Tanfield Regulatory News (TAN)

The Tanfield Group Plc

("Tanfield", "Group", or "the Company")

Final Results for the year ending 31 December 2012

Tanfield Group Plc, a leading manufacturer of aerial work platforms, announces its final results for the year ending 31 December 2012. The audited financial statements are being posted to shareholders and are available on the Company website at www.tanfieldgroup.com.

Summary

·; Recovery in key markets for aerial lifts continues

·; Demand outstripping capability to supply

·; Gross margins increased to 41% (2011: 37%)

·; Supply chain challenges and working capital constraining speed of recovery

·; Discussions on sale of Snorkel division on-going

Jon Pither, Chairman of Tanfield, said:

" As we predicted, global demand for aerial work platforms continued to grow significantly throughout 2012, pricing has improved and margins increased. Customers remain engaged in fleet replacement programmes after ageing their fleets during the economic downturn. However, the extended cash-to-cash cycle of key markets in the Asia-Pacific region, combined with supply chain constraints put additional strain on our working capital, so we reined in production during the final quarter in order to rebalance inventory and maintain cash . "

For further information:

The Tanfield Group Plc 0845 155 7755

Darren Kell / Charles Brooks

WH Ireland 020 7220 1666

James Joyce / Nick Field, Nominated Adviser

Seb Wykeham / Ruari McGirr, Broking

Buchanan 020 7466 5000

Charles Ryland / Helen Greenwood

www.buchanan.uk.com 

FINANCIAL AND BUSINESS REVIEW

Financial highlights

CHAIRMAN'S STATEMENT

As we predicted, global demand for aerial work platforms continued to grow significantly throughout 2012. We were able to capitalise on this returning market after successfully raising £11m, net of costs, in March 2012, via a share placing. In the ensuing six months we achieved monthly incremental gains in output and sales, leading to our first break-even month since 2008.

However, the extended cash-to-cash cycle of key markets in the Asia-Pacific region, combined with supply chain constraints put additional strain on our working capital, so we reined in production during the final quarter in order to rebalance inventory and maintain cash.

Global demand for our Snorkel range of aerial lifts remains strong, pricing has improved and margins increased. Customers remain engaged in fleet replacement programmes after ageing their fleets during the economic downturn. We continue to increase our distribution channels in key markets, including both Latin America and North America. Scandinavia and Japan remained particularly buoyant markets.

I would like to thank all of our employees for their efforts this year, particularly in achieving our first break-even month in October. I look forward to working with you all in 2013.

CHIEF EXECUTIVE'S REVIEW

Summary

The fleet replacement initiatives we first saw in 2011 continued into 2012, as equipment rental and plant hire companies revitalised ageing fleets of aerial work platforms. We significantly strengthened our supply chain during 2012 and achieved our first month of profitability since 2008.

However cash constraints in the final quarter meant that we lost some momentum and losses for the year reached £14.5m.

Powered Access & Engineering: Turnover of £45.1m (2011: £48.3m)

Demand grew for powered access products in 2012, outstripping our capability to supply. We continued to plan for the future with the development of two exciting new products that we introduced in April 2013. Tanfield sells the Snorkel brand of aerial work platforms through a global network of independent distributors. In 2012 we appointed new distributors in Germany, France, Brazil, Colombia; as well as more re-sellers in North America.

Zero Emission Vehicles

Smith Electric Vehicles US Corp ("SEVUS"), in which Tanfield retains a 24 per cent holding, successfully raised $40m in February 2012 to continue its development. However, the company withdrew its planned Initial Public Offering on Nasdaq in September 2012. SEVUS continues to progress, winning new customers in North America, Europe and Asia. We remain supportive of the SEVUS management strategy, which we believe will ultimately deliver a significant return on our investment.

Outlook

We expect global demand for aerial work platforms will continue to grow during 2013 and beyond, although there remains some level of economic uncertainty in the key markets of North America and the Eurozone.

In order to fully exploit the significant opportunities available in 2013 - and to return to sustainable profitability - Tanfield requires additional working capital, beyond the £2.1m placing in April 2013.

Tanfield is not proposing to pay a dividend for the period.

As outlined in our announcements of 20 February 2013 and 15 April 2013, The Board has received a substantial number of approaches from credible parties interested in purchasing our Powered Access division and the Snorkel brand.

Due to the strength of this interest, in April 2013 the Board of Directors appointed an M&A advisory firm to further explore and manage this process to optimise value for shareholders. Further announcements will be made in due course.

FINANCE DIRECTOR'S REPORT

The Revenue for the year of £45.1m (2011 £48.3m) reflected the difficulty in responding to the improved market conditions owing to the constraints imposed by supply chain capacity and working capital constraints in 2012.

As in 2011, the cost base has been held as low as possible without damaging the overall group infrastructure, and, in spite of the lower turnover in the year, the business reported a similar Loss before Tax investment and associate of £15.3m (2011 £15.1m). Expenses in all categories were very similar to 2011 and improved performance is dependent upon increased volumes.

Reassessment of the company's holding in Smith Electric Corp.

During the year, Tanfield's holding in Smith Electric Corp was diluted by successive fundraisings. In addition, Tanfield's influence at board level has reduced, following the appointment of further non-executive directors. As a result, Tanfield's holding can no longer be considered that of an associate. It is therefore now treated as an investment. As such, it is now being held at the lower of cost and realisable value. Whilst the realisable value of a private company is difficult to estimate, all valuation discussions in relation to recent fundraisings by Smith Electric use valuation ranges well in excess of £1.3m which is the recorded cost of the investment. The investment is valued at cost, £1.3m.

Loss from continuing operations after impairments

The Loss from Operations in the period was £15.3m (2011 £15.2m). This was a trading loss reflecting low sales volumes given the constraints to revenue.

Finance income

The interest cost in the period of £127k (2011: £286k) was lower owing to higher cash balances in the period and interest income £146k (on deferred consideration of £220k (2011: £470k)) was lower as 2011 benefited from interest on deferred consideration relating to the Smith sale.

Taxation

In spite of the consolidated losses, a tax charge of £79k arose in a specific fiscal jurisdiction (Japan) in the period (2011 £186k). There is no brought forward deferred tax asset, and none was recognised in the period resulting in no adjustment to deferred tax, consistent with 2011.

Loss from continuing operations

Given the above, Loss from continued operations was £14.5m, (2011 £16.5), the most significant differences between 2012 and 2011 being the reassessment of the holding in Smith Electric Vehicles.

Total comprehensive income for the year

The total comprehensive income for the year was a loss of £15.5m, (2011 £15.7m), after a £1.0m charge (2011 £0.7m income) relating to currency translation differences.

Earnings per share

Loss per share from continuing operations was 12.0 pence (2011: Loss 17.5 pence). No dividend has been declared. (2011: nil)

Cash

At 31 December 2012, the Group had cash of £2.2m (2011: £3.5m). Although the business reported a loss of 14.5m in the period, the cash used was £1.3m. The difference was funded by issuing ordinary shares, (£13.4m net, of which £2m was loaned to Smith) and £1.9m from working capital.

1. Basis of preparation

The results announcement has been prepared under the historical cost convention on a going concern basis and in accordance with the recognition and measurement principles of International Financial Reporting Standards and IFRIC interpretations as adopted by the EU ("IFRS").

The announcement has been prepared on the basis of the same accounting policies as published in the audited financial statements of the Group for the year ended 31 December 2012.

The information in this  statement has been extracted from the accounts for the year ended 31 December 2012 and as such, does not contain all the information required to be disclosed in accordance with the International financing reports standards ("IFRS").

2. Audited Financial Statements

The financial information set out above does not constitute the Group's statutory accounts for the years ended 31 December 2012 or 2011 within the meaning of s435 of the Companies Act 2006 but is derived from those accounts. Statutory accounts for 2011 have been delivered to the registrar of companies, and those for 2012 will be delivered in due course. The auditors have reported on those accounts; their report was (i) unqualified, and (ii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006 in respect of the accounts for 2012 or 2011. Without qualifying their report for the year ended 31 December 2012, the auditors drew attention by way of emphasis to going concern. The results for the year ended 31 December 2012 were approved and authorised for issue by the Board of Directors on 27 June 2013 and are audited.

The information contained in this announcement has been approved and authorised for issue by the Board of Directors.