Tanfield Group PLC
26 April 2006


                               Tanfield Group plc


                              Preliminary Results


                      Twelve months to December 31st, 2005

Highlights

   ?Turnover Growth £22.4 million from £10.7million
   ?Operating profit (continuing and discontinuing) before tax £2.0m compared
    to loss of £5.8million.
   ?Strengthened Balance Sheet £11.8million net assets from £1.4million.
   ?Continued growth in order book.
   ?Launch of new products: Aerial Access; Electric Vehicles.
   ?Confirmed orders for new range of electric vehicles.

Tanfield Group Plc (TAN) is pleased to announce its preliminary results for the
twelve month period to 31 December 2005 and also takes the opportunity to
comment on the structure of the Group, acquisitions, recent trading performance
and future prospects.

Following the large scale restructuring in 2004, the financial results for the
twelve months to December 2005 demonstrate strong growth, profitability and a
robust balance sheet.

Summary of Financial Performance

Turnover for the twelve month period grew to £22.4m, which compares to £10.7m
for the full year to December 2004. This follows significant organic growth in
the Group's operations and integrating the Smith Electric Vehicles business,
which has stimulated sales growth across all of the Group's divisions.

Operating profit (continuing and discontinuing) before tax for the period of
£2.0m compares favourably to the loss of £5.8m in the year to December 2004.

The balance sheet has been significantly strengthened during the period, with
net assets at the end of December of £11.8m compared to £1.4m at the end of
2004. We now have Net Current Assets of £2.5m, compared to Net Current
Liabilities of £1.9m at December 2004 and total debt has reduced to £2.8m at
December 2005.

During the period, a new £4m Group bank facility was agreed which not only
increases the working capital facilities available to the Group, but also
significantly reduces its cost of borrowing. Furthermore, the Group raised
mortgage funding to allow it to acquire the long leasehold on two of its
buildings on the Tanfield site for a consideration of £1.16m.

Structure of the Group

Over the past twelve months the Group has developed a portfolio of businesses
focused on providing zero emission vehicles and zero emission industrial
products to customers operating in closed urban and industrial environments.
This portfolio of businesses is supported by our well-established engineering
capability.

Smith Electric Vehicles: is the largest manufacturer of commercial road going
electric vehicles in the world with a customer base of over 500 operating both
in the private and public sectors. It provides customers with vehicles using
traditional technology and more recently has begun to deliver Faraday vehicles
which have proven innovative technology with much greater range and speed. It
also provides a national service and maintenance infrastructure to these
customers with over 120 engineers in the field at eleven depots. This
infrastructure gives customers, particularly large fleet users, the confidence
that the Group can support the vehicles in the field.

Norquip: is one of the world's leading manufacturer of ground support equipment
in the form of airport service vehicles and passenger transfer units. Since the
business was relaunched by the Group and the design of vehicles re-engineered,
product has been delivered to customers and both the order book is ahead of plan
and enquiry levels very buoyant.

Jumbotugs: is a UK brand that is recognised worldwide for producing one of the
best electric powered tow tractors and platform trucks. These vehicles are used
predominantly in the Airport and Industrial sectors.
Aerial Access: is a manufacturer with a global reputation for innovation and a
strong heritage in the design and manufacture of high quality electrically
powered aerial lifts and access platforms.
Tanfield Engineering Systems: is an engineering business that as well as
supporting the Group's own product range also provides complex integrated
systems to third party blue chip customers.

Growth of the Group

The profitable growth over the past year demonstrates the success of the
strategy for the Group to concentrate on the expansion of the product ranges of
electric vehicles and aerial access equipment and on value added engineering
work with blue chip customers. The Group is considering further consolidation of
all its assembly processes onto one site as the Directors believe this would
increase operational efficiency. Existing operational improvements at the
Tanfield site have already significantly reduced the unit cost of manufacture
and improved output volumes.

Trading Update

The acquisition of SEV Group at the end of 2004 and of Norquip mid 2005 have
both proved to be a success which the Directors believe have significantly
increased the growth potential for the Group.

Smith Electric Vehicles

The most exciting development has been the significant growth in the order book
for electric vehicles. There has been a substantial increase in orders for
vehicles in the public sector : for municipals in such areas as waste disposal,
parks and gardens maintenance, hospitals and universities; and in the private
sector for home delivery companies, airport operators and wider industry. This
has led to a quadrupling of output since the end of the third quarter of 2004.
The increase in sales has been reflected in both the traditional type vehicles
and, more significantly, the updated technology vehicles such as Faraday.

Service and Maintenance: There has been a doubling of sales in the service and
maintenance division over the past twelve months. There continues to be further
growth potential in this division based out of our nationwide chain of depots.
SEV currently has over 120 people employed in servicing and maintaining electric
vehicles throughout the UK, increased from 80 people at the half year. The
Directors expect that this division will be further supplemented by increased
business from existing customers. Also, as each new electric vehicle is sold it
normally involves a five year service and maintenance contract. The availability
of this service and maintenance network gives existing and future buyers of
electric vehicles the confidence that there is a high level of support for their
fleets.

New Vehicle Production: During the past twelve months this division has
developed two new road going electric vehicles that can achieve ranges of over
100 miles and speeds of 50 mph. These vehicles cater for the demand in the home
delivery market. The vehicles are now in production for a number of customers
including, as well as those who traditionally buy electric vehicles, a number
who have not previously bought electric vehicles. We have established for these
new users that the vehicles offer significant whole life cost savings over, and
are comparable in driveability to equivalent diesel vehicles.





Orders for New Vehicles (Faraday): As well as being in final negotiations with a
number of other significant logistics, courier, Internet and home shopping
companies. The following customers have confirmed orders;

   ? Sainsbury PLC - Home shopping delivery

   ? Petit Forestier - Europe wide Chilled Food distribution

   ? BAA - Airport transit and transport usage

   ? Co-Op Services-  Secure data and recyclable waste transport

   ? Enterprise plc - Facilities management usage

   ? MRS Ltd - Estate services and management

The above orders reflect the level of acceptance in the market for our new
vehicles.

New Vehicle Development: We are also working in collaboration with a national
parcel delivery company and a specialist national food chain business to produce
vehicles that meet specific specifications for their operations. These two
vehicles have a potential demand of several thousand units within their sectors.
They are expected to be ready for production by September 2006. We are also
developing a "mini-bus" vehicle for the National Trust. They have several
hundred such diesel vehicles across their estate and want to replace these with
zero emission electric vehicles.

By the end of 2006 we expect to have introduced five new electric vehicles to
the market, each with a number of body configurations.

Aerial Access

There has been growth in both existing and new markets. More aggressive
marketing of what was already a well respected product range meant that during
2005 there was large growth in the United States and mainland Europe. The
business has aimed at serving the independent sector of this market.

Output Growth: Sales have increased by over 400% during the year with 90% of
these exported sales. The division has experienced further substantial growth in
Europe over the past six months, seeing output rise to this market by over 250%.
The drivers behind this growth are better distribution channels, the appointment
of new, better qualified agents and improvements to the range. Another important
driver is the legislation introduced across Europe, The Health and Safety at
Work Regulation, which limits the use of ladders and forces people to either use
scaffolding or powered work platforms.

A new range of Aerial Access lifts, based on a standardised build programme,
with enhanced features, was launched at the end of 2005. This product range has
been well received by the market and orders have exceeded expectation.
Distribution of the product range will be increased over the next twelve months
by appointing more agents in mainland and Eastern Europe. The new venture with a
partner in China is progressing and production will commence in the fourth
quarter of this year.

Jumbotugs

Before the acquisition of SEV by Tanfield Group, this business had received very
little development or focused investment for a number of years. The opportunity
to provide zero emission tow tractors to the airport sector is a large, global
opportunity and the sector is under pressure to reduce emissions. The product
range has been re-engineered for ease of manufacture and to improve margins and
the revised product has been very well received in the market place. During
2005, sales grew by 300% to over £1million and the business achieved 80% of
export sales. This year to date, the sales and order book exceed this figure
substantially. Enquiries are at an unprecedented level. A new vehicle has been
introduced to the market and is currently being trialled by two major national
airlines. The trials to date are proving successful and because of its unique
performance characteristics the vehicle has the potential to increase the sales
of the business significantly over the next twelve months.

Norquip

The acquisition of the Norquip business for £280k in May 2005 has proven to be a
worthwhile investment. The market has received the re-launch of the business
with great enthusiasm. Sales are ahead of plan and the order book has grown
substantially. This business exports 80% of its sales. This acquisition has
increased our product offering in the airport sector and it allows the Group to
integrate this product range with our electric drive train. This integration has
proved very successful and we have received orders for 4 vehicles incorporating
this technology, thus providing a product which was previously mounted on a
diesel vehicle as a zero emission vehicle.

Tanfield Engineering Systems

The Group has leveraged the exceptional engineering capability of this division
to support the development and sales of its product based businesses. There has
seen significant organic growth within Tanfield Engineering Systems with the
monthly run rate growing significantly and steadily during the year and we are
confident of being able to grow this business further. In 2005 this division
accounted for 45% of sales of the Group. This year it will represent less than
20% due to the growth and acquisitions in other areas

Summary

Following a year of large scale change in our business model and the strategic
acquisitions of SEV Group and Norquip, the Group is now demonstrating markedly
improved profitable growth. The product portfolio that has been put together is
highly complementary and has major growth potential in several large global
markets. We have a number of exciting new products and projects in the pipeline,
in both the Aerial Access and Electric Vehicle sectors, which are soon to be
launched and we are seeing continuing organic growth in all our chosen target
markets. We are also now operating from a position of renewed financial
strength.

There has been major change in our organisation over the past twelve months.
This would not have been possible without the efforts of all our people. I would
like to take this opportunity to thank all our people for their efforts over the
past 12 months and for the continuing support of all our stakeholders.

Roy Stanley
Chairman Tanfield Group plc







TANFIELD GROUP PLC

CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2005


                                                   2005                  2004
                                                 £000's                £000's
Continuing Operations                          
Revenue                                          22,431                10,687

Other operating income                               42                     1
Changes in inventories of finished goods          1,983                   (12)
and WIP
Raw materials and consumables used               (9,112)               (3,692)
Reversal of previously impaired assets               69                     -
Staff costs                                      (9,080)               (5,457)
Depreciation and amortisation expense               456                  (490)
Other operating expenses                         (4,680)               (3,305)
                                                 -------              --------
Profit/(Loss) from continuing operations          2,109                (2,268)

Finance costs                                      (109)                 (643)
                                                 -------              --------
Net Profit/(Loss) before tax for year             2,000                (2,911)

Income tax expense                                 (344)                   38
                                                 -------              --------
Profit/(Loss) for the year from                   1,656                (2,873)
continuing operations

Discontinued operations
Profit/(Loss) for period from                        38                (2,936)
discontinued operations
                                                 -------              --------
Net profit for the year                           1,694                (5,809)
                                                 =======              ========

Earnings per share
From continuing operations
Basic                                              1.00p               -3.98p
Diluted                                            0.97p               -3.98p

From continuing and discontinued
operations
Basic                                              1.03p               -8.04p
Diluted                                            0.99p               -8.04p





CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2005

                                                          2005            2004
                                                        £000's          £000's
ASSETS

Non Current Assets
Property, Plant and Equipment                            4,015           2,289
Goodwill                                                 5,143           4,913
Intangible Assets                                        3,213             604
                                                        -------        --------
                                                        12,371           7,806
                                                        -------        --------
Current Assets
Inventories                                              4,377           2,417
Trade and Other Receivables                              5,700           4,041
Cash and Cash Equivalents                                1,478           8,746
                                                        -------        --------
                                                        11,555          15,204
                                                        -------        --------
TOTAL ASSETS                                            23,926          23,010
                                                        =======        ========
LIABILITIES
Current liabilities
Trade and Other Payables                                 5,511           6,711
Tax Liabilities                                            299               -
Obligations Under Finance Leases                           631             547
Bank and other Loans and Overdrafts                      1,048           9,620
Other Creditors                                          1,583               -
Provisions                                                   -             279
                                                        -------        --------
                                                         9,072          17,157
                                                        -------        --------
Non Current Liabilities
Bank and other Loans                                     1,392             329
Other Creditors                                            211             291
Obligations Under Finance Leases                           723             927
Deferred Tax Liability                                      45               -
Convertible Loan Notes                                      69           1,663
Provisions                                                 661           1,209
                                                        -------        --------
                                                         3,101           4,419
                                                        -------        --------
TOTAL LIABILITIES                                       12,173          21,576
                                                        -------        --------

Equity
Share Capital                                            1,905           1,328
Share Premium Account                                    1,509          18,632
Share Option reserve                                       308             410
Loan Stock Equity Reserve                                    6             169
Merger Reserve                                           1,534           1,534
Capital Reduction Reserve                                7,228               -
Profit And Loss Account                                   (737)        (20,639)
                                                        -------        --------
Total Equity                                            11,753           1,434
                                                        -------        --------
                                                        -------        --------
Total Equity & Liabilities                              23,926          23,010
                                                        =======        ========



CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2005

                 Share    Share    Share   Capital     Loan Merger   Profit    Total
               capital  Options  Premium Reduction    Stock Reserve and Loss  Equity
                        reserve           Reserve    Equity          Account
                                                    Reserve
                 £000's  £000's   £000's   £000's    £000's  £000's  £000's   £000's

Balance at 1        617     410   12,529        -             1,534 (14,908)     182
January 2004

Issue of new        711            6,103        -         -       -       -    6,814
share capital
Equity element        -       -        -        -       169       -       -      169
of loan stock
Net loss for the      -       -        -        -         -       -  (5,809)  (5,809)
year
Balance at 1      1,328     410   18,632        -       169   1,534 (20,717)   1,356
January 2005
- prior period        -       -        -        -         -       -      78       78
adjustments      ------  ------   ------   ------    ------  ------  ------   ------
- as restated     1,328     410   18,632        -       169   1,534  (20,639)  1,434
                 
Exercise of          12    (102)       -        -         -       -      134      44
share options              
Issue of new        356       -    6,517        -         -       -        -   6,873
share capital                                                                  
Capital               -       -  (25,302)   7,228         -       -   18,074       -
Reduction
Conversion of       200       -    1,581        -      (163)      -       -    1,618
convertible loan
notes
Shares issued        9        -       81        -         -       -       -       90
for
consideration
Net profit for       -        -        -        -         -       -    1,694   1,694
the year

Balance at 31    1,905      308     1,509   7,228         6   1,534     (737) 11,753
December 2005
                ------  ------   ------   ------    ------  ------  ------   ------







CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2005

                                                           2005         2004
                                                         £000's       £000's

Operating Activities
Cash used in operations                                  (1,990)      (2,614)
Interest paid                                              (207)        (620)
                                                          ------     --------
Net Cash used in Operating activities                    (2,197)      (3,234)
                                                          ------     --------

Investing Activities
Acquisitions                                               (324)      (2,541)
Purchase of property, plant and equipment                (2,562)        (202)
Proceeds from sale of property, plant and
equipment                                                     -          222
Purchase of intangible fixed assets                      (1,488)         (11)
Interest received                                            98           18
                                                          ------     --------

Net cash used in investing activities                    (4,276)      (2,514)
                                                          ------     --------

Financing Activities
Issue of ordinary share capital                           6,886        6,714
Repayment of bank loans                                     742         (110)
Capital element of finance leases                          (121)        (648)
                                                          ------     --------

Net cash from financing                                   7,507        5,956
                                                          ------     --------

Net Increase in Cash and Cash Equivalents                 1,034          208

Cash and cash Equivalents at beginning of Year              (74)        (282)
                                                          ------     --------
Cash and Cash equivalents at end of the year                960          (74)
                                                          ------     --------



Notes

1.  Accounting Policies

    The financial statements have been prepared in accordance with International
    Financial Reporting Standards ("IFRS") for the first time.

2.  Unaudited Financial Statements
    The above figures do not constitute full accounts within the meaning of
    Section 240 of the Companies Act 1985.

    The figures for the year ended 31st December 2004 constitute abridged
    accounts extracted from the published accounts for the year which have been
    filed with the Registrar of Companies and on which the auditors' report was
    unqualified and did not contain a statement under Section 237(2) or (3) of
    the Companies Act 1985.

    These figures have been restated in accordance with IFRS. The financial
    statements have been prepared in accordance with International Financial
    Reporting Standards ("IFRS") for the first time.

3.  Earnings per ordinary share

    Earnings per share have been calculated using the weighted average number of
    shares in issue during the relevant financial periods. The weighted average
    number of shares in issue is 165,038,027 (2004 - 72,209,946), and the
    earnings, being the profit on ordinary activities after taxation and
    minority interest are £1,694,000. (2004: loss of £5,809,000).

    The weighted average number of shares for diluted earnings per share is
    169,884,842, and the diluted earnings are £1,649,000. No diluted loss per
    share was disclosed in 2004 as the share options were anti dilutive.


                    Year ended 31 December 2005     Year ended 31 December 2004
                                          Pence                           Pence
Earnings/(Loss) Per share                  1.03                           (8.04)
Diluted Earnings per share                 0.99                           (8.04)

4   Explanation of transition to IFRS

    This is the first year that the company has presented its financial
    statements under IFRS. The following disclosures are required in the year of
    transition. The last financial statements under UK GAAP were for the year
    ended 31 December 2004 and the date of transition to IFRS was therefore 1
    January 2004.

    Group Balance Sheet

    Reclassifications

    IFRS results in a number of reclassifications between balance sheet
    categories. For clarity, the reclassifications are shown in a separate
    column to the other IFRS impacts which increase or decrease net assets.

    Share Based Payments

    Under IFRS2 'Share Based Payments' a charge to the income statement is made
    reflecting the fair value of options granted. The Group has elected to apply
    the exemption permitted under IFRS1 in respect of options granted but not
    vested before 1 January 2005 to not implement IFRS2. There have been no
    resulting changes in financial statements.

    Business Combinations

    The Group has not elected to make retrospective application of IFR 3 in
    respect of business combinations prior to the transition date of 1st January
    2004.

    In October 2004, the Group acquired SEV Group Ltd. The business combination
    has been restated to comply with IFRS 3. Assets acquired have been valued at
    deemed cost. The impact has been the reclassification of part of the
    goodwill as an intangible asset representing the value of the order book
    acquired of £560,000.

    Goodwill

    IAS 36 has been applied in testing the goodwill for impairment at the date
    of transition to IFRS. No changes have been made to the carrying amounts of
    goodwill.

    Under IFRS 3 there is no amortisation of goodwill. The impact has been the
    write back of goodwill amortisation after the transition date of £236,000.

    Loan Stock Equity

    Under IAS 32 'Financial Instruments: Presentation and Disclosure'. On
    initial recognition the carrying amount of convertible loan stock is
    allocated between the liability element and an equity component,
    representing the fair value of the embedded option to convert the liability
    into equity of the Group. The effective interest rate on the liability
    component is 10.5%. The impact has been the re-categorisation of £169,000
    from non current liabilities to equity.

    Intangible Assets.

    Under IAS 38 'Intangible Assets', where software does not form an integral
    part of the machinery or computer hardware to which it relates it is
    accounted for separately as an intangible asset. The impact of this is the
    re-categorisation of £44,000 from tangible to intangible assets.


Tanfield Group Plc             Income Statement Reconciliation                     31 December 2004
---------------------- ------------------  ---------------------------------------------------------- ------------------
UK GAAP balances in UK GAAP       IFRS          UK GAAP balances in IFRS FRS      IFRS balances in IFRS format   
Format                           adjts                                Adjustments 
---------------------- ------------------  ---------------------------------------------------------- ------------------
                      £000's    £000's    £000's                         £000's     £000's  £000's

                               Reclass                                Amortisation Writeback
                                                                        of Order     of
                                                                          Book     goodwill
Turnover              11,765   (1,078)    10,687 Revenue                    -         -    10,687 Revenue
Cost of sales        (9,020)     9,020         -                                                       -
                     --------  -------    ------                       ------    ------    ------
Gross profit           2,745
                                     1         1 Other operating            -         -         1 Other operating
                                                 income                                           income
                                  (12)      (12) Changes in                 -         -      (12) Changes in
                                                 inventories                                      inventories
                               (3,692)   (3,692) Raw materials and          -         -   (3,692) Raw materials and
                                                 consumables                                      consumables used
                               (5,457)   (5,457) Employee Costs             -         -   (5,457) Employee benefit
                                                                                                  costs
                                 (412)     (412) Depreciation and        (78)         -     (490) Depreciation and
                                                 amortisation expense                             amortisation
                                                                                                  expense
                               (3,541)   (3,541) Other operating                    236   (3,305) Other expenses
                                                 charges
Administrative       (7,920)     7,920
expenses
                     --------  -------    ------                       ------    ------    ------
Operating loss       (5,175)         -   (2,426) Operating loss          (78)       236   (2,268)
Interest receivable       18         -        18 Interest receivable                          18
& similar income                                 & similar income      
interest payable &     (848)       187     (661) Interest payable &                         (661) Finance costs
similar charges                                  similar charges
                     --------  -------    ------                       ------    ------    ------
Loss on ordinary     (6,005)   (2,936)   (3,069) Loss on ordinary        (78)       236   (2,911) Loss before tax
activities before                                activities before
tax                                              tax
Tax charge on profit      38         -        38 Tax charge on profit                          38 Income tax
on ordinary                                      on ordinary                                      expense
activities                                       activities
                     --------  -------    ------                       ------    ------    ------
Loss on ordinary     (5,967)   (2,936)   (3,031) Loss on ordinary        (78)       236   (2,873)
activities after tax                             activities after tax
Discontinued                         -         - Discontinued                                   - Discontinued
operations                                       operations                                       operations
Loss for period from       -   (2,936)   (2,936) Loss for period from                     (2,936) Loss for period
discontinued                                     discontinued                                     from discontinued
operations                                       operations                                       operations
                     --------  -------    ------                       ------    ------    ------
Retained loss        (5,967)         -   (5,967) Retained loss           (78)       236   (5,809) Net loss for the 
                                                                                                  year




NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2005


                            Consolidated Balance Sheet Reconciliation - 31 December 2004

---------------------- ------------------  ---------------------------------------------------------- ------------------
UK GAAP balances              IFRS          UK GAAP balances Further IFRS adjustments (UK GAAP to IFRS) IFRS balances in
in UK GAAP Format         Adjustments        in IFRS format                                                IFRS format
                     Creditors Provisions
---------------------- ------------------  ---------------------------------------------------------- ------------------
                £000's    £000's £000's    £000's                £000's     £000's  £000's   £000's   £000's
                                                                Reclassi-   Write    Order  Reclassi-
                                                                fication   back of   Book   fication
                                                                   of      goodwill Capitali- 
                                                              intangibles    2004    sation

ASSETS                                            ASSETS                                                     ASSETS
Fixed Assets                                      Non Current                                                Non Current
                                                  Assets                                                     Assets
Tangible         2,333         -     -      2,333 Property,          (44)       -       -       -      2,289 Property,
Assets                                            Plant and                                                  Plant and
                                                  Equipment                                                  Equipment
Goodwill         5,237         -     -      5,237 Goodwill              -     236   (560)       -      4,913 Goodwill
Intangible                     -     -          - Intangible           44       -     560       -        604 Intangible
assets                                            Assets                                                     Assets
               -------  -----------------  ------                ----------------------------------  -------
                 7,570         -     -      7,570                       -     236       -       -      7,806
               -------  -----------------  ------                ----------------------------------  -------
Current                                           Current Assets                                             Current
Assets                                                                                                       Assets
Stocks           2,417         -     -      2,417 Inventories           -       -       -       -      2,417 Inventories
Debtors due      4,041         -     -      4,041 Trade and             -       -       -       -      4,041 Trade and
within one                                        Other                                                      Other
year                                              Receivables                                                Receivables
Cash and         8,746         -     -      8,746 Cash and Cash         -       -       -       -      8,746 Cash and
balances with                                     Equivalents                                                Cash
banks                                                                                                        Equivalents
               -------  -----------------  ------                ----------------------------------  -------
                15,204         -     -     15,204                                                     15,204
               -------  -----------------  ------                ----------------------------------  -------
Total Assets    22,774         -     -     22,774 Total Assets         --     236       -       -     23,010 Total
                                                                                                             Assets
               -------  -----------------  ------                ----------------------------------  -------

EQUITY &                                          EQUITY &                                                   EQUITY &
LIABILITIES                                       LIABILITIES                                                LIABILITIES
Capital and                                       Equity                                                     Equity
reserves
Share Capital    1,328         -     -      1,328 Share Capital         -       -       -       -      1,328 Share
                                                                                                             Capital
Shares to be       410         -     -        410 Capital               -       -       -       -        410 Share
issued                                            Reserves                                                   Option
                                                                                                             Reserve
                                                                        -       -       -     169        169 Loan Stock
                                                                                                             Equity
                                                                                                             Reserve
Merger           1,534         -     -      1,534 Merger reserve        -       -       -       -      1,534 Merger
reserve                                                                                                      reserve
Capital         18,632         -     -     18,632 Capital               -       -      --       -     18,632 Share 
Reserves                                          Reserves                                                   Premium
                                                                                                             Account
Profit and    (20,875)         -     -   (20,875) Profit and            -     236       -       -   (20,639) Profit and
loss account                                      loss account                                               loss 
                                                                                                             account
               -------  -----------------  ------                ----------------------------------  -------
Total Equity     1,029         -     -      1,029 Total Equity          -     236       -     169      1,434 Total 
                                                                                                             Equity
               -------  -----------------  ------                ----------------------------------  -------

Creditors:       3,379   (3,379)     -          - Non-current                                                Non-current
due after one                                     liabilities                                                liabilities
year                         389              389 Bank Loans            -       -       -    (60)        329 Bank Loans
                           1,832            1,832 Convertible           -       -       -   (169)      1,663 Convertible
                                                  Loan Notes                                                 Loan Notes
                             927              927 Obligations           -       -       -       -        927 Obligations
                                                  Under Finance                                              Under 
                                                  Leases                                                     Finance
                                                                                                             Leases



                     Consolidated Balance Sheet Reconciliation - 31 December 2004 (continued)

---------------------- ------------------  ---------------------------------------------------------- ------------------
UK GAAP balances              IFRS          UK GAAP balances Further IFRS adjustments (UK GAAP to IFRS) IFRS balances in
in UK GAAP Format         Adjustments        in IFRS format                                                IFRS format
                     Creditors Provisions
---------------------- ------------------  ---------------------------------------------------------- ------------------
                £000's    £000's £000's    £000's                £000's     £000's  £000's   £000's   £000's

                                  1,488    1,488 Provisions             -       -       -   (279)    1,209 Provisions
                            231              231 Other creditors        -       -       -      60      291 Other
                                                                                                           creditors
               3,379          -   1,488    4,867                        -       -       -   (448)    4,419
Provisions     1,488            (1,488)        -
for
liabilities &
charges
               -------  -----------------  ------                ----------------------------------  ------
Current       16,878   (16,878)                - Current                                                   Current
liabilities                                      liabilities                                               liabilities
                          6,711            6,711 Trade and Other        -       -       -       -    6,711 Trade and
                                                 Payables                                                  Other
                                                                                                           Payables
                            547              547 Obligations            -       -       -       -      547 Obligations
                                                 Under Finance                                             Under Finance
                                                 Leases                                                    Leases
                          9,620            9,620 Bank Loans and         -       -       -       -    9,620 Bank Loans 
                                                                                                           and
                                                 Overdrafts -                                              Overdrafts
                                                 due within 1 yr
                                               - Provisions             -       -       -     279      279 Provisions
               -------  -----------------  ------                ----------------------------------  ------
              16,878     16,878       -   16,878                        -       -       -     279   17,157
               -------  -----------------  ------                ----------------------------------  ------
Total         21,745          -       -   21,745 Total                  -       -       -     169   21,576 Total
Liabilities                                      Liabilities                                               Liabilities
               -------  -----------------  ------                ----------------------------------  ------

               -------  -----------------  ------                ----------------------------------  ------
Total equity  22,774          -       -   22,774 Total equity &         -     236       -           23,010 Total equity
& liabilities                                    liabilities                                               & liabilities
               -------  -----------------  ------                ----------------------------------  ------





NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2005



Tanfield Group Plc                 Consolidated Balance Sheet Reconciliation - 31 December 2003
----------- ------------------  ------  -------------------  -----------------------  ---------------------------
UK GAAP              IFRS Adjustments    UK GAAP balances  Further IFRS adjustments (UK GAAP    IFRS balances in
balances in UK                           in IFRS format                to IFRS)                 IFRS format
GAAP Format                             
           Creditors Provisions
----------- ------------------  ------  -------------------  -----------------------  ---------------------------
              £000's    £000's £000's   £000's                   £000's      £000's   £000's
                                                            Reclassification Reclass-
                                                             of intangibles  ification
ASSETS                                          ASSETS                                     ASSETS
Fixed                                           Non Current                                Non Current
Assets                                          Assets                                     Assets
Tangible       2,962         -     -      2,962 Property,          (40)       -      2,922 Property,
Assets                                          Plant and                                  Plant and
                                                Equipment                                  Equipment
Goodwill       4,556         -     -      4,556 Goodwill              -       -      4,556 Goodwill
Intangible         -         -     -          - Intangible           40       -         40 Intangible
assets                                          Assets                                     Assets
             -------   -------  ----     ------                   -----   -----     ------
               7,518         -     -      7,518                                      7,518
             -------   -------  ----     ------                   -----   -----     ------
Current                                         Current                                    Current
Assets                                          Assets                                     Assets
Stocks           779         -     -        779 Inventories           -       -        779 Inventories
Debtors due    1,228         -     -      1,228 Trade and             -       -      1,228 Trade and
within one                                      Other                                      Other
year                                            Receivables                                Receivables
Cash and       3,172         -     -      3,172 Cash and              -       -      3,172 Cash and
balances                                        Cash                                       Cash
with banks                                      Equivalents                                Equivalents
             -------   -------  ----     ------                   -----   -----     ------
               5,179         -     -      5,179                       -       -      5,179
             -------   -------  ----     ------                   -----   -----     ------
Total         12,697         -     -     12,697 Total                 -       -     12,697 Total
Assets                                          Assets                                     Assets
             -------   -------  ----     ------                   -----   -----     ------
EQUITY & LIABILITIES                            EQUITY &                                   EQUITY &
                                                LIABILITIES                                LIABILITIES
Capital and reserves                            Equity                                     Equity
Share            617         -     -        617 Share                 -       -        617 Share
Capital                                         Capital                                    Capital
Shares to        410         -     -        410 Shares to             -       -        410 Share
be issued                                       be issued                                  Options
                                                                                           Reserve
Merger         1,534         -     -      1,534 Merger                -       -      1,534 Merger
reserve                                         reserve                                    reserve
Capital       12,529         -     -     12,529 Capital               -       -     12,529 Capital
Reserves                                        Reserves                                   Reserves
Profit and  (14,908)         -     -   (14,908) Profit and            -       -   (14,908) Profit and
loss                                            loss                                       loss
account                                         account                                    account
             -------   -------  ----     ------                   -----   -----     ------
Total            182         -     -        182 Total                 -       -        182 Total
Equity                                          Equity                                     Equity
             -------   -------  ----     ------                   -----   -----     ------
Creditors:     3,418   (3,418)     -            Non-current                                Non-current
due after                                       liabilities                                liabilities
one year
                           850     -        850 Bank Loans            -       -        850 Bank Loans
                         1,784     -      1,784 Convertible           -       -      1,784 Convertible
                                                Loan Notes                                 Loan Notes
                           784     -        784 Obligations           -       -        784 Obligations
                                                Under                                      Under
                                                Finance                                    Finance
                                                Leases                                     Leases
                                 544        544 Provisions            -   (195)        349 Provisions
             -------   -------  ----     ------                   -----   -----     ------
               3,418         -   544      3,962                           (195)      3,767
             -------   -------  ----     ------                   -----   -----     ------
Provisions       544        -  (544)          -                       -       -
for liabilities
& charges    -------   -------  ----     ------                   -----   -----     ------



Tanfield Group Plc                              Consolidated Balance Sheet Reconciliation - 31 December 2003
--------------------- -------- ------  -------------------------  -----------------------   ---------------------------
UK GAAP balances in     IFRS Adjustments      UK GAAP balances     Further IFRS adjustments (UK GAAP    IFRS balances 
in IFRS UK GAAP Format                        in IFRS format                  to IFRS)                        format
                     Creditors Provisions
--------------------- -------- ------  -------------------------  -----------------------   ---------------------------
              £000's   £000's £000's   £000's                        £000's         £000's  £000's
                                                                Reclassification  Reclassi-
                                                                 of intangibles   fication

Current        8,553   (8,553)     -        - Current                                          Current
liabilities                                   liabilities                                      liabilities
                         4,046     -    4,046 Trade and                  -          -    4,046 Trade and Other
                                              Other                                            Payables
                                              Payables
                         1,053     -    1,053 Obligations                -          -    1,053 Obligations
                                              Under Finance                                    Under Finance
                                              Leases                                           Leases
                         3,454     -    3,454 Bank Loans                 -          -    3,454 Bank Loans and
                                              and                                              Overdrafts
                                              Overdrafts -
                                              due within 1 yr
                                           -  Provisions                 -        195      195 Provisions
             -------   ------- -----   ------                       ------     ------   ------
               8,553     8,553     -    8,553                            -        195    8,748
             -------   ------- -----   ------                       ------     ------   ------
Total         12,515         -     -   12,515         Total              -          -   12,515 Total
Liabilities                                     Liabilities                                    Liabilities
             -------   ------- -----   ------                       ------     ------   ------
Total equity  12,697         -     -   12,697  Total equity              -          -   12,697 Total equity &
& liabilities                                 & liabilities                                    liabilities
             -------   ------- -----   ------                       ------     ------   ------



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2005


Tanfield Group Plc                  2004 Cash Flow Statement Reconciliation

UK GAAP balances in IFRS Format                    IFRS Adjustments          Total IFRS Adj  IFRS
-----------------------  --------           -------------- -----------           --------   --------
                         £000's                  £000's                          £000's     £000's
                                  Reclass of intangible 
                                           fixed assets
Operating Activities
Profit before tax
and interest expense     (5,175)                      -           -                        (5,175)
Depreciation of
property, plant and
equipment                   570                     (20)          -                (20)       550
Impairment of
property, plant and
equipment                 1,337                       -           -                  -      1,337
Amortisation of
intangible fixed
assets                      236                      20           -                 20        256
(Increase)/decrease
in debtors                 (998)                      -           -                  -       (998)
(Decrease)/Increase
in creditors                813                       -           -                  -        813
(Decrease)/Increase
in provisions               284                       -           -                  -        284
(Increase)/decrease
in inventories              319                       -           -                  -        319
Interest paid              (620)                      -           -                  -       (620)
                         --------         -------------- -----------           --------   --------
Net Cash from
Operating activities     (3,234)                      -           -                  -     (3,234)
                         --------         -------------- -----------           --------   --------
Investing Activities
Acquisitions             (2,541)                      -           -                  -     (2,541)
Purchase of
property, plant and
equipment                  (213)                     11           -                 11       (202)
Proceeds from sale
of property, plant
and equipment               222                       -           -                  -        222
Purchase of
intangible fixed
assets                        -                     (11)          -                (11)       (11)
Interest received            18                       -           -                  -         18
                         --------          -------------- -----------           --------   --------
Net cash used in
investing activities     (2,514)                      -           -                  -     (2,514)
                         --------          -------------- -----------           --------   --------
Financing Activities
Issue of ordinary
share capital             6,714                       -           -                  -      6,714
Repayment of bank
loans                      (110)                      -           -                  -       (110)
Capital element of
finance leases             (648)                      -           -                  -       (648)
                                                                                           --------
Net cash used in
financing                 5,956                       -           -                  -      5,956
                         --------          -------------- -----------           --------   --------
Net increase/(decrease)
in cash and cash 
equivalents                 208                       -           -                  -        208
                         --------          -------------- -----------           --------   --------




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