Interim Results

Tanfield Group PLC 30 September 2005 Tanfield Group plc Interim Results Six months to June 30, 2005 Highlights 1. Turnover Growth Â£10.4 million from Â£5.1 million (6 months to June 2004) 2. Operating profit Â£332k compared to loss of (Â£5.2) million (year to December 2004) 3. Strengthened Balance Sheet Â£8.3 million net assets from Â£1 million (at Jan 1 2005) 4. Continued growth in order book 5. Launch of new products: Aerial Access; and Electric Vehicles Tanfield Group Plc ('Tanfield') is pleased to announce its unaudited interim results for the six month period to June 2005 and also takes the opportunity to comment on recent trading performance and future prospects. Following the large scale restructuring in 2004 the financial results for the six months to June 2005 demonstrate strong growth, profitability and a robust balance sheet. Turnover for the six month period grew to Â£10.4m which compares to Â£11.8m for the full year to December 2004 and Â£5.1m for the 6 months to June 2004. This follows significant organic growth in Tanfield Holdings, our engineering business, and the acquisition and subsequent growth of Smiths Electric Vehicles (SEV). Operating profit for the period of Â£332k compares favourably to the loss of Â£ (5.2)m in the year to December 2004 and the Group showed growth in its Gross margin, up from 23% in 2004 to 26% for the period. This profitable growth underlines the benefits of the strategy for the Group as announced last year, to concentrate on value added engineering work with Blue chip customers together with the expansion of the OEM product ranges of Electric Vehicles and Aerial Access equipment. The results have been enhanced by the success of the operational strategy at the Tanfield site which has significantly reduced the unit cost of manufacture and improved output volumes. The Tanfield site now operates as a single, efficient manufacturing unit covering all the Group divisions. The balance sheet has been significantly strengthened during the period with net assets at the end of June of Â£8.3m compared to Â£1m at the end of December 2004. We now have Net Current Assets of Â£2.8m compared to Net Current Liabilities of Â£1.7m at December 2004, and debt has reduced by Â£2.3m to stand at Â£2.3m at June 2005. During the period a new Â£4m Group bank facility was implemented which not only increases the working capital facilities available to the Group but will also significantly reduce the cost of borrowing. Furthermore the Group has raised mortgage funding to allow it to acquire the long leasehold on two of its key buildings on the Tanfield site for a consideration of Â£1.16m. The relocation of the SEV manufacturing operation from its existing site at Gateshead to Tanfield is now complete. Trading Update Smiths Electric Vehicles: The prior year acquisition of SEV Group has proved to be a success which the Directors believe has significantly increased the growth potential for the Group. As noted above the SEV operation is now integrated into the Tanfield site with consequent cost savings. Aerial Access The Aerial Access division has shown growth in both existing and new markets. More aggressive marketing of what was already a well respected product range has seen growth in both the United States and mainland Europe. Better distribution channels, new agents and improvements to the range have assisted this growth. Monthly output capacity of the Access Vehicles has increased from 12 vehicles to over 70 vehicles in the 11 months since SEV was acquired. Furthermore a new range of Aerial Access lifts based on a standardised build program with enhanced features and telescopic booms were launched this month. This product range has been well received by the market. We expect this will allow us to capture a larger market share in our target regions. Distribution of the product range will be increased over the next two months by appointing more agents in mainland and Eastern Europe. Electric Vehicle The most exciting development has been the significant growth in the order book for Electric Vehicles. The Group expects this division to demonstrate substantial growth in the future. We have won increased orders for vehicles in the airport, public and delivery sectors. A new electric delivery vehicle and a new range of electric tugs are to be launched in October 2005. The control technology on these vehicles will allow the Group to migrate into the 'donor vehicle' sector, whereby we use standard body shells from the commercial vehicle automotive sector and build in our electric drive and control systems, as well as continuing to promote the Group's own range of vehicles. The Directors believe that this will present a full electric delivery vehicle offering to the operators within closed urban environments. Service and Maintenance We are continuing to see further growth potential in the Service and Maintenance division based out of our nationwide chain of Depots. SEV currently has over 80 people employed in servicing and maintaining electric vehicles throughout the UK. As announced yesterday the potential for the Dairy Crest business is to more than double the size of this division. This gives existing and future buyers of electric vehicles the confidence that there is a high level of support for their fleets. Norquip: The acquisition of the Norquip business for Â£280k in May is already starting to bear fruit. This acquisition has increased our product offering, particularly in the airport sector, and allows the Group to integrate this product range with our Electric drive train. We have received orders for 4 vehicles and have a level of enquiries which if converted would generate Â£5m of sales. Tanfield Holdings: As mentioned above we have seen significant organic growth within the Tanfield Holdings engineering business. Concentration on the move away from simply manufacturing components towards assemblies and turnkey solutions has proved successful with a number of new Blue chip customers together with growth with existing customers. In addition, these orders offer a significantly higher proportion of value added work and hence higher margin. Tanfield Holdings monthly run rate has grown significantly during the first half year and we are confident of being able to grow further, particularly in the Health, Defence and Off Highway markets. Summary Following a year of large scale restructuring in 2004 and the strategic acquisitions of SEV Group and Norquip the Group is now demonstrating markedly improved profitable growth. We have a number of exciting new products in the Aerial Access and Electric Vehicle sectors which are soon to be launched and we are seeing continuing organic growth in all our chosen target markets. We are also now operating from a position of renewed financial strength. I would like to take this opportunity to thank all our people for their efforts over the past 12 months and for the continuing support of all our stakeholders. Roy Stanley Chairman Tanfield Group plc Tanfield Group PLC Consolidated Profit and Loss Account For the six months ended 30th June 2005 Unaudited Unaudited Audited 6 Months to 6 Months to Year ended 31 Note 30th June 2005 30th June 2004 December 2004 Â£ Â£ Â£ TURNOVER Existing Operations 10,273,809 5,099,812 10,686,989 Acquisitions 4 168,808 - - -------------- -------------- -------------- Continuing operations 10,442,617 5,099,812 10,686,989 Discontinued operations 1,077,750 -------------- -------------- -------------- 10,442,617 5,099,812 11,764,739 -------------- -------------- -------------- Cost of Sales -Exceptional cost of sales 5 - - (252,760) -Other cost of sales (7,738,591) (2,048,032) (8,766,955) -------------- -------------- -------------- Total cost of sales (7,738,591) (2,048,032) (9,019,715) -------------- -------------- -------------- -------------- -------------- -------------- Gross Profit 2,704,026 3,051,780 2,745,024 -------------- -------------- -------------- Administrative Expenses -Exceptional administrative expenses 5 - (1,642,560) (1,859,000) -Other administrative expenses (2,372,314) (3,624,232) (6,061,473) -------------- -------------- -------------- Total administrative expenses (2,372,314) (5,266,792) (7,920,473) -------------- -------------- -------------- OPERATING PROFIT/ (LOSS) Existing Operations 332,807 (2,215,012) (4,815,487) Acquisitions 4 (1,096) - - -------------- -------------- -------------- Continuing operations 331,712 (2,215,012) (4,815,487) Discontinued operations - - (359,962) -------------- -------------- -------------- OPERATING PROFIT/(LOSS) 331,712 (2,215,012) (5,175,449) Interest Receivable and similar income 97,938 15,216 18,916 Interest Payable and similar charges (377,959) (355,156) (848,117) -------------- -------------- -------------- PROFIT/(LOSS) ON ORDINARY ACTIVITES BEFORE TAXATION 51,691 (2,554,952) (6,004,650) Tax on loss on ordinary activities 2 - - 38,446 -------------- -------------- -------------- RETAINED PROFIT/(LOSS) FOR FINANCIAL YEAR/PERIOD 51,691 (2,554,952) (5,966,204) ============== ============== ============== Basic Profit/(loss) per ordinary share 6 0.04p (4.14)p (4.49)p ============== ============== ============== Diluted Earnings per share 6 0.04p - - ============== ============== ============== Tanfield Group PLC Consolidated Balance Sheet As at 30th June 2005 Note Unaudited Unaudited Audited 30 June 2005 30 June 2004 31 December 2004 FIXED ASSETS Â£ Â£ Â£ Intangible Assets 5,591,208 4,425,751 5,236,731 Tangible Assets 3,752,421 1,415,801 2,332,537 -------------- -------------- -------------- 9,343,629 5,841,552 7,569,268 -------------- -------------- -------------- CURRENT ASSETS Stocks 3,921,418 769,277 2,417,395 Debtors 5,330,034 1,946,436 4,042,035 Cash at bank and in hand 1,015,972 3,188,503 8,745,702 -------------- -------------- -------------- 10,267,424 5,904,216 15,205,132 CREDITORS: amounts falling due within one year (7,511,036) (10,665,383) (16,878,345) -------------- -------------- -------------- NET CURRENT ASSETS/(LIABILITIES) 2,756,388 (4,761,167) (1,673,213) -------------- -------------- -------------- TOTAL ASSETS LESS CURRENT LIABILITIES 12,100,017 1,080,385 5,896,055 CREDITORS: amounts falling due after more than one year Convertible Debt (75,000) (1,831,880) (1,831,880) Other Creditors (2,690,193) (1,270,901) (1,547,641) PROVISIONS FOR LIABILITIES AND CHARGES 7 (1,012,452) (351,019) (1,487,532) -------------- -------------- -------------- 8,322,372 (2,373,415) 1,029,002 ============== ============== ============== CAPITAL AND RESERVES Called Up Share Capital 1,818,616 617,347 1,327,847 Shares to be issued 162,304 298,706 298,706 Other reserve - 111,150 111,150 Share Premium Account 25,301,685 12,528,605 18,631,774 Merger Reserve 1,614,740 1,533,740 1,533,740 Profit and Loss Account (20,574,973) (17,462,963) (20,874,215) -------------- -------------- -------------- TOTAL EQUITY SHAREHOLDERS' FUNDS/(DEFICIT) 8,322,372 (2,373,415) 1,029,002 ============== ============== ============== Tanfield Group PLC Consolidated Cash Flow Statement For the six months ended 30th June 2005 Unaudited Unaudited Audited 6 Months to 6 Months to Year ended 31 Note 30th June 2005 30th June 2004 December 2004 Â£ Â£ Â£ Net cash outflow from operating activities 8 (2,354,329) (757,133) (2,614,290) Returns on investments and servicing of finance (460,021) (339,939) (601,201) Taxation 0 0 0 Acquisitions and disposals (328,818) 0 (2,541,354) Capital expenditure & financial investment (1,681,350) 184,751 8,910 -------------- -------------- -------------- Cash Outflow before financing (4,824,518) (912,321) (5,747,935) Financing 5,765,509 (483,090) 5,956,030 -------------- -------------- -------------- Increase/(Decrease) in cash in the period 940,991 (1,395,411) 208,095 ============== ============== ============== NOTES 1. Basis of preparation The financial statements for the six months ended 30 June 2005 have been neither audited nor reviewed, nor have the financial statements for the six months ended 30 June 2004. 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 2004. The figures for the year ended 31 December 2004 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 31st December 2005. 3. Acquisitions During the period the Group acquired the entire issued share capital of Clickhere Limited for a total initial consideration of Â£120,000. This comprised 900,000 ordinary shares with a nominal value of 1p each together with cash of Â£30,000. The provisionally assessed fair value of the net liabilities of the acquired company was Â£95,434 (including net overdraft of Â£18,018) and goodwill of Â£215,434 arose after the application of merger relief. Also during the period the Group entered an agreement whereby it acquired the trade and certain assets of both Norquip Limited and Saxon Specialist Vehicles Limited from their parent Ennstone plc in exchange for cash consideration of Â£280,000. The directors have not yet completed their investigation into the fair value of all assets acquired although their provisional assessment is that intellectual property acquired has a fair value of Â£280,000, sundry stock items acquired have a fair value of Â£nil, and that no goodwill arose on acquisition. This assessment will be completed and updated as necessary within the annual accounts as allowed by FRS 7. 4. Segmental Information SEGMENT INFORMATION Classes of business Â£'000 Engineering Vehicle Hire Software Training Graphical Imaging Group 6 mths 12 mths 6 mths 12 mths 6 mths 12 mths 6 mths 12 mths 6 mths 12 mths Jun-05 Dec-04 Jun-05 Dec-04 Jun-05 Dec-04 Jun-05 Dec-04 Jun-05 Dec-04 Turnover Total Sales 10,553 11,483 927 406 171 34 12 134 11,662 12,057 Inter-segment sales (1,220) (292) - - - - - - (1,220) (292) Sales to Third Parties 9,333 11,191 927 406 171 34 12 134 10,443 11,765 Finance charges (net) (280) (829) Segment Profit/ (Loss) before tax 368 (5,333) 118 143 (82) (54) (49) (760) 355 Common Costs (303) ------- Group Profit/ (Loss before tax) 52 (6,004) ----------------- Net assets/ (liabilities) 11,051 3,457 801 683 (728) (591) (2,802) (2,520) 8,322 1,029 Common costs include goodwill and legal & professional charges which the directors do not believe can be allocated fairly across the segments. The analyses presented above include the following amounts in respect of operations acquired during the 6 months to June 2005. The figures are all included within Software Training Sales to third parties Â£168,808 Loss before tax Â£1,096 Net Liabilities Â£96,230 The geographical analysis of turnover by destination is: 6 Months to 30th Year ended 31st June 2005 December 2004 Â£ Â£ United Kingdom 8,593,229 11,231,717 USA 1,374,812 271,757 Other European Countries 474,576 261,265 ---------------- --------------- 10,442,617 11,764,739 ================ =============== 5. Exceptional Items 6 Months to 30th 6 Months to 30th Year ended 31st June 2005 June 2004 December 2004 Â£ Â£ Â£ Exceptional cost of sales Stock Provision - - 252,760 ================ ================ =============== Exceptional administrative costs Impairment of fixed assets - 1,642,560 1,859,000 ================ ================ =============== 6. Profit/(Loss) per ordinary share Basic Profit/(Loss) per share has been calculated using weighted average number of shares in issue during the relevant financial periods. Unaudited Unaudited Audited 6 months ended 6 months ended 12 months ended 30 June 2005 30 June 2004 31 December 2004 Weighted average number of shares (no.) 146,563,869 61,734,716 72,209,946 Profit/(Loss) on ordinary activities after taxation (Â£) 51,691 (2,554,952) (5,966,204) The calculation of diluted earnings per share for the period ending 30 June 2005 is based upon a weighted average number of shares in issue of 147,261,709 after adjusting for 697,840 potentially dilutive ordinary shares arising from share options. No diluted loss per share was calculated for the periods ending 30 June 2004 or 31 December 2004 as the effect of outstanding share options and convertible debt was anti-dilutive. 7. Movement on provisions PROVISIONS FOR LIABILITIES AND CHARGES Group Warranty Legal Onerous Provision Reserve Lease Total Â£ Â£ Â£ Â£ As at 1st January 2005 155,160 584,126 748,246 1,487,532 Utilised in period (20,521) (20,521) (Released)/charged to profit and loss account 28,876 (483,435) (454,559) 0 ---------- ---------- ---------- ---------- As at 30th June 2005 155,160 592,481 264,811 1,012,452 ---------- ---------- ---------- ---------- 8. Net cash outflow from operating activities Unaudited Unaudited Audited 6 months ended 6 months ended 12 months ended 30 June 2005 30 June 2004 31 December 2004 Operating profit/(loss) loss 331,712 (2,215,012) (5,175,449) Depreciation on tangible fixed assets 373,662 237,936 570,013 Impairment of tangible fixed assets - 1,160,370 1,337,000 Amortisation of intangible fixed assets 140,957 154,791 235,548 Impairment of intangible fixed assets - - - (Profit)/Loss on disposal of tangible fixed assets (104,586) - - (Decrease)/ Increase in provisions (475,080) (192,750) 283,602 (Increase)/Decrease in stocks (1,504,023) 9,723 319,149 (Increase)/Decrease in debtors (1,251,025) (743,831) (997,592) Increase/(Decrease) in creditors 134,054 831,640 813,437 -------------- -------------- -------------- Net cash outflow from operating activities (2,354,329) (757,133) (2,614,290) ============== ============== ============== For further information call; Tanfield Group PLC Roy Stanley - Chief Executive - 01207 521111 Daniel Stewart & Company PLC Ruari McGirr - 020 7776 6550 This information is provided by RNS The company news service from the London Stock Exchange

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