Tanfield Group Plc is classified as an Investing Company. The Company has a 49% membership interest in Snorkel International Holdings and a 5.76% interest in the shares of Smith Electric Vehicles Corp.

Investing Policy

The holdings in Snorkel International Holdings and Smith Electric Vehicles are passive investments. It is the intention that where distributions or realisations of such holdings are made (or there is a receipt of marketable securities) that these are distributed to shareholders, subject to compliance with any legal requirements associated with such distributions. There is presently no anticipated limit on the amount of time the holdings are to be held by the Company.

The Company does not have and will not make cross holdings and does not have a policy on gearing.

Board of Directors

Daryn Robinson
Non-Executive Director

Daryn Robinson was invited to join the board in November 2015 following several years of involvement with Tanfield Group dating back to 2002. He was a key member of the senior management team during the acquisitions of Smith Electric in 2004, Upright Powered Access in 2006 and Snorkel in 2007. More recently he was appointed Company Secretary in 2014. With a strong background in finance, mergers and acquisitions, he went on to provide business consultancy services to a number of other companies both privately owned and publicly listed on the AIM and ISDX markets. This included an interim CFO role with Darwen Group who in 2007 acquired the former bus manufacturer East Lancashire Coachbuilders and listing the Company on the AIM market as Darwen Holdings Plc. In 2008 he worked with Darwen on the acquisition of Optare and following the merger and restructuring the Company become the enlarged AIM listed company Optare Plc, employing 830 people with a £80 million turnover. In 2010 he assisted Optare to secure an initial investment from Ashok Leyland which culminated in the disposal of 75% of the share capital to Ashok in 2012. Daryn sits on the Remuneration Committee.

Martin Groak
Non-Executive Director

Martin Groak joined the board of Tanfield in June 2005. He qualified as a chartered accountant after completing a degree in economics from the University of London and has over 30 years of international business experience. Martin is multi-lingual, with a strong background in finance and financial control, predominantly in the oil and gas, steel, logistics and energy sectors. He has previously held four other directorships of publicly quoted companies and is currently CFO of ISDX-listed CAP Energy Plc, which is exploring for oil offshore West Africa. Martin is Chairman of Tanfield's Audit Committee.

Investments

Tanfield owns 5.76% of the shares in Smith Electric Vehicles Corp, a leading designer and producer of all-electric commercial vehicles for short haul urban fleets. Smith produces zero-emission vehicles that deliver a significantly superior performance to traditional diesel trucks, at greater operational efficiency and significantly lower cost. The Smith mission is to be the leading producer of high efficiency, zero-emissions vehicles in the commercial transportation industry, utilising its unique platform to partner with world-class brands to transform their entire fleets, help them operate more profitably and return energy to the grid.

www.smithelectricvehicles.com

Tanfield has a 49% membership interest in Snorkel International Holdings LLC, subject to the provisions of the agreement with its partner Xtreme Manufacturing LLC (further details of which are set out in the circular to shareholders dated 20 September 2013).

Tracing its roots back to 1946, Snorkel is a global producer of self-propelled, towable and push-around aerial lifts, including diesel and electric scissor lifts, mast lifts, telescopic boom lifts and articulating booms. Snorkel's comprehensive range of aerial lifts delivers safer and more efficient working at heights from 10ft to 132ft (3m to 40m). Snorkel offers machines for almost any application, from compact electric lifts for interior building maintenance through to big diesel booms and scissors for the toughest construction job sites.

Snorkel's philosophy is "keep it simple" - the company manufactures robust, reliable machines that take workers off the ground in a safe and efficient manner. Snorkel lifts are simple to use, simple to maintain and simple to repair; a philosophy that makes them ideal for demanding rental applications.

www.snorkellifts.com

Corporate Governance

Principles of Corporate Governance

The Company is not required to comply with the UK Corporate Governance Code or the Corporate Governance Code for Small and Mid-Size Quoted Companies 2013, as published by the Quoted Companies Alliance. However, the Directors recognise the importance of sound corporate governance and the Board intends so far as is practicable for a company of its size to implement certain corporate governance recommendations. Details are provided below:

The role of the Board is to provide entrepreneurial leadership of the Company within a framework of prudent and effective controls, which enables risk to be assessed and managed. The Board sets the Company's strategic aims, ensures that the necessary financial and human resources are in place for the Company to meet its objectives and reviews management performance. The Board sets the Company's values and standards and ensures that its obligations to its shareholders and others are understood and met.

Board Structure

The Board comprises of the Non-Executive Chairman and two other Non-Executive Directors.

Board Role

The Board is responsible to shareholders for the proper management of the Group. To enable the Board to discharge its duties, all Directors have full and timely access to all relevant information and there is a procedure for all Directors, in furtherance of their duties, to take independent professional advice, if necessary, at the expense of the Group. The Board has a formal schedule of matters reserved to it. It is responsible for overall group strategy, approval of major capital expenditure projects and consideration of significant financing matters. The Board met on six separate occasions in the year.

Appointment and Induction of Directors

The composition of the Board is kept under review with the aim of ensuring that the Directors collectively possess the necessary skills and experience to direct the Group's business activities.

Board Committees

The Board delegates certain matters to its two principal committees, which deal with remuneration and audit.

Remuneration Committee

The Remuneration Committee comprises Jon Pither (Chair) and Daryn Robinson. The Remuneration Committee determines and agrees with the Board the framework of remuneration for the Executive Directors. The Company currently does not have any Executive Directos. The Board itself determines the remuneration of the Non-Executive Directors.

There was one remuneration committee meeting in the period which was fully attended. The report on Directors' remuneration is set out in the Company's Report and Financial statements on pages 8 to 9.

Audit Committee

The Audit Committee comprised the Non-Executive Directors Martin Groak (Chair) and Jon Pither.

The Audit Committee is responsible for:

  1. Reviewing the scope of external audit, to receive regular reports from RSM UK Audit LLP (formerly Baker Tilly UK Audit LLP).
  2. Reviewing the half-yearly and annual accounts prior to their recommendation to the Board.
  3. Reviewing the Group's internal financial controls and risk management systems and processes.
  4. Making recommendations on the appointment, re-appointment and removal of external auditors and approving the terms of engagement.
  5. Reviewing the nature of the work and level of fees for non-audit services provided by the external auditors.
  6. Assessing the independence, objectivity and effectiveness of the external auditor.
  7. The committee met on two occasions during the year and they were fully attended.
Internal Control

The Board has overall responsibility for the Group's system of internal control and risk management and for reviewing the effectiveness of this system. Such a system can only be designed to manage, rather than eliminate, the risk of failure to achieve business objectives and can therefore only provide reasonable, and not absolute assurance against material misstatement or loss.

The Board is of the view that, due to the current size and composition of the Group, that it is not necessary to establish an internal audit function.

Relations with Shareholders

The Company values its dialogue with both institutional and private investors. Effective two-way communication with fund managers, institutional investors and analysts is actively pursued and this encompasses issues such as performance, policy and strategy.

Private investors are encouraged to participate in the Annual General Meeting, at which the Chairman presents a review of the results and comments on current business activity. The Chairmen of the Audit and Remuneration Committees will be available at the Annual General Meeting to answer any shareholder questions.

Share Dealing Code

The Company has adopted a code for directors' dealings appropriate for a company whose ordinary shares are admitted to trading on AIM. The form of this code is substantially similar to the Model Code.

Jon Pither
Chairman
24 June 2016