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Tandem Group PLC   -  TND   

Half Yearly Report

Released 07:01 30-Sep-2019

RNS Number : 0370O
Tandem Group PLC
30 September 2019
 

 

  

 

Tandem Group plc

 

Half Yearly Report

for the six months ended

30 June 2019

 

 

 

 

CHAIRMAN'S STATEMENT

 

Results

Trading performance improved in the six months to 30 June 2019 with Group revenue increasing by approximately 27% to £16,029,000 compared to £12,670,000 in the six months to 30 June 2018. 

 

There was an increase in gross profit from £3,779,000 to £4,911,000.  Gross profit margin also increased to 30.6% compared to 29.8% in the prior period.  We continue to work hard to maintain our profit margins.

 

Operating expenses increased from £3,997,000 to £4,331,000 in the six months to 30 June 2019 broadly as a result of the increased revenue.

 

Operating profit was £580,000 compared to an operating loss of £218,000 in the six months to 30 June 2018.  There were no exceptional costs incurred during the period (six months ended 30 June 2018 - £45,000).

 

Finance costs were significantly higher at £210,000 in the six months to 30 June 2019.  This compared to £85,000 in the prior period.  There was a fair value charge for foreign currency derivative contracts of £54,000 compared to a credit of £55,000 in the prior period.  This is shown in non-underlying items.  Non-underlying items also included finance costs of £85,000 in respect of the pension schemes against £60,000 in the six months to 30 June 2018.

 

The profit before taxation after non-underlying items for the period was £370,000 compared to a loss of £348,000 in the six month period to 30 June 2018.

 

There was a tax charge of £215,000 during the period compared to £8,000 in the prior period.  This reflected the increased level of business undertaken from our Far East operations.

 

Net profit for the period was £155,000 compared to a loss £356,000 in the six months to 30 June 2018.

 

Basic earnings per share in the six months to 30 June 2019 was 3.1 pence per share compared to a loss of 7.1 pence per share in the prior period.

 

Net assets at 30 June 2019 increased to £12,446,000 against £10,625,000 at 30 June 2018.

Cash and cash equivalents were £3,740,000 at 30 June 2019 which compared to £957,000 at 30 June 2018.  The timing of creditor payments, utilisation of invoice finance facilities and ongoing careful management of inventories helped to improve this position.

 

There was a 43% reduction in net debt from £3,508,000 at 30 June 2018 to £2,006,000 at 30 June 2019.

 

 

Trading update and outlook

As we reported in our AGM Statement on 27 June 2019, it has been an encouraging year so far for the Group with significant revenue and profitability growth over the prior year period.

 

Our licensed properties including LOL Surprise!, Peppa Pig and Paw Patrol have continued to perform strongly since the half year.  Our new Disney licences, including Spider-Man and, most notably, Toy Story and Frozen, have also performed well.  Disney Princess is ahead of the prior year.  We remain enthusiastic about the cinema release of Frozen 2 in November 2019 which should bring further growth.

As previously reported, the majority of our own brands including Kickmaster, U-Move and Wired are ahead of the prior year.  Hedstrom has continued to perform very well with significant growth since 30 June over the corresponding period.

Our investment into the Ben Sayers brand delivered double digit growth in the first half of the year which has improved further still going into the second half.

Performance from our bicycles brands remains mixed.  Our Squish lightweight junior range continues to be significantly up against the same period in the prior year.  We reported that Squish had been a particular success story at the half year, gaining market share and greater consumer brand awareness.  This has been sustained in the second half and Squish is now recognised as a leading supplier to the lightweight junior cycle market.

Other independent bicycle dealer (IBD) sales from our Dawes and Claud Butler brands continue to be more challenging against a backdrop of declining traditional IBD customers following closures of a number of retailers coupled with falling consumer bicycle demand, particularly in the leisure market.  We remain focussed on maintaining a strong and compelling offering to our IBD customers, despite these significant headwinds.

National retailer bicycle sales, from our Falcon, Boss, Townsend, Elswick and Zombie brands, which were tracking at similar levels to last year as at June 2019, have weakened slightly in the period since due to strong August 2018 comparatives.

Our online and direct-to-consumer activities continue to progress in a number of product areas albeit hampered by reduced gazebo revenue from a major online platform, the mixed August weather and overall economic environment.  As we previously stated, the retail climate has been increasingly challenging for certain product groups. 

Notwithstanding this, we are very pleased with the growth from our flagship website, Garden Comforts (www.garden-camping.com), which has shown significant growth this year.  In addition, it has been a strong summer period for our mobility business, Pro Rider Mobility (www.proridermobility.com).

The improvements that we previously reported ranging from refinements in search engine optimisation and more focussed 'pay per click' advertising to an enriched website/mobile shopping experience and a more responsive customer service function have helped to grow certain channels.

The potential threats on the horizon that we previously alluded to remain in place.  Whilst we shouldn't seek to 'blame' Brexit, we remain cautious as to the impact that it will have, should it materialise soon, with potentially uncertain future import duty rates and with regards to consumer spending which is discretionary for the type of products that we supply. 

Weak sterling, and therefore a correspondingly stronger US dollar, is also likely to effect the cost of future imports.

We previously stated that the longevity and success of most licences is limited and transient.  Whilst we continue to seek new, exciting and profitable properties there is no guarantee of this.

Despite these threats we look forward to the rest of the year with some confidence and expect to deliver a satisfactory result to our stakeholders for the full year.

 

Dividend

Due to the strong performance of the Company in the first half of the year we are declaring an interim dividend of 1.56p per share (2018 - 1.42p per share) payable on or about 11 November 2019.  This represents an increase of 10% over the prior year.  We will continue to review our dividend strategy and pay a progressive dividend where profits permit.  The ex-dividend date will be 10 October 2019 and the record date 11 October 2019.  

 

Board change

We have announced the appointment of Mark Taylor as a non executive director of the Company who joins with effect from 1 October.

 

Mark served as a Partner with Grant Thornton for 19 years and has considerable experience in the areas of corporate transactions, governance as well as audit and financial reporting.

 

In addition, Mark brings a wealth of pensions knowledge and is currently Chairman of the Grant Thornton Pensions Fund.

 

 

Investor presentation

A presentation for investors has been posted on the Company's website and may be found here.  This sets out detailed information about the Group for existing, new and potential investors.  Investors are encouraged to contact the Company with any questions about the business by telephone, using the website or by emailing our dedicated shareholder email address investorrelations@tanddemgroup.co.uk.

 

 

Shareholder benefits

We have added a facility for shareholders to benefit from an exclusive 10% discount code on our garden, home and leisure websites www.garden-camping.com, www.athomecomforts.co.uk and www.proriderleisure.com by entering the discount code "SH10" on the checkout page.

 

 

Mervyn Keene

Chairman

30 September 2019
 

 

 

CONDENSED CONSOLIDATED INCOME STATEMENT

For the 6 months ended 30 June 2019

 

 

 

 

 

 

 

 

 

6 months ended 30 June 2019

Unaudited

 

6 months ended 30 June 2018 Unaudited

 

Year ended 31 December 2018

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

 

16,029

-

16,029

12,670

-

12,670

32,511

-

32,511

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

(11,118)

-

(11,118)

(8,891)

-

(8,891)

(22,262)

-

(22,262)

Gross profit

 

4,911

-

4,911

3,779

-

3,779

10,249

-

10,249

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

(4,331)

-

(4,331)

(3,997)

-

(3,997)

(8,002)

-

(8,002)

Operating profit/(loss) before exceptional items

 

580

 

-

580

(218)

 

-

(218)

 

2,247

-

2,247

 

 

 

 

 

 

 

 

 

 

 

Exceptional items

 

-

-

-

-

(45)

(45)

-

(218)

(218)

 

Operating profit/(loss) after exceptional items

 

580

-

580

(218)

(45)

(263)

 

2,247

(218)

2,029

Finance costs

 

(71)

(139)

(210)

(80)

(5)

(85)

(166)

9

(157)

 

 

 

 

 

 

 

 

 

 

 

Profit/(loss) before taxation

 

509

 

(139)

370

(298)

 

(50)

(348)

 

2,081

(209)

1,872

 

 

 

 

 

 

 

 

 

 

 

Tax expense

 

(215)

-

(215)

(8)

-

(8)

(195)

(55)

(250)

 

 

 

 

 

 

 

 

 

 

 

 

Net profit/(loss) for the period

 

 

294

 

(139)

155

(306)

 

(50)

(356)

 

1,886

(264)

1,622

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pence

 

 

Pence

 

 

Pence

Earnings/(loss) per share

 

 

 

 

 

 

 

 

 

 

Basic

2

 

 

3.1

 

 

(7.1)

 

 

32.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

2

 

 

3.0

 

 

(7.0)

 

 

32.1

                             

  

All figures relate to continuing operations.

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME      

For the 6 months ended 30 June 2019

 

 

 

6 months

ended

30 June 2019

 6 months

ended

30 June

2018

Year ended 31 December

2018

 

Unaudited

Unaudited

Audited

 

£'000

£'000

£'000

 

 

 

 

Profit/(loss) for the period

155

(356)

1,622

 

 

 

 

Other comprehensive income:

 

 

 

Items that will be reclassified subsequently to profit and loss:

Foreign exchange differences on translation of overseas subsidiaries

13

45

102

 

 

 

 

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

 

 

 

Actuarial loss on pension schemes

-

-

(222)

Movement in pension schemes' deferred tax provision

-

37

Other comprehensive income for the period

13

45

(83)

 

 

 

 

Total comprehensive income attributable to equity shareholders of Tandem Group plc

168

(311)

1,539

 

 

 

 

 

 

All figures relate to continuing operations.

 

 

CONDENSED CONSOLIDATED BALANCE SHEET

As at 30 June 2019

 

 

 

 

 

At 30 June

2019

  At 30 June

2018

At 31

December

2018

 

 

Unaudited

Unaudited

Audited

 

 

£'000

£'000

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non current assets

 

 

 

 

Intangible fixed assets

 

5,574

5,588

5,580

Property, plant and equipment

 

3,458

3,532

3,480

Deferred taxation

 

1,776

1,800

1,776

 

 

10,808

10,920

10,836

 

 

 

 

 

Current assets

 

 

 

 

Inventories

 

5,735

6,164

4,250

Trade and other receivables

 

7,123

5,572

4,397

Derivative financial asset held at fair value

 

-

-

54

Cash and cash equivalents

 

3,740

957

4,847

 

 

16,598

12,693

13,548

 

 

 

 

 

Total assets

 

27,406

23,613

23,384

 

 

 

 

 

Current liabilities

 

 

 

 

Trade and other payables

 

(6,240)

(5,655)

(4,266)

Other liabilities

 

(4,736)

(3,048)

(3,542)

Current tax liabilities

 

(304)

(68)

(143)

 

 

(11,280)

(8,771)

(7,951)

Non current liabilities

Other payables

 

-

(1)

-

Other liabilities

 

(1,010)

(1,417)

(1,198)

Pension schemes' deficits

 

(2,670)

(2,799)

(2,827)

 

 

(3,680)

(4,217)

(4,025)

 

 

 

 

 

Total liabilities

 

(14,960)

(12,988)

(11,976)

 

 

 

 

 

Net assets

 

12,446

10,625

12,408

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

Share capital

 

1,503

1,503

1,503

Shares held in treasury

 

(247)

(247)

(247)

Share premium

 

286

286

286

Other reserves

 

3,657

3,587

3,644

Profit and loss account

 

7,247

5,496

7,222

Total equity

 

12,446

10,625

12,408

 

 

 

 

 

 

CONDENSED Consolidated statement of changes in equity

As at 30 June 2019

 

 

 

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

£'000

 

 

 

 

 

 

 

 

 

 

At 1 January 2018

1,503

(247)

286

1,036

1,427

530

549

5,984

11,068

 

 

 

 

 

 

 

 

 

 

Net loss for the period

-

-

-

-

-

-

-

(356)

(356)

Retranslation of overseas subsidiaries

-

-

-

-

-

-

45

-

45

Total comprehensive income for period attributable to equity shareholders

-

-

-

-

-

-

45

(356)

(311)

Share based payments

-

-

-

-

-

-

-

6

6

Dividends paid

-

-

-

-

-

-

-

(138)

(138)

Total transactions with owners

-

-

-

-

-

-

45

(488)

(443)

At 30 June 2018

1,503

(247)

286

1,036

1,427

530

594

5,496

10,625

 

 

 

 

 

 

 

 

 

 

Net profit for the period

-

-

-

-

-

-

-

1,978

1,978

Retranslation of overseas subsidiaries

-

-

-

-

-

-

57

-

57

Net actuarial loss on pension schemes

-

-

-

-

-

-

-

(185)

(185)

Total comprehensive income for period attributable to equity shareholders

-

-

-

-

-

-

57

1,793

1,850

Share based payments

-

-

-

-

-

-

-

5

5

Dividends paid

-

-

-

-

-

-

-

(72)

(72)

Total transactions with owners

-

-

-

-

-

-

57

1,726

1,783

At 1 January 2019

1,503

(247)

286

1,036

1,427

530

651

7,222

12,408

 

 

 

 

 

 

 

 

 

 

Net profit for the period

-

-

-

-

-

-

-

155

155

Retranslation of overseas subsidiaries

-

-

-

-

-

-

13

-

13

Total comprehensive income for period attributable to equity shareholders

-

-

-

-

-

-

13

155

168

Share based payments

-

-

-

-

-

-

-

15

15

Dividends paid

-

-

-

-

-

-

-

(145)

(145)

Total transactions with owners

-

-

-

-

-

-

13

25

38

At 30 June 2019

1,503

(247)

286

1,036

1,427

530

664

7,247

12,446

 

 

 

 

 

 

 

 

 

 

                           

 

 

 

 

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

For the 6 months ended 30 June 2019

 

 

 

 

 

 

At 30 June

2019

  At 30 June

2018

At 31

December

2018

 

 

Unaudited

Unaudited

Audited

 

 

£'000

£'000

£'000

 

Cash flows from operating activities

 

 

 

Profit/(loss) for the period

155

(356)

1,622

Adjustments:

 

 

 

Depreciation of property, plant and equipment

69

73

139

Amortisation of intangible fixed assets

11

10

41

Profit on sale of property, plant and equipment

(1)

-

(5)

Contributions to defined benefit pension schemes

(219)

(189)

(423)

Finance costs

210

85

157

Tax expense

215

8

250

Share based payments

15

6

11

Net cash flow from operating activities before movements in working capital

455

(363)

1,792

 

 

 

 

Change in inventories

(1,485)

(2,163)

(407)

Change in trade and other receivables

(2,726)

(1,033)

142

Change in trade and other payables

1,977

1,343

111

Cash flows from operations

(1,779)

(2,216)

1,638

Interest paid

(96)

(80)

(166)

Tax paid

(54)

(47)

(153)

Net cash flow from operating activities

(1,929)

(2,343)

1,319

 

 

 

 

Cash flows from investing activities

 

 

 

Purchase of intangible fixed assets

(5)

(1)

(24)

Purchase of property, plant and equipment

(48)

(56)

(70)

Sale of property, plant and equipment

1

1

6

Net cash flow from investing activities

(52)

(56)

(88)

 

 

 

 

Cash flows from financing activities

 

 

 

Loan repayments

(203)

(204)

(408)

Finance lease repayments

(12)

(13)

(27)

Movement in invoice financing

1,221

(190)

303

Dividends paid

(145)

(138)

(210)

Net cash flow from financing activities

861

(545)

(342)

 

 

 

 

Net change in cash and cash equivalents

(1,120)

(2,944)

889

Cash and cash equivalents at beginning of period

4,847

3,856

3,856

Effect of foreign exchange rate changes

13

45

102

Cash and cash equivalents at end of period

3,740

957

4,847

 

 

 

 

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, distribution and retail 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 2019 (including the comparatives for the period ended 30 June 2018 and the year ended 31 December 2018) were approved by the Board of Directors on 30 September 2019.  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 2018, 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 2018 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 2019 is based on the actuarial valuation under IAS19 at 31 December 2018 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 2019.
 

 

2   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 2019

    6 months

ended

30 June 2018

Year

ended 31 December

2018

 

£'000

£'000

£'000

 

 

 

 

Profit/(loss) for the period

155

(356)

1,622

 

 

 

 

 

Number

Number

Weighted average shares in issue used for basic earnings per share

5,026,091

5,026,091

5,026,091

Weighted average dilutive shares under option

92,590

27,968

25,005

Average number of shares used for diluted earnings per share

5,118,681

5,054,059

5,051,096

 

 

 

 

 

Pence

Pence

Pence

 

 

 

 

Basic earnings/(loss) per share

3.1

(7.1)

32.3

 

 

 

 

Diluted earnings/(loss) per share

3.0

(7.0)

32.1

 

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 & Broker

Cairn Advisers LLP

Tony Rawlinson

James Caithie

Telephone 020 7213 0880

 

 

 

 


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Half Yearly Report - RNS