Last checked at 29 Sep 2011 07:00
The Tanfield Group Plc
("Tanfield", "Group", or "the Company")
Interim Results for the six month period to 30 June 2011
29th September 2011
The Tanfield Group Plc, a leading manufacturer of aerial work platforms, announces its unaudited interim results for the six month period ended 30 June 2011.
·; Global aerial lift market recovering
·; Turnover increased to £24.6m (H1 2010: £19.6m / H2 2010: £23.8m)
·; Operating losses reduced to £7.0m (H1 2010: Operating loss: £7.7m / H2 2010 Operating loss: £8.1m)
·; Net cash at 30 June of £4.7m (31 December 2010: £3.6m)
·; Order book at 30 June of £20.9m (31 December 2010: £7.7m)
·; Supply chain capabilities limiting rate of growth
Darren Kell, CEO of Tanfield, said: "Global demand for aerial work platforms is returning, driven by major fleet operators replacing ageing equipment. However, this has created bottlenecks as the supply chain struggles to restore the capacity it lost during the protracted downturn.
"Our order book rose 170% over the first half of the year and has improved further since the half year end. We are working hard to resolve the supply chain issues so that we can bring orders through to sales at a faster rate and take the business back to profitability."
Further information:
Tanfield Group plc Darren Kell / Charles Brooks
| 0845 155 7755 |
Arbuthnot Securities Limited (NOMAD and Broker) James Steel / Ed Groome
| 020 7012 2000 |
Media Enquiries Dan Jenkins | 07536 092682 |
Summary
Trading for the first half was in line with the Board's expectations, with turnover increasing 25% to £24.6 million, compared to £19.6 million in the same period last year. Net cash improved to £4.7m (31 December 2010: £3.6 million). The order book at 30 June 2011 stood at £20.9m, a 170% improvement since the last period (31 December 2010: £7.7m).
The increase in demand is largely driven by Snorkel customers replacing ageing equipment, plus the strength of the Snorkel brand's international distributor network. Given the capacity that has been removed from the market during the downturn, even this replacement is enough to absorb the available capacity. As a result, pricing has improved and margins have increased.
Order intake has continued to exceed sales in spite of increased lead times for many products. Lead times have increased owing to a combination of supply chain issues and careful management of our working capital. The global supply chain to the aerial lift industry is still rebuilding capacity that it lost during the downturn. Certain supply chain partners were able to accommodate our increasing demand in the first half, from their built up inventory and stock - however, once exhausted, it became clear that many were in turn facing their own supply chain issues and working capital constraints. The fragile condition of many suppliers, post market recovery, has resulted in shorter payment terms, putting increased pressure on the Company's working capital. The Company is therefore controlling its growth rate to ensure that it has sufficient working capital to fund the growth. This slower, controlled growth rate will extend the time taken for the Company to reach break even. The Board expects this scenario to continue throughout the second half of 2011.
Snorkel - The Powered Access Market
The worldwide economic recession led to significantly reduced demand for aerial work platforms across the industry's main markets of North America and Western Europe. The extended moratorium on capital expenditure within our customer base meant that many companies did not purchase equipment for a number of years. Clearly this situation was unsustainable as the equipment wears out and must be renewed in order to maintain an acceptable standard and competitive fleet age. Recovery in our markets is now therefore being driven by fleet replacement, rather than fleet expansion. True market growth is expected to return once increased demand within the non-residential construction and facilities maintenance markets increases the utilisation of equipment beyond acceptable parameters. The Company is preparing for that tipping point.
We are making gains in China, where we now produce several all-electric lifts for the local market. The construction boom in Brazil represents a significant opportunity to increase our presence in Latin America and we have recently appointed our first agent in this important market.
Following the completion of the re-brand and harmonisation of our UpRight Powered Access division, the Snorkel brand is now firmly established and has been fully embraced by our distributor network. Our engineers are engaged in a new product design programme that improves commonality of parts across our volume products and combines Snorkel's durability with enhanced machine performance.
Snorkel continues to attract high quality companies to act as its distributors. During the period, for example, we appointed the multi-billion euro Enka group as our distributor in Turkey.
Funding
Net cash improved by £1.1m during the six months to £4.7m at 30 June 2011 and we remain focused on the optimisation of our working capital.
Dividends
The Board has not declared a dividend for the period.
Outlook
Overall, the Board expects the trading performance in the second half of 2011 to be similar to the first half. Global demand for aerial work platforms is returning, driven by major fleet operators replacing ageing equipment. However, this has created bottlenecks as the supply chain struggles to restore the capacity it lost during the protracted downturn. Our order book rose 170% over the first half year and has improved further since the half year end. We are working hard to resolve the supply chain issues so that we can bring orders through to sales at a faster rate and take the business back to profitability.
CONSOLIDATED INCOME STATEMENT | |||
FOR THE SIX MONTHS ENDING 30 JUNE 2011 | |||
Six months | Six months | Year to | |
to 30 Jun 11 | to 30 Jun 10 | 31 Dec 10 | |
(unaudited) | (unaudited) | (audited) | |
£000's | £000's | £000's | |
Continuing operations | |||
Revenue | 24,633 | 19,653 | 43,500 |
Changes in inventories of finished goods and WIP | (5,610) | (4,272) | (7,689) |
Raw materials and consumables used | (12,464) | (9,582) | (27,025) |
Staff costs | (8,577) | (7,401) | (14,747) |
Depreciation and amortisation expense | (806) | (892) | (1,745) |
Other operating expenses | (4,206) | (5,166) | (8,121) |
Loss from continuing operations before impairments | (7,030) | (7,660) | (15,827) |
Share of results of associates | - | - | - |
Impairment of Receivables | - | - | (650) |
Loss from continuing operations after impairments | (7,030) | (7,660) | (16,477) |
Finance costs | (565) | (185) | (294) |
Interest receivable | 264 | 36 | 108 |
Net finance expense | (301) | (149) | (186) |
Loss before taxation | (7,331) | (7,809) | (16,663) |
Taxation | (58) | (34) | (1,950) |
Loss for the period from continuing operations | (7,389) | (7,843) | (18,613) |
Discontinued operations | |||
Loss for the period from discontinued operations | - | (2,162) | (5,375) |
Profit on disposal of discontinued operations | 173 | - | - |
Net loss for the period | (7,216) | (10,005) | (23,988) |
Attributable to: | |||
Owners of the parent | (7,216) | (9,960) | (23,986) |
Non-controlling interest | - | (45) | (2) |
Earnings per share from continuing operations | |||
Basic (pence) | (7.7) | (13.2) | (29.8) |
Diluted (pence) | (7.7) | (13.2) | (29.8) |
CONSOLIDATED BALANCE SHEET | ||||
AS AT 30 JUNE 2011
| 30 Jun 11 | 30 Jun 10 | 31 Dec 10 | |
(Unaudited) | (Unaudited) | (Audited) | ||
£000's | £000's | £000's | ||
Non current assets | ||||
Goodwill | - | 356 | - | |
Intangible assets | 5,124 | 13,066 | 5,546 | |
Property, plant and equipment | 3,531 | 4,896 | 3,879 | |
Deferred tax assets | - | 1,915 | - | |
Associate | - | - | - | |
Deferred consideration receivable | 1,405 | - | - | |
Trade and other receivables | 250 | 900 | 250 | |
10,310 | 21,133 | 9,675 | ||
Current assets | ||||
Inventories | 23,458 | 39,720 | 25,408 | |
Trade and other receivables | 10,855 | 12,528 | 10,510 | |
Investments | 417 | 451 | 395 | |
Current tax assets | 11 | 72 | 11 | |
Deferred consideration receivable | 3,575 | - | - | |
Cash and cash equivalents | 4,682 | 2,228 | 3,637 | |
42,998 | 54,999 | 39,961 | ||
Assets classified as held for sale | - | - | 13,194 | |
42,998 | 54,999 | 53,155 | ||
Total assets | 53,308 | 76,132 | 62,830 | |
Current liabilities | ||||
Trade and other payables | 13,235 | 16,757 | 11,293 | |
Provisions | 327 | 598 | 272 | |
Tax liabilities | 95 | 79 | 83 | |
Obligations under finance leases | 98 | 417 | 197 | |
Other creditors | - | 2,534 | 2,294 | |
13,755 | 20,385 | 14,139 | ||
Liabilities directly associated with assets classified as held for sale | - | - | 3,832 | |
13,755 | 20,385 | 17,971 | ||
Non-current liabilities | ||||
Obligations under finance leases | - | - | - | |
Deferred tax liabilities | 375 | 375 | 375 | |
375 | 375 | 375 | ||
Total liabilities | 14,130 | 20,760 | 18,346 | |
Equity | ||||
Share capital | 4,727 | 3,704 | 4,704 | |
Share premium | 2,346 | - | 827 | |
Share option reserve | 1,764 | 1,764 | 1,764 | |
Special reserve | 66,837 | 66,837 | 66,837 | |
Merger reserve | 1,534 | 1,534 | 1,534 | |
Translation reserve | 11,800 | 10,164 | 11,432 | |
Profit and loss account | (49,827) | (28,585) | (42,611) | |
Equity attributable to the owners of the parent | 39,181 | 55,418 | 44,487 | |
Non controlling interests | (3) | (46) | (3) | |
Total equity and total liabilities | 53,308 | 76,132 | 62,830 | |
CONSOLIDATED CASH FLOW STATEMENT | |||
FOR THE SIX MONTHS ENDING 30 JUNE 2011 | |||
Six months | Six months | Year to | |
to 30 Jun 11 | to 30 Jun 10 | 31 Dec 10 | |
(unaudited) | (unaudited) | (audited) | |
£000's | £000's | £000's | |
Continuing operations | |||
Loss before interest and taxation | (6,857) | (7,660) | (16,477) |
Depreciation and amortisation | 806 | 892 | 1,745 |
Profit on disposal of discontinued operations | (173) | - | - |
Loss on disposal of fixed assets | - | - | 23 |
Impairment of receivables | - | - | 650 |
Operating cash flows before movements in working capital | (6,224) | (6,768) | (14,059) |
(Increase) decrease in receivables | (441) | 198 | 611 |
Increase (decrease) in payables | 2,563 | (305) | (2,656) |
Increase (decrease) in provisions | 55 | 73 | (28) |
Decrease in inventories | 1,561 | 3,133 | 13,111 |
Net cash (used in) operations - continuing operations | (2,486) | (3,669) | (3,021) |
Discontinued operations | |||
Loss before interest and taxation | - | (2,159) | (5,369) |
Depreciation and amortisation | - | 562 | 655 |
Loss on disposal of fixed assets | - | - | 11 |
Operating cash flows before movements in working capital | - | (1,597) | (4,703) |
(Increase) decrease in receivables | - | (556) | 1,194 |
Increase (decrease) in payables | - | 714 | (197) |
Increase in provisions | - | - | 300 |
Decrease in inventories | - | 2,543 | 3,410 |
Net cash from operations - discontinued operations | - | 1,104 | 4 |
Cash used in operations | (2,486) | (2,565) | (3,017) |
Interest paid | (143) | (188) | (300) |
Income taxes (paid) received | (37) | - | 80 |
Net cash used in operating activities | (2,666) | (2,753) | (3,237) |
Cash flow from Investing Activities | |||
Purchase of property, plant and equipment | (79) | (59) | (313) |
Deferred consideration received | 3,774 | - | - |
Purchase of investments | (32) | (143) | (70) |
Purchase of intangible fixed assets | (1) | (136) | (375) |
Exclusivity agreement cash received | - | - | 491 |
Interest received | 123 | 36 | 108 |
Net cash (used in) from investing activities | 3,785 | (302) | (159) |
Cash flow from financing activities | |||
Proceeds from issuance of ordinary shares net of costs | - | - | 1,827 |
Repayments of obligations under finance leases | (97) | (227) | (458) |
Net cash (used in) from financing activities | (97) | (227) | 1,369 |
Effect of exchange rate changes on cash and cash equivalents | 23 | 96 | 250 |
Net increase (decrease) in cash and cash equivalents | 1,045 | (3,186) | (1,777) |
Cash and cash equivalents at the start of year | 3,637 | 5,414 | 5,414 |
Cash and cash equivalents at the end of the year | 4,682 | 2,228 | 3,637 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
|
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Attributable to the owners of the parent |
| |||||||||
Share capital | Share premium | Shares option reserve | Merger reserve | Capital reduction reserve | Special reserve | Translation reserve | Retained earnings | Non-controlling interests | Total | |
£000's | £000's | £000's | £000's | £000's | £000's | £000's | £000's | £000's | £000's | |
For the six month period ended 30 June 2011 | ||||||||||
Balance at 1 January 2011 | 4,704 | 827 | 1,764 | 1,534 | - | 66,837 | 11,432 | (42,611) | (3) | 44,484 |
Comprehensive income | ||||||||||
Loss for the period | - | - | - | - | - | - | (7,216) | - | (7,216) | |
Other comprehensive income | ||||||||||
Currency translation differences | - | - | - | - | - | - | 368 | - | - | 368 |
Total other comprehensive income for the year | - | - | - | - | - | - | 368 | - | - | 368 |
Total comprehensive income for the year | - | - | - | - | - | - | 368 | (7,216) | - | (6,848) |
Transactions with owners in their capacity as owners:- | ||||||||||
Issue of shares | 23 | 1,519 | - | - | - | - | - | - | - | 1,542 |
At 30 June 2011 | 4,727 | 2,346 | 1,764 | 1,534 | - | 66,837 | 11,800 | (49,827) | (3) | 39,178 |
For the six month period ended 30 June 2010 | ||||||||||
Balance at 1 January 2010 | 3,704 | - | 1,764 | 1,534 | - | 66,837 | 8,923 | (18,625) | (1) | 64,136 |
Comprehensive income | ||||||||||
Loss for the period | - | - | - | - | - | - | - | (9,960) | (45) | (10,005) |
Other comprehensive income | ||||||||||
Currency translation differences | - | - | - | - | - | - | 1,241 | - | - | 1,241 |
Total other comprehensive income for the year | - | - | - | - | - | - | 1,241 | - | - | 1,241 |
Total comprehensive income for the year | - | - | - | - | - | - | 1,241 | (9,960) | (45) | (8,764) |
At 30 June 2010 | 3,704 | - | 1,764 | 1,534 | - | 66,837 | 10,164 | (28,585) | (46) | 55,372 |
For the twelve month period ended 31 December 2010 | ||||||||||
Balance at 31 December 2009 | 3,704 | - | 1,764 | 1,534 | - | 66,837 | 8,923 | (18,625) | (1) | 64,136 |
Comprehensive income | ||||||||||
Loss for the year | - | - | - | - | - | - | (23,986) | (2) | (23,988) | |
Other comprehensive income | ||||||||||
Currency translation differences | - | - | - | - | - | - | 2,509 | - | - | 2,509 |
Total other comprehensive income for the year | - | - | - | - | - | - | 2,509 | - | - | 2,509 |
Total comprehensive income for the year | - | - | - | - | - | - | 2,509 | (23,986) | (2) | (21,479) |
Transactions with owners in their capacity as owners:- | ||||||||||
Issue of shares | 1,000 | 827 | - | - | - | - | - | - | - | 1,827 |
At 31 December 2010 | 4,704 | 827 | 1,764 | 1,534 | - | 66,837 | 11,432 | (42,611) | (3) | 44,484 |
1 Basis of preparation The consolidated Interim Report of the Group for the six months ended 30 June 2011 has been prepared in accordance with AIM Rule 18 and not in accordance with IAS 34 "Interim Financial Reporting" therefore it is not fully in compliance with IFRS.
The half year report does not constitute financial statements as defined in Section 434 of the Companies Act 2006 and does not include all of the information and disclosures required for full annual statements. It should be read in conjunction with the annual report and financial statements for the year ended 31 December 2010 which is available on request from the Group's registered office, Vigo Centre, Birtley Road, Washington, Tyne and Wear NE38 9DA or can be downloaded from the corporate website www.tanfieldgroup.com.
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2 Accounting policies The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December 2010, as described in those financial statements.
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LOSS PER SHARE | ||||
The calculation of the basic and diluted loss per share is based on the following data:
Number of shares | ||||
Six months | Six months | Year to | ||
To 30 Jun 11 | to 30 Jun 10 | 31 Dec 10 | ||
Weighted average number of shares in thousands | ||||
Basic | 94,234 | 75,552 | 80,183 | |
Potential dilutive ordinary shares from share options | 1,792 | 164 | 143 | |
Total diluted | 96,026 | 75,716 | 80,326 | |
Earnings | ||||
From continuing and discontinuing operations | ||||
Earnings for the purposes of basic earning per share | (7,216) | (9,960) | (23,986) | |
Potential dilutive ordinary shares from share options | - | - | - | |
Earnings for the purposes of diluted earnings per share | (7,216) | (9,960) | (23,986) | |
From continuing operations | ||||
Earnings for the purposes of basic earning per share | (7,216) | (9,960) | (23,986) | |
Adjustment to exclude the loss for the period from discontinued operations | - | 2,162 | 5,375 | |
Earnings for the purposes of diluted earnings per share | (7,216) | 7,798 | (18,611) | |
Adjustment for one off items: | ||||
Impairments | - | - | 650 | |
Profit on disposal of discontinued operations | (173) | - | - | |
Loss for the purposes of loss per share before one off items | (7,389) | (7,798) | (17,961) | |
Loss per share from continuing operations | ||||
Basic loss per share (pence) | (7.7) | (13.2) | (29.8) | |
Diluted loss per share (pence) | (7.7) | (13.2) | (29.8) | |
Loss per share from continuing operations before one off items | ||||
Basic loss per share before one off items (pence) | (7.8) | (10.3) | (22.4) | |
Diluted loss per share before one off items (pence) | (7.8) | (10.3) | (22.4) | |
IAS33 defines dilution as a reduction in earnings per share or an increase in loss per share resulting from the assumption that options are exercised. As the potential dilutive ordinary shares from share options reduce the loss per share these share are omitted from the dilutive loss per share calculation. | ||||