Preliminary Results

Tanfield Group PLC
04 April 2005


                                Tanfield Group Plc


                               Preliminary Results

                     for the year ended 31st December 2004

Tanfield Group plc ('Tanfield' or 'the Group'), is pleased to announce its
preliminary results for the twelve months ended 31st December 2004. The
Directors also take this opportunity to highlight recent developments and
outline the continuing strategy of the Group

Summary of Key Developments:

Introduction

The Group has undergone a significant transformation during the period since
December 2003, firstly acquiring the Tanfield engineering businesses and then
SEV Group Limited ('SEV') whilst during this time carrying out a significant
restructuring exercise. The Group is now focused on its specialist engineering
and electric vehicle divisions. The Directors believe that this transition has
gone well and that the Group will deliver significant shareholder value in the
future. The Group has grown substantially over the past six months, new product
lines have come on stream, major orders have been won and deliveries against
these orders have commenced. Trading in the last quarter of 2004 and the first
quarter of 2005 have been in line with expectations.

The strategy outlined in the announcement of the interim results in September
2004 of the Group exiting from the supply of automotive components and removing
itself from lower margin component supply has been completed. Before its
acquisition by the Group 30% of the Tanfield Holdings group turnover was related
to the supply of automotive components out of E2A Ltd. This turnover has been
replaced by sales of higher margin assembly and sub assembly products and by
income arising from the acquisition of SEV Group Ltd.

Financial Results

The Group reported turnover for the year to December of £11.76m (2003 £2.85m),
an increase of 312% principally represented by the acquisition of the Tanfield
Holdings group at the end of 2003 and the SEV Group in October 2004. Included in
discontinued operations are the activities of E2A and E Comeleon following the
decisions to withdraw from the automotive sector and to focus solely on the
licensing of E Comeleon's imaging technology. This sector provided turnover pre
acquisition of £1.84m in the 9 months to December 2003 and thus represented 30%
of the business prior to restructuring. The year on year improvement in sales
results from strong turnover growth within HMH Ltd as well as contribution to
sales from the SEV Group Ltd acquisition completed in October 2004.

The pre tax consolidated loss for the year was £5.97m (2003 £6.99m) after
accounting for a goodwill amortisation of £235k. This loss includes substantial
costs associated with restructuring the Group's business activities, including
exceptional costs of £2.11m connected to the discontinuance of certain divisions
and restructuring of the operations of the Group. The loss for the year is also
affected by significant start up costs associated with the introduction of new
customers within the Groups new target market. Furthermore the Board has also
taken the decision to vacate Comeleon House and give up the lease now that the
e-comeleon business no longer operates manufacturing facilities there. Costs
associated with this include £253k in respect of the write off of stock. Group
net assets as at December were £1.03m (2003 £0.18m). The Group has raised new
equity funds of £7m during the year.

The Group Structure

The Group now falls into two main divisions;

Tanfield Holdings; this division designs and manufactures added value assembly
and sub assembly products. The Directors of Tanfield have moved this division
away from being a sub-contract business with a short horizon order book to being
focussed on delivered assemblies with longer term visibility of earnings, higher
margins and a higher degree of lock in with blue chip customers and partners.

Smiths Electric Vehicles (SEV); this division designs and manufactures electric
vehicles and, aerial access equipment and also provides servicing and
maintenance of the vehicles and equipment. Since the acquisition in October 2004
there has been a focus on rationalising and improving the product range and
re-organising, through improved distribution, the sales function of SEV.

Growth of the Group;

The Group has grown significantly since the third quarter of 2004. This growth
is attributable to both organic factors and the acquisition of SEV. The number
of employees has increased from 160 at the end of March 2004 to the current
headcount of 395.

It is anticipated that bringing the two divisions together on one site could
provide the advantage of several major synergies. Grant assistance is being
sought for this project. The manufacturing expertise within Tanfield Holdings
has been used to improve the costs of production of SEV vehicles.

The Order Book

The current order book of both divisions is at record levels; in particular,
there has been a large increase in the rate of growth in the SEV order book.

Tanfield Holdings division has won a number of significant contracts in a range
of sectors; Defence, Power Generation, Industrial Vehicles and the Health
Sector. The annualised order book stands at over £18 million, compared to £7
million at the beginning of 2004. The level of enquiries is also currently at a
record level compared to last year. All these orders are now being delivered
against and further projects are expected to come on stream over the next three
months. The directors believe that the rate of growth in the order book will
increase during the remainder of the year particularly going into the last
quarter of 2005.

SEV has a record order book of over £9 million, compared to £5 million this time
last year. The growth rate in the order book is accelerating. Since the start of
the year the company has received over £3.5 million of orders for products to be
exported to North America, Eastern Europe and Australia. The company, in
February, won its first fleet contract in the airport sector. The order was with
a major regional airport for electric baggage handling vehicles. The company has
also secured an order from a major North American airline for 19 vehicles and in
the view of the Directors these orders indicate the great potential in this
market sector.



Opportunities for the Future

New product development across the divisions provides great scope for the
future. The Group will establish alliances with appropriate partners that
provide good brand recognition and established routes to market. The focus for
SEV is developing export sales through distribution networks and bringing
further products to the market that address the legislative and environmental
issues that are facing its customers.

Conclusion

The final results for the twelve months ended 31st December 2004 reflect a
business which was in transition. This transitional process is complete. The
Directors have a strategy for growth, which incorporates both the organic
development of the Group and, where appropriate, acquisitions.

The successful implementation of the strategy to date is as a result of the
efforts of all the people involved within the Group. The business is trading in
line with expectations and there are good opportunities for further growth.

Chairman's Comment:

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

' There are a number of good opportunities being presented to the business. The
Directors are pleased with the progress the Group has made during 2004. '



CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 31 December 2004

                                          Note       Year ended        15 month
                                                    31 December    period ended
                                                           2004     31 December
                                                              £            2003
                                                                              £

TURNOVER
Existing operations                                   8,362,143              -
Acquisitions                                          2,324,846              -

Continuing operations                                10,686,989              -
Discontinued operations                               1,077,750      2,854,037

                                                     11,764,739      2,854,037
Cost of sales
                                                        ---------     ----------
-Exceptional cost of sales                4            (252,760)             -
-Other cost of sales                                 (8,766,955)    (3,855,248)
                                                        ---------     ----------

Total cost of sales                                  (9,019,715)    (3,855,248)

Gross profit/(loss)                                   2,745,024     (1,001,211)

Administrative expenses
                                                        ---------     ----------
-Exceptional administrative expenses 
-goodwill impairment                       4                  -       (672,067)
-Exceptional administrative expenses 
-other                                     4         (1,859,000)    (1,196,934)
-Other administrative expenses                       (6,061,473)    (4,008,557)
                                                        ---------     ----------

Total administrative expenses                        (7,920,473)    (5,877,558)

OPERATING LOSS
Existing operations                                  (2,538,898)             -
Acquisitions                                           (173,229)             -

Continuing operations                                (2,712,127)             -
Discontinued operations                              (2,471,722)    (6,878,769)

                                                     (5,175,449)    (6,878,769)

Interest receivable and similar income                   18,916         36,275
Interest payable and similar charges                   (848,117)      (145,799)

LOSS ON ORDINARY ACTIVITIES BEFORE
TAXATION                                             (6,004,650)    (6,988,293)

Tax on loss on ordinary activities                       38,446              -

LOSS ON ORDINARY ACTIVITIES AFTER
TAXATION                                             (5,966,204)    (6,988,293)

RETAINED LOSS FOR THE FINANCIAL YEAR
WITHDRAWN FROM RESERVES                              (5,966,204)    (6,988,293)

Basic and diluted loss per ordinary share      5         (8.26p)       (45.08p)



CONSOLIDATED BALANCE SHEET

As at 31 December 2004

                                                            2004          2003
                                                               £             £
FIXED ASSETS

Intangible assets                                      5,236,731     4,556,411
Tangible assets                                        2,332,537     2,962,325

                                                       7,569,268     7,518,736

CURRENT ASSETS

Stocks                                                 2,417,395       779,000
Debtors                                                4,042,035     1,228,057
Cash at bank and in hand                               8,745,702     3,171,604

                                                      15,205,132     5,178,661

CREDITORS: amounts falling due within one year       (16,878,345)   (8,554,196)

NET CURRENT LIABILITIES                               (1,673,213)   (3,375,535)

TOTAL ASSETS LESS CURRENT LIABILITIES                  5,896,055     4,143,201

CREDITORS: amounts falling due after more than one
year

Convertible debt                                      (1,831,880)   (1,783,880)
Other creditors                                       (1,547,641)   (1,634,015)

PROVISION FOR LIABILITIES AND CHARGES                 (1,487,532)     (543,769)

                                                       1,029,002       181,537

CAPITAL AND RESERVES

Called up share capital                                1,327,847       617,347
Shares to be issued                                      298,706       298,706
Other reserve                                            111,150       111,150
Share premium account                                 18,631,774    12,528,605
Merger Reserve                                         1,533,740     1,533,740
Profit and loss account                              (20,874,215)  (14,908,011)

TOTAL EQUITY SHAREHOLDERS' FUNDS                       1,029,002       181,537


CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2004

                                      Note          Year ended  15 months ended
                                                   31 December      31 December
                                                          2004             2003
                                                             £                £

Net cash outflow from operating
activities                            6             (2,614,290)      (2,009,152)

Returns on investments and servicing
of finance                                            (601,201)        (109,524)

Taxation                                                     -           24,679

Acquisitions and disposals                          (2,541,354)      (2,328,817)

Capital expenditure & financial
investment                                               8,910         (155,483)

Cash outflow before financing                       (5,747,935)      (4,578,297)

Financing                                            5,956,030        1,309,989

Increase/(decrease) in cash in the
period                                8, 7             208,095       (3,268,308)


NOTES

1.        Accounting policies

These financial statements have been prepared using the accounting policies set
out in the Annual Report and Financial Statements for the 15 months ended 31
December 2003.

The financial statements are prepared in accordance with United Kingdom
applicable accounting standards.

2.        Basis of consolidation

The group financial statements consolidate the financial statements of the
company and its subsidiary undertakings drawn up to 31 December each year. The
results of subsidiaries acquired are consolidated for the periods from the date
on which control passed.

Tanfield Group Plc (formerly Comeleon Plc) was incorporated on 30 August 2000
and on 28 November 2000 acquired the entire share capital of E Comeleon Limited.
In accordance with the principles set out in Financial Reporting Standard (FRS)
6 'Acquisitions and Mergers', 93.5% of the shares acquired were accounted for
under merger accounting. The remaining 6.5% have been accounted for under
acquisition accounting.

Tanfield Group Plc (formerly Comeleon Plc) acquired the entire share capital of
Tanfield Holdings Limited on 30 December 2003. The consideration given in
exchange for the entire share capital of Tanfield Holdings Limited was
45,906,312 ordinary shares in Tanfield Group Plc (formerly Comeleon Plc). In
accordance with the provisions of section 131 of the Companies Act 1985, the
company has taken advantage of merger relief accounting.

All other acquisitions are accounted for under the acquisition method.

3.        Unaudited Financial Statements

The financial information set out in the announcement does not constitute
statutory accounts for the periods ending 31 December 2003 or 2004.

The results for the 15 months ended 31 December 2003 have been extracted from
the Annual Report and Financial Statements for that year, which have been
delivered to the Registrar of Companies and on which the auditors have given an
unqualified report which did not contain a statement under Section 237(2) or (3)
of the Companies Act 1985.

The statutory accounts for the year ended 31 December 2004 will be finalised on
the basis of the financial information presented by the directors in this
preliminary announcement and will be delivered to the Registrar of Companies
following the company's annual general meeting.


4.        Exceptional Items

                                              Year ended       15 months ended
                                             31 December           31 December
                                                    2004                  2003
                                                       £                     £

Exceptional cost of sales
Stock provision                                  252,760                     -

Exceptional administrative costs
Impairment of goodwill                                 -               672,067
Impairment of tangible fixed assets            1,337,000             1,196,934
Onerous lease                                    522,000                     -

                                               1,859,000             1,869,001


5.        Loss per ordinary share

Loss per share has been calculated using the weighted average number of shares
in issue during the relevant financial periods. The weighted average number of
shares in issue is 72,209,946 (2003 - 15,501,846), and the earnings, being loss
on ordinary activities after taxation and minority interest are £5,966,204 (2003
- £6,988,293).

No diluted loss per share has been disclosed as the share options are
anti-dilutive.
                                       Year ended               15 months ended
                                      31 December                   31 December
                                             2004                          2003
                                            Pence                         Pence

Loss per share                             (8.26)                       (45.08)


6.        Reconciliation of operating loss to net cash outflow from operating
activities

                                                              2004         2003
                                                                 £            £

Operating loss                                         (5,175,449)  (6,878,768)
Depreciation on tangible fixed assets                     570,013      753,424
Impairment of tangible fixed assets                     1,337,000    1,196,934
Amortisation of intangible fixed assets                   235,548       11,270
Impairment of intangible fixed assets                           -      672,067
Loss on disposal on tangible fixed assets                       -      488,951
Increase in provisions                                    438,763      309,769
Decrease in stocks                                        319,149      326,797
(Increase)/decrease in debtors                           (997,592)   4,606,657
Increase/(decrease) in creditors                          658,276   (3,496,253)

Net cash outflow from operating activities             (2,614,290)  (2,009,152)


7.        Analysis of net debt

                      At  On acquisition                Other non            At
               1 January (excluding cash         Cash        cash   31 December
                    2004  and overdrafts)        Flow     changes          2004
                       £               £            £           £             £

Cash in hand
and at bank    3,171,604               -    5,574,098           -     8,745,702
Overdrafts    (3,454,178)              -   (5,366,003)          -    (8,820,181)

                (282,564)              -      208,095           -       (74,479)

Debt due
within one
year            (850,000)        (50,000)     100,000           -      (800,000)
Debt due
after         
one year      (1,783,800)       (358,856)      10,055     (88,000)   (3,020,681)

Finance       
leases        (1,836,622)       (274,008)     647,584     (11,548)   (1,474,594)

              (4,753,076)       (682,864)     965,734     (99,548)   (4,569,754)

During the period the group entered into finance lease arrangements in respect
of assets with a total capital value at inception of £51,548 (2003 - £Nil),
released £48,000 (2003 - £Nil) of capitalised finance charges to the profit and
loss account, and reclassified £40,000 (2003 - £Nil) to debt from finance
leases.


8.        Reconciliation of net cash flow to movement in net debt

                                     2004         2004         2003        2003
                                        £            £            £           £

Increase/(decrease) in            
cash in the year                  208,095                (3,268,308)
Cash inflow/(outflow)
from increase in                  
debt and lease
financing                         757,639                (1,122,477)

Change in net debt
resulting from cash                            
flows                                          965,734               (4,390,785)

Other non cash changes                         (99,548)                (375,000)
Loans and finance leases
acquired with                                 
subsidiary                                    (682,864)              (1,895,000)

Movement in the year                           183,322               (6,660,785)
Net funds at 1 January 2004                 (4,753,076)               1,907,709

Net debt at 31 December 2004                (4,569,754)              (4,753,076)




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