Tandem : 28/03/22 Trading Update

TANDEM GROUP PLC

(the "Company" or "Group")

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2021

The Board of Tandem Group plc (AIM: TND), designers, developers, distributors and retailers of sports, leisure and mobility equipment, announces its results for the year ended 31 December 2021.

Highlights

•  Revenue increased approximately 10.4% to £40,917,000 (2020 - £37,056,000)

•  Gross profit increased to £12,051,000 (2020 - £11,018,000)

•  Increase in operating profit to £4,939,000 (2020 - £4,095,000)

•  Profit before tax after non-underlying items was £4,732,000 (2020 - £4,004,000)

•  Net profit for the period was £3,826,000 (2020 - £3,458,000)

•  Basic earnings per share 73.8p (2020 - 68.5p)

•  Net assets increased to £22,739,000 (2020 - £16,608,000)

•  Cash and cash equivalents as at 31 December 2021 of £6,367,000 (2020 - £6,076,000)

•  Net cash as at 31 December 2021 of £2,326,000 (2020 - £3,779,000) following land purchase and construction

For further information contact:

Enquiries:

Tandem Group plc

David Rock, Company Secretary Telephone 0121 748 8075

Nominated Adviser and Broker Cenkos Securities plc

Ben Jeynes / Dan Hodkinson - Corporate Finance Russell Kerr / Michael Johnson - Sales

Telephone 020 7397 8900

Chairman's statement

Introduction

It has been a further successful period for the Group and I am therefore pleased to present the results for the year ended 31 December 2021. Both revenue and profitability increased, building on the strong foundations of prior years.

Results

Group revenue for the year ended 31 December 2021 increased by over 10% from £37,056,000 in the previous year to £40,917,000.

In the first half of the year Group revenue increased by approximately 14% with growth in three of our four operating divisions. The exception was bicycles where stock availability continued to be a challenge for the Group.

In the second half of the year there was an increase of approximately 8% in Group revenue mainly driven by strong performance from our Toys, Sports & Leisure division, partly offset by bicycles and the supply issues as previously reported.

Toys, Sports & Leisure

Following the reclassification from the Toys, Sports & Leisure division of character licensed bicycles shown in our previous announcement in the Bicycles division, our Toys, Sports & Leisure division grew by approximately 15% during the year. Particularly strong licences in the year included Paw Patrol, Peppa Pig and Nerf.

Our own branded ranges also grew by 15% driven by Stunted and uMoVe scooters and our outdoor play brand, Hedstrom.

Ben Sayers, our golf brand, had another strong year with revenue growth of 23% compared to the prior year, with growth especially strong from our package set range. This percentage has changed from that provided in the Group's Trading Update of 31 January 2022 as a result of the subsequent reclassification of electric golf trolleys into the 'eMobility' segment.

eMobility

Our eMobility division comprising ebikes, escooters, electric golf trolleys and mobility scooters continued to grow significantly, up 56% overall for the year. The reclassification of electric golf trolleys into this category has led to the difference in movement compared to the recent Trading Update.

The ebike and escooter ranges were expanded during the year using our bicycle brands Dawes and Falcon for ebikes and Li-Fe and Wired for escooters.

Mobility scooters were under greater pressure with revenue 17% behind the prior year mostly as a result of the impact of the COVID-19 pandemic.

Bicycles

Stock availability proved to be a significant problem throughout the year, both for independent bicycle dealers with our Dawes and Claud Butler ranges and also national retailer customers with our Falcon, Boss, Elswick, Townsend and Zombie brands.

Licensed character bicycles, which were also reclassified from Toys, Sports & Leisure in the year end accounts, were approximately 30% behind the prior year and this was due to a supply chain issue which has subsequently been rectified by re-sourcing supply to alternative factories. Cost price increases also had a greater impact due to the price sensitivity of junior licensed bikes.

The exception to this was Squish, our range of lightweight junior bikes, which grew by 31% in the year demonstrating continued progress in this category.

As a result of the issues raised above the bicycle division finished 12% behind the previous year.

Home & Garden

Sales from our Home & Garden division, mostly sold direct to consumer via our Garden Comforts by Garden & Camping (www.garden-camping.com) and At Home Comforts by Jack Stonehouse (www.jackstonehouse.com) websites as well as third party (3P) websites, grew by 9% over the prior year.

It was particularly pleasing to note that website revenue increased by 17% reducing the reliance on 3P sites and this accounted for approximately 25% of the division.

Growth was driven predominantly from our outdoor living and garden storage ranges.

Group operating profit

Group operating profit before finance costs and taxation increased by nearly 21% to £4,939,000 for the year ended 31 December 2021 compared to £4,095,000 for the year ended 31 December 2020.

Following the purchase of the land adjacent to the Birmingham site and the commencement of warehouse construction, property, plant and equipment increased from £4,624,000 at 31 December 2020 to £7,775,000 at 31 December 2021.

As the business resumed to some degree of normality with significant stock of bicycles arriving just before the year end, the total year end inventory position increased to £8,064,000 at 31 December 2021 compared to £4,512,000 at the end of the previous year.

The property project had an impact on the net cash position. Although cash and cash equivalents increased by nearly 5% to £6,367,000 at 31 December 2021 compared to £6,076,000 at 31 December 2020, following the land purchase overall net cash reduced to £2,326,000 compared to £3,779,000 at the end of 2020.

Net assets increased by 37% to £22,739,000 at 31 December 2021 compared to £16,608,000 at 31 December 2020. This was augmented by a material improvement in the valuation of the defined benefit pension schemes.

Further details of operational activities can be found in the Strategic Review.

Dividend

As in previous years it continues to be the Board's intention to maintain the progressive dividend as trading results and funds permit.

As a result of the Group's continued strong performance the Board is of view that the dividend will be increased further this year.

We are therefore proposing to pay a final ordinary dividend of 6.57 pence per share (year ended 31 December 2020 - 5.50 pence per share) which is an increase of more than 19%.

When combined with the interim dividend of 3.43 pence per share (year ended 31 December 2020 - 3.12 pence per share), this is a total dividend of 10.00 pence for the year. This compared to 8.62 pence per share in the year ended 31 December 2020.

Subject to shareholder approval at the Annual General Meeting to be held on 23 June 2022, the final dividend will be paid on or around 30 June 2022 to shareholders on the share register as at 13 May 2022. The ex-dividend date will be 12 May 2022.

In accordance with the provision that in any calendar year should dividend payments exceed pension deficit contributions, an additional contribution, equal to the excess, is paid into the scheme, an additional payment of approximately £175,000 will be paid into the Tandem Group Pension Plan.

Employees

I would like once more to thank all colleagues for their efforts and contribution to the profitability of the businesses in 2021. A profit related pay scheme was introduced in the year to enable staff to participate further in the success of the Group.

Outlook

Unsurprisingly, given the significant global uncertainty and prevailing economic conditions currently in play, the year has started more slowly than we would have wanted. In the 11 weeks to 20 March 2022 Group revenue was £4,432,000 which was approximately 43% behind the same 11 week period in the prior year which was exceptionally high as back orders for 2020 were fulfilled. However, it was still 7% ahead of the comparative period in 2020.

The Group's sales order book is currently £16,394,000, compared to £27,329,000 at this point last year, with the reduced order book level attributable to the completion of back orders, cancellations and a reduction in the levels of orders currently being received.

The order book remains well ahead of 2020 when it was £5,134,000 and the Board remains confident in the long term growth prospects of the Group notwithstanding current inflationary pressures, particularly from food, fuel and energy and increasing interest rates having an impact on consumer discretionary spending. Input costs remain under some pressure also and this has been further exacerbated by rising energy and hydrocarbon costs as a result of Russia's invasion of Ukraine.

In particular, we continue to see a big opportunity for our eMobility sector which saw a 56% increase in revenues during 2021 and subject to changes to escooter legislation, which we now expect in early 2023, there remains significant further growth potential in our eMobility division.

Given the growing consumer trend towards these types of products we will, as previously announced, be investing further in this sector during 2022. Our plans to refurbish the onsite shop at the Group's Birmingham premises to focus on our eMobility offering and to launch a dedicated eMobility B2C website are progressing well.

In addition, we have added to our roster of licences this year having signed Bluey, Disney Pixar Lightyear, Rainbow High and Molcar. Initial feedback on these additions has been encouraging, and when coupled with strongly performing classics such as Paw Patrol, Peppa Pig and Nerf, will make a positive contribution in both Toys, Sports & Leisure and Bicycles divisions.

Early signs from Independent Bike Dealers (IBD) customers are that many have surplus stocks and consumer demand in our Bicycle division has been slow. We still see good growth potential from Squish and an opportunity to grow business with our corporate customers. In 2022, we plan to introduce the bicycle 'click and collect' functionality for bicycle purchases to be fulfilled by participating IBDs which was delayed in 2021 due to stock availability issues.

We have started the year in a strong stock position in our Home & Garden division and we expect trading to increase as the weather improves subject to the macro-economic issuesdiscussed above. We have continued to recruit heavily following the relocation of this part of the Group from Northampton to Birmingham.

The construction of our new warehousing and distribution facility, which will double our existing Birmingham storage capacity to 160,000 square feet, is progressing as anticipated and we are on track for occupancy in Q4 2022.

In summary, we have entered 2022 with a degree of caution given the challenges that we along with many other businesses face, however, we are confident in our current strategy for the Group.

S J Grant Chairman

28 March 2022