RNS Number : 6927J
Tanfield Group PLC
21 August 2019
 

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")

 

Interim Results for the six-month period to 30 June 2019

 

 

Tanfield, an investing company as defined by AIM Rules, announces its half year results for the period ending 30 June 2019. The unaudited financial information will shortly be available on the Company website at www.tanfieldgroup.com.

 

Background

 

The Company is currently defined as an investing company that has two passive investments. This status resulted from the disposal of Smith Electric Vehicles in 2010 and the transfer of the Snorkel division to Snorkel International Holdings LLC ("Snorkel") in October 2013.  Tanfield currently owns 49% of Snorkel and 5.76% of Smith Electric Vehicles Corp. ("Smith").

 

The strategy of the Company in relation to these investments is to return as much as possible of any realised value to shareholders as events occur and circumstances allow, subject to compliance with any legal requirements associated with such distributions.

 

Summary

·    As reported in the 2018 interim results, the Board impaired the Snorkel investment value to £19.1m, representing approximately 11.7p per share.

·    Smith continues to be held at a nil balance sheet value following the impairment of the investment at the end of 2015. 

·    As reported in November 2018, the Board received a call option notice in which Xtreme, via its subsidiary SKL Holdings, requested to exercise a call option to acquire Tanfield's interest in Snorkel. In the request, SKL Holdings stated that the option price to acquire Tanfield's holding was $0 (nil) and that payment of the priority amount and preferred return (collectively "the Preferred Interest") was not required.

·    The Board did not agree with this statement and does not believe that the contractual agreements, or the circular distributed to shareholders to fully explain the terms of the transaction - and thereby seek their authority to enter in to the transaction - allow for a call option whereby Xtreme can acquire Tanfield's interest in Snorkel for a nil value.  The Board therefore rejected the call option notice and discussions are ongoing.

·    The Board remain of the opinion that the Preferred Interest, being the calculated value placed on the assets Tanfield transferred to the joint venture, is the minimum payment required under the terms of the contractual agreements, as described in the circular, in order for Xtreme to acquire Tanfield's interest.  Therefore, the Board deem this to be an appropriate basis for determining the value the investment is to be carried at.

·    Due to the risks involved with the ongoing different opinions regarding the contractual agreements, it is possible the actual realisation of value could be less than the current valuation.  Due to these inherent uncertainties, the Board is unable to determine whether the actual outcome will be less than the current valuation of £19.1m, which it believes is underpinned by the value of the Preferred Interest, and so feel the valuation of £19.1m should be maintained.

·    Should Xtreme attempt to acquire Tanfield's 49% interest in Snorkel for an unacceptable value, the Board will vigorously defend its position that the Preferred Interest is payable.

·    The Company's operating loss in H1 2019 increased to £127k (H1 2018: £94k) as a consequence of additional legal fees during the period, with the retained loss for the period being £127k (H1 2018: £17.3m, including a £17.2m impairment of the Snorkel investment).

 

 

Overview of investments

 

Based on the unaudited financial information received from Snorkel, during the first 6 months of 2019 the business achieved further sales growth resulting in sales of US$112.5m, an increase of around 17% compared to H1 2018 when sales were US$96.3m.  Should the trend of sales growth continue for the remainder of the year, the Board believes 2019 could see total sales of around US$230m (2018: US$201m).  

 

The reported gross profit for the period was US$13.8m, an increase of $1.5m compared to H1 2018 (US$12.3m) however, the gross profit margin reduced slightly to 12.2% compared to 12.7% in H1 2018.  Selling, general and administrative costs increased to US$12.7m (2018: US$11.5m) during the period, resulting in an operating profit, excluding depreciation, of US$1.1m (H1 2018 US$0.8m). 

 

The reported EBITDA for the last 12 month period, ending June 2019, is US$3.2m.  The Board did not receive the information necessary to provide a comparison for the 12 month period ending June 2018, and the closest comparison available is for the 12 month period ending September 2018, which saw a last 12 month EBITDA of US$1.8m reported. 

 

The Board is unable to provide an opinion at this juncture on the profit expectation for the remainder of 2019.

 

In 2015 the investment in Smith was impaired to nil due to the uncertainty around its future and the level of funding it required. The situation continues to be monitored but the Board is of the opinion that it is highly unlikely that any value will materialise from the investment.

 

 

 

For further information:

 

Tanfield Group Plc                                                                          020 7220 1666

Daryn Robinson                                                                                                 

 

WH Ireland Limited - Nominated Advisor / Broker

James Joyce / Lydia Zychowska                                                     020 7220 1666

 

 

 

STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDING 30 JUNE 2019

 

 

 

 

 

 

 

 

 

Six months to

30 Jun 19 (unaudited)

Six months to

30 Jun 18 (unaudited)

Year to

 31 Dec 18

 (audited)

 

 

 

 

£000's

£000's

£000's

 

 

 

 

 

 

 

 

Revenue

 

 

-

-

-

 

Staff costs

 

 

(32)

(32)

(74)

 

Other operating income

 

 

11

15

28

 

Other operating expenses

 

 

(106)

(77)

(149)

 

Loss from operations before impairments

 

 

(127)

(94)

(195)

 

Impairment of Investments

 

 

-

(17,183)

(17,183)

 

Loss from operations after impairments

 

 

(127)

(17,277)

(17,378)

 

Finance expense

 

 

-

-

-

 

Finance income

 

 

-

-

1

 

Net finance expense

 

 

-

-

1

 

 

 

 

 

 

Loss from operations before tax

 

 

(127)

(17,277)

(17,377)

 

Taxation

 

 

-

-

-

 

Loss & total comprehensive income for the period attributable to equity shareholders

(127)

(17,277)

(17,377)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss per share from operations

 

 

 

 

 

 

Basic and diluted (p)

 

 

(0.08)

(10.95)

(10.99)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                               
 

 

BALANCE SHEET

AS AT 30 JUNE 2019

 

 

 

 

 

30 Jun 19

(unaudited)

30 Jun 18

(unaudited)

31 Dec 18

(audited)

 

 

 

 

£000's

£000's

£000's

 

Non current assets

 

 

 

 

 

Non current Investments

 

 

19,100

19,100

19,100

 

 

 

 

19,100

19,100

19,100

 

Current assets

 

 

 

 

 

Trade and other receivables

 

 

35

32

11

 

Cash and cash equivalents

 

 

273

255

188

 

 

 

 

308

287

199

 

 

 

 

 

 

 

 

Total assets

 

 

19,408

19,387

19,299

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Trade and other payables

 

 

63

40

52

 

 

 

 

63

40

52

 

 

 

 

 

 

 

 

Total liabilities

 

 

63

40

52

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

Share capital

 

 

8,145

7,920

7,920

 

Share premium

 

 

17,336

17,336

17,336

 

Share option reserve

 

 

331

331

331

 

Special reserve

 

 

66,837

66,837

66,837

 

Merger reserve

 

 

1,534

1,534

1,534

 

Retained earnings

 

 

(74,838)

(74,611)

(74,711)

 

Total equity

 

 

19,345

19,347

19,247

 

 

 

 

 

 

 

 

Total equity and total liabilities

 

 

19,408

19,387

19,299

 

 

 

 

 

 

 

 

 

                       

 

STATEMENT OF CHANGES IN EQUITY

 

 

 

 

Share capital

 

Share premium

 

Share option reserve

 

Merger reserve

 

Special reserve

 

Retained earnings

 

Total

 

 

£000's

£000's

£000's

£000's

£000's

£000's

£000's

Six months to 30 June 2019 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January 2019

 

7,920

17,336

331

1,534

66,837

(74,711)

19,247

Comprehensive income

 

 

 

 

 

 

 

 

Loss for the period

 

-

-

-

-

-

(127)

(127)

Total comprehensive income for the year

 

-

-

-

-

-

(127)

(127)

Transactions with owners in their capacity as owners:-

 

 

 

 

 

 

 

 

 

   Issuance of new shares

 

225

-

-

-

-

-

225

 

At 30 June 2019

 

8,145

17,336

331

1,534

66,837

(74,838)

19,345

 

 

 

 

 

 

 

 

 

 

Six months to 30 June 2018 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January 2018

 

7,816

17,190

331

1,534

66,837

(57,334)

36,374

Comprehensive income

 

 

 

 

 

 

 

 

Loss for the period

 

-

-

-

-

-

(17,277)

(17,277)

Total comprehensive income for the year

 

-

-

-

-

-

(17,277)

(17,277)

Transactions with owners in their capacity as owners:-

 

 

 

 

 

 

 

 

   Issuance of new shares

 

104

146

-

-

-

-

250

At 30 June 2018

 

7,920

17,336

331

1,534

66,837

(74,611)

19,347

 

 

 

 

 

 

 

 

 

 

Year to December 2018 (audited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January 2018

 

7,816

17,190

331

1,534

66,837

(57,334)

36,374

 

Comprehensive income

 

 

 

 

 

 

 

 

 

Loss for the year

 

-

-

-

-

-

(17,377)

(17,377)

 

Total comprehensive income for the year

 

-

-

-

-

-

(17,377)

(17,377)

 

Transactions with owners in their capacity as owners:-

 

 

 

 

 

 

 

 

 

   Share based payments

 

104

146

-

-

-

-

250

 

At 31 December 2018

 

7,920

17,336

331

1,534

66,837

(74,711)

19,247

 

                                                           

 

 

CASH FLOW STATEMENT

FOR THE SIX MONTHS ENDING 30 JUNE 2019

 

 

 

 

Six months to 30 Jun 19 (unaudited)

Six months to 30 Jun 18 (unaudited)

Year to

 31 Dec 18

 (audited)

 

 

 

£000's

£000's

£000's

 

 

 

 

 

 

 

Loss before interest and taxation

 

(127)

(17,277)

(17,378)

 

Loss on impairment of investments

 

-

17,183

17,183

 

Operating cash flows before movements in working capital

 

(127)

(94)

(195)

 

(Increase)/decrease in receivables

 

(24)

(20)

2

 

Increase/(decrease) in payables

 

11

(15)

(4)

 

Net cash used in operating activities

 

(140)

(129)

(197)

 

 

 

 

 

 

 

Cash flow from Investing Activities

 

 

 

 

 

Interest received

 

-

-

1

 

Net cash from investing activities

 

-

-

1

 

 

 

 

 

 

 

Cash flow from financing activities

 

 

 

 

 

Proceeds from issuance of ordinary shares net of costs

 

225

250

250

 

Net cash from financing activities

 

225

250

250

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

85

121

54

 

Cash and cash equivalents at the start of period

 

188

134

134

 

Cash and cash equivalents at the end of the period

 

273

255

188

 

               
 

 

1  Basis of preparation

The Interim Report of the Company for the six months ended 30 June 2019 has been prepared in accordance with AIM Rule 18 and not in accordance with IAS34 "Interim Financial Reporting" therefore 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 2018 which is available on request from the Company's registered office, Sandgate House, 102 Quayside, Newcastle upon Tyne NE1 3DX or can be downloaded from the corporate website www.tanfieldgroup.com.

 

 

2  Accounting Policies

New and amended standards and interpretations effective from 1 January 2019, which have been considered by the Directors, are IFRS16 leases.  Given the operational status of the company, the Directors do not think this new standard, nor any of the matters raised in the Annual Improvements projects 2014 - 2016 and 2015 - 2017, nor the amendments to IAS1 and IAS8, will have a material impact on the interim results.  Therefore, the accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December 2018, as described in those financial statements.  In particular, the accounts have been prepared on a going concern basis, and as set out on page 16 of those financial statements. 

 

 

 

3  Loss per share

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

 

 

Number of shares

 

Six months

Six months

Year to

 

 

 

to 30 Jun 19

to 30 Jun 18

31 Dec 18

 

 

 

000's

000's

000's

 

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

 

159,004

157,727

158,070

 

Effect of dilutive potential ordinary shares from share options

 

-

-

-

 

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

 

159,004

157,727

158,070

 

 

 

Loss

 

Six months

Six months

Year to

 

 

 

to 30 Jun 19

to 30 Jun 18

31 Dec 18

 

From operations

 

£000's

£000's

£000's

 

Loss for the purposes of basic earnings per share being net profit attributable to owners of the parent

 

(127)

(17,277)

(17,377)

 

Potential dilutive ordinary shares from share options

 

-

-

-

 

Loss for the purposes of diluted earnings per share

 

(127)

(17,277)

(17,377)

 

 

 

 

 

 

 

Loss per share from operations

 

 

 

 

 

Basic and diluted (p)

 

(0.08)

(10.95)

(10.99)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                             

 


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