have the financial statements for the six months ended
30 June 2005. 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 2005.
The figures for the year ended 31 December 2005 do not constitute the company's
statutory accounts for that period within the meaning of Section 240 of the
Companies Act but have been extracted from the statutory accounts, which have
been filed with 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.
2. Taxation
The tax charge in the period is based on the anticipated effective rate of tax
for the period to 30th
June 2006.
3. Business and Geographical Segment Information
Powered Zero
Access Emission
Platforms Vehicles Engineering Consolidated
£000's £000's £000's £000's
Revenue
External Sales 3,128 8,883 4,483 16,494
Inter-segment sales
Total revenue 3,128 8,883 4,483 16,494
Result
Segment Result
before restructuring 367 1,279 423 2,068
Restructuring Costs 211 - - 211
Segment Result 156 1,279 423 1,858
Unallocated corporate - - - -
expenses
Profit from operations 156 1,279 423 1,858
Finance costs 24 68 34 126
Profit before tax 132 1,211 388 1,732
Income tax expense 0 - 0 0
Profit after tax 132 1,211 388 1,732
Other information
Capital additions 1,243 415 68 1,726
Depreciation and
amortisation (355) 433 94 173
Impairment losses
recognised in income 0 0 0 0
Balance Sheet
Assets:
Segment assets 16,062 10,558 9,587 36,207
Consolidated total assets 16,062 10,558 9,587 36,207
Liabilities:
Segment Liabilities 3,542 5,610 3,874 13,026
Consolidated total
liabilities 3,542 5,610 3,874 13,026
4. Earnings per share
Including discontinuing operations
The calculation of the basic and diluted earnings per share is
based on the following data:
Earnings 6 months ended 6 months ended Year Ended
30/06/2006 30/06/2005 31/12/2005
Earnings for the purposes
of basic earnings per share 1,732 192 1,694
Effect of dilutive potential
ordinary shares: 14 14 14
- interest on convertible loan
notes
Earnings for the purposes
of diluted earnings per share 1,718 179 1,680
Number of shares
Weighted average number of ordinary
shares for the purposes of
basic earnings per share 216,053,300 146,563,869 165,038,027
Convertible Loan Notes 789,474 789,474 789,474
Share Options 2,928,671 3,057,342 4,057,342
Weighted average number
of ordinary shares for the
purposes of diluted earnings
per share 219,771,444 150,410,684 168,884,843
From continuing operations
The calculation of the basic and diluted earnings per share is
based on the following data:
Earnings Year Ended Year Ended Year Ended
31/12/2006 31/12/2006 31/12/2005
Earnings for the purposes
of basic earnings per share 1,732 192 1,656
Effect of dilutive potential
ordinary shares: 14 14 14
- interest on convertible loan
notes
Earnings for the purposes of diluted
earnings per share 1,718 179 1,642
Earnings per share from continuing
operations
Basic 0.80p 0.13p 1.00p
Diluted 0.78p 0.12p 0.97p
5. Acquisition.
On 8th June 2006, the Group acquired the PartsRight business and the UpRight
brand of powered access equipment from Upright International Manufacturing a
consideration of £6.8m. This has been accounted for by the purchase method of
accounting.
Fair Value
2006
Net Assets Acquired £'000s
Inventories 5,497
Debtor Book 1,004
Order Book 327
Other Intangible Assets 533
IPR 347
--------
7,708
Goodwill (860)
--------
Total Consideration 6,848
Satisfied by :
Cash 6,848
--------
--------
Net cash outflow arising on acquisition 6,848
========
6. Reconciliation of profit from operations to net cash used in operating
activities
6 months 6 months Year
to 30th to 30th Ended 31
June June December
2006 2005 2005
£000's £000's £000's
Operating Activities
Profit before tax and
interest expense 1,858 472 2,147
Depreciation of property,
plant and equipment 450 374 742
Write off of negative
goodwill (860) - (1,356)
Impairment of property, plant - - -
and equipment
Amortisation of intangible
fixed assets 238 - 159
(Profit)/Loss on disposal of
fixed assets - (105) 102
(Increase)/decrease in
debtors (1,487) (1,251) (1,622)
(Decrease)/Increase in
creditors 1,957 134 205
(Decrease)/Increase in
provisions (46) (475) (787)
(Increase)/decrease in
inventories (4,434) (1,504) (1,579)
Net Cash from Operating
activities (2,324) (2,355) (1,990)
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.
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 1 hour ago Urban Logistics Reit
- 2 hours ago Ocado Group
- 2 hours ago AJ Bell
- 2 hours ago Foresight Enterprise VCT
- 2 hours ago Mitie Group