Snorkel Investment Update

RNS Number : 4528G

Tanfield Group PLC

15 November 2022

 

The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain

Tanfield Group Plc

("Tanfield" or the "Company")

Snorkel Investment Update

The Board of Tanfield (the "Board") is pleased to update the market on its investment in Snorkel International Holdings LLC ("Snorkel"), the aerial work platform business.

Investment Background

· Tanfield is a 49% shareholder in the equity of Snorkel following the joint venture between the Company and Xtreme Manufacturing LLC ("Xtreme") (the "Contemplated Transaction"), a company owned by Don Ahern of Ahern Rentals Inc, relating to Snorkel, in October 2013.

· T he Snorkel investment is valued at £19.1m.  The outcome of the US Proceedings referenced below could have an impact on this valuation.

· On 22 October 2019, the Company announced that it had received a Summons and Complaint, filed in Nevada (the "US Proceedings") by subsidiaries of Xtreme, relating to the Contemplated Transaction .

· On 24 October 2019, the Company announced it had become necessary to issue and serve a claim in the English High Court (the "UK Proceedings") against its former solicitors acting for the Company at the time of the Contemplated Transaction. 

· On 18 October 2022, the Company announced that it had fully settled its claim in relation to the UK Proceedings on a no-fault basis for a total of £6.9m.

Highlights

· In the third quarter of 2022, Snorkel's sales increased slightly to US$42.4m, compared to US$42.2m for the third quarter of 2021.  This resulted in sales for the first 9 months of 2022 being US$131.0m, compared to US$113.9m for the same period in 2021, an increase of 15.0%.

· The EBITDA for the third quarter of 2022 was a loss of US$3.1m, compared to a loss of US$2.8m for the third quarter of 2021.  Despite the 15% increase in sales for the first 9 months of 2022, which amounted to £17.1m of additional sales, the EBITDA loss for the first 9 months of 2022 increased to US$10.9m, compared to US$5.3m for the same period in 2021. 

Business Update

Tanfield is a 49% shareholder in the equity of Snorkel following the joint venture between the Company and Xtreme, a company owned by Don Ahern of Ahern Rentals Inc, relating to Snorkel, in October 2013 .

In the third quarter of 2022, Snorkel's sales increased slightly to US$42.4m, compared to US$42.2m for the third quarter of 2021.  While Snorkel's recovery from the impact of the global COVID-19 pandemic has slowed in the third quarter, sales for the first 9 months of 2022 increased to US$131.0m, compared to US$113.9m for the same period in 2021, an increase of 15.0%.

The EBITDA for the third quarter of 2022 was a loss of US$3.1m, compared to a loss of US$2.8m for the third quarter of 2021.  Despite the 15% increase in sales for the first 9 months of 2022, which amounted to £17.1m of additional sales, the EBITDA loss for the first 9 months of 2022 increased to US$10.9m, compared to US$5.3m for the same period in 2021.  While the Board note that the gross profit margin has increased slightly in the third quarter of 2022 to 6.9%, compared to 2.8% in the second quarter of 2022, the gross profit margin for the first 9 months of 2022 is only 4.6%.  The Board continues to believe that the gross profit margins are not in line with the industry averages and work to investigate this is ongoing.

Below is a summary of the consolidated financial statement for the third quarter and year to date of 2022, including comparative figures for 2021:

US$000's	Q3 2022	YTD 2022		Q3 2021	YTD 2021
Net sales	42,422	130,976		42,203	113,920
Cost of goods sold	39,487	125,001		40,120	106,246
Gross profit	2,935	5,975		2,083	7,674
	6.9%	4.6%		4.9%	6.7%
Selling, general & administrative costs	4,945	14,814		4,865	12,722
Foreign currency exchange (gain)/loss	1,125	2,040		36	248
EBITDA profit/(loss)	(3,135)	(10,879)		(2,818)	(5,296)
Depreciation & non-operating costs	650	1,831		671	1,829
Net profit/(loss)	(3,785)	(12,710)		(3,489)	(7,125)

The Board views the year-to-date increase in sales as a positive development. 

The Company are now focussing on the US Proceedings which are continuing, with a jury trial currently expected to take place around the summer of 2023. 

The Board continue to believe that a positive outcome to the US Proceedings is possible.  So far as it is necessary, the Company will continue to vigorously defend its position, whilst continuing to seek advice. 

Further updates will be provided to Shareholders as and when appropriate.

For further information:

Tanfield Group Plc   020 7220 1666

Daryn Robinson 

WH Ireland Limited - Nominated Advisor / Broker

James Joyce / Megan Liddell      020 7220 1666

 

END

 

 

MSCFFESUIEESEIF