Source - RNS
RNS Number : 4766K
Tandem Group PLC
11 April 2018
 

 TANDEM GROUP PLC

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2017

 

 

Chairman's statement

______________________________________________________________

 

Introduction

I am pleased to present the results for the year ended 31 December 2017. 

 

Results

There was a 4% reduction in revenue which was in line with our expectations following the restructuring of our bicycle operations.  Revenue decreased from £38,414,000 for the year ended 31 December 2016 to £36,837,000 in the year ended 31 December 2017.  

 

Operating profit before finance costs and taxation was £2,401,000 for the year ended 31 December 2017 compared to £1,379,000 for the year ended 31 December 2016.

 

Finance costs increased to £511,000 compared to £465,000 in the previous year although this included a fair value charge in respect of foreign currency derivatives of £172,000 (year ended 31 December 2016 - £129,000).

 

I am pleased to report that cash and cash equivalents increased from £1,101,000 at 31 December 2016 to £3,856,000 at 31 December 2017.  This was due to increased Group profitability and the strong control of working capital, particularly stock, where we entered 2018 with little carry-over stock from the previous season.

 

Net assets also increased during the year to £11,068,000 at 31 December 2017 compared to £8,214,000 at 31 December 2016, an increase of 35%.

  

Dividend

We are proposing to pay a final dividend of 2.75 pence per share (year ended 31 December 2016 - 2.60 pence per share) which, when combined with the interim dividend of 1.35 pence per share (year ended 31 December 2016 - 1.30 pence per share), gives a total dividend of 4.10 pence for the year (year ended 31 December 2016 - 3.90 pence per share), an increase of 5%.

 

Subject to shareholder approval at the Annual General Meeting to be held on 28 June 2018, the final dividend will be paid on or around 4 July 2018 to shareholders on the share register as at 18 May 2018.  The ex-dividend date will be 17 May 2018.

 

Pension schemes

The Group operates two defined benefit pension schemes with both schemes closed to new members.  There are no active members in either scheme.  There was a net reduction in the deficit of the schemes from £4,215,000 at 31 December 2016 to £2,928,000 at 31 December 2017.  Government gilt yields improved which, in turn, increased the discount rate used to calculate scheme liabilities.  This was coupled with minor changes to mortality assumptions.

 

Notwithstanding the above, total payments made by the company into the schemes continue to be significant.  During the year to 31 December 2017 total payments in respect of these schemes were £345,000 (year ended 31 December 2016 - £368,000) comprising deficit contributions of £265,000 (year ended 31 December 2016 - £260,000) and government levies and administration costs of £80,000 (year ended 31 December 2016 - £108,000).  In line with the previously agreed recovery plans deficit contributions are expected to increase to £423,000 in 2018.

 

Employees

I would like to thank all employees, on behalf of the Board of Directors, for their continued hard work and support in what continues to be a challenging, yet rewarding, environment.

  

Outlook

The start of 2018 has been more challenging for the Group.  However, we have secured many new licences including Hatchimals, Jo Jo Siwa, Jurassic World, LOL Surprise, Nella the Princess Knight, Rusty Rivets and Super Wings.

  

We expect a strong year from Kickmaster in light of the forthcoming World Cup in Russia and we anticipate a better performance from Ben Sayers following new developments to the product range for 2018.

 

Excellent feedback was again received from our recent exhibition at the London Toy Fair and our bicycle 2018 product launch show in January. 

 

Our product ranges for 2018 are extensive and varied whilst maintaining a strong focus on our core values of quality and value.

 

We are pleased with the progress of our Squish lightweight bicycle brand and have won new business with a significant retail customer for 2018 and entered into an exclusive distribution arrangement with a new partner covering the Republic of Ireland and Northern Ireland.

 

Our own brand Pro Rider mobility scooter range has been fully redesigned and will be launched at Naidex, Europe's most comprehensive trade, professional and consumer event dedicated to the independent living sector, where we will be exhibiting in April.

 

During the course of the year we also expect to develop our direct to consumer websites further and recruit in the areas of product development and marketing in order to bring more new and innovative products to market.

 

Our use of automated technology in our operations, logistics and distribution will continue to be streamlined to enable an ever more efficient process from customer order to despatch and delivery.

 

We are cautious about the outlook for the year ahead, but we remain confident that we have the resources and personnel to deliver profitability to our shareholders. 

 

M P J Keene

Chairman

 

11 April 2018

 

 

Strategic report

______________________________________________________________
 

Operating and Financial Review

 

Revenue

There was a reduction in Group revenue for the year ended 31 December 2017 to £36,837,000 from £38,414,000 in the prior year. 

 

This reduction was mainly as a result of the restructuring undertaken in our bicycles operations which involved a number of measures taken to significantly reduce costs.  As a result, and as we anticipated, revenue reduced.

 

Toy sales were broadly flat compared to the prior year.  However, as we reported in our trading statement of 1 March, this was a strong result against a backdrop of a reported decline in revenues in the UK outdoor toy market of 6% in 2017.

 

Notwithstanding this, there were a number of our licences which performed particularly well during the year.  Following the release of the Cars 3 movie, our sales of related wheeled toys were strong.  Batman continued to show growth over the previous year.  We were also pleased that a new licence, PJ Masks, delivered a strong first year performance.

 

Our range of own branded Stunted stunt scooters and accessories showed double digit growth in 2017.  Our range of Hedstrom outdoor play products also showed double digit growth, with increases across many product lines.

 

For Dawes and Claud Butler, as part of our overall efforts to further improve working capital, 2017 was a year in which we streamlined stock holdings in anticipation of relaunching the brands in 2018.

 

We introduced a new range of value for money British Eagle bicycles during the year and have been encouraged by the launch of our Squish lightweight junior range against a difficult backdrop for independent dealer cycle sales in the UK.

 

It was also a more challenging year for Ben Sayers with revenue behind the prior year.

 

As we previously reported, our direct to consumer operations continued to show revenue growth.

 

Revenue from both our Airwave range of gazebos and party tent ranges increased.  It was also a strong year for electric golf trolleys, sales of which increased following the launch of a new product range.

 

A particular success for the year was the introduction of new ranges of heating and cooling products, both of which made a solid contribution to direct to consumer revenue.

 

We expanded our range of garden furniture, garden storage and outdoor inflatable spas where there was also revenue growth.

 

Gross profit

Gross profit increased by 9% to £10,887,000 from £9,980,000 in 2016 with the gross profit percentage increasing from 26.0% last year to 29.6% in the year ended 31 December 2017.

 

As we reported in our recent trading update, there was a strong focus during the year to improve our gross margin.  A number of the measures that we began to implement towards the end of 2016 were successfully carried forward into 2017 in the following key areas:

 

·      We were able to achieve better supplier buying prices for a number of products;

·      Where this could not be achieved, products were re-sourced or discontinued;

·      In accordance with our ongoing product development programmes, a considerable number of new products were introduced across the Group during 2017; and

·      There was a greater concentration on more profitable product lines.

 

These objectives were achieved despite the ongoing adverse impact of the US dollar during 2017 and major customers continuing to exert significant pricing pressure on the Group.

  

Operating expenses

Operating expenses were £8,486,000 in the year ended 31 December 2017 compared to £8,744,000 for the year ended 31 December 2016.  This was a reduction of 3%.

 

There was additional investment in advertising, promotional and marketing activities in a number of areas of the Group but this was more than offset by the restructuring undertaken in our bicycles operations.

 

Operating profit

As a result of the positive impact on gross margin and operating expenses, we are pleased to report that operating profit before exceptional items increased to £2,401,000 for the year ended 31 December 2017 compared to £1,236,000 in the prior year. 

 

Non-underlying items

Non-underlying items are material items which have arisen from unusual non-recurring or non-trading events.  There were no non-underlying exceptional items for the year ended 31 December 2017.  However, in the prior year ended 31 December 2016 there were exceptional restructuring costs of £191,000 incurred and an exceptional release of deferred consideration of £334,000 in respect of the Pro Rider and ESC acquisitions.

 

Other non-underlying items comprised:

 

·      a fair value charge adjustment for foreign currency derivative contracts under IAS39 of £172,000 (year ended 31 December 2016 - £129,000);

·      pension finance costs under IAS19 of £107,000 (year ended 31 December 2016 - £129,000); and

·      a deferred tax charge of £114,000 (year ended 31 December 2016 - £9,000 credit) in respect of share option and pension schemes.

 

Finance costs

Total net finance costs for the year ended 31 December 2017 were £511,000 compared to £465,000 for the year ended 31 December 2016. 

 

Interest payable on bank loans, overdrafts, hire purchase and invoice finance facilities was £232,000 compared to £207,000 in the prior year. 

 

Finance costs of £107,000 in respect of the pension schemes provided in accordance with IAS19 were incurred compared to £129,000 for year ended 31 December 2016. 

 

In accordance with IAS39, there was an increase in the fair value charge of £172,000 in respect of derivative foreign exchange contracts against £129,000 in the prior year.

 

As in previous years and explained above, the net cost of pension schemes' finance costs and foreign currency derivatives, which totalled £279,000 (year ended 31 December 2016 - £258,000), is included in non-underlying items.

 

Taxation

The tax expense increased from £137,000 for the year ended 31 December 2016 to £146,000 for the year ended 31 December 2017.

 

The current tax charge, which comprised corporation tax from the overseas Hong Kong operation, was £219,000 (year ended 31 December 2016 - £173,000).

 

Deferred tax income of £73,000 comprised tax in respect of movements in trading losses and pension schemes' liabilities and compared to £36,000 in the prior year.

 

Net profit

Net profit for the year ended 31 December 2017 after non-underlying items, finance costs and taxation more than doubled to £1,744,000 compared to £777,000 for the year ended 31 December 2016.

 

Capital expenditure

There was minimal capital expenditure incurred during the year.  Total expenditure was £27,000 (year ended 31 December 2016 - £59,000).

 

Property

A valuation of the Castle Bromwich property was carried out by CBRE Ltd in January 2018 in accordance with the RICS Valuation - Professional Standards January 2014, published by The Royal Institution of Chartered Surveyors.  

 

The value placed on the property was £3,150,000 and we consider this to represent the fair value at 31 December 2017.  We are pleased to report therefore that the property investment, which is utilised by parts of our Group, has increased in value by over 20% since acquisition. 

 

The property was originally purchased in February 2013 for £2,600,000 satisfied by means of a new 5 year term loan of £1,600,000 million provided by the Company's bankers.  The loan was subject to a bullet payment at the end of year 5 which was subsequently renegotiated.  The reduced bullet payment now falls due in 2020. 

 

Cash flows, working capital and net debt

Net cash inflow from operating activities before movements in working capital for the year ended 31 December 2017 was £2,330,000 compared to £693,000 in the prior year.

 

The focus on strong stock control enabled cash generated from operations to increase to £4,061,000 compared to £1,800,000 last year. 

 

Net cash outflows from investing activities were £32,000 in the year ended 31 December 2017 against £130,000 in the previous year.

 

There was a net cash outflow from financing activities of £543,000 in the year ended 31 December 2017 which compared to £1,275,000 in the year ended 31 December 2016.

 

As a result of these movements the closing cash position at 31 December 2017 was £3,856,000 compared to £1,101,000 at 31 December 2016.

 

Net debt, comprising cash and cash equivalents, invoice financing liabilities and borrowings, was significantly reduced to £1,016,000 at 31 December 2017 compared to £4,197,000 at the end of the previous year.

 

Dividends

We have increased total dividends paid and proposed for the year ended 31 December 2017 by over 5% to 4.1 pence per share compared to 3.9 pence per share for the year ended 31 December 2016. 

 

The dividend cover ratio was 8.5 (year ended 31 December 2016 - 4.1). 

 

As we have previously stated, it continues to be the Group's policy to progressively increase the dividend payment to shareholders where trading performance permits.

 

Earnings per share

Basic earnings per share was 35.0 pence per share for the year ended 31 December 2017 compared to 16.0 pence per share in the year ended 31 December 2016.  Diluted earnings per share was 34.8 pence per share compared to 15.7 pence per share in the prior year.

 

 

 

 

 

S J Grant                                                               J C Shears

Chief Executive Officer                                   Group Finance Director

 

11 April 2018

 

 

Consolidated income statement

______________________________________________________________

 

 

 

 

 

 

 

31 December 2017

 

31 December 2016

 

Note

Before non-underlying items

 

Non-underlying items

 

After non-underlying items

 

Before non-underlying items

 

Non-underlying items

 

After non-underlying items

 

 

£'000

 

£'000

 

£'000

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

36,837

 

__

 

36,837

 

38,414

 

__

 

38,414

 

Cost of sales

 

(25,950)

 

__

 

(25,950)

 

(28,434)

 

__

 

(28,434)

Gross profit

 

10,887

 

__

 

10,887

 

9,980

 

__

 

9,980

Operating expenses

 

(8,486)

 

__

 

(8,486)

 

(8,744)

 

__

 

(8,744)

Operating profit before exceptional income

 

2,401

 

__

 

2,401

 

1,236

 

__

 

1,236

Exceptional income

 

__

 

__

 

__

 

__

 

143

 

143

Operating profit after exceptional income

 

2,401

 

__

 

2,401

 

1,236

 

143

 

1,379

Finance costs

 

(232)

 

(279)

 

(511)

 

(207)

 

(258)

 

(465)

Profit before taxation

 

2,169

 

(279)

 

1,890

 

1,029

 

(115)

 

914

Tax (expense)/credit

 

(32)

 

(114)

 

(146)

 

(146)

 

9

 

(137)

Net profit for the year

 

2,137

 

(393)

 

1,744

 

883

 

(106)

 

777

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share

3

 

 

 

 

Pence

 

 

 

 

 

Pence

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

35.0

 

 

 

 

 

16.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

34.8

 

 

 

 

 

15.7

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated statement of

comprehensive income

______________________________________________________________

 

 

 

31 December 2017

 

 

31 December 2016

 

 

£'000

 

£'000

 

 

 

 

 

Net profit for the year

 

1,744

 

777

Other comprehensive income:

 

 

 

 

Items that will be reclassified subsequently to profit and loss:

Foreign exchange differences on translation of foreign operations

 

 

(254)

 

 

322

 

 

 

 

 

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

 

 

 

 

 

Revaluation of property, plant and equipment

 

530

 

__

Actuarial gain/(loss) on pension schemes

 

1,129

 

(738)

Movement in pension schemes' deferred tax provision

 

(191)

 

57

 

 

 

 

 

Other comprehensive income for the year, net of tax

 

1,214

(359)

 

 

 

 

 

 

 

 

Total comprehensive income for the year attributable to equity shareholders

 

 

2,958

 

418

 

All figures relate to continuing operations.

 

Consolidated balance sheet

______________________________________________________________

 

 

 

 

At 31 December 2017

At 31 December 2016

 

 

£'000

£'000

Non current assets

 

 

 

Intangible fixed assets

 

5,597

5,625

Property, plant and equipment

 

3,550

3,141

Deferred taxation

 

1,800

1,918

 

 

10,947

10,684

 

 

 

 

Current assets

 

 

 

Inventories

 

4,001

7,624

Trade and other receivables

 

4,539

3,910

Derivative financial asset held at fair value

 

__

117

Cash and cash equivalents

 

3,856

1,101

 

 

12,396

12,752

 

 

 

 

Total assets

 

23,343

23,436

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

Trade and other payables

 

(4,312)

(5,571)

Other liabilities

 

(3,237)

(3,226)

Derivative financial liability held at fair value

 

(55)

__

Current tax liabilities

 

(107)

(133)

 

 

(7,711)

(8,930)

 

 

 

 

Non current liabilities

 

 

 

Other payables

 

(1)

(5)

Other liabilities

 

(1,635)

(2,072)

Pension schemes' deficits

 

(2,928)

(4,215)

 

 

(4,564)

(6,292)

 

 

 

 

Total liabilities

 

(12,275)

(15,222)

 

 

 

 

 

 

 

 

Net assets

 

11,068

8,214

 

 

 

 

Equity

 

 

 

Share capital

 

1,503

1,503

Shares held in treasury

 

(247)

(272)

Share premium

 

286

232

Other reserves

 

3,542

3,266

Profit and loss account

 

5,984

3,485

Total equity

 

11,068

8,214

 

 

 

 

 

 

  

 

Consolidated statement of changes in equity

______________________________________________________________

 

 

Share capital

 

Shares held in treasury

 

Share premium

 

Merger  reserve

 

Capital redemption reserve

 

Revaluation reserve

 

Translation reserve

 

Profit and loss account

 

Total

 

 

£'000

 

£'000

 

£'000

 

£'000

 

£'000

 

£'000

 

£'000

 

£'000

At 1 January 2016

1,503

 

(316)

 

127

 

1,036

 

1,427

 

-

 

481

 

3,561

 

7,819

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net profit for the year

-

 

-

 

-

 

-

 

-

 

-

 

-

 

777

 

777

Re-translation of overseas subsidiaries

-

 

-

 

-

 

-

 

-

 

-

 

322

 

-

 

322

Net actuarial loss on pension schemes

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(681)

 

(681)

Total comprehensive income for the year attributable to equity shareholders

-

 

-

 

-

 

-

 

-

 

-

 

322

 

96

 

418

Share based payments

-

 

-

 

-

 

-

 

-

 

-

 

-

 

13

 

13

Exercise of share options

 

 

44

 

105

 

-

 

-

 

-

 

-

 

-

 

149

Dividends paid

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(185)

 

(185)

Total transactions with owners

-

 

44

 

105

 

-

 

-

 

-

 

-

 

(172)

 

(23)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January 2017

1,503

 

(272)

 

232

 

1,036

 

1,427

 

-

 

803

 

3,485

 

8,214

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net profit for the year

-

 

-

 

-

 

-

 

-

 

-

 

-

 

1,744

 

1,744

Re-translation of overseas subsidiaries

-

 

-

 

-

 

-

 

-

 

-

 

(254)

 

-

 

(254)

Revaluation of property, plant and equipment

-

 

-

 

-

 

-

 

-

 

530

 

-

 

-

 

530

Net actuarial gain on pension schemes

-

 

-

 

-

 

-

 

-

 

-

 

-

 

938

 

938

Total comprehensive income for the year attributable to equity shareholders

-

 

-

 

-

 

-

 

-

 

530

 

(254)

 

2,682

 

2,958

Share based payments

-

 

-

 

-

 

-

 

-

 

-

 

-

 

13

 

13

Exercise of share options

-

 

25

 

54

 

-

 

-

 

-

 

-

 

-

 

79

Dividends paid

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(196)

 

(196)

Total transactions with owners

-

 

25

 

54

 

-

 

-

 

-

 

-

 

(183)

 

(104)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2017

1,503

 

(247)

 

286

 

1,036

 

1,427

 

530

 

549

 

5,984

 

11,068

 

 

Consolidated cash flow statement

______________________________________________________________

 

 

 

 

31

December 2017

£'000

31 December 2016

£'000

Cash flows from operating activities

 

 

 

 

Net profit for the year

 

1,744

777

 

Adjustments:

 

 

 

 

Depreciation of property, plant and equipment

 

148

186

 

Amortisation of intangible fixed assets

 

39

31

 

Profit on sale of property, plant and equipment

 

(6)

(5)

 

Waiver of deferred consideration

 

-

(651)

 

Contribution to defined benefit plans

 

(265)

(260)

 

Finance costs

 

511

465

 

Tax expense

 

146

137

 

Share based payments

 

13

13

 

Net cash flow from operating activities before movements in working capital

2,330

693

 

Change in inventories

3,623

(1,397)

 

Change in trade and other receivables

(629)

1,558

 

Change in trade and other payables

 

(1,263)

946

 

Cash generated from operations

4,061

1,800

 

Interest paid

(232)

(207)

 

Tax paid

(245)

(287)

 

Net cash flows from operating activities

3,584

1,306

 

 

 

 

 

Cash flows from investing activities

 

 

 

Acquisition of subsidiaries deferred consideration paid

 

-

(32)

 

Purchases of intangible fixed assets

 

(11)

(44)

 

Purchases of property, plant and equipment

 

(27)

(59)

 

Sale of property, plant and equipment

 

6

5

 

Net cash flows from investing activities

(32)

(130)

 

 

 

 

 

Cash flows from financing activities

 

 

 

Loan repayments

(407)

(407)

 

Finance lease repayments

(27)

(24)

 

Movement in invoice financing

8

(808)

 

Exercise of share options

 

79

149

 

Dividends paid

 

(196)

(185)

 

Net cash flows from financing activities

 

(543)

(1,275)

 

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

3,009

(99)

 

Cash and cash equivalents at beginning of year

1,101

878

 

Effect of foreign exchange rate changes

(254)

322

 

Cash and cash equivalents at end of year

3,856

1,101

 

             

 

 

 

Notes to the preliminary results

_____________________________________________________________

 

 

1.  General information

 

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 434 of the Companies Act 2006.  The Consolidated income statement, the Consolidated statement of comprehensive income, the Consolidated balance sheet at 31 December 2017, the Consolidated statement of changes in equity, the Consolidated cash flow statement and the associated notes for the period then ended have been extracted from the Group's financial statements upon which the auditor's opinion is unqualified and does not include any statement under section 498 of the Companies Act 2006.  The statutory accounts for the year ended 31 December 2017 will be delivered to the Registrar of Companies following the Group's Annual General Meeting.

 

2.  Basis of preparation

 

The consolidated financial statements of the Group have been prepared under the historical cost convention and in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU.  The principal accounting policies adopted by the Group, which remain unchanged, are set out in the statutory financial statements for the year ended 31 December 2017.

 

Non-underlying items

Non-underlying items are material items which arise from unusual non-recurring or non-trading events.  They are disclosed in aggregate on the Consolidated income statement where in the opinion of the Directors such disclosure is necessary in order to fairly present the results for the period.  Non-underlying items comprise exceptional costs of Group restructuring, the finance cost related to the Group's pension schemes calculated in accordance with IAS19, the impact of the movement in respect of derivative foreign exchange contracts held at fair value through the profit and loss in accordance with IAS39 and the release of the over provision in respect of contingent consideration.

 

Key areas of estimation uncertainty

Impairment of goodwill

The annual impairment assessment in respect of goodwill requires estimates of the value in use of cash generating units to which goodwill has been allocated to be calculated.  As a result, estimates of future cash flows are required, together with an appropriate discount factor for the purpose of determining the present value of those cash flows.

 

Financial instruments valuation

Forward contracts and options are used to minimise the impact of foreign exchange fluctuations on the group. An asset or liability is recognised representing the fair value of the instruments in place at the year end. The fair value is calculated using certain estimates and valuation models by reference to significant inputs including; implied volatilities in foreign currency and historical movements in foreign currency exchange rates. Changes in the fair value of the instruments are recognised in profit or loss in the income statement.

 

Pension scheme valuation

The liabilities in respect of defined benefit pension schemes are calculated by qualified actuaries and reviewed by the Group, but are necessarily based on subjective assumptions.  The principal uncertainties relate to the estimation of the discount rate, life expectancies of scheme members, future investment yields and general market conditions for factors such as inflation and interest rates.  Profits and losses in relation to changes in actuarial assumptions are taken directly to reserves and therefore do not impact on the profitability of the business, but the changes do impact on net assets.

   

Inventory provisioning

The Group reviews the net realisable value of and demand for its inventory on an ongoing basis to ensure recorded inventory is stated at the lower of cost or net realisable value.  Factors that could impact estimated demand and selling prices are the timing and success of future technological innovations, competitor actions, suppliers' prices and economic trends.  If total inventory losses differ, the Group's consolidated net income in the year would have improved or declined, depending upon whether the actual results were better or worse than expected.

 

Bad debt provision

At each reporting period, the Directors review outstanding debts and determine appropriate provision levels.  The recovery of certain debts is dependent on the individual circumstances of customers.  At the year end there are a number of debts which remain outstanding past their due date, which the Directors believe to be recoverable.

 

Intangible asset valuation

In attributing value to intangible assets arising on acquisition, management has made certain assumptions in terms of cash flows attributable to intellectual property and customer relationships. The key assumptions relate to the trading performance of the acquired business, royalty rates applied in the royalty relief calculation and discount rates applied to calculate the present value of future cash flows. The Directors consider the resulting valuation to be a reasonable approximation as to the value of the intangibles acquired.

 

Key judgements

Deferred tax assets

In determining the deferred tax asset to be recognised the Directors carefully review the recoverability of these assets on a prudent basis and reach a judgement based on the best available information.  Estimates and judgements used in the financial statements are based on historical experience and other assumptions that the Directors and management consider reasonable and are consistent with the Group's latest budgeted forecasts where applicable.  Judgements are based on the information available at each balance sheet date.  Although these estimates are based on the best information available to the Directors, actual results may ultimately differ from those estimates.

 

Pension deficit

In accordance with the winding up provisions of the Trust deeds the Directors have concluded that the Group has a discretionary right to receive returns of contributions if the schemes were to be in surplus.  Accordingly, and where material, any excess funding has not been recognised on the balance sheet.

  

 

3.  Earnings per share

 

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

 

 

31 December 2017

 

31 December 2016

 

£'000

 

£'000

 

 

 

 

Net profit for the year

1,744

 

777

 

 

 

 

Weighted average shares in issue (excluding shares held in treasury) used for basic earnings per share

4,981,003

 

4,863,496

Weighted average dilutive shares under option

24,163

 

84,530

Average number of shares used for diluted earnings per share

5,005,166

 

4,948,026

 

 

 

 

 

Pence

 

Pence

Basic earnings per share

                   35.0

 

                   16.0

Diluted earnings per share

                   34.8

 

                   15.7

 

 

4.  Dividend
 

The Directors are proposing a final dividend of 2.75 pence per ordinary share (year ended 31 December 2016 - 2.60 pence) payable to shareholders on the register on 18 May 2018 and will be paid on or around 4 July 2018.

 

5.  Annual report and accounts
 

The annual report and accounts will be posted to shareholders shortly and will be available on the Company's website, www.tandemgroup.co.uk.

 

 

6.  Annual General Meeting
 

The Annual General Meeting will be held at 11:00 a.m. on 28 June 2018 at 35 Tameside Drive, Castle Bromwich, Birmingham, B35 7AG.

 

For further information contact:

 

Tandem Group plc

Steve Grant, Chief Executive

Jim Shears, Group Finance Director and Company Secretary

Telephone 0121 748 8075

 

Nominated Adviser

Cairn Financial Advisers LLP

Tony Rawlinson

James Caithie

Telephone 020 7213 0880

 

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


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