The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain

Tanfield Group Plc

("Tanfield" or the "Company")

Snorkel Investment Update

The Board of Tanfield (the "Board") is pleased to update the market on its investment in Snorkel International Holdings LLC ("Snorkel"), the aerial work platform business.

Investment Background

·    Tanfield is a 49% shareholder in the equity of Snorkel following the joint venture between the Company and Xtreme Manufacturing LLC ("Xtreme") (the "Contemplated Transaction"), a company owned by Don Ahern of Ahern Rentals Inc, relating to Snorkel, in October 2013.

·    The Snorkel investment is valued at £19.1m.  The outcome of the US and UK Proceedings referenced below could have an impact on this valuation.

·    On 22 October 2019, the Company announced that it had received a Summons and Complaint, filed in Nevada (the "US Proceedings") by subsidiaries of Xtreme, relating to the Contemplated Transaction.

·    On 24 October 2019, the Company announced it had become necessary to issue and serve a claim in the English High Court against Ward Hadaway (the "UK Proceedings"), the solicitor acting for the Company at the time of the Contemplated Transaction, in order to fully protect the Company's rights pending the outcome of the US Proceedings.  

Highlights

·    Snorkel continues to be impacted by the global COVID-19 pandemic which has resulted in sales for the third quarter of 2020 being US$26.3m, compared to US$57.1m for the same period in 2019, a reduction of 53.9%.

·    As a result of the sales reduction, Snorkel's EBITDA for the third quarter of 2020 was a negative US$2.0m compared to a positive US$1.7m for the same period in 2019.

·    Snorkel's sales for the 9 months to September 2020 were US$86.5m, down 49.0% compared to the same period in 2019 (Q3 YTD 2019 US$169.5m).   

·    As a result of the sales reduction, Snorkel's EBITDA for the 9 months to September 2020 was a negative US$8.4m compared to a positive US$2.7m for the same period in 2019.

Business Update

Tanfield is a 49% shareholder in the equity of Snorkel following the joint venture between the Company and Xtreme, a company owned by Don Ahern of Ahern Rentals Inc, relating to Snorkel, in October 2013. 

Snorkel continues to be impacted by the global COVID-19 pandemic which has impacted its ability to operate as it normally would.  As reported on 10 July 2020, many of its manufacturing facilities were closed for substantial periods and during the third quarter of 2020 a phased return to operations was being implemented where possible, while continuing to protect both the workforce and other stakeholders.    

Consequently, sales in the third quarter of 2020 increased by 56.2% compared to sales in the second quarter of 2020 (Q3 2020 US$26.3m / Q2 2020 US$16.8m).  Furthermore, gross operating margins increased from 6.0% for the first six months of 2020 to 10.4% for the third quarter of 2020, only slightly lower than the full year 2019 margins of 11.5%. 

Below is a summary of the quarterly consolidated operating statement for 2020, including comparative figures for the 2019 year to date:

The Board is not able to determine how long COVID-19 will continue to impact Snorkel and when the market for Snorkel's equipment will return to previous levels but it views the increase in sales from the second quarter of 2020 to the third quarter of 2020 as a positive step. 

As outlined in the update on 30 July 2020, both the US Proceedings and the UK Proceedings are continuing to progress, with the Board continuing to seek advice, and further updates will be provided to shareholders as and when appropriate.

For further information:

Tanfield Group Plc                                                                          020 7220 1666

Daryn Robinson                                                                                                 

WH Ireland Limited - Nominated Advisor / Broker

James Joyce / Lydia Zychowska                                                    020 7220 1666