Snorkel Investment Update

RNS Number : 7354S

Tanfield Group PLC

18 November 2021

 

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.

· The Snorkel investment is valued at £19.1m.  The outcome of the US and UK 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 against Ward Hadaway (the "UK Proceedings"), the solicitor acting for the Company at the time of the Contemplated Transaction, in order to fully protect the Company's rights pending the outcome of the US Proceedings.  

Highlights

· Snorkel continues to recover from the impact of the global COVID-19 pandemic and has seen sales for the third quarter of 2021 increase by around 61% to US$42.2m compared to the third quarter of 2020 when sales were only US$26.3m.

· Despite sales increasing by around 61%, the EBITDA loss for the third quarter of 2021 increased to around US$2.8m compared to the third quarter of 2020 when the EBITDA loss was only US$2.0m. 

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 .  

Snorkel continues to recover from the impact of the global COVID-19 pandemic, which has impacted its ability to operate as normal, and has seen sales for the third quarter of 2021 increase by around 61% to US$42.2m compared to the third quarter of 2020 when sales were only US$26.3m. 

Despite sales increasing by around 61%, the EBITDA loss for the third quarter of 2021 increased to around US$2.8m compared to the third quarter of 2020 when the EBITDA loss was only US$2.0m.  The Board note that the gross profit margin has reduced to around 4.9% for the third quarter of 2021, compared to 10.4% for the third quarter of 2020.  The Board are unaware of the reason for the reduction.  The Board remain of the opinion that gross profit margins generally do not appear to be in line with the industry averages and work to investigate this is continuing.

Below is a summary of the consolidated operating statement for the third quarter of 2021 and 2020, as well as the year to date figures for 2021 and 2020:

US$000's	Q3 2021	YTD 2021		Q3 2020	YTD 2020
Net sales	42,203	113,920		26,275	86,517
Cost of goods sold	40,120	106,246		23,535	80,133
Gross profit	2,083	7,674		2,740	6,384
	4.9%	6.7%		10.4%	7.4%
Selling, general & administrative costs	4,865	12,722		4,493	14,728
Foreign currency exchange (gain)/loss	36	248		215	(164)
EBITDA profit/(loss)	(2,818)	(5,296)		(1,968)	(8,180)
Depreciation & non-operating costs	671	1,829		555	1,662
Net profit/(loss)	(3,489)	(7,125)		(2,523)	(9,842)

The Board views the continued recovery from the impact of COVID-19 during the first nine months of 2021 as a positive development and is not aware of any reason why this improving trend should not continue. The Board therefore anticipates improved results for the full year of 2021, compared to 2020.  

The US Proceedings and UK Proceedings are continuing, and the Board still believe that a positive outcome to either/both proceedings is possible.  So far as it is necessary, the Company will continue to vigorously defend and advance its position in both proceedings, 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

 

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