A horrible set of full-year results from aerial work platform group Tanfield (TAN:AIM) have triggered a 9.5% fall in the share price to 21.5p as they highlight how important ready cash is to a business.

In 2012 the £33 million cap was hamstrung by a lack of working capital which prevented it from taking advantage of increased demand for aerial work platforms and led it to report a pre-tax loss for 2012 (albeit narrowed year-on-year) of £14.4 million.

Alongside the numbers, the company reiterated it had received approaches for its main Powered Access division and the Snorkel brand and had engaged a corporate advisory firm to handle this process.

Despite the less-than-stellar performance, management were actually paid more last year than in 2011. Total directors' remuneration went up from £1.16 million to £1.28 million. Chief executive officer Darren Kell saw his salary increase 13% to £459,000 and finance director Charles Brooks 7% to £328,000.


Shareholders have not been as well rewarded, the stock has more than halved in value in the last 12 months. A £12 million placing at 41p in February 2012 was supposed to accelerate the expected return to profitability and was followed by a further £2 million placing at 20p announced in March this year (20 Mar).

Today's results saw the company flag a increase in gross margins from 37% to 41% but note supply chain challenges and tight working capital had constrained the speed of recovery with revenue down 6.7% at £45.1 million.

In the words of chairman Jon Pither: 'The extended cash-to-cash cycle of key markets in the Asia-Pacific region, combined with supply chain constraints put additional strain on our working capital, so we reined in production during the final quarter in order to rebalance inventory and maintain cash.' The group ended the year with a cash balance of £2.2 million, down 36.5%.

House broker WH Ireland, which has a 'speculative buy' rating on the stock, has suspended its price target and 2013 and 2014 forecasts (for a loss of £3.3 million and profit of £1.1 million respectively). It noted the lack of a 'substantive' update on current trading and 'new news' on the approaches for the Powered Access business or Snorkel brand.

Tanfield also has a 24% interest in US private electric vehicle firm Smith Electric. This holding was diluted last year by successive fundraisings – such that it is no longer considered an associate company but is classed instead as an investment valued at £1.3 million.

Issue Date: 28 Jun 2013