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LONDON (Alliance News) - Tandem Group PLC Friday reported significantly lower annual pretax profit due to restructuring costs and a change in the fair value of its foreign currency derivatives contracts, but Chairman Mervyn Keene said the bicycle maker's second-half recovery carried into the new financial year.
Pretax profit shrank to just GBP16,000 in 2013, compared with GBP768,000 in 2012. Revenue declined by GBP605,000 to GBP28.3 million, coupled with operating expenses falling by GBP303,000 to GBP7.3 million.
But Tandem booked GBP142,000 restructuring costs after consolidating its warehouse operation and streamlining its management team, as well as a GBP516,000 charge in relation to a fair value adjustment for foreign currency derivative contracts. Keene said the "significant" fair value adjustment will unwind as foreign currency contracts mature, which should enhance 2014 profitability, though he noted Tandem's caution with regard to fluctuations in the dollar.
Pretax profit excluding non-underlying items, which include restructuring costs and fair value adjustment foreign currency derivative contracts, was GBP823,000, compared with 768,000, according to Tandem.
"Although the first-half of the year was disappointing, with revenues nearly 22% behind the prior period due to a prolonged period of poor weather, in the second half the group recovered strongly with revenue more than 17% ahead of the prior year second half," Keene said in a statement. "I am happy to report that the strong second half performance has been carried forward into 2014."
The chairman added that Tandem expects its restructuring to improve operational efficiency, reduce overhead and further develop the business.
And Keene said the new financial year began positively, with new products being well-received at various trade and road shows in January. He said the weather has been milder than that which hurt sales in the first six months of 2013, with group revenue for the first-quarter "well ahead" of the corresponding period in the prior year.
Tandem increased its full-year dividend to 3.45 pence from 3.30 pence.
Tandem shares were Friday quoted at 87.00 pence, up 12%, putting it in AIM's top five gainers.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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