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Tandem Group PLC  -  TND   

Half-year Report

Released 07:00 29-Sep-2017

RNS Number : 1709S
Tandem Group PLC
29 September 2017
 

 

 

 

 

 

Tandem Group plc

 

Half Yearly Report

for the six months ended

30 June 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CHAIRMAN'S STATEMENT

 

Results

I am pleased to announce the Group's interim results for the six month period ended 30 June 2017.  There was an increase in Group revenue in the six months to 30 June 2017 of approximately 3.1% to £17,651,000 which compared to £17,115,000 in the prior year period. 

 

Gross profit slightly reduced from £5,106,000 to £4,938,000 in the period.  As we have previously reported, to compensate for the ongoing pressure on margin from the weak GBP to USD exchange rate we had no alternative but to implement a price increase in the latter part of 2016, negotiated better buying prices with suppliers and where this could not be achieved, re-sourced to new factories.

 

There was a reduction in operating expenses of £630,000 from £4,812,000 to £4,182,000 in the six months to 30 June 2017 compared to the prior year period.  This reflected the reorganisation undertaken in our bicycles division in the second half of 2016 and resultant cost savings.

 

Operating profit before exceptional costs and credits increased to £756,000 compared to £294,000 in the six months to 30 June 2016. 

 

Principally as a result of the fair value revaluation of our derivative currency contracts, finance costs increased from £304,000 to £337,000 in the six months to 30 June 2017.  This fair value charge and finance costs in respect of the pension schemes are shown in non-underlying items. 

 

The profit before taxation after non-underlying items for the period increased to £419,000 in the six month period to 30 June 2017 compared to £196,000 in the prior year period.

 

The tax charge for the period was £46,000 compared to £62,000 in the prior period.  This reflected the tax charge in the Hong Kong business. 

 

Net profit for the period increased to £373,000 compared to £134,000 in the six months to 30 June 2016.

 

Basic earnings per share in the six months to 30 June 2017 was 7.6 pence per share compared to 2.8 pence per share in the same period in 2016.

 

Cash and cash equivalents increased from £980,000 at 30 June 2016 to £1,506,000 at 30 June 2017.  There were cash inflows from operations of £266,000 which contributed to the improvement.

 

Net debt reduced from £5,824,000 at 30 June 2016 to £4,292,000 at 30 June 2017 with net assets at 30 June 2017 £8,400,000 against £8,048,000 at 30 June 2016.

Sports, leisure and toys

In the six months to 30 June 2017 revenue increased to £12,956,000 compared to £11,037,000 in the prior year period.

 

There was an increase in operating profit from £562,000 in the period ended 30 June 2016 to £874,000 in the period to 30 June 2017.

 

The new Cars 3 and Trolls licences performed well during the period and PJ Masks started strongly.  Disney Princess, Batman and Paw Patrol also continued to perform ahead of expectation.

 

In own brands, Stunted and Hedstrom performed particularly well.  Revenue from our Airwave gazebo and party tent products exceeded the comparative period last year.

 

During the period we continued to develop our direct to consumer business with our marketing team focussed on improving brand awareness and the visibility of our products on the various websites from which we sell.

  

Bicycles and mobility

Revenue in our bicycles, accessories and mobility businesses reduced compared to the previous year period from £6,078,000 to £4,695,000 for the six month period to 30 June 2017.  This was anticipated and in line with expectations following the restructuring of the bicycle businesses last year.

 

Notwithstanding the reduction in revenue, operating profit increased to £125,000 compared to £19,000 in the prior year.

 

Mobility sales were behind the prior year period, principally due to pricing issues although this has been addressed in the second half of the year.

 

The new range of Squish lightweight junior bicycles continued to gain momentum and we significantly increased the number of customers stocking the range during the period.

 

 

Trading update and outlook

Many retailers have reported that poor weather in July and August has affected sales.  We are no exception and this has led to Group revenue for the 38 week period to 22 September being slightly behind the prior year period at approximately £28.2 million compared to £28.8 million in the comparative period last year. 

 

Sports, leisure and toys

Sports, leisure and toys revenue for the 38 week period to 22 September was approximately £21.3 million compared to £19.8 million last year.

 

A number of national retailer customers are reporting that they are overstocked after the poor summer trading period.  It has been reported that the outdoor toy market was 25% behind the prior year in both July and August.

 

The recent rise in inflation increases our concerns about a general slowing in the economy as we lead up towards the busy Christmas period.

 

One of our major customers has filed for Chapter 11 bankruptcy protection in the US and Canada but this does not apply to its UK operation which continues to trade normally.  We are closely monitoring the position. 

We are bringing a number of new products to market including an extended range of gazebos, outdoor light up furniture under our "Party Glow" brand and a range of tepees both for children and adults.

 

Bicycles and mobility

In the bicycles, accessories and mobility businesses revenue for the 38 weeks to 22 September was approximately £6.9 million compared to £9.0 million in the prior year.  However, we remain on target with our turnaround plan and expect to make the anticipated cost savings of £1 million that we reported in our trading update in January.

 

The market remains unquestionably challenging.  Our cost base has been adjusted to reflect this following the restructuring of the business.  We remain committed to supporting our loyal network of independent bicycle dealers with our Claud Butler, Dawes, British Eagle and Squish brands despite the number of independent bicycle shops continuing to decrease.

 

We expect to make continued progress with our lightweight children's Squish range of bicycles and are excited by the opportunity to develop the brand further.

 

There are ongoing opportunities to increase revenue from our corporate brands including Falcon, Elswick, Townsend, Boss and Zombie.

  

We have re-sourced a number of our own brand Pro Rider mobility scooters which offer better specification at lower prices.  In addition, we have added to our distribution portfolio following an agreement with KYMCO.  This compliments well with our existing ranges of Pro Rider, Drive Devilbiss, Freerider, Sunrise Medical and TGA Mobility products.  Mobility scooter performance has improved in the second half of the year to date.

 

 

Dividend

We are declaring an interim dividend of 1.35p per share (2016 - 1.30p per share) payable on or about 13 November 2017 in line with our progressive dividend policy.  The ex-dividend date will be 12 October 2017 and the record date 13 October 2017.

 

 

MPJ Keene

Chairman

29 September 2017
 

 

 

CONDENSED CONSOLIDATED INCOME STATEMENT

For the 6 months ended 30 June 2017

 

 

 

 

 

 

 

 

 

6 months ended 30 June 2017

Unaudited

 

6 months ended 30 June 2016 Unaudited

Year ended 31 December 2016

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

2

17,651

-

17,651

17,115

-

17,115

38,414

-

38,414

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

(12,713)

-

(12,713)

(12,009)

-

(12,009)

(28,434)

-

(28,434)

Gross profit

 

4,938

-

4,938

5,106

-

5,106

9,980

-

9,980

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

(4,182)

 

-

(4,182)

(4,812)

 

-

(4,812)

 

(8,744)

-

(8,744)

Operating profit before exceptional items

 

756

 

-

756

294

 

-

294

 

1,236

-

1,236

 

 

 

 

 

 

 

 

 

 

 

Exceptional items

 

-

-

-

-

206

206

-

143

143

Operating profit after exceptional items

 

756

-

756

294

206

500

 

1,236

143

1,379

 

 

 

 

 

 

 

 

 

 

 

Finance costs

 

(122)

(215)

(337)

(112)

(192)

(304)

(207)

(258)

(465)

Profit before taxation

 

634

(215)

419

182

14

196

1,029

(115)

914

 

 

 

 

 

 

 

 

 

 

 

Tax (expense)/credit

 

(46)

-

(46)

(62)

-

(62)

(146)

9

(137)

 

 

 

 

 

 

 

 

 

 

 

Net profit for the period

 

2

588

 

(215)

373

120

 

14

134

 

883

(106)

777

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pence

 

 

 

Pence

 

 

 

Pence

 

Earnings per share

 

 

 

 

 

 

 

 

 

 

Basic

3

 

 

7.6

 

 

2.8

 

 

16.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

3

 

 

7.5

 

 

2.7

 

 

15.7

                             

 

 

  

All figures relate to continuing operations.

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME       

 

For the 6 months ended 30 June 2017

 

 

 

6 months

ended

30 June 2017

 6 months

ended

30 June

2016

Year ended 31 December

2016

 

Unaudited

Unaudited

Audited

 

£'000

£'000

£'000

 

 

 

 

Profit for the period

373

134

777

 

 

 

 

Other comprehensive income:

 

 

 

Items that will be reclassified subsequently to profit and loss:

Foreign exchange differences on translation of overseas subsidiaries

(144)

 

 

 

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

 

 

 

Actuarial loss on pension schemes

-

(738)

Movement in pension schemes' deferred tax provision

-

-

57

Other comprehensive income for the period

(144)

139

(359)

 

 

 

 

Total comprehensive income attributable to equity shareholders of Tandem Group plc

229

273

418

 

 

 

 

 

 

All figures relate to continuing operations.

 

 

CONDENSED CONSOLIDATED BALANCE SHEET

As at 30 June 2017

 

 

 

 

 

At 30 June

2017

  At 30 June

2016

At 31

December

2016

 

 

Unaudited

Unaudited

Audited

 

 

£'000

£'000

£'000

 

 

 

 

 

Non current assets

 

 

 

 

Intangible fixed assets

 

5,617

5,612

5,625

Property, plant and equipment

 

3,071

3,206

3,141

Deferred taxation

 

1,921

1,825

1,918

 

 

10,609

10,643

10,684

 

 

 

 

 

Current assets

 

 

 

 

Inventories

 

7,267

8,121

7,624

Trade and other receivables

 

6,713

7,379

3,910

Derivative financial asset held at fair value

 

-

125

117

Cash and cash equivalents

 

1,506

980

1,101

 

 

15,486

16,605

12,752

 

 

 

 

 

Total assets

 

26,095

27,248

23,436

 

 

 

 

 

Current liabilities

 

 

 

 

Trade and other payables

 

(7,073)

(8,434)

(5,571)

Other liabilities

 

(3,946)

(4,527)

(3,226)

Derivative financial liability held at fair value

 

(28)

-

-

Current tax liabilities

 

(640)

(477)

(133)

 

 

(11,687)

(13,438)

(8,930)

Non current liabilities

Other payables

 

(2)

(6)

(5)

Other liabilities

 

(1,852)

(2,277)

(2,072)

Pension schemes' deficits

 

(4,154)

(3,479)

(4,215)

 

 

(6,008)

(5,762)

(6,292)

 

 

 

 

 

Total liabilities

 

(17,695)

(19,200)

(15,222)

 

 

 

 

 

Net assets

 

8,400

8,048

8,214

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

Share capital

 

1,503

1,503

1,503

Shares held in treasury

 

(247)

(295)

(272)

Share premium

 

286

175

232

Other reserves

 

3,122

3,083

3,266

Profit and loss account

 

3,736

3,582

3,485

Total equity

 

8,400

8,048

8,214

 

 

 

 

 

 

 

 

 

CONDENSED Consolidated statement of changes in equity

As at 30 June 2017

 

 

 

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 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

 

 

 

 

 

 

 

 

 

 

 

Net profit for the period

-

-

-

-

-

-

643

643

 

Retranslation of overseas subsidiaries

-

-

-

-

-

183

-

183

 

Net actuarial loss on pension schemes

-

-

-

-

-

-

(681)

(681)

 

Total comprehensive income for period attributable to equity shareholders

-

-

-

-

-

183

(38)

145

 

Share based payments

-

-

-

-

-

-

5

5

 

Deferral tax on share options

-

-

-

-

-

-

-

-

 

Exercise of share options

-

23

57

-

-

-

-

80

 

Dividends paid

-

-

-

-

-

-

(64)

(64)

 

Total transactions with owners

-

23

57

-

-

183

(97)

166

 

At 1 January 2017

1,503

(272)

232

1,036

1,427

803

3,485

8,214

 

 

 

 

 

 

 

 

 

 

 

Net profit for the period

-

-

-

-

-

-

373

373

 

Retranslation of overseas subsidiaries

-

-

-

-

-

(144)

-

(144)

 

Total comprehensive income for period attributable to equity shareholders

-

-

-

-

-

(144)

373

229

 

Share based payments

-

-

-

-

-

-

6

6

 

Exercise of share options

-

25

54

-

-

-

-

79

 

Dividends paid

-

-

-

-

-

-

(128)

(128)

 

Total transactions with owners

-

25

54

-

-

(144)

251

186

 

At 30 June 2017

1,503

(247)

286

1,036

1,427

659

3,736

8,400

 

 

 

 

 

 

 

 

 

 

 

                                     

 

 

 

 

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

For the 6 months ended 30 June 2017

 

 

 

 

 

 

At 30 June

2017

  At 30 June

2016

At 31

December

2016

 

 

Unaudited

Unaudited

Audited

 

 

£'000

£'000

£'000

 

Cash flows from operating activities

 

 

 

Profit for the period

373

134

777

Adjustments:

 

 

 

Depreciation of property, plant and equipment

78

98

186

Amortisation of intangible fixed assets

8

-

31

Loss/(profit) on sale of property, plant and equipment

 

1

 

-

(5)

Waiver of deferred consideration

-

(241)

(651)

Contributions to defined benefit pension schemes

(132)

(130)

(260)

Finance costs

337

304

465

Tax expense

46

62

137

Share based payments

6

8

13

Net cash flow from operating activities before movements in working capital

717

235

693

 

 

 

 

Change in inventories

356

(1,894)

(1,397)

Change in trade and other receivables

(2,803)

(1,789)

1,558

Change in trade and other payables

1,996

3,299

946

Cash flows from operations

266

(149)

1,800

Interest paid

(122)

(54)

(207)

Tax paid

(40)

(22)

(287)

Net cash flow from operating activities

104

(225)

1,306

 

 

 

 

Cash flows from investing activities

 

 

 

Acquisition of subsidiaries deferred consideration paid

-

-

(32)

Purchase of intangible fixed assets

-

-

(44)

Purchase of property, plant and equipment

(8)

(42)

(59)

Sale of property, plant and equipment

-

-

5

Net cash flow from investing activities

(8)

(42)

(130)

 

 

 

 

Cash flows from financing activities

 

 

 

Loan repayments

(204)

(204)

(407)

Finance lease repayments

(13)

(12)

(24)

Change in invoice financing

718

493

(808)

Exercise of share options

78

69

149

Dividends paid

(128)

(121)

(185)

Net cash flow from financing activities

451

225

(1,275)

 

 

 

 

Net change in cash and cash equivalents

547

(42)

(99)

Cash and cash equivalents at beginning of period

1,101

878

878

Effect of foreign exchange rate changes

(142)

144

322

Cash and cash equivalents at end of period

1,506

980

1,101

 

 

 

 

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 2017 (including the comparatives for the period ended 30 June 2016 and the year ended 31 December 2016) were approved by the Board of Directors on 29 September 2017.  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 2016, 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 2016 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 2017 is based on the actuarial valuation under IAS19 at 31 December 2016 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 2017.
 

 

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:

 

Sports, leisure and toys

Bicycles and mobility

Total

 

£'000

£'000

£'000

6 months ended 30 June 2017

 

 

 

 

 

 

 

Revenue

12,956

4,695

17,651

 

 

 

 

Segment result

874

125

999

Unallocated corporate charges

 

 

(243)

Operating profit before exceptional items

 

 

756

Finance costs

 

 

(337)

Profit for the period before taxation

 

 

419

Tax expense

 

 

(46)

Net profit for the period

 

 

373

 

6 months ended 30 June 2016

 

 

 

 

 

 

 

Revenue

11,037

6,078

17,115

 

 

 

 

Segment result

562

19

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

 

 

 

 

Year ended 31 December 2016

 

 

 

 

 

 

 

Revenue

26,975

11,439

38,414

 

 

 

 

Segment result before corporate charges

2,233

124

2,357

Corporate charges

(695)

(363)

(1,058)

Segment result after corporate charges

1,538

(239)

1,299

Unallocated corporate charges

 

 

(63)

Operating profit before exceptional items

 

 

1,236

Exceptional items

 

 

143

Operating profit after exceptional items

 

 

1,379

Finance costs

 

 

(465)

Profit before taxation

 

 

914

Tax expense

 

 

(137)

Net profit for the year

 

 

777

 

   

 

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 2017

    6 months

ended

30 June 2016

Year

ended 31 December

2016

 

£'000

£'000

£'000

 

 

 

 

Net profit for the period

373

134

777

 

 

 

 

 

Number

Number

Number

Weighted average shares in issue used for basic earnings per share

4,930,187

4,755,880

4,863,496

Weighted average dilutive shares under option

72,775

186,527

84,530

Average number of shares used for diluted earnings per share

5,002,962

4,942,407

4,948,026

 

 

 

 

 

Pence

Pence

Pence

 

 

 

 

Basic earnings per share

7.6

2.8

16.0

 

 

 

 

Diluted earnings per share

7.5

2.7

15.7

 

 

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 Advisers LLP

Tony Rawlinson

James Caithie

Telephone 020 7213 0880

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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Half-year Report - RNS