Interim Results

RNS Number : 2723R
Tanfield Group PLC
18 August 2010
 

The Tanfield Group Plc

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

 Interim Results for the six month period to 30 June 2010

18th August 2010

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 2010.

·     Turnover of £28.1m (H1 2009: £29.9m / H2 2009 £28.2m)

·     Operating loss reduced to £9.8m  (H1 2009: Operating loss of £11.0m / H2 2009 Operating  loss £10.4m)

·     Net cash at 30 June of £2.2m (31 December 2009: £5.4m)

·     Return to growth in Electric Vehicles division

·     Initial signs of stability in Powered Access end markets

·     Negotiations on-going to consolidate Electric Vehicle businesses to optimise shareholder value

·     Review of alternative near-term funding possibilities pending successful completion of  consolidation of the Electric Vehicle business

Darren Kell, CEO of Tanfield, said: "Both of the principal business units performed in line with our expectations, during another extremely challenging period for the global economy.

"We maintained tight control of cash and moved closer towards a break-even position, while still retaining all our core people and skills.

"Tanfield continues to leverage its status as the world leader in commercial electric vehicles, while we are also seeing signs that the global market for aerial lifts is stabilising, albeit at very low levels."

For further information:

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

Darren Kell, CEO / Charles Brooks, FD

Arbuthnot Securities, Nomad & Broker                                                                 +44(0)20 7012 2000

James Steel

Media Enquiries                                                                                                               +44 (0) 7536 092682

Dan Jenkins                                                       

 

Summary

We maintained our focus on cash preservation, whilst retaining our infrastructure and skills base for the eventual market recovery. Turnover in the first half was £28.1m, resulting in a loss of £9.8m, a significant improvement over the operating loss of £11.0m in the corresponding period of 2009. The company ended the period with a net cash balance of £2.2m reflecting the adverse trading conditions in the period.

Demand for electric commercial vehicles continued to rise steadily during the period, with new markets outside of the UK accounting for a significant proportion of order intake. However, the ongoing global downturn in the construction sector, exacerbated by the continued absence of credit, denied the Powered Access division any opportunity for recovery.

Discussions with Smith Electric Vehicles US Corporation

As outlined in our announcement of 9th August, Tanfield has signed non-binding Heads of Terms with Smith Electric Vehicles US Corp (SEV US). The strategy centres on an agreement to consolidate the UK arm of Smith Electric Vehicles and SEV US. SEV US has indicated that it is exploring a possible public offering of its equity securities on the NASDAQ exchange. Because of this development, we are restricted in our ability to comment on SEV US. However, the Board of Directors will update shareholders on these discussions, as soon as it is appropriate.

Powered Access:  Turnover of £18.6m (H1 2009: £21.2m / H2 2009: £20.5m)

We believe that, after an extremely turbulent two years, the market for aerial work platforms is beginning to stabilise.

During the period, the Powered Access division successfully sold significant amounts of excess inventory; going forward, we will maintain strategic stock across the globe.

For the past two years, we have marketed aerial lifts under two brands, UpRight Powered Access and Snorkel. In April 2010 we launched our new global Snorkel branding, which has been positively received by our customer base. On 31st August 2010, we will cease to market aerial work platforms under the UpRight banner, with all UpRight lifts consolidated into a global Snorkel product range. This consolidated portfolio contains new products in the volume segments of boom lifts and scissor lifts. The first of these new models are now in production and we will launch more next year.

During the first half, Tanfield further expanded and enhanced its global dealer network, with the appointment of new distributors in Latin America and Europe.  However, the major equipment rental companies continued to age their fleets and held off additional capital expenditure. As these companies account for more than 70% of worldwide sales for powered access equipment, their ongoing lack of spending continues to impact the entire aerial lift industry.

In light of this situation, Tanfield continues to explore other opportunities for growth. Our licensing agreement with Pop-Up Products Ltd has allowed Tanfield to quickly generate a world-leading position in the emerging market of low-level access. Pop-Up is the acknowledged market leader in lightweight, compact lifts for interior use, which deliver substantial safety and productivity benefits in areas previously reliant on stepladders or scaffold podium towers. Working with Pop-Up, we have already launched new machines in this segment and are growing sales through our global distribution capabilities.

Zero Emission Vehicles:  Turnover of £8.4m (H1 2009: £8.1m / H2 2009: £7.0m)

Tanfield remains the recognised world leader in commercial electric vehicle technologies and continued to enhance this position during the period.

After the most severely depressed period on record for the whole commercial vehicle sector, with demand in certain vehicle types down by as much as 80%, there are now some signs of market recovery, and it is encouraging that year on year revenues have grown in this division. 

The Zero Emission Vehicles division has commenced delivery of the 47 electric vans through the UK Government's Low Carbon Vehicle Procurement Programme. We are on target to meet our agreed delivery schedule for these vehicles, which are destined for a range of Government bodies and local authorities. Tanfield is the largest supplier of electric vans into Phase One of the programme.

We have also supplied the majority of the 51 Smith Edison electric vehicles for Sainsbury's Online, on target with the customer's delivery schedule. We believe that this is already the largest fleet of electric light commercial vehicles in the world.

During the period, we continued to win new blue chip customers, including outsourcing group Bunzl and utility Western Power Distribution, plus 10 Smith Edison vans for a German Government project in Cologne. Smith Electric Vehicles launched several new products, including a new 17-seat minibus and Smith Telemetry, the world's first telematics software specifically developed for electric vehicles. We commenced trials of a hydrogen fuel cell range-extender and continued to add new export markets, with the appointment of a distributor in France.

Our associate company SEV US has successfully implemented its targeted build and delivery plan for the first half and is winning new business with US blue chip clients. SEV US is in receipt of a grant from the US Government Department of Energy of $32m to accelerate the implementation of these products in the USA. It is very likely that future growth in the US will be significantly more rapid than in the European market, due to number of Federal and state initiatives to drive demand and application.

In the UK, Smith is also leading on two world-first training initiatives; the Smith Electric Vehicles Apprenticeship Programme and an MSc in Low Carbon Vehicle Technologies.

Other:  Turnover of £1.1m (H1 2009: £0.6m / H2 2008: £0.8m)

The core customer base of Tanfield's Engineering operations is mining and off-highway vehicle manufacturers. A small increase in activity from these customers delivered moderate growth in this business unit.

Funding

Despite our focus on cash preservation net cash declined by some £3.2m during the six months to £2.2m at 30 June 2010.  The Directors are conscious that this has subsequently reduced further and, as a priority, they are reviewing alternative ways to fund the continuing cash outflow pending successful completion of the consolidation of the Electric Vehicle business which is expected to lead to a cash inflow for Tanfield.

 

Outlook

Demand for low emission vehicles, especially in the commercial vehicle sector, will remain a major market driver for growth in the Smith Electric Vehicles business, in both the medium and long term. Short term predictions remain modest, with any substantial growth dependent upon the economic recovery in the key end markets of the UK and Western Europe.  However we expect more rapid growth in the US market due to specific market drivers combined with a supportive grant and incentive environment.

While we believe the global market for aerial lifts has bottomed out, the low levels of activity mean there is little potential for growth before 2011. As we previously indicated, it appears that the major rental companies will not be investing in new fleets during 2010.

However, these major buyers of powered access now have fleets of aerial lifts well over their target average age for rental equipment. We therefore expect them to begin re-investing in new equipment at some point in 2011, dependent also on wider economic indicators and the availability of financing.

Overall, the Board expects trading conditions in the second half of 2010 will be similar to the first half of the year.

Given the focus on cash preservation, Tanfield is not proposing to pay a dividend for the period.

ENDS

 

 

 

CONSOLIDATED INCOME STATEMENT 

FOR THE SIX MONTHS ENDING 30 JUNE 2010









Six months

Six months

Year to


to 30 Jun 10

to 30 Jun 09

31 Dec 09


(unaudited)

(unaudited)

(audited)


£000's

£000's

£000's





Revenue

29,928

58,159

Changes in inventories of finished goods and WIP

(2,702)

840

(6,358)

Raw materials and consumables used

(24,103)

(39,945)

Staff costs

(9,501)

(18,645)

Depreciation and amortisation expense

(1,539)

(3,007)

Other operating income

                             -

-

Other operating expenses

(6,672)

(11,648)

Loss from operations before impairments

(9,819)

(11,047)

(21,444)

Share of results of associates

-

(51)

Impairment of Receivables

-

-

(600)

Loss from operations after impairments

(9,819)

(11,047)

(22,095)

Finance costs

(188)

(567)

Interest receivable

36

26

207

Net finance expense

(152)

(348)

(360)





Loss before taxation

(9,971)

(11,395)

(22,455)

Taxation

(34)

838

1,066

Net loss

(10,005)

(10,557)

(21,389)








Attributable to:



Owners of the parent

(10,557)

(21,388)

Non-controlling interest

(45)

-

(1)





Earnings per share




Basic  (pence)

(13.4)

(14.3)

(28.9)

Diluted (pence)

(13.4)

(14.3)

(28.9)

















 

 

 

CONSOLIDATED BALANCE SHEET




AS AT 30 JUNE 2010

 

 

30 Jun 10

30 Jun 09

31 Dec 09


(Unaudited)

(Unaudited)

(Audited)


£000's

£000's

£000's

Non current assets




Goodwill

356

356

356

Intangible assets

13,066

14,583

13,825

Property, plant and equipment

4,896

5,630

5,200

Deferred tax assets

1,915

1,781

1,915

Associate

-

-

-

Trade and other receivables

900

1,500

900


21,133

23,850

22,196

Current assets




Inventories

39,720

49,426

44,615

Trade and other receivables

12,528

13,103

11,878

Investments

451

208

275

Current tax assets

72

59

72

Cash and cash equivalents

2,228

10,813

5,414


54,999

73,609

62,254

Total assets

76,132

97,459

84,450





Current liabilities




Trade and other payables

16,757

15,176

16,178

Provisions

598

-

527

Tax liabilities

79

-

45

Obligations under finance leases

417

547

480

Other creditors

2,534

9,138

2,553


20,385

24,861

19,783

Non-current liabilities




Other creditors

-

-

-

Obligations under finance leases

-

303

156

Deferred tax liabilities

375

307

375


375

610

531

Total liabilities

20,760

25,471

20,314





Equity




Share capital

3,704

3,704

3,704

Share premium

-

138,511

-

Share option reserve

1,764

1,653

1,764

Special reserve

66,837

-

66,837

Merger reserve

1,534

1,534

1,534

Capital reduction reserve

-

7,228

-

Translation reserve

10,164

6,054

8,923

Profit and loss account

  (28,585)

(86,696)

(18,625)

Total parent shareholders' equity

55,418

71,988

64,137

Minority interests

(46)

-

(1)

Total equity and total liabilities

76,132

97,459

84,450

 

 

CONSOLIDATED CASH FLOW STATEMENT 

FOR THE SIX MONTHS ENDING 30 JUNE 2010









Six months

Six months

Year to


to 30 Jun 10

to 30 Jun 09

31 Dec 09


(unaudited)

(unaudited)

(audited)


£000's

£000's

£000's

Cash flow from operating activities




Loss before interest and taxation

(9,819)

(11,047)

(22,095)

Depreciation and amortisation

1,454

1,539

3,007

(Gain) on deferred consideration reassessment

-

-

(926)

(Gain) Loss on disposal of fixed assets

-

-

55

(Gain) Loss on disposal of Intangible assets

-

-

69

Impairment of receivables

-

-

600

Loss on impairment of investments

-

-

51

Operating cash flows before movements in working capital

(8,365)

(9,508)

(19,239)





(Increase) decrease  in receivables

Decrease (increase) in receivables

(358)

7,029

8,668

Increase (decrease) in payables

409

(3,881)

(2,981)

Increase (decrease) in provisions

73

-

(2,840)

Decrease (increase) in inventories

5,676

8,072

14,821

Net cash (used) generated from operating activities

(2,565)

1,712

(1,571)

Interest paid

(188)

(69)

(567)

Income taxes received

-

(374)

241

Net cash (used) generated from operating activities

(2,753)

1,269

(1,897)





Cash flow from Investing Activities

Cash flow from Investing Activities




Purchase of investments in Associates

-

-

(51)

Purchase of property, plant and equipment

(59)

(80)

(243)

Payment of deferred consideration

-

(349)

(2,904)

Proceeds from sale of property, plant and equipment

-

-

58

Purchase of investments

(143)

(3)

(51)

Purchase of intangible fixed assets

(136)

(349)

(544)

Interest received

36

26

 207

Net cash used in investing activities

(302)

(755)

(3,528)





Cash flow from financing activities

Cash flow from financing activities




Repayments of obligations under finance leases

(227)

(278)

(504)

Net cash used in financing activities

(227)

(278)

(504)





Effect of exchange rate changes on cash and cash equivalents

Effect of exchange rate changes on cash and cash equivalents

96

(553)

213

Net decrease in cash and cash equivalents

(3,186)

(317)

(5,716)

Cash and cash equivalents at the start of the period

5,414

11,130

11,130

Cash and cash equivalents at the end of the period

2,228

10,813

5,414






 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 

 

 

 

Share capital

Share premium

Share option reserve

Special 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

 

For the six month period ended 30 June 2010










Balance at 1 January 2010

3,704

-

1,764

66,837              

1,534

-

8,923

(18,625)

64,137

Foreign exchange differences on retranslation of investments

                   -

                   -

                    -

                   -

                  -

                      -

1,241

                   -

1,241

Net (loss) for the period

                   -

                   -

                    -

                   -

                  -

                      -

                        -

(9,960)

(9,960)

Balance at 30 June 2010

3,704

-

1,764

66,837            

1,534

-

10,164

(28,585)

55,418






















For the six month period ended 30 June 2009










Balance at 1 January 2009

3,704

138,511

1,653

                   -

1,534

7,228

9,290

(76,139)

85,781

Foreign exchange differences

                   -

                   -

                    -

                   -

                  -

                      -

(3,236)

                   -

(3,236)

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 year ended 31 December 2009










Balance at 1 January 2009

3,704

138,511

1,653

                   -

1,534

7,228

9,290

(76,139)

85,781

Share option provision

-

-

111

-

-

-

-

-

111

Cancellation of share premium account

-

(138,511)

-

66,837

-

(7,228)

-

78,902

-

Foreign exchange differences

                   -

                   -

                    -

                   -

                  -

                      -

(367)

                   -

(367)

Net (loss) for the period

                   -

                   -

                    -

                   -

                  -

                      -

                        -

(21,388)

(21,388)

Balance at 31 December 2009

3,704

-

1,764


66,837 

1,534

-

8,923

(18,625)

64,137

 


1 Basis of preparation

The consolidated Interim Report of the Group for the six months ended 30 June 2010 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 2009 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.

 

2 Accounting policies

The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December 2009, as described in those financial statements.

 

 

LOSS PER SHARE








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

 

 




Six months

Six months

Year to


To 30 Jun 10

to 30 Jun 09

31 Dec 09

 

Weighted average number of shares in thousands








Basic

74,077

74,077

74,077

Potential dilutive ordinary shares from share options

150

170

 164

Total diluted

74,227

74,247

74,241









Loss per share








Loss attributable to equity shareholders of the parent

(9,960)

(10,557)

(21,388)

Adjustment for one off items:




 Impairments

600

(Gain) on deferred consideration reassessment

-

-

(926)

Loss for the purposes of loss per share before one off items

(9,960)

(10,557)

(21,714)













Basic loss per share (pence)

(13.4)

(14.3)

(28.9)

Diluted loss per share (pence)

(13.4)

(14.3)

(28.9)





Basic loss per share before one off items (pence)

(13.4)

(14.3)

(29.3)

Diluted loss per share before one off items (pence)

(13.4)

(14.3)

(29.3)





 

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. 

 


BUSINESS SEGMENTS 

For management purposes, the Group is currently organised into three operating divisions - Powered Access Platforms, Zero Emission Vehicles and other operations. These divisions are the basis on which the Group reports its primary segment information.

 

Principal activities are as follows:

 

Powered Access Platforms:  design and manufacture of powered access equipment

Zero Emission Vehicles: design, manufacture, service and maintenance of electric vehicles

Other: design and manufacture of engineering parts and the group holding company

 

 

Operating results by line of business

 

Six months ending 30 June 2010

Six months ending 30 June 2009

Year ended 31 December 2009

 

Revenue

Loss

Revenue

Loss

Revenue

Loss

 

£000's

£000's

£000's

£000's

£000's

£000's

Powered Access Platforms

18,582

(6,579)

21,184

(8,084)

41,708

(15,457)

Zero Emission Vehicles

8,438

(2,159)

8,100

(1,887)

15,057

(5,427)

Other

1,072

(1,081)

644

(1,076)

1,394

(1,160)

Segment revenue / loss

28,092

(9,819)

29,928

(11,047)

58,159

(22,044)

Share of post tax loss of associate


-


-


(51)

Restructuring costs


-


-


-

Finance income


36


26


207

Finance costs


(188)


(374)


(567)

Taxation


(34)


838


1,066

Loss for the period


(10,005)


(10,557)


(21,389)

 

 







Assets and liabilities by line of business





Six months ended 30 June 2010

Six months ended 30 June 2009

Year ended 31 Dec 2009





£000's

£000's

£000's

Assets







Powered Access Platforms




54,756

69,190

60,562

Zero Emission Vehicles




16,819

21,051

18,943

Other




2,570

5,378

2,958

Total segment assets




74,145

95,619

82,463

Current tax assets




72

59

72

Deferred tax assets




1,915

1,781

1,915

Total assets




76,132

97,459

84,450








Liabilities







Powered Access Platforms




(11,066)

(14,509)

(10,792)

Zero Emission Vehicles




(4,351)

(3,090)

(3,675)

Other




(2,636)

(1,531)

(3,175)

Total segment liabilities




(18,053)

(19,130)

(17,642)

Current tax liabilities




(79)

-

(45)

Deferred tax liabilities




(375)

(307)

(375)

Retirement benefit obligations




(25)

(26)

(24)

Deferred consideration




(2,228)

(6,008)

(2,228)

Total liabilities




(20,760)

(25,471)

(20,314)












BUSINESS SEGMENTS CONTINUED

 

 


Total amortisation and depreciation, and capital expenditure by line of business

                                                                                                                                           






Six months ended 30 June 2010

Six months ended 30 June 2009

Year ended 31 Dec 2009





£000's

£000's

£000's








Depreciation and amortisation







Powered Access Platforms




795

700

1,639

Zero Emission Vehicles




562

572

1,148

Other




97

267

220

Total




1,454

1,539

3,007








Capital expenditure







Powered Access Platforms




30

136

245

Zero Emission Vehicles




153

293

542

Other




12

-

-

Total




195

429

787








Impairments







Powered Access Platforms




-

-

600

Zero Emission Vehicles




-

-

-

Other




-

-

-

Total




-

-

600

 

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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