Tanfield Regulatory News (TAN)

22 Apr 2008 07:01

Tanfield Group PLC22 April 2008 THE TANFIELD GROUP PLC ("TANFIELD", THE "GROUP" OR THE "COMPANY") PRELIMINARY RESULTS FOR THE YEAR TO 31 DECEMBER 2007 The Tanfield Group Plc, the leading manufacturer of zero emission electricvehicles and aerial work platforms, is pleased to announce its PreliminaryResults for the financial year ending 31 December 2007. Highlights: Financial • Strong financial performance across the Group: o Turnover increased 201% to £123m (2006: £40.9m) o Profit after tax from continuing operations increased 310% to £11.9m (2006: £2.9m) o Basic Earnings per Share increased 194% to 3.59p (2006: 1.22p) o Net cash at year end £28m, (June 07 £4.9m) o Net assets of £165m (2006: £43.4m) Operational • Agreement with Ford on development of commercial electric vehicles • Agreement to develop and manufacture electric taxi cab • Launch new light van utilising Tanfield derived IP • Confirmed vehicle order book for remainder of 2008 of 523 units • Expansion of vehicle production facilities on track • Powered Access order book for 2008 of £101m • OEM agreement signed with Manitou • Record US customer backlog of $111m • Snorkel acquisition fully integrated • Expansion of Powered Access facilities on track Commenting, Darren Kell, Chief Executive of The Tanfield Group Plc, said: "Wehave delivered an excellent set of results, in line with our strategy forprofitable growth. "We have strengthened our position as the worldwide leader in commercialelectric vehicles and continue to develop our powered access division into oneof the leading global players in this sector. "We are already delivering on our strategy for 2008 and retain an extremelyrobust outlook for future performance." For further information:The Tanfield Group Plc Tel: +44(0)20 7839 4321 on 22 April onlyDarren Kell, Chief Executive Tel: +44(0)845 1557 755 thereafterCharles Brooks, Finance Director www.tanfieldgroup.com Fishburn Hedges Tel: +44(0)20 7839 4321 Morgan Bone Mob: +44(0) 7767 622 967 Michelle James Mob: +44(0) 7958 451 446 tanfield@fishburn-hedges.co.uk Cenkos Securities plc Tel: +44(0)20 7397 8900 Stephen Keys St. Helen's Capital plc Tel: +44(0)20 7628 5582 Seb Wykeham Ruari McGirr Notes to editors The Tanfield Group Plc is the world's leading developer and manufacturer ofroad-going commercial electric vehicles and aerial work platforms. Tanfield isheadquartered in Washington, Tyne & Wear, with operations in Europe,Scandinavia, North America, the Middle East, Asia-Pacific and Africa. It has twomain divisions: Smith Electric Vehicles, was founded in 1920 and acquired by Tanfield in October2004. Following its acquisition, Smith is developing into a world leader in newtechnology electric vans and trucks with greatly enhanced performance, speed andrange capabilities. This makes them attractive for all fleet operators in largetowns, cities and closed industrial environments. For the first time, thesefleet operators have economically viable, zero emission alternatives to usingdiesel vans and trucks. Smith has an unrivalled UK-wide service and supportnetwork, which already maintains over 5,000 vehicles for major fleet operators.Smith's airport offering is complemented by two specialist airport vehiclesub-divisions; Jumbotugs and Norquip. www.smithelectricvehicles.com Powered Access, contains two of the world's most established aerial workplatform brands, UpRight Powered Access and Snorkel International. UpRight isthe UK's biggest manufacturer of self-propelled aerial work platforms (alsoknown as "cherry-pickers", "mobile elevating work platforms", "aerial lifts",etc). UpRight has assembly facilities in the UK and USA, with products soldthrough a strong network of over 200 independent, full-service distributorsacross Europe, Scandinavia, the Middle East and Asia-Pacific regions. Snorkel,acquired in August 2007, has significant manufacturing capabilities along withstrong sales and distribution, in North America and Australasia. Tanfield hassuccessfully extended its powered access product range and is now one of onlythree "full line" aerial lift manufacturers to have a significant globalfootprint in both the North America and EMEA regions, in what is a $7bn market. www.upright.com / www.snorkelusa.com CHAIRMAN'S STATEMENT I am delighted once again to report a record set of results, achieved in anothertransformational year for the Group. The Board remains committed to creating value for our shareholders through thegrowth of our core divisions. We have again delivered a superb financialperformance, demonstrating Tanfield's successful execution of its strategy forhigh growth, while maintaining profitability. This illustrates that the Company as a whole has taken another significant steptowards becoming an established world leader in its chosen markets. Financial Performance 2007 was a year of significant growth, as the Group maintained focus on its twomain divisions, Powered Access and Zero Emission Vehicles. This resulted in a194% increase in basic earnings per share from 1.22p to 3.59p. Turnoverincreased 201% to £123m, compared to £40.9m in 2006 and profit after tax fromcontinuing operations rose 310% to £11.9m, from £2.9m in 2006. Sales in the Zero Emission Vehicles division grew 37%, from £19m in 2006 to £26min 2007. The Powered Access Division grew sales from £11m in 2006 to £90m in2007, an increase of 718%. Delivering Our Strategy The growth achieved in 2007 was primarily organic, building on the acquisitionof UpRight in 2006 and the further development of our new range of higherfunction commercial electric vehicles. The most impressive growth occurred in the Powered Access division, as 2007 wasthe first full year to benefit from our reinvigoration of the UpRight brand(acquired in June 2006). We grew its independent distributor network during 2007from 45 to over 180 companies and this drove a significant increase in sales. To meet this higher demand from our customer base, we also increased outputtenfold at Vigo Centre, our UK headquarters, from 20 units per week at the closeof 2006 to 200 per week at the end of 2007. The acquisition of Snorkel International Inc on 1 August 2007 is delivering theintended benefits. It accelerated the Group's growth in aerial work platforms,through immediate access to new geographical markets complementary to thosealready served by Tanfield. It also instantly added a range of larger, provenproducts that would have taken us many years to develop. As a result, the Groupis now one of four "full line" manufacturers in the powered access market andone of only three with a truly global footprint. The Zero Emission Vehicles Division also enjoyed unprecedented growth, as twonext-generation electric vehicles went into full production and achieved strongsales. Edison is the world's first higher function electric van with a Gross VehicleWeight (GVW) of under 3,500kg. This is critical to domestic sales, as anyonewith a standard UK driving licence can operate vehicles under this GVW. Vehiclesof a higher weight require drivers to have a commercial vehicle licence - andqualified drivers command higher wages. Newton is the world's first higher function electric truck and remains theworld's largest commercial electric vehicle, offered in GVWs from 7,500kg to12,000kg. It uses a truck chassis cab from Avia in the Czech Republic. We launched the Smith Newton in December 2006 and this generated significantsales throughout 2007, as we added further variants up to a Gross Vehicle Weight(GVW) of 12,000kg, based on the same chassis cab configuration. Newton was followed by the Smith Edison, utilising the Ford Transit shell. Welaunched Edison in April 2007 at the Commercial Vehicle Show, one of the largestannual events for vans and trucks in Europe. The addressable market for vans isconsiderably larger than that of truck-sized goods vehicles and Edison isalready outselling Newton 2:1. Sales of these vehicles in 2007 confirmed Tanfield's position as the world'slargest manufacturer of road-going, commercial electric vehicles and maintainedour market leading position. We successfully capitalised on market drivers that increasingly influenceoperators of urban vans and trucks. The most obvious benefit is reducing theenvironmental impact of a customer's commercial vehicle fleet, by providing 100%reduction in greenhouse gas (GHG) emissions and air pollutants, at the point ofuse. This can manifest as an economic benefit, as worldwide, zero emissionvehicles are almost always exempt from road pricing such as congestion chargesor highway tolls. For third party logistics providers, adopting zero emissionvehicles can also provide a competitive edge, as a growing number ofenvironmentally-conscious blue chip companies are demanding that their supplychain also reduces its carbon footprint. With only a relatively small number of moving parts in the electric drive trainand greatly reduced "fuel" costs, operating overheads for our EVs aresignificantly lower than those of the equivalent diesel vehicles. Finally, thedriver experience is much more pleasant, as urban drivers do not have to endurethe countless gear changes or cab vibration, noise and smell associated withdiesel vehicles. During 2007, the growth achieved by this division was chiefly as a result ofincreases in vehicle sales, underpinned by our EV service and maintenanceoperations. Our People In July 2007, Tanfield embarked on a comprehensive training programme that willsee all production workers at Vigo Centre achieve an NVQ qualification in BIT(Business Improvement Techniques). This programme has had a tangible impact on the shop floor. By the end of 2007,we had achieved a significant increase in productivity on the main PoweredAccess assembly lines. Board Changes We regularly review the composition of the Board to ensure it continues toprovide the right leadership for the Group's further development. On 23 May 2007 Colin Billiet joined the Board as Non-Executive Director. Hisexperience as former Chief Executive of high growth, multinational, filtrationproduct manufacturer Domnick Hunter will be extremely valuable as Tanfieldcontinues to grow globally. In January 2008, I became non-executive Chairman. Summary The Group has experienced another exciting year of exceptional growth andimproved profitability. We have increased our global presence in sizeable markets, which continue topresent significant opportunities for growth. We remain a market leader incommercial electric vehicles and the Group's strategy continues to focus ongrowing its two core divisions, both organically and - where opportunities arise- through acquisition. I would like to thank all our people for their efforts and for the continuedsupport of all our stakeholders. Roy Stanley, Chairman Chief Executive's Review of 2007 & Trading Update for Q1 2008 Zero Emission Vehicles Division Ford Partnership Tanfield has reached a broad agreement with Ford to collaborate on future zeroemission vehicle projects and is investigating further opportunities in sales,marketing and product development both in Europe and North America. The agreement includes dual-badging certain vehicles as Ford and Smith productsand marketing support. Ford will continue to supply considerable engineeringresource for the design and development of future commercial electric vehicles.This resource is focused on the chassis and does not involve Tanfield sharingits knowledge, expertise or intellectual property concerning the electric drivetrain. We continue to strengthen and grow our relationship with Ford, which we believeprovides Tanfield with a considerable competitive advantage over our peers. Joint Venture to Produce Pure Electric Taxi Cab Tanfield has signed an agreement with LTI Vehicles Ltd (LTI), a subsidiary ofManganese Bronze Holdings Plc (MNGS), to produce a battery powered, zeroemission urban taxi cab. Under the agreement, LTI and Tanfield will produce an all-electric version ofLTI's TX4 black cab, branded the TX4E. Preliminary specifications for thevehicle are a top speed of 50mph and a range in excess of 100 miles on onebattery charge. The TX4E will contain all the conventional features of the TX4, but will bepowered by Tanfield's advanced electric drive train and Iron Phosphatelithium-ion battery pack. It will be manufactured in the UK for the domesticurban taxi market and sold through LTI's distribution network. Based on current electricity prices, the vehicle will cost less than 4p per mileto run, therefore providing significant whole life cost savings over anequivalent diesel vehicle. We believe that this partnership will create a unique and highly marketable zeroemissions vehicle and see the TX4E as an exciting growth opportunity that givesus first mover status in what is potentially a very large global marketplace. Sales and Order Book Tanfield built and shipped 260 vehicles in 2007, in line with internal targets.The Company delivered 200 out of the 260 units in the second half of the year,as we successfully ramped up production. We closed 2007 with an order book of 387 units and at the end of March 2008, theconfirmed order book for the remainder of 2008 stood at 523 units. This is acombination of initial orders, plus a myriad of fleet orders from clients movingfrom the low volume trial stage to smaller fleet purchases. We expect thisprocess will lead to further significant volume fleet orders in 2008. In the first three months of 2008, we built and shipped 146 vehicles to over 50new customers in the private sector, along with a considerable number of publicsector organisations. Other Developments We improved on our marked increase in production capacity as 2007 progressed andended the year with the proven output capability of up to 28 vehicles per week.Currently we have the production capabilities to produce 30 vehicles per week,compared to 10 per week at the start of 2007. To facilitate further growth, wehave identified a dedicated production facility for the Zero Emission VehiclesDivision. This 150,000sq ft (14,000sq m) factory, also in the North East ofEngland, will provide maximum capacity for 3,000 vehicles per annum - or 58vehicles per week, ensuring the electric vehicle business has the space to growover the medium term. Plans are at an advanced stage to transfer the entire Zero Emissions VehiclesDivision, including the Sales, Product Support, Technical, and Production teams.We anticipate that the first vehicles will begin to roll off the new lines ofthis facility early in the second half of 2008. The strategy we outlined at the beginning of 2007 was to sell seed vehicles tomajor fleet operators in our core market of UK urban delivery, whileestablishing the methodology for volume production. Against these targets, SmithElectric Vehicles delivered an excellent performance throughout 2007. Ourvehicles continue to demonstrate cost savings and environmental benefits tomajor fleet operators. We significantly increased our addressable market with the launch of several newproducts, on 15 April 2008, at the Commercial Vehicle Show (CV Show) inBirmingham, UK. Ampere is based on the Ford Transit Connect chassis cab and has a GVW of2,340kg, with payload capacity of up to 800kg. This smaller, lighter vehiclesector is the largest volume market within commercial vehicles. We will beginfull production of Ampere in the second half of 2008. Ampere is dual badged as both a Ford and a Smith Electric Vehicles product andFord launched Ampere on its stand at the CV Show concurrently with Smith. Fordprovided significant engineering support with regard to the Connect chassisthroughout the vehicle design and development process. Ampere is powered by adrive train developed in-house and Tanfield retains all the intellectualproperty on this drive line. Ford has already announced that the Ford Transit Connect will be sold in NorthAmerica and has unveiled a taxi cab variant intended for the USA. We will launchour Ampere vehicle in North America concurrently with Ford's launch of theConnect, next year. The CV Show also marked the launch of our new Edison series, powered by an IronPhosphate lithium-ion battery pack. This advanced technology allows us for thefirst time to produce van-sized vehicles with the same carrying space as theequivalent diesel vehicles. The previous battery technology could not bepackaged as intricately and ate slightly into Edison's load area. Joining the panel van and chassis cab variants of Edison is a new, pure electricminibus. The minibus is in the final stages of pre-production and customerdeliveries will commence later this year. All Edison models are based on theFord Transit chassis and, going forward, will also be dual badged as Ford andSmith products. A small but significant number of fleet operators in the UK require heavy vanswith a GVW in excess of 3,500kg, for extra payload capabilities. To accommodatethis sector of the market, Tanfield has specifically developed a larger versionof Edison, utilising the new 4,600kg larger Ford Transit chassis cab. In North America, Ford has agreed to supply Tanfield with a range of itsF-Series commercial vehicles as the chassis cabs for our US-specific commercialvehicles. This will include the F350, F450, F550 and F650 vans and trucks,providing us with vehicles that will be recognisable to and readily accepted byAmerican customers. The requisite design engineering work to bring these vehicles to market isunderway and we displayed a pre-production, all-electric F650 truck at the CVShow. We are working through the necessary legislative requirements for vehicletype approval in North America, with support from Ford, and expect to commenceUS manufacture in the second half of 2008. Following the development of our relationship with Ford in the USA, we havere-examined our options for the manufacture of vehicles in North America. As aresult, the Board has identified several potential sites in North America forthe production of commercial electric vehicles and we will provide furtherdetail in due course. Edison and Newton are both attracting buyers outside of their core market ofurban delivery vehicles. We have now delivered product to diverse sectorsincluding vehicle rental, tool hire, utilities, airports, telecommunications,construction and highways. In short, our electric vehicles are demonstratingcost savings, improved driver satisfaction and environmental benefits forcustomers in a widening range of applications for commercial vehicles within aclosed urban environment. We have achieved our first sales into mainland Europe, to customers nowincluding TNT in the Netherlands and Carlsberg in Switzerland. Europe representsa significant opportunity for Tanfield's electric vehicles and the Group isembarking on a strategy of appointing distributors for Smith Electric Vehiclesin key European territories. Powered Access Division The order book at the end of December 2007 stood at £83m, compared to £35m atthe close of 2006. We increased production tenfold in this period and havesignificantly reduced lead times on all machines. We have enjoyed a strong start to the year and sales for the first three monthsof 2008 reached £43m. At the end of March 2008, the confirmed order book for thecalendar year 2008 stood at £101m. This reflects our increased penetration ofall key target markets, including North America, Europe, Scandinavia, Russia andthe Baltics, the Middle East and the Asia-Pacific region. Total global production capacity currently stands at 320 units per week,compared to 270 units per week at the close of 2007 and 45 units per week at theend of 2006. At Vigo Centre, we have maintained production capacity at 200 units per week,despite introducing larger products with a higher unit price into the build mix.The relocation of the Zero Emission Vehicles division will allow for the cranelines to increase in length and will provide room for up to two more similarlines. This space will be required for the larger, more expensive machines wewish to build in Vigo. The acquisition of Snorkel Holdings LLC in August 2007 significantly enhancedour Powered Access product offering, improved our market presence in NorthAmerica and increased our production capabilities. Snorkel is enjoying its strongest start to the year for a decade, with sales of£21m in the first three months of 2008. Through our cross-selling into theUpRight distributor network, Snorkel is exporting more machines than everbefore. Similarly, Tanfield is significantly increasing Snorkel's domestic sales, inparticular to Tier One equipment rental companies. Examples of this growthinclude one of America's largest equipment rental companies outlining an initialfleet requirement in excess of US$50m. Tanfield has achieved preferred vendorstatus with this customer and we are examining further opportunities to growsales and develop the relationship. Another major rental company andlong-standing Snorkel customer placed a US$10m order for Snorkel products at theConExpo construction equipment exposition in Las Vegas in March 2008. The strong start to 2008 by Snorkel, allied to our successful strategy ofpushing the Snorkel big booms through the UpRight distribution channels outsideof America, has significantly increased demand on Snorkel's productionfacilities in Kansas, USA. Although we have initiated a plan to ramp upproduction in Kansas by 60%, we have already sold the first six months of outputin 2008. We are increasing the assembly footprint in Kansas by 100,000sq ft, or 25 percent. Through the introduction of lean manufacturing techniques and smarterworking practices, we also expect to significantly improve efficiencies from theexisting floor space. Prior to the UpRight acquisition, Tanfield produced the steel fabrications forits aerial work platforms in-house. UpRight brought with it a fabricationssupply chain from low cost countries including China and we further expanded,developed and refined this supplier base during 2007. Initial payment terms hada detrimental effect on working capital, but we successfully negotiated muchmore favourable terms as volumes grew. We are switching Snorkel to this low cost supply chain and expect the process tobe complete by end of 2008. During 2007, we increased the UpRight distributor network to 180 members andhave raised this to over 200 dealers during the first three months of 2008. Weincreased the UpRight product portfolio from 10 machines to over 30, byre-introducing models discontinued under the previous owners and by addingSnorkel products to the range. I am pleased to announce that Tanfield has signed an OEM agreement withconstruction equipment and aerial work platform manufacturer Manitou. Under theagreement, Tanfield will manufacture certain key products from its range forManitou's Maniaccess range of aerial work platforms, to be sold via Manitou'sextensive global network of over 500 distributors. We have further augmented the UpRight distributor network in the first quarterof 2008, by appointing strong dealers in key territories including SouthernAfrica, the Iberian Peninsula and the Middle East. Market Outlook 1. Zero Emission Vehicles Division At the end of March 2008, UK diesel at the pump cost 115p per litre vs 93p inMarch 2007, a rise of 19.1%. US diesel pump prices are now around $4 per gallon,up $1.17 in the past 12 month, an increase of 29%. For first time, US freightoperators are spending more on fuel than labour. Every increase in fossil fuelprices underlines the economic argument for our vehicles. A growing number of cities are imposing fiscal penalties on commercial vehicleswhich enter their most densely populated urban centres, in a bid to reducecongestion and improve air quality. The continued exemption of electric vehiclesfrom these congestion charges and road tolls adds to the inherent cost savingsthat our products already provide to customers. The Board continues to expect that the economic, environmental and operatorbenefits of deploying electric vehicles over conventional vehicles in urbanareas will increase the number of fleet managers who engage with us. The widespread success of field trials with logistics and delivery companiesduring 2007 will continue to drive volume sales in 2008 and beyond. Our earlypenetration of other sectors deploying urban fleets bodes well for thedevelopment of new markets, while buoyant sales of commercial vehicles in the UKand Europe demonstrate that both the overall market and our addressable marketare growing. The appetite for electric vehicles in the USA is extremely strong and we expectthis market to develop at a much faster rate than in Europe. Also, our earlyexperiences with US customers indicate that in many cases, the percentage ofvehicles within a fleet which fall within the operating capabilities of our EVsis higher than in the equivalent sector in Europe. The launch of the world's first higher function electric minibus and the world'sfirst high performance electric light van further consolidate our position asthe market leader in zero emission commercial vehicles. No other manufacturer inthe world can offer anywhere near the breadth and depth of Tanfield's road-goingelectric vehicle portfolio. The cementing of our partnership with Ford, one of the most respected names inthe automotive industry, underlines our global leader status, allows for fasterand more efficient new product development and provides access to new, untappedmarkets. We expect this relationship will create many more excitingopportunities for both companies to exploit as we develop together. 2. Powered Access Division Snorkel enjoys an excellent reputation among leading North American aerial liftrental companies - all of whom are forecasting considerable capital expenditureon fleet replacement and/or expansion during 2008. Snorkel's position in this critical sales territory is unique, in that it is awell-respected brand but has not reflected this eminence in market share. Aspart of The Tanfield Group Plc, Snorkel is already beginning to properlyleverage its brand equity. The outlook for the US construction market remains mixed, but most signs arethat non-residential construction - the key end user market for larger aerialwork platforms - will continue to grow, albeit at a reduced rate. Residentialconstruction has little impact on our Powered Access sales. This is because thechief product offering in the residential sector from our peers is the roughterrain fork lift, or telehandler. Tanfield does not manufacture telehandlers,so is nowhere near as exposed to trends in residential construction as itscompetitors. Globally, the outlook for the construction industry is extremely healthy.Regions expected to grow the most this year include the Middle East, Russia &the Baltics and Southern Africa. Tanfield has worked hard to appoint highquality distributors in all these territories. The continued growth of non-residential construction is equally as important tothe smaller aerial work platforms in the product range, as these machines areprimarily deployed in repair and maintenance of commercial and industrialpremises. Globally, end user purchases represent just 30% of all powered access sales,with the remaining 70% sold direct to equipment rental companies. Our increasingpenetration of the rental sector therefore represents a significant opportunitygoing forward. The growth achieved with UpRight in 2007 was almost entirely fromsales to end users, via the distributor network, with practically no sales tolarge equipment rental companies. However, the added value that UpRight's uniquedistributor network brings is also attracting rental company business inScandinavia, Europe, the Baltic States and the Middle East. Along with ourexpanded product range, rental companies particularly appreciate the local,own-language product support with which the dealers can provide them. We areengaging with all of the major rental companies in Europe and Scandinavia atpresent and will continue to explore sales in this market, where appropriate. Current Trading & Prospects 2007 was another highly successful year for the Company, as we once againtransformed potential into profitable sales. In both divisions of Powered Accessand Zero Emission Vehicles, we have successfully ramped up production, increasedsales, enhanced the product range and expanded our global reach. Our decision to utilise proven chassis from major manufacturers as the basis forour electric vehicles, rather than design a new product from the ground up, isproving to be the best route to growing profitable sales. It enables us to takeyears off the time frame of bringing a new vehicle to market. This strategy alsoallows us to benefit from the original vehicle manufacturers' investment indesign development, which typically totals hundreds of millions of pounds. Itprovides us with robust and reliable chassis, which means we can focus ourresources on the battery and electric drive train. Crucially, it also avoids anypotential reliability issues that a newly-designed chassis could encounter. The achievements of the first quarter of 2008 demonstrate that we arecapitalising on the highly promising opportunities afforded by our growingglobal reputation. These new opportunities, allied to the ongoing development ofexisting products and sales channels, will continue to support the execution ofour high growth strategy. Finance Director's Report All figures and their comparatives are presented in line with the InternationalFinancial Reporting Standards (IFRS). In 2007 we delivered another record financial performance. Revenue was up 201%to £123m (2006: 98%). EBITA before restructuring was up 256% to £14.6m (2006:£4.1m). Profit from continuing operations before restructuring rose to £13.1m(2006: £5.7m) The dramatic increases result from good organic growth in both zero emission andpowered access divisions because of the increase in the volumes of new electricvehicles made and sold, and the execution of the ramp up the reinvigoratedUpright brand. The results benefitted from the contribution of SnorkelInternational Inc following its acquisition in August. Amortisation of Acquired Intangibles and Restructuring Costs Profit from Operations is reported after charging Amortisation of £1.8m (2006:£0.4m) arising from the write down of Intangible Assets valued followingacquisitions, of which £0.9m resulted from the acquisition of Snorkel. Restructuring costs in the year of £1.2m related to costs arising following theacquisition of Snorkel. 2006 restructuring costs of £1.9m related to the UpRightacquisition. Net Operating Expenses Operating expenses are stated net of operating income from Government Grants andrecovery of a Snorkel customer debt of £2m. Net Finance Income Net finance Income in the period was £0.9m (2006: Finance costs £0.1m)reflecting the net cash position held by the group throughout the period. Profit before Tax Profit before tax for continuing operations was £12.4m up 235% on 2006. Therewas a loss in the year for discontinued operations of £1.5m. Taxation The tax charge includes £1.7m of tax costs arising in the US, of which £0.4m wasa non cash cost related to the creation of a deferred tax liability. Earnings Earnings per share increased by 194% to 3.59p (2006:1.22p). No dividend has beendeclared (2006:nil). The retained profit of £10.4m has been added to reserves tofund further business growth. Net Cash At 31 December 2007, the Group had cash of £28m. This cash will be used to fundfurther development of the business, including a transition in the supply chain. Acquisitions The Group acquired Snorkel International Inc on 1 August 2007. The acquisitionwas funded through a private placing. TANFIELD GROUP PLC CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2007 Restated 2007 2006 £000's £000'sContinuing OperationsRevenue 123,288 40,580 Other operating income - -Changes in inventories of finished 8,702 1,222goods and WIPRaw materials and consumables used (87,980) (20,224)Staff costs (23,667) (11,041)Depreciation and amortisation expense (2,724) 845Other operating expenses (4,791) (5,696)Restructuring costs (1,270) (1,877) Profit from continuing operations 11,558 3,809 Finance costs 879 (84) Net Profit before tax for year 12,437 3,725 Income tax expense (560) (823) Profit for the year from continuing 11,877 2,902operations Discontinued operations(Loss)/Profit for period from (1,484) (398)discontinued operations Net profit for the year 10,393 2,504 Earnings per shareFrom continuing operationsBasic 3.59p 1.22pDiluted 3.41p 1.14p From continuing and discontinuedoperationsBasic 3.14p 1.05pDiluted 2.99p 0.99p The results for year ending 31 December 2006 have been restated for theactivities discontinued in the year ending 31 December 2007. CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2007 2007 2006 £000's £000'sASSETSNon Current AssetsProperty, plant and 6,098 3,734equipmentGoodwill 32,244 5,143Intangible assets 22,685 5,792Deferred tax asset 785 - 61,812 14,669Current AssetsInventories 60,352 14,158Trade and other 47,197 13,833receivablesInvestments 120 94Current tax assets 1,459 -Cash and cash equivalents 27,952 13,605 137,080 41,690TOTAL ASSETS 198,892 56,359LIABILITIESCurrent LiabilitiesTrade and other payables 26,406 6,801Tax liabilities - 1,178Obligations under finance 684 421leasesBank & other loans and - 163overdraftsOther creditors 467 2,221 27,557 10,784Non Current LiabilitiesBank & other loans - 948Other creditors 5,021 310Obligations under finance 1,100 549leasesDeferred tax liability - 19Convertible loan notes - 69Provisions - 262 6,121 2,157TOTAL LIABILITIES 33,678 12,941EQUITYShare capital 3,703 2,921Share premium account 138,493 29,578Share option reserve 992 255Loan stock equity reserve - 6Merger reserve 1,534 1,534Capital reduction reserve 7,228 7,228Translation reserve 879 -Profit and loss account 12,385 1,896TOTAL EQUITY 165,214 43,418 TOTAL EQUITY AND 198,892 56,359LIABILITIES CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2007 Share Share Share Loan Merger Capital Translation Profit Total capital premium option stock reserve reduction reserve and Equity reserve equity reserve loss reserve account £000's £000's £000's £000's £000's £000's £000's £000's £000's Balance at 1 2,921 29,578 255 6 1,534 7,228 - 1,896 43,418January 2007 Issue of new share 706 107,893 - - - - - 108,599capitalExercise of 8 67 - (6) - - - - 69convertible loanstockShare options 68 955 - - - - - - 1,023exercisedExercise of share - - - - - - - 96 96optionsShare option - - 737 - - - - - 737provisionForeign exchange - - - - - - 879 - 879differences onretranslation ofinvestments insubsidiaryundertakingsNet profit for the - - - - - - - 10,393 10,393year Balance at 31 3,703 138,493 992 - 1,534 7,228 879 12,385 165,214December 2007 CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2007 2007 2006 £000's £000's Operating ActivitiesProfit from Operations 10,074 3,455Depreciation, Amortisation and 3,320 (773)ImpairmentMovement in Working Capital (42,435) (9,930)Cash used in operations (29,041) (7,248)Income taxes paid (2,943) -Interest paid (331) (208) Net Cash used in Operating activities (32,315) (7,456) Investing ActivitiesAcquisitions (44,564) (6,851)Purchase of property, plant and (1,851) (503)equipmentProceeds from sale of property plant 758 150and equipmentPurchase of investments (23) (94)Purchase of intangible fixed assets (2,949) (312)Interest received 1210 34 Net cash used in investing activities (47,419) (7,576) Financing ActivitiesIssue of ordinary share capital 109,622 29,055Repayment of bank loan (14,904) (870)Capital element of finance leases (621) (567) Net cash from financing 94,097 27,618 Net Increase in Cash and Cash Equivalents 14,363 12,586 Cash and cash Equivalents at beginning 13,546 960of YearEffect of foreign exchange changes 43 -Cash and Cash equivalents at end of 27,952 13,546the year Notes to the financial statements at 31 December 2007 1 Accounting Policies The financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU ("IFRS"). 2. Unaudited Financial Statements The above figures do not constitute full accounts within the meaning of Section 240 of the Companies Act 1985. The figures for the year ended 31st December 2006 constitute abridged accounts extracted from the published accounts for the year which have been filed with the Registrar of Companies and on which the auditors' report was unqualified and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985. 3. Earnings per ordinary share Earnings per share have been calculated using the weighted average number of shares in issue during the relevant financial periods. The weighted average number of shares in issue is 331,253,401 (2006 - 237,396,217), and the earnings, being the profit on ordinary activities after taxation and minority interest are £10,393,000 (2006: 2,504,000). The weighted average number of shares for diluted earnings per share is 347,837,812 (2006 - 252,639,362) and the diluted earnings are £10,393,000 (2006 -£2,490,000). Year ended 31 Year ended 31 December 2007 December 2006 Pence Pence Basic Earnings Per share 3.14 1.05 Diluted Earnings per share 2.99 0.99 This information is provided by RNS The company news service from the London Stock Exchange