Half Yearly Report

RNS Number : 9066Z
Tanfield Group PLC
30 September 2009
 



The Tanfield Group Plc 

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

 Interim Results for the six month period to 30 June 2009 

30 September 2009

Tanfield Group Plc, the leading manufacturer of aerial work platforms and commercial electric vehicles, announces its unaudited interim results for the six month period to 30 June 2009.

Summary

  • Turnover of £29.9m (H1 2008: £92.8m / H2 2008 £52.9m)

  • Operating loss of £11.0m  (H1 2008: Operating profit  £10.3m / H2 Operating loss £9.0m)

  • Net cash at 30 June of £10.8m (31 December 2008: £11.1m)

  • Staff costs reduced by 40% since H2 08


Darren Kell, CEO of Tanfield, said: 'Sales performance across the Group continues to be constrained by the global recessionary environment.

'However, we took appropriate and timely corrective action to reshape the business. Throughout the period we have consciously run the Company for cash ahead of profitability; a strategy that has maintained the cash position, with the group still retaining a strong balance sheet.

'We continue to prepare for an eventual upturn in market demand in both our core business sectors, and are already witnessing positive developments in the Zero Emission Vehicles division.'

 

For further information:

The Tanfield Group Plc                                                                               +44 (0) 845 155 7755

Darren Kell, CEO

Charles Brooks, FD


Arbuthnot Securities                                                                                   +44(0)20 7012 2000

Nomad & Broker

James Steel


Media Enquiries:                                      Dan Jenkins                              +44 (0) 191 461 6842

 

 

Summary

Throughout the period, the Company continued to experience volatility in all its market sectors as a direct consequence of the worldwide economic recession. Turnover declined 68% to £29.9m, resulting in a loss of £11.0m for the period.

Market pricing continued to decline in the period, particularly in the Powered Access division, where our revenue performance declined in line with the market and our peers.  Access to credit for capital goods purchases remains the most significant challenge faced by the Company's customers in both the Powered Access and Zero Emission Vehicles divisions.

We took decisive action to reduce the cost base and improve business efficiency at the beginning of 2009, coupled with measures including shorter working weeks and periods of unpaid leave. This resulted in a reduction of staff costs by 40% whilst retaining the core skills base of the workforce. However, price erosion in Powered Access markets has meant that even after this level of resizing, the business has reported a loss. We have consciously focused on cash generation, ahead of profitability, to ensure that we maintained the cash position and the Company remained debt-free, rather than reduce the size of the business to a level that would have jeopardised recovery.  


Strategic Developments

The Board of Directors is currently engaged in a strategic review of the business. Detailed consideration is being given to a possible de-merger of the two core trading divisions, thereby creating two separate companies focused on Powered Access and Zero Emission Vehicles respectively. The Board is reviewing how this could improve shareholder value, whilst providing sustained growth opportunities in each of the business units. The Board will, in due course, provide more detailed information on the outcome of this strategic review.


  Powered Access: Turnover of £21.2m (H1 2008: £72.9m / H2 2008: £41.5m)

A focus on inventory reductions during the period generated cash and harmonised Tanfield's finished goods stock with production target levels.

During the first half, Tanfield further expanded its global dealer network, with the appointment of new distributors in Latin AmericaNorth Africa and Europe. The Company also appointed a national network of sales agents in North America, to target smaller, family-owned equipment rental companies.

Tanfield has substantially strengthened the core competencies of its workforce in North East England. The Company took advantage of workforce training opportunities and has received 3,750 man-hours of education for employees in the Powered Access Division. This has resulted in improved skills and qualifications for every production operative.

The almost blanket cessation of fleet purchases by equipment rental companies seen in the second half of 2008 continued throughout this period. This has fuelled increased competition for the end user market, resulting in heavy discounting from all the Company's major competitors. However, while revenues in the period have declined, our performance is in line with, or better than, our sector peers.


Zero Emission Vehicles: Turnover of £8.1m (H1 2008: £15.6m / H2 2008: £9.5m)

The Tanfield Group is already recognised worldwide as a leading manufacturer of electric vehicles and is therefore well placed to capitalise on the growing demand for these products. In the light of this, the Company continues to exploit opportunities for the advancement of electric vehicle sales across the world.

During the first half, Tanfield ramped up its strategy to grow export sales into countries that are aggressively incentivising electric vehicle procurement. The company has since appointed new distributors in Hong KongSouthern China and Denmark, adding to existing dealers in The Netherlands and the Republic of Ireland. This strategy is already bearing fruit; in September 2009, Tanfield received purchase orders for 50 electric vans in Holland. The vehicles will be deployed by Dutch utility company Eneco. Our distributor in Hong Kong, also appointed in September, has ordered 15 commercial electric vehicles, which are destined for the fleet of the Hong Kong government.

As previously reported, Tanfield successfully completed a Licence Agreement with its US associate company Smith Electric Vehicles US Corporation (SEV US Corp). Under this arrangement, Tanfield will hold 49% of the equity of SEV US Corp and the company will manufacture and distribute Tanfield products under licence in North America. This strategic development has enabled Tanfield to achieve a low cost entry into the US market, which has already won financial support from the Federal Government and sold vehicles to high profile customers including Coca-Cola and Staples.

In the UK, Tanfield was one of four producers of low carbon vans to be selected for the Government's Low Carbon Vehicle Procurement Programme. 

In Phase One, Tanfield will deliver 54 vehicles out of a total 129 electric and hybrid vans, making the Company the largest supplier of electric vans into the programme.

Tanfield is also part of two consortia that both won funding for Technology Strategy Board programmes. These programmes will see the Company deliver 16 electric passenger vehicles and develop new, high-efficiency vehicle ancillary systems.

Official figures for June 2009 showed that year-on-year total van sales in the UK had declined by approximately 40%. Inevitably this has been reflected in Tanfield's sales performance of electric commercial vehicles during the period. Furthermore, the inability of some fleet operators to access credit during this period has resulted in a number of UK customers postponing - and in some cases reducing - orders.


Other: Turnover of £0.6m (H1 2008: £4.3m / H2 2008: £2.0m)

The core customer base of Tanfield's Engineering operations is construction vehicle manufacturers. These customers continued to experience a sharp decline in sales during this period, reflected in lower turnover for this business unit.


Outlook

The Board is confident that the worldwide demand for low emission vehicles, especially in the commercial vehicle sector, will remain a major market driver and provide significant medium and longer term growth prospects for the Zero Emission Vehicles division. Short term predictions are modest, with any substantial growth opportunity dependent upon worldwide economic recovery.

The short term outlook for Powered Access remains challenging. Major rental companies have applied a capital expenditure moratorium on new equipment and are actively reducing inventory. This has resulted in a large number of used machines entering the market, which has in turn impacted on new product sales and pricing. Rental customers, that globally account for over two-thirds of all powered access sales, are indicating that their 'purchasing holiday' could continue throughout 2010.

Notwithstanding these market challenges, the Board expects that the strong customer relationships and product support capabilities of Tanfield's distributor network will sustain sales, albeit at the significantly reduced levels and pricing similar to those experienced so far this year. 

Overall, the Board expects trading conditions in the second half of 2009 will be similar to the first half of the year.

Given the focus on cash generation, Tanfield is not proposing to pay a dividend for the period. The business remains well funded with zero debt and a strong balance sheet.


Consolidated Income Statement 

 

 

 

For the six months ending 30th June 2009

 




 




Six months

Six months

Year to


to 30 Jun 09

to 30 Jun 08

31 Dec 08


(unaudited)

(unaudited)

(audited)

 

£000's

£000's

£000's


 

 



 

 


Continuing operations

 

 


Revenue

29,928

92,785

145,734


 

 


Changes in inventories of finished goods and WIP

840

(3,896)

4,808

Raw materials and consumables used

(24,103)

(53,374)

(102,724)

Staff costs

(9,501)

(16,971)

(32,197)

Depreciation and amortisation expense

(1,539)

(1,400)

(3,195)

Other operating income

  - 

  - 

500

Other operating expenses

(6,672)

(6,858)

(11,221)

Restructuring costs

  - 

  - 

(372)

Profit from operations

(11,047)

10,286

1,333

Impairment of Goodwill

-

(33,155)

    (31,895)

Impairment of Intangible assets

-

(15,260)

(12,605)

Impairment of Property, plant & equipment

-

-

(83)

Impairment of Inventories

-

(15,325)

 (22,185)

Impairment of Receivables

-

(11,549)

(22,894)

(Loss) / Profit from continuing operations

(11,047)

(65,003)

(88,329)


 

 


Finance costs

(374)

(549)

(913)

Interest receivable

26

288

457

(Loss) / profit before taxation

(11,395)

(65,264)

(88,785)


Income tax expense

838

(2,807)

239


 

 


Net (loss) / profit from continuing operations

(10,557)

(68,071)

(88,546)


 

 







 

 



 

 


Earnings per share before exceptional items

 

 


From continuing operations

 

 


Basic (pence)

(14.25)

9.75

2.01

Diluted (pence)

(14.25)

9.40

1.96


 

 


From continuing and discontinued operations

 

 


Basic (pence)

(14.25)

9.75

2.01

Diluted (pence)

(14.25)

9.40

1.96





Consolidated Balance Sheet 

 

 

 

As at 30th June 2009

30 Jun 09

30 Jun 08

31 Dec 08


(Unaudited)

(Unaudited)

(Audited)

 

£000's

£000's

£000's

ASSETS




Non Current Assets




Goodwill

356

-

356

Intangible assets

14,583

13,110

15,153

Property, plant and equipment

5,630

8,106

6,346

Deferred tax asset

1,781

785

1,779

Trade and other receivables

1,500

-

1,500

 

23,850

22,001

25,134

Current Assets




Inventories

49,426

61,300

60,560

Trade and other receivables

13,103

46,197

20,595

Investments

208

130

251

Current tax assets

59

-

-

Cash and cash equivalents

10,813

12,009

11,130

 

73,609

119,636

92,536

Total Assets

97,459

141,637

117,670


LIABILITIES




Current liabilities




Trade and other payables

15,176

32,169

19,807

Tax liabilities

-

1,293

687

Obligations under finance leases

547

671

565

Other creditors

9,138

3,728

9,954

 

24,861

37,861

31,013

Non Current Liabilities




Other creditors 

-

5,066

-

Deferred tax liability

307  

  - 

307

Obligations under finance leases 

303

800

569

 

610

5,866

876

Total Liabilities

25,471

43,727

31,889


Equity




Share capital

3,704

3,704

3,704

Share premium account

138,511

138,511

138,511

Share option reserve

1,653

992

1,653

Loan stock equity reserve

  - 

  - 

  - 

Merger reserve

1,534

1,534

1,534

Translation reserve

6,054

1,627

9,290

Capital reduction reserve

7,228

7,228

7,228

Profit and loss account

(86,696)

(55,686)

(76,139)

Total Equity

71,988

97,910

85,781

Total Equity and Liabilities

97,459

141,637

117,670






Consolidated Cash Flow Statement

 

 

 

For the six months ending 30th June 2009









Six months

Six months

Year to


to 30 Jun 09

to 30 Jun 08

31 Dec 08


(unaudited)

(unaudited)

(audited)

 

£000's

£000's

£000's

Operating Activities




Profit / (loss) from continuing and discontinuing operations

(11,047)

(65,003)

(88,329)

Depreciation of property, plant and equipment

621

535

1,165

Amortisation of intangible fixed assets

918

865

2,030

impairments

-

75,289

89,662

(Gain) loss on disposal of fixed assets

-

(15)

(587)

Operating cash flows before movements in working capital

(9,508)

11,671

3,941

(Increase) decrease in debtors

7,029

(10,247)

4,585

Increase (decrease) in creditors

(3,881)

4,598

(8,140)

(Decrease) Increase in provisions

-

3,216

2,612

(Increase) decrease in inventories

8,072

(15,764)

(13,933)

Cash (used) generated from operations

1,712

(6,526)

(10,935)

Tax paid

(69)

(46)

510

Interest paid

(374)

(549)

(913)

Net Cash (used) generated from Operating activities

1,269

(7,121)

(11,338)





Investing Activities




Payment of deferred consideration

  (349) 

  - 

(252)

Purchase of property, plant and equipment

(80)

(2,513)

(1,087)

Proceeds from sale of property, plant and equipment

  - 

  - 

623

Purchase of investments

(3)

(3)

(45)

Purchase of intangible fixed assets

(349)

(6,417)

(6,431)

Interest received

26

288

457

Net cash used in investing activities

(755)

(8,645)

(6,735)





Financing Activities




Proceeds from issuance of ordinary shares

-

19

19

Increase in bank loans and other borrowings

-

  - 

  - 

Repayment of borrowings

-

  - 

-

Repayment of obligations under finance leases

(278)

(327)

(693)

Net cash used in financing

(278)

(308)

(674)





Net Increase/(Decrease) in Cash and Cash Equivalents

236

(16,074)

(18,747)

Cash and cash equivalents at beginning of the period

11,130

27,952

27,952

Effect of foreign exchange changes

(553)

131

1,925

Cash and cash equivalents at end of the period

10,813

12,009

11,130






Consolidated Statement of Changes in Equity 

For the six month period ended 30th June 09


Share capital

Share Premium

Share Option Reserve

Loan Stock Reserve

Merger Reserve

Capital Reduction Reserve

Translation reserve

Profit and Loss Account

Total Equity

 

£000's

£000's

£000's

£000's

£000's

£000's

£000's

£000's

£000's











Balance at 1 January 2009

3,704

138,511

1,653

  - 

1,534

7,228

9,290

(76,139)

85,781

Exercise of share options

-

-

  - 

  - 

  - 

  - 

  - 

  - 

-

Net gains/(losses) not recognised in the income statement

  - 

  - 

  - 

  - 

  - 

  - 

  - 

  - 

  - 

Issue of new share capital

  - 

  - 

  - 

  - 

  - 

  - 

  - 

  - 

  - 

Capital Reduction

  - 

  - 

  - 

  - 

  - 

  - 

  - 

  - 

  - 

Conversion of convertible loan notes

  - 

  - 

  - 

  - 

  - 

  - 

  - 

  - 

  - 

Foreign exchange differences on retranslation of investments

  - 

  - 

  - 

  - 

  - 

  - 

(3,236)

  - 

(3,236)

Shares issued for consideration

  - 

  - 

  - 

  - 

  - 

  - 

  - 

  - 

  - 

Net (loss) for the period

  - 

  - 

  - 

  - 

  - 

  - 

  - 

(10,557)

(10,557)

Balance at 30 June 2009

3,704

138,511

1,653

  - 

1,534

7,228

6,054

(86,696)

71,988


For the six month period ended 30th June 08

Share capital

Share Premium

Share Option Reserve

Loan Stock Reserve

Merger Reserve

Capital Reduction Reserve

Translation reserve

Profit and Loss Account

Total Equity

 

£000's

£000's

£000's

£000's

£000's

£000's

£000's

£000's

£000's











Balance at 1 January 2008

3,703

138,493

992

  - 

1,534

7,228

879

12,385

165,214

Exercise of share options

1

18

  - 

  - 

  - 

  - 

  - 

  - 

19

Net gains/(losses) not recognised in the income statement

  - 

  - 

  - 

  - 

  - 

  - 

  - 

  - 

  - 

Issue of new share capital

  - 

  - 

  - 

  - 

  - 

  - 

  - 

  - 

  - 

Capital Reduction

  - 

  - 

  - 

  - 

  - 

  - 

  - 

  - 

  - 

Conversion of convertible loan notes

  - 

  - 

  - 

  - 

  - 

  - 

  - 

  - 

  - 

Foreign exchange differences on retranslation of investments

  - 

  - 

  - 

  - 

  - 

  - 

748

  - 

748

Shares issued for consideration

  - 

  - 

  - 

  - 

  - 

  - 

  - 

  - 

  - 

Net (loss) for the period

  - 

  - 

  - 

  - 

  - 

  - 

  - 

(68,071)

(68,071)

Balance at 30 June 2008

3,704

138,511

992

  - 

1,534

7,228

1,627

(55,686)

97,910



Earnings per Share

 

 

 

 

 

 

 

The calculation of the basic and diluted earnings per share is based on the following data:


 

 

 

Six months

Six months

Year to

 

to 30 Jun 09

to 30 Jun 08 
(Restated)

31 Dec 08 (Restated)

Continuing operations

 

 

 

 

 

 

 

Earnings

 

 

 

Earnings for the purposes of basic earnings per share

(10,557)

(68,071)

(88,546)

Effect of dilutive potential ordinary shares:

 

 

 

- interest on convertible loan notes

-

-

-

Earnings for the purposes of diluted earnings per share

(10,557)

(68,071)

(88,546)

Impairments

-

75,289

89,662

Restructuring

-

-

372

Adjusted earnings for the purposes of earnings per share before exceptional items

(10,557)

7,218

1,488

 

 

 

 

 

 

 

 

Number of shares (restated)

 

 

 

Weighted average number of ordinary shares for the purposes of basic earnings per share

74,077,218

74,067,218

74,072,218

Convertible Loan Notes

-

-

-

Share Options

821,527

2,751,882

1,859,723

Weighted average number of ordinary shares for the purposes of diluted earnings per share

74,077,218

76,819,100

75,931,941

 

 

 

 

Basic earnings per share (pence)

(14.25)

(91.90)

(119,54)

Diluted earnings per share (pence)

(14.25)

(91.90)

(119.54)

 

 

 

 

Basic earnings per share before exceptional items (pence)

(14.25)

9.75

2.01

Diluted earnings per share before exceptional items (pence)

(14.25)

9.40

1.96

 

 

 

 


On the 16th June 2009 the Company's existing Ordinary Shares of 1 pence were consolidated into new Ordinary Shares of 5 pence each. The earnings per share comparatives have been adjusted to reflect this consolidation.



Business Segments 

 


For the six months ending 30.06.09


For the six months ending 30.06.08


For the twelve months ending 31.12.08 (restated)



Powered Access Platforms

Zero Emmission Vehicles

Other

Group



Powered Access Platforms

Zero Emmission Vehicles

Other

Group



Powered Access Platforms

Zero Emmission Vehicles

Other

Group

 

£000's

£000's

£000's

£000's


£000's

£000's

£000's

£000's


£000's

£000's

£000's

£000's

Revenue

 

 

 

 


 

 

 

 


 

 

 

 

External Sales

21,184

8,100

644

29,928


72,900

15,600

4,285

92,785


114,388

25,087

6,259

145,734

Inter-segment sales

 

 

 

 


 

 

 

 


 

 

 

 

Total revenue

21,184

8,100

644

29,928


72,900

15,600

4,285

92,785


114,388

25,087

6,259

145,734


Result

 

 

 

 


 

 

 

 


 

 

 

 

Segment Result before restructuring 

(8,084)

(1,887)

(1,076)

(11,047)


(66,992)

1,896

93

(65,003)


(82,689)

(1,389)

(3,879)

(87,957)

Restructuring

-

-

-

-


-

-

-

-


(263)

(38)

(71)

(372)

Loss from operations

(8,084)

(1,887)

(1,076)

(11,047)


(66,992)

1,896

93

(65,003)


(82,952)

(1,427)

(3,950)

(88,329)

Finance costs




(348)





(261)





(456)

Loss before tax




(11,395)





(65,264)





(88,785)

 




 





 





 

Income tax (expense)




838





(2,807)





239

Loss after tax




(10,557)





(68,071)





(88,546)


Other information

 

 

 

 


 

 

 

 


 

 

 

 

Capital additions

136

293

-

429


2,437

6,471

22

8,930


2,179

5,317

22

7,518

Depreciation and amortisation

700

572

267

1,539


810

455

135

1,400


2,025

904

265

3,195

Impairments

-

-

-

-


74,012

1,097

180

75,289


88,385

1,097

180

89,662


Balance Sheet

 

 

 

 


 

 

 

 


 

 

 

 

Assets:

 

 

 

 


 

 

 

 


 

 

 

 

Segment assets

69,636

20,706

7,117

97,459


109,301

23,106

9,230

141,637


88,266

21,338

8,066

117,670

Consolidated total assets

69,636

20,706

7,117

97,459


109,301

23,106

9,230

141,637


88,266

21,338

8,066

117,670

Liabilities:

 

 

 

 


 

 

 

 


 

 

 

 

Segment Liabilities

14,493

3,103

7,875

25,471


30,654

4,883

8,190

43,727


19,133

3,677

9,079

31,889

Consolidated total liabilities

14,493

3,103

7,875

25,471


30,654

4,883

8,190

43,727


19,133

3,677

9,079

31,889




This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
IR BRGDCGXDGGCC
UK 100

Latest directors dealings