Trading Update and Notice of Results

Tandem Group PLC

01 February 2024

 

1 February 2024

 

Tandem Group plc

(the "Company" or "Group")

Trading Update and Notice of Results

Tandem Group plc (AIM: TND) designers, developers, distributors and retailers of sports, leisure and mobility equipment, provides the following trading update and confirms that its annual results for the year ended 31 December 2023 ("FY23") will be announced on 25 March 2024.

Trading and operations update

As the Company reported in its interim results on 20 September 2023, revenue in the first half of the year was approximately 24% behind the equivalent period in the previous year. A comparatively stronger second half of the financial year resulted in unaudited Group revenue for the full year of £22.2m, 17% behind the prior year and in line with updated guidance provided by the Company on 13 December 2023.

The economic environment in the consumer sector continued to pose challenges, which reflected the broader issues faced by many businesses in the UK. Suppressed consumer spending continued to impact the domestic sales market, which proved more challenging than anticipated, further complicating the landscape.

The Directors expect the loss before tax for FY23, subject to audit, to be in line with guidance provided by the Company on 13 December 2023.

Toy, Sports & Leisure

The Toys, Sports, and Leisure (TSL) business encompasses character-licensed products, primarily wheeled toys and in-house sports and leisure items. These products are distributed to both independent and national retailers. Revenue from this division reduced by approximately 32% compared to the previous year.

Throughout FY23 we have emphasised that retailers have been transitioning away from Freight on Board (FOB) sales as a result of them adopting a more cautious approach to their stockholding amid restrained consumer spending. This aligns with widespread reports of retailers facing tough trading conditions during the run up to Christmas, as businesses continue to navigate the challenging market conditions.

Golf turnover, including electric golf trolleys* finished behind the previous year by 8%. However, turnover from electric golf trolleys more than doubled during the period.

Bicycles

Bicycle sales, including electric bikes* finished, the year 17% ahead of the prior year, defying widespread challenges reported across the cycling sector. The successful introduction of our newly launched electric bikes range played a significant role in bolstering overall sales and in delivering significant overperformance by the group in this area.

Sales of our lightweight premium Squish bikes experienced growth for the year, surpassing the figures from the prior year.

Mechanical bike sales declined by 12% overall, and we continue to see the market move away from traditional mechanical bikes in favour of electric powered alternatives.

Home & Garden

Our Home and Garden revenue was approximately 27% behind the previous period. This can be largely attributed to the adverse weather conditions prevailing throughout 2023, impacting both heating and cooling products, which sharply contrasted with the more favourable climate experienced in 2022.

Despite these challenges, performance in November and December showed positive signs in this division, outperforming the prior year by around 9% over the same months in the prior year.

eMobility

As part of our strategic focus on eMobility products, we have successfully delivered a strong performance this year, with the division achieving a 44% increase in sales compared to the previous year. As detailed above, the sales of both electric golf trolleys and electric bikes played a significant role in driving this growth.

Outlook

The Group is targeting a 19% increase in turnover for the year 2024 at £26.5m, in line with existing market expectations, and a planned return to profitability. The recent addition of three new national retailer accounts is a testament to our expanding market presence and enhances our growth prospects. During January 2024, we have seen encouraging indicators from retailers which are aligning well with our projections to attain the heightened turnover for the year.

We are pleased to announce that the Group continues to enjoy the support of our banking partners, HSBC. Further to the update provided in the Company's interim results published on 20 September 2023, the Group has now entered into a new five year bank facility with HSBC, which will refinance and replace all existing loans with HSBC on drawdown, ensuring stability for our future plans and growth.

In order to improve operational efficiency and overall performance, we are implementing strategic improvements, particularly within our warehouse operations. We are actively engaged in discussions to maximise the short-term utilisation of our newly constructed warehouse, including considering potential acquisition opportunities that would have the potential to create synergies.

Investing in innovation and newness continues to be a strategic priority. Across all divisions, our focus remains on developing new products. Specifically, we are introducing new features to our ride-on toys, launching new electric and mechanical bike designs in June 2024, and we continue to develop innovative products in Home and Garden.

In summary, the Group retains a strong balance sheet and a well-managed current stock position. The refinancing of our lending facility, increased turnover target, new national retailer accounts, operational improvements, and our commitment to innovation and market expansion collectively pave the way for a positive outlook in 2024 and beyond for the Group.

Notice of results

The Group expects to publish its FY23 results on 25 March 2024.

A final results presentation will be available on the website after the results are published at www.tandemgroupplc.co.uk/investor-presentations. Investors with questions are asked to email the Company at [e-mail].

This announcement contains inside information for the purposes of the UK Market Abuse Regulation and the Directors of the Company take responsibility for this announcement.

*which form part of the eMobility category

Enquiries:

Tandem Group plc

Peter Kimberley, CEO

David Rock, Company Secretary

Telephone [phone]

Nominated Adviser

Cavendish Capital Markets Limited (Nominated Adviser and Broker)

Ben Jeynes / Dan Hodkinson - Corporate Finance

Michael Johnson / Charlie Combe - Sales and Equity Capital Markets

Telephone [phone]

Forward Looking Statements

This announcement contains forward-looking statements relating to expected or anticipated future events and anticipated results that are forward-looking in nature and, as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, competition for qualified staff, the regulatory process and actions, technical issues, new legislation, uncertainties resulting from potential delays or changes in plans, uncertainties resulting from working in a new political jurisdiction, uncertainties regarding the results of exploration, uncertainties regarding the timing and granting of prospecting rights, uncertainties regarding the Company's or any third party's ability to execute and implement future plans, and the occurrence of unexpected events. Actual results achieved may vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors.

 

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