Source - RNS
RNS Number : 2690L
Tandem Group PLC
30 September 2016
 

 

 

 

 

 

Tandem Group plc

 

Half Yearly Report

for the six months ended

30 June 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CHAIRMAN'S STATEMENT

 

Results

In the six months to 30 June 2016 Group revenue increased by approximately 10% to £17,115,000 compared to £15,585,000 in the six months to 30 June 2015.  This incorporated a full period of contribution from the E.S.C (Europe) Ltd acquisition.  Gross profit was £5,106,000 compared with £5,052,000 in 2015. 

 

There was an increase in operating expenses from £4,288,000 to £4,812,000 in the six months to 30 June 2016 principally due to the acquisition.

 

Operating profit was £500,000 compared to £764,000 in the six months to 30 June 2015.  There was an exceptional credit of £206,000 during the period (six months to 30 June 2015 - £nil) relating to the release of over-provided deferred consideration from the ESC and Pro Rider acquisitions.

 

Finance costs were £304,000 in the six months to 30 June 2016.  This compared to £420,000 in the prior period.  There was a fair value charge for foreign currency derivative contracts of £122,000 compared to a charge of £230,000 in the prior year.  This is shown in non-underlying items.  Non-underlying items also included finance costs of £70,000 in respect of the pension schemes against £85,000 in the six months to 30 June 2015.

 

The profit before taxation after non-underlying items for the period was £196,000 compared to £344,000 in the six month period to 30 June 2015.

 

There was a tax charge of £62,000 during the period compared to a credit of £11,000 in the prior period.  The previous period included a tax credit relating to deferred tax on the foreign currency derivative contracts.

 

Net profit for the period was £134,000 compared to £355,000 in the six months to 30 June 2015.

 

Basic earnings per share in the six months to 30 June 2016 reduced to 2.82 pence per share compared to 7.60 pence per share in the prior period.

 

Net assets at 30 June 2016 were £8,048,000 against £6,843,000 at 30 June 2015.

Cash and cash equivalents were £980,000 at 30 June 2016 which compared to an overdraft of £545,000 at 30 June 2015.  The timing of creditor payments, improved supplier terms and careful management of inventories helped to improve this position.

 

Net debt reduced from £6,164,000 at 30 June 2015 to £5,824,000 at 30 June 2016.

 

Sports, leisure and toys

Revenue from our sports, leisure and toy businesses was £11,037,000 compared to £7,188,000 in the six months to 30 June 2015 which was an increase of 54%.  This included the contribution from the ESC business acquired in September 2015.

 

Operating profit in the sports, leisure and toys businesses for the period to 30 June 2016 was £562,000 compared to £435,000 in the same period last year. 

 

As stated in our announcement of 19 April 2016, we have invested heavily in our direct to consumer business to recruit the appropriate personnel, to improve our order processing and fulfilment systems and to redevelop all websites.   Although sales were in line with our expectations this investment has impacted on profitability during the period. 

 

We have been very encouraged by the performance from our toys business which outperformed the overall outdoor toy sector during the period.

 

In respect of import duty matters previously reported with regards to the ESC business, there were no further developments to report and the position remains under review.

  

 

Bicycles, accessories and mobility

Revenue from our bicycles, bicycle accessories and mobility businesses reduced to £6,078,000 compared to £8,397,000 last year. 

 

A significant national retailer bicycle promotion last year was not repeated this year.

 

Operating profit was £19,000 compared to £597,000 in the period to 30 June 2015.

 

Mobility sales and profitability were marginally behind and this was adversely impacted by an HMRC demand for retrospective import duty which we previously reported and which has meant retail prices have been increased to compensate.

 

Despite it being obvious that our mobility scooters are designed solely for the use by disabled persons, it is HMRC and the European Commission's view that because a mobility scooter may be purchased by an able bodied person it is subject to a 10 per cent rate of duty.    Whilst we believe that this is fundamentally wrong, after taking legal advice we are of the opinion that there is limited chance of a successful and cost effective appeal against the ruling. 

 

The vendor of the Pro Rider business has settled all liabilities up to the date of inspection in February 2016.

 

We are aware that HMRC are actively targeting all competitors and we will continue to push to ensure that there is a level playing field in this sector.

 

 

Trading update and outlook

Group revenue for the 38 week period to 23 September was approximately £28.8 million compared to £25.1 million in the comparative period last year.  In the 12 week period from 30 June to 23 September 2015, Group revenue was approximately 21% ahead of the prior year period. 

 

Sports, leisure and toys

Sports, leisure and toys revenue for the 38 week period to 23 September was approximately £19.8 million compared to £13.3 million last year.

 

We are encouraged by our prospects for the forthcoming Christmas trading period.  

 

Batman, Paw Patrol, Shopkins and Finding Dory are performing strongly along with, in particular, our own brand Kickmaster.

 

By Christmas we expect to have relaunched all our direct to consumer websites, re-engineered our order processing and despatch operation and our employee recruitment programme will be complete.  We expect to be in a resilient position to take the business forward in 2017.

 

Bicycles, accessories and mobility

In the bicycles, accessories and mobility businesses revenue for the 38 weeks to 23 September was approximately £9.0 million compared to £11.8 million in the prior year.

 

As we have previously reported it has been a particularly challenging period for the UK leisure cycling market.  This has further been impacted by significant promotional activity by certain large competitors over recent months and an oversupply of product in the market.

 

US Dollar

The challenging environment has also been exacerbated by the weakness in sterling following the outcome of the EU Referendum vote.  Although we hedge a proportion of our future US dollar requirement, we have had no alternative but to increase prices to mitigate this impact.

 

 

 

Dividend

We are declaring an interim dividend of 1.30p per share (2015 - 1.25p per share) payable on or about 14 November 2016 in line with our progressive dividend policy.  The ex-dividend date will be 13 October 2016 and the record date 14 October 2016.

 

MPJ Keene

Chairman

30 September 2016
 

 

 

CONDENSED CONSOLIDATED INCOME STATEMENT

For the 6 months ended 30 June 2016

 

 

 

 

 

 

 

 

 

6 months ended 30 June 2016

Unaudited

6 months ended 30 June 2015 Unaudited

 

Year ended 31 December 2015

Audited

 

 

 

 

 

 

 

 

 

 

 

 

 

Note

Before non-underlying items

£'000

Non-underlying items

£'000

After non-underlying items

£'000

Before non-underlying items

£'000

Non-underlying items

£'000

After non-underlying items

£'000

Before non-underlying items

£'000

Non-underlying items

£'000

After non-underlying items

£'000

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

17,115

-

17,115

15,585

-

15,585

34,385

-

34,385

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

(12,009)

-

(12,009)

(10,533)

-

(10,533)

(24,265)

-

(24,265)

Gross profit

 

5,106

-

5,106

5,052

-

5,052

10,120

-

10,120

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

(4,812)

 

-

(4,812)

(4,288)

 

-

(4,288)

 

(8,700)

(140)

(8,840)

Operating profit before exceptional items

 

294

 

-

294

764

 

-

764

 

1,420

(140)

1,280

 

 

 

 

 

 

 

 

 

 

 

Exceptional items

 

-

206

206

-

-

-

-

7

7

Operating profit after exceptional items

 

294

206

500

764

-

764

 

1,420

(133)

1,287

 

 

 

 

 

 

 

 

 

 

 

Finance costs

 

(112)

(192)

(304)

(105)

(315)

(420)

(206)

(36)

(242)

Profit before taxation

 

182

14

196

659

(315)

344

1,214

(169)

1,045

 

 

 

 

 

 

 

 

 

 

 

Tax (expense)/credit

 

(62)

-

(62)

(35)

46

11

(128)

84

(44)

 

 

 

 

 

 

 

 

 

 

 

Net profit for the period

 

120

 

14

134

624

 

(269)

355

 

1,086

(85)

1,001

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pence

 

 

 

Pence

 

 

 

Pence

 

Earnings per share

 

 

 

 

 

 

 

 

 

 

Basic

3

 

 

2.82

 

 

7.60

 

 

21.31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

3

 

 

2.71

 

 

7.30

 

 

20.27

                             

 

 

 

 

 

 

All figures relate to continuing operations.

 

 

 

 

 

 

 

 

 

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME       

For the 6 months ended 30 June 2016

 

 

 

6 months

ended

30 June 2016

 6 months

ended

30 June

2015

Year ended 31 December

2015

 

Unaudited

Unaudited

Audited

 

£'000

£'000

£'000

 

 

 

 

Profit for the period

134

355

1,001  

 

 

 

 

Other comprehensive income:

 

 

 

Items that will be reclassified subsequently to profit and loss:

Foreign exchange differences on translation of overseas subsidiaries

(12)

51

Items that will not be reclassified subsequently to profit or loss:

 

 

Deferred tax credit on share based payments

-

75   

Actuarial gain on pension schemes

-

423   

Movement in pension schemes' deferred tax provision

(223) 

Other comprehensive income for the period

139

(12)

326   

 

 

 

 

Total comprehensive income attributable to equity shareholders of Tandem Group plc

273

343

1,327 

 

 

 

 

 

 

All figures relate to continuing operations.

 

 

CONDENSED CONSOLIDATED BALANCE SHEET

As at 30 June 2016

 

 

 

 

 

At 30 June

2016

  At 30 June

2015

At 31

December

2015

 

 

Unaudited

Unaudited

Audited

 

 

£'000

£'000

£'000

 

 

 

 

 

Non current assets

 

 

 

 

Intangible fixed assets

 

5,612

4,107

5,612

Property, plant and equipment

 

3,206

3,352

3,267

Deferred taxation

 

1,825

2,036

1,825

 

 

10,643

9,495

10,704

 

 

 

 

 

Current assets

 

 

 

 

Inventories

 

8,121

7,983

6,227

Trade and other receivables

 

7,379

6,306

5,468

Derivative financial asset held at fair value

 

125

-

246

Cash and cash equivalents

 

980

-

878

 

 

16,605

14,289

12,819

 

 

 

 

 

 

 

 

 

 

Total assets

 

27,248

23,784

23,523

 

 

 

 

 

Current liabilities

Bank overdraft

 

-

(545)

-

Trade and other payables

 

(8,434)

(6,325)

(5,001)

Other liabilities

 

(4,527)

(4,185)

(4,034)

Derivative financial liability held at fair value

 

-

(88)

-

Current tax liabilities

 

(477)

(306)

(559)

 

 

(13,438)

(11,449)

(9,594)

Non current liabilities

Other payables

 

(6)

(38)

(8)

Other liabilities

 

(2,277)

(1,434)

(2,494)

Pension schemes' deficits

 

(3,479)

(4,020)

(3,608)

 

 

(5,762)

(5,492)

(6,110)

 

 

 

 

 

Total liabilities

 

(19,200)

(16,941)

(15,704)

 

 

 

 

 

Net assets

 

8,048

6,843

7,819

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

Share capital

 

1,503

1,503

1,503

Shares held in treasury

 

(295)

(328)

(316)

Share premium

 

175

130

127

Other reserves

 

3,083

2,881

2,944

Profit and loss account

 

3,582

2,657

3,561

Total equity

 

8,048

6,843

7,819

 

 

 

 

 

 

 

 

 

CONDENSED Consolidated statement of changes in equity

As at 30 June 2016

 

 

 

Share

capital

Shares held in treasury

 

Share premium

Merger reserve

Capital redemption reserve

Translation

reserve

Profit

and loss

account

Total

 

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

 

 

 

At 1 January 2015

1,503

(336)

84

1,036

1,427

430

2,442

6,586

 

Net profit for the period

-

-

-

-

-

-

355

355

 

Retranslation of overseas subsidiaries

-

-

-

-

-

(12)

-

(12)

 

Total comprehensive income for period attributable to equity shareholders

-

-

-

-

-

(12)

355

343

 

Share based payments

-

-

-

-

-

-

2

2

 

Exercise of share options

-

 

8

46

-

-

-

(29)

25

 

Dividends paid

-

 

-

-

-

-

-

(113)

(113)

 

Total transactions with owners

-

8

46

-

-

(12)

215

257

 

At 30 June 2015

1,503

(328)

130

1,036

1,427

418

2,657

6,843

 

 

 

 

 

 

 

 

 

 

 

Net profit for the period

-

-

-

-

-

-

646

646

 

Retranslation of overseas subsidiaries

-

-

-

-

-

63

-

63

 

Net actuarial gain on pension schemes

-

-

-

-

-

-

200

200

 

Total comprehensive income for period attributable to equity shareholders

-

-

-

-

-

63

846

909

 

Share based payments

-

-

-

-

-

-

12

12

 

Deferral tax on share options

-

-

-

-

-

-

75

75

 

Exercise of share options

-

12

(3)

-

-

-

29

38

 

Dividends paid

-

-

-

-

-

-

(58)

(58)

 

 

 

 

 

 

 

 

 

 

 

Total transactions with owners

-

12

(3)

-

-

63

904

976

 

At 1 January 2016

1,503

(316)

127

1,036

1,427

481

3,561

7,819

 

 

 

 

 

 

 

 

 

 

 

Net profit for the period

-

-

-

-

-

-

134

134

 

Retranslation of overseas subsidiaries

-

-

-

-

-

139

-

139

 

Total comprehensive income for period attributable to equity shareholders

-

-

-

-

-

139

134

273

 

Share based payments

-

-

-

-

-

8

8

 

Exercise of share options

-

21

48

-

-

-  

-

69

 

Dividends paid

-

-

-

-

-

-

(121)

(121)

 

Total transactions with owners

-

21

48

-

-

139

21

229

 

At 30 June 2016

1,503

(295)

175

1,036

1,427

620

3,582

8,048

 

 

 

 

 

 

 

 

 

 

 

                                     

 

 

 

 

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

For the 6 months ended 30 June 2016

 

 

 

 

 

 

At 30 June

2016

  At 30 June

2015

At 31

December

2015

 

 

Unaudited

Unaudited

Audited

 

 

£'000

£'000

£'000

 

Cash flows from operating activities

 

 

 

Profit before taxation for the period

196

344

1,045

Adjustments:

 

 

 

Depreciation of property, plant and equipment

98

97

193

Amortisation of intangible fixed assets

-

5

16

Finance costs

304

420

242

Share based payments

8

2

14

Net cash flow from operating activities before movements in working capital

606

868

1,510

 

 

 

 

Change in inventories

(1,894)

(2,911)

(137)

Change in trade and other receivables

(1,789)

291

1,814

Change in trade and other payables

2,928

471

(1,476)

Cash flows from operations

(149)

(1,281)

1,711

Interest paid

(54)

(78)

(108)

Tax paid

(22)

(23)

(120)

Net cash flow from operating activities

(225)

(1,382)

1,483

 

 

 

 

Cash flows from investing activities

 

 

 

Acquisition of subsidiary net of cash acquired

-

-

(2,057)

Acquisition of subsidiaries deferred consideration paid

-

-

(290)

Purchase of intangible fixed assets

-

-

(39)

Purchase of property, plant and equipment

(42)

(119)

(132)

Sale of property, plant and equipment

-

-

6

Net cash flow from investing activities

(42)

(119)

(2,512)

 

 

 

 

Cash flows from financing activities

 

 

 

New loans

-

-

1,500

Loan repayments

(204)

(54)

(182)

Finance lease repayments

(12)

(11)

(23)

Change in invoice financing

493

(684)

(1,136)

Exercise of share options

69

25

63

Dividends paid

(121)

(113)

(171)

Net cash flow from financing activities

225

(837)

51

 

 

 

 

Net change in cash and cash equivalents

(42)

(2,338)

(978)

Cash and cash equivalents at beginning of period

878

1,805

1,805

Effect of foreign exchange rate changes

144

(12)

51

Cash and cash equivalents/(overdraft)  at end of period

980

(545)

878

 

 

 

 

NOTES TO THE HALF YEARLY REPORT

 

1   General information

 

Tandem Group plc is a public limited company incorporated and domiciled in the United Kingdom with its shares listed on AIM, the market of that name operated by the London Stock Exchange.

The principal activity of the Group is the design, development and distribution of sports, leisure and mobility equipment.

The ultimate parent company of the Group is Tandem Group plc whose principal place of business and registered office address is 35 Tameside Drive, Castle Bromwich, Birmingham,
B35 7AG.

The interim financial statements for the period ended 30 June 2016 (including the comparatives for the period ended 30 June 2015 and the year ended 31 December 2015) were approved by the Board of Directors on 30 September 2016.  Under the Security Regulations Act of the European Union ("EU"), amendments to the financial statements are not permitted after they have been approved.

The financial information set out in this interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.  The Group's statutory financial statements for the year ended 31 December 2015, prepared under International Financial Reporting Standards ("IFRS"), have been filed with the Registrar of Companies.  The auditor's report on those financial statements was unqualified and did not contain statements under Sections 498(2) and 498(3) of the Companies Act 2006.

This interim financial information has been prepared using the accounting policies set out in the Group's 2015 statutory accounts.  Copies of the annual statutory accounts and the interim report may be obtained by writing to the Company Secretary of Tandem Group plc, 35 Tameside Drive, Castle Bromwich, Birmingham, B35 7AG and can be found on the Company's website at www.tandemgroup.co.uk.

The net retirement benefit obligation recognised at 30 June 2016 is based on the actuarial valuation under IAS19 at 31 December 2015 updated for movements in net defined benefit pension income and contributions paid during the half year period.  A full valuation for IAS19 financial reporting purposes will be carried out for incorporation in the audited financial statements for the year ending 31 December 2016.
 

2   segmental reporting

 

For management purposes the Group is organised into two operating segments.  The revenues and net results for these segments are shown below:

 

Bicycles, accessories and mobility

Sports, leisure and toys

Total

 

£'000

£'000

£'000

6 months ended 30 June 2016

 

 

 

 

 

 

 

Revenue

6,078

11,037

17,115

 

 

 

 

Segment result

19

562

581

Unallocated corporate charges

 

 

(287)

Operating profit before exceptional items

 

 

294

Exceptional items

 

 

206

Operating profit after exceptional items

 

 

500

Finance costs

 

 

(304)

Profit for the period before taxation

 

 

196

Tax expense

 

 

(62)

Net profit for the period

 

 

134

 

6 months ended 30 June 2015

 

 

 

 

 

 

 

Revenue

8,397

7,188

15,585

 

 

 

 

Segment result

597

435

1,032

Unallocated corporate charges

 

 

(268)

Operating profit

 

 

764

Finance costs

 

 

(420)

Profit for the period before taxation

 

 

344

Tax credit

 

 

11

Net profit for the period

 

 

355

 

 

 

 

Year ended 31 December 2015

 

 

 

 

 

 

 

Revenue

15,478

18,907

34,385

 

 

 

 

Segment result before corporate charges

895

1,300

2,195

Corporate charges

(331)

(512)

(843)

Segment result after corporate charges

564

788

1,352

Unallocated corporate charges

 

 

(72)

Operating profit before exceptional items

 

 

1,280

Exceptional items

 

 

7

Operating profit after exceptional items

 

 

1,287

Finance costs

 

 

(242)

Profit before taxation

 

 

1,045

Tax expense

 

 

(44)

Net profit for the year

 

 

1,001

 

 

 

 

 

 

 

3   earnings per share

 

The calculation of earnings per share is based on the net result and ordinary shares in issue during the period as follows:

 

6 months

ended

30 June 2016

    6 months

ended

30 June 2015

Year

ended 31 December

2015

 

£'000

£'000

£'000

 

 

 

 

Net profit for the period

134

355

1,001

 

 

 

 

 

Number

Number

Number

Weighted average shares in issue used for basic earnings per share

4,755,880

4,670,908

4,696,752

Weighted average dilutive shares under option

186,527

192,444

241,974

Average number of shares used for diluted earnings per share

4,942,406

4,863,352

4,938,726

 

 

 

 

 

Pence

Pence

Pence

 

 

 

 

Basic earnings per share

2.82

7.60

21.31

 

 

 

 

Diluted earnings per share

2.71

7.30

20.27

 

 

 

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 (MAR).

 

Enquiries:

Tandem Group plc

Steve Grant, Chief Executive

Jim Shears, Group Finance Director and Company Secretary

Telephone 0121 748 8075

 

Nominated Adviser

Cairn Financial Advisers

Tony Rawlinson

Telephone 020 7148 7901

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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