TANFIELD GROUP PLC
The Tanfield Group Plc
("Tanfield", or "the Company")
Interim Results for the six-month period to 30 June 2014
Tanfield Group Plc, an investing company as defined by AIM Rules, announces its half year results for the period ending 30 June 2014. The unaudited financial statements are available on the Company website at www.tanfieldgroup.com.
Summary
• Positive update on Snorkel
o Valuation of holding in Snorkel: £36.28 million ($60.1 million)
• Smith Electric Vehicles:
o Acquisition of OTCBB target completed
o Planned OTCBB listing and subsequent planned US National Exchange flotation
o Planned completion of Series E funding
o Valuation of holding in Smith: £1.28 million ($2.11 million) equity and £2.78 million ($4.75 million) debt
• Based on revised, positive outlook for short-term realisation of value:
o No requirement for an Open Offer to shareholders
o No current proposed change in investment strategy
• Date of AGM 30 September 2014
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 disposal of Snorkel Europe Limited in October 2013. Tanfield Group Plc currently owns 24% of Smith Electric Vehicles Corp. ("Smith") and 49% of Snorkel International Holdings LLC ("Snorkel"). The Directors believe that these investments have the potential to provide a return of value to shareholders over time.
The strategy of the company in relation to these investments is to return as much of the realised value in these investments as soon possible to shareholders as and when they occur. The way that value will be returned to shareholders is under review.
Overview of current investments
Snorkel
The Snorkel business continues to progress well. The new entity in which Tanfield holds its interest is an LLC organised under US law with Tanfield owning 49%. Both production and the order book continue to increase. The annualised run rate of sales currently exceeds $100 million. Significant new working capital of in excess of $30m has been introduced into the business. Restructuring has taken place to reduce the breakeven of the business. The Board of Tanfield is confident that the Snorkel business continues to move towards meaningful profitability.
The carrying value of Tanfield's investment in Snorkel is £36.28 million. This represents a value per share of 25.6p.
Smith Electric Vehicles
Smith has executed the acquisition of American Business Services, Inc (ABSR), an OTCBB company, by acquiring 85% of the common stock of ABSR. Smith is in the process of completing its Series E funding round, expected to raise up to $20 million. On the closing of this funding round Smith then intends to complete the merger with ABSR and become a publicly traded company on the OTCBB
Proposed subsequent flotation on a US National Exchange
As previously announced on 20 May 2014, following the completion of the merger with ABSR Smith intends to apply for a Listing on a US national exchange. Subject to meeting the applicable listing requirements, it is proposed that Smith will apply to list on NYSE or NASDAQ upon completion of a subsequent underwritten offering. This is in order to satisfy the waiver of the one year seasoning requirement, a regulation relating primarily to applicant companies that have previously been traded on another exchange, and the reporting of information.
Realisation of Smith Investment
It is currently anticipated that Tanfield Group could have tradable NYSE or NASDAQ listed stock in ABSR after 180 day lock in expires from the date that Smith becomes a publicly traded company on the OTCBB.
Strategy of the Board of Directors' in relation to its current investment status
The Tanfield Group Board has now decided that in the light of the potential realisation of its investment in Smith Electric Vehicles, it will not pursue an open offer to shareholders, as previously indicated in its announcement of 2 June 2014. In addition the Board has also decided not to seek to change its current investment strategy, but feels it prudent to keep this under review.
It is the aim of the Board to return any value realisation from its investments in Smith and Snorkel to shareholders as soon as these events occur and circumstances allow. If and when opportunities arise, the methods of return of value will be decided on the basis of the most cost effective and efficient ways available at the time.
AGM
The Company's AGM will be held at 10:00am on 30 September 2014 at the Company's registered office, Sandgate House, 102 Quayside, Newcastle upon Tyne, NE1 3DX. A notice of AGM will be sent out in due course and will be available on the Company website www.tanfieldgroup.com.
For further information:
Tanfield Group Plc
Roy Stanley - Non-executive Director 0845 155 7755
WH Ireland Limited
James Joyce / Nick Field 020 7220 1666
Peterhouse Corporate Finance
Peter Greensmith/Duncan Vasey/Lucy Williams 020 7469 0930
STATEMENT OF COMPREHENSIVE INCOME | |||||||||||||||
FOR THE SIX MONTHS ENDING 30 JUNE 2014 | |||||||||||||||
Six months to 30 Jun 14 (unaudited) | Six months to 30 Jun 13 (unaudited) | Year to 31 Dec 13 (audited) | |||||||||||||
£000's | £000's | £000's | |||||||||||||
Revenue | - | 1,270 | 2,223 | ||||||||||||
Staff costs | (56) | (909) | (2,606) | ||||||||||||
Depreciation and amortisation expense | - | - | |||||||||||||
Other operating income | 9 | - | - | ||||||||||||
BALANCE SHEET | |||||||||||
AS AT 30 JUNE 2014 | |||||||||||
30 Jun 14 (unaudited) | 30 Jun 13 (unaudited) | 31 Dec 13 (audited) | |||||||||
£000's | £000's | £000's | |||||||||
Non current assets | |||||||||||
Non current Investments | 37,563 | - | 37,563 | ||||||||
Investments in subsidiaries | - | 11,965 | - | ||||||||
37,563 | 11,965 | 37,563 | |||||||||
Current assets | |||||||||||
Trade and other receivables | 2,574 | 19,719 | 2,902 | ||||||||
Deferred consideration | 341 | 339 | 349 | ||||||||
Cash and cash equivalents | 257 | 380 | 375 | ||||||||
3,172 | 20,438 | 3,626 | |||||||||
Total assets | 40,735 | 32,403 | 41,189 | ||||||||
Current liabilities | |||||||||||
Trade and other payables | 1,581 | 624 | 1,885 | ||||||||
1,581 | 624 | 1,885 | |||||||||
Non-current liabilities | |||||||||||
Deferred tax liabilities | - | - | - | ||||||||
- | - | - | |||||||||
Total liabilities | 1,581 | 624 | 1,885 | ||||||||
Equity | |||||||||||
Share capital | 7,086 | 6,975 | 6,975 | ||||||||
Share premium | 16,262 | 16,262 | 16,262 | ||||||||
Share option reserve | 862 | 1,966 | 1,904 | ||||||||
STATEMENT OF CHANGES IN EQUITY | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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CASH FLOW STATEMENT | |||||||
FOR THE SIX MONTHS ENDING 30 JUNE 2014 | |||||||
Six months to 30 Jun 14 (unaudited) | Six months to 30 Jun 13 (unaudited) | Year to 31 Dec 13 (audited) | |||||
£000's | £000's | £000's | |||||
Profit/(loss) before interest and taxation | (129) | (82) | 7,424 | ||||
Loss on current asset currency fluctuations | (95) | - | 27 | ||||
Adjustment to fair value of investment | - | - | (26,650) | ||||
Loss on intercompany loan write off | - | - | 17,141 | ||||
Loss on impairment of investments | - | - | 1,357 | ||||
Operating cash flows before movements in working capital | (224) | (82) | (701) | ||||
(Increase)/decrease in receivables | 337 | (2,132) | (1,513) | ||||
Increase/(decrease) in payables | (305) | 207 | 270 | ||||
Net cash (used in) operations | (192) | (2,007) | (1,944) | ||||
Interest paid | (44) | - | (80) | ||||
Net cash used in operating activities | (236) | (2,007) | (2,024) | ||||
Cash flow from Investing Activities | |||||||
Purchase of investments | - | - | - | ||||
Loan to Smith Electric Vehicles US Corp | - | - | - | ||||
Interest received | 7 | 22 | 34 | ||||
Net cash from/(used in) investing activities | 7 | ||||||
1 Basis of preparation The Interim Report of the Company for the six months ended 30 June 2014 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 2013 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 The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December 2013, as described in those financial statements. In particular, the accounts have been prepared on a going concern basis, and as set out on page 17 of those financial statements. | ||||||||||||||||||||||
3 Earnings/(loss) per share | ||||||||||||||||||||||
The calculation of the basic and diluted (loss)/earnings per share is based on the following data: | ||||||||||||||||||||||
Number of shares | Six months | Six months | Year to | |||||||||||||||||||
to 30 Jun 14 | to 30 Jun 13 | 31 Dec 13 | ||||||||||||||||||||
000's | 000's | 000's | ||||||||||||||||||||
Weighted average number of ordinary shares for the purposes of basic earnings per share | 141,427 | 134,223 | 136,879 | |||||||||||||||||||
Effect of dilutive potential ordinary shares from share options | 720 | 2,891 | 2,883 | |||||||||||||||||||
Weighted average number of ordinary shares for the purposes of diluted earnings per share | 142,147 | 137,114 | 139,762 | |||||||||||||||||||
Earnings | Six months | Six months | Year to | |||||||||||||||||||
to 30 Jun 14 | to 30 Jun 13 | 31 Dec 13 | ||||||||||||||||||||
From operations | £000's | £000's | £000's | |||||||||||||||||||
Earnings/(loss) for the purposes of basic earnings per share being net profit attributable to owners of the parent | (261) | (60) | 7,392 | |||||||||||||||||||
Potential dilutive ordinary shares from share options | - | - | - | |||||||||||||||||||
Earnings/(loss) for the purposes of diluted earnings per share | (261) | (60) | 7,392 | |||||||||||||||||||
Earnings/(loss) per share from operations | ||||||||||||||||||||||
This information is provided by RNS
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