Last checked at 7 May 2019 12:57
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 Tanfield Group Plc and Xtreme Manufacturing LLC, a Company owned by Don Ahern of Ahern Rentals Inc ("Ahern"), relating to Snorkel, in October 2013.
· As reported in the Interim Results on 28 September 2018, the Board impaired the Snorkel investment value from £36.3m to £19.1m.
· Snorkel's growth trend continues with sales during 2018 increasing once again, resulting in a fourth quarter increase of 14% to US$47.8m and a full year increase of 21% to US$200.5m (when compared to the same periods in 2017).
· The Board reported in the 2017 Annual Report that entering into the next phase would bring with it a level of uncertainty and the Board anticipated that there would likely be a period of negotiation - potentially protracted - prior to any financial realisation. On 22 November the Company announced it had received a call option notice over its interest in Snorkel which the Board rejected as being invalid. This continues to be the position and the Board will continue to take appropriate advice to safeguard Tanfield's investment and will provide an update upon any material change.
Business Update
Tanfield is a 49% shareholder in the equity of Snorkel following the joint venture between Tanfield Group Plc and Xtreme Manufacturing LLC ("Xtreme"), a Company owned by Don Ahern of Ahern Rentals Inc ("Ahern"), relating to Snorkel, in October 2013.
Snorkel has provided management account information for the business. Snorkel's sales in the fourth quarter of 2018 were US$47.8m (Q4 2017: US$41.7m), an increase of 14% in comparison to the same period in 2017, with an operating result, excluding depreciation, of US$0m (Q4 2017: US$1.0m loss). Sales for the full year in 2018 were US$200.5m (2017: US$165.8m), an increase of 21% in comparison to 2017, with an operating profit, excluding depreciation, of US$2.9m (2017: US$1.6m). The Board is unaware of any reason why the continuing growth and operating profitability trends should not continue and therefore expect to see further growth in 2019.
Below is a summary of the consolidated operating statement for the last 5 years:
US$000's | 2014 | 2015 | 2016 | 2017 | 2018 |
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Net sales | 85,282 | 109,895 | 130,490 | 165,811 | 200,507 |
Cost of goods sold | 72,256 | 99,047 | 118,087 | 144,828 | 175,654 |
Gross profit | 12,756 | 10,848 | 12,403 | 20,982 | 24,823 |
| 15.0% | 9.9% | 9.5% | 12.7% | 12.4% |
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Selling, general & administrative costs | 27,639 | 21,443 | 15,205 | 19,345 | 21,948 |
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Operating profit/(loss) excl depreciation | (14,883) | (10,595) | (2,801) | 1,637 | 2,874 |
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Depreciation & non-operating costs | 3,697 | 5,014 | 2,084 | 2,636 | 3,274 |
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Net loss | (18,580) | (15,609) | (4,885) | (999) | (400) |
The Board expects to be able to update shareholders with the results for the first quarter of 2019 in due course.
For further information:
Tanfield Group Plc 020 7220 1666
Daryn Robinson
WH Ireland Limited - Nominated Advisor / Broker
James Joyce / Lydia Zychowska 020 7220 1666