REG - Tandem Grp PLC - Final Results
28/03/2022 07:00
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RNS Number : 1553G Tandem Group PLC 28 March 2022
TANDEM GROUP PLC
(the "Company" or "Group")
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2021
The Board of Tandem Group plc (AIM: TND), designers, developers, distributors
and retailers of sports, leisure and mobility equipment, announces its results
for the year ended 31 December 2021.
Highlights
Ø Revenue increased approximately 10.4% to £40,917,000 (2020 - £37,056,000)
Ø Gross profit increased to £12,051,000 (2020 - £11,018,000)
Ø Increase in operating profit to £4,939,000 (2020 - £4,095,000)
Ø Profit before tax after non-underlying items was £4,732,000 (2020 -
£4,004,000)
Ø Net profit for the period was £3,826,000 (2020 - £3,458,000)
Ø Basic earnings per share 73.8p (2020 - 68.5p)
Ø Net assets increased to £22,739,000 (2020 - £16,608,000)
Ø Cash and cash equivalents as at 31 December 2021 of £6,367,000 (2020 -
£6,076,000)
Ø Net cash as at 31 December 2021 of £2,326,000 (2020 - £3,779,000)
following land purchase and construction
For further information contact:
Enquiries:
Tandem Group plc
David Rock, Company Secretary
Telephone 0121 748 8075
Nominated Adviser and Broker
Cenkos Securities plc
Ben Jeynes / Dan Hodkinson - Corporate Finance
Russell Kerr / Michael Johnson - Sales
Telephone 020 7397 8900
Chairman's statement
Introduction
It has been a further successful period for the Group and I am therefore
pleased to present the results for the year ended 31 December 2021. Both
revenue and profitability increased, building on the strong foundations of
prior years.
Results
Group revenue for the year ended 31 December 2021 increased by over 10% from
£37,056,000 in the previous year to £40,917,000.
In the first half of the year Group revenue increased by approximately 14%
with growth in three of our four operating divisions. The exception was
bicycles where stock availability continued to be a challenge for the Group.
In the second half of the year there was an increase of approximately 8% in
Group revenue mainly driven by strong performance from our Toys, Sports &
Leisure division, partly offset by bicycles and the supply issues as
previously reported.
Toys, Sports & Leisure
Following the reclassification from the Toys, Sports & Leisure division of
character licensed bicycles shown in our previous announcement in the Bicycles
division, our Toys, Sports & Leisure division grew by approximately 15%
during the year. Particularly strong licences in the year included Paw Patrol,
Peppa Pig and Nerf.
Our own branded ranges also grew by 15% driven by Stunted and uMoVe scooters
and our outdoor play brand, Hedstrom.
Ben Sayers, our golf brand, had another strong year with revenue growth of 23%
compared to the prior year, with growth especially strong from our package set
range. This percentage has changed from that provided in the Group's Trading
Update of 31 January 2022 as a result of the subsequent reclassification of
electric golf trolleys into the 'eMobility' segment.
eMobility
Our eMobility division comprising ebikes, escooters, electric golf trolleys
and mobility scooters continued to grow significantly, up 56% overall for the
year. The reclassification of electric golf trolleys into this category has
led to the difference in movement compared to the recent Trading Update.
The ebike and escooter ranges were expanded during the year using our bicycle
brands Dawes and Falcon for ebikes and Li-Fe and Wired for escooters.
Mobility scooters were under greater pressure with revenue 17% behind the
prior year mostly as a result of the impact of the COVID-19 pandemic.
Bicycles
Stock availability proved to be a significant problem throughout the year,
both for independent bicycle dealers with our Dawes and Claud Butler ranges
and also national retailer customers with our Falcon, Boss, Elswick, Townsend
and Zombie brands.
Licensed character bicycles, which were also reclassified from Toys, Sports
& Leisure in the year end accounts, were approximately 30% behind the
prior year and this was due to a supply chain issue which has subsequently
been rectified by re-sourcing supply to alternative factories. Cost price
increases also had a greater impact due to the price sensitivity of junior
licensed bikes.
The exception to this was Squish, our range of lightweight junior bikes, which
grew by 31% in the year demonstrating continued progress in this category.
As a result of the issues raised above the bicycle division finished 12%
behind the previous year.
Home & Garden
Sales from our Home & Garden division, mostly sold direct to consumer via
our Garden Comforts by Garden & Camping (www.garden-camping.com
(http://www.garden-camping.com/) ) and At Home Comforts by Jack Stonehouse
(www.jackstonehouse.com (http://www.jackstonehouse.com) ) websites as well as
third party (3P) websites, grew by 9% over the prior year.
It was particularly pleasing to note that website revenue increased by 17%
reducing the reliance on 3P sites and this accounted for approximately 25% of
the division.
Growth was driven predominantly from our outdoor living and garden storage
ranges.
Group operating profit
Group operating profit before finance costs and taxation increased by nearly
21% to £4,939,000 for the year ended 31 December 2021 compared to £4,095,000
for the year ended 31 December 2020.
Following the purchase of the land adjacent to the Birmingham site and the
commencement of warehouse construction, property, plant and equipment
increased from £4,624,000 at 31 December 2020 to £7,775,000 at 31 December
2021.
As the business resumed to some degree of normality with significant stock of
bicycles arriving just before the year end, the total year end inventory
position increased to £8,064,000 at 31 December 2021 compared to £4,512,000
at the end of the previous year.
The property project had an impact on the net cash position. Although cash
and cash equivalents increased by nearly 5% to £6,367,000 at 31 December 2021
compared to £6,076,000 at 31 December 2020, following the land purchase
overall net cash reduced to £2,326,000 compared to £3,779,000 at the end of
2020.
Net assets increased by 37% to £22,739,000 at 31 December 2021 compared to
£16,608,000 at 31 December 2020. This was augmented by a material
improvement in the valuation of the defined benefit pension schemes.
Further details of operational activities can be found in the Strategic
Review.
Dividend
As in previous years it continues to be the Board's intention to maintain the
progressive dividend as trading results and funds permit.
As a result of the Group's continued strong performance the Board is of view
that the dividend will be increased further this year.
We are therefore proposing to pay a final ordinary dividend of 6.57 pence per
share (year ended 31 December 2020 - 5.50 pence per share) which is an
increase of more than 19%.
When combined with the interim dividend of 3.43 pence per share (year ended 31
December 2020 - 3.12 pence per share), this is a total dividend of 10.00 pence
for the year. This compared to 8.62 pence per share in the year ended 31
December 2020.
Subject to shareholder approval at the Annual General Meeting to be held on 23
June 2022, the final dividend will be paid on or around 30 June 2022 to
shareholders on the share register as at 13 May 2022. The ex-dividend date
will be 12 May 2022.
In accordance with the provision that in any calendar year should dividend
payments exceed pension deficit contributions, an additional contribution,
equal to the excess, is paid into the scheme, an additional payment of
approximately £175,000 will be paid into the Tandem Group Pension Plan.
Employees
I would like once more to thank all colleagues for their efforts and
contribution to the profitability of the businesses in 2021. A profit
related pay scheme was introduced in the year to enable staff to participate
further in the success of the Group.
Outlook
Unsurprisingly, given the significant global uncertainty and prevailing
economic conditions currently in play, the year has started more slowly than
we would have wanted. In the 11 weeks to 20 March 2022 Group revenue was
£4,432,000 which was approximately 43% behind the same 11 week period in the
prior year which was exceptionally high as back orders for 2020 were
fulfilled. However, it was still 7% ahead of the comparative period in
2020.
The Group's sales order book is currently £16,394,000, compared to
£27,329,000 at this point last year, with the reduced order book level
attributable to the completion of back orders, cancellations and a reduction
in the levels of orders currently being received.
The order book remains well ahead of 2020 when it was £5,134,000 and the
Board remains confident in the long term growth prospects of the Group
notwithstanding current inflationary pressures, particularly from food, fuel
and energy and increasing interest rates having an impact on consumer
discretionary spending. Input costs remain under some pressure also and this
has been further exacerbated by rising energy and hydrocarbon costs as a
result of Russia's invasion of Ukraine.
In particular, we continue to see a big opportunity for our eMobility sector
which saw a 56% increase in revenues during 2021 and subject to changes to
escooter legislation, which we now expect in early 2023, there remains
significant further growth potential in our eMobility division.
Given the growing consumer trend towards these types of products we will, as
previously announced, be investing further in this sector during 2022. Our
plans to refurbish the onsite shop at the Group's Birmingham premises to focus
on our eMobility offering and to launch a dedicated eMobility B2C website are
progressing well.
In addition, we have added to our roster of licences this year having signed
Bluey, Disney Pixar Lightyear, Rainbow High and Molcar. Initial feedback on
these additions has been encouraging, and when coupled with strongly
performing classics such as Paw Patrol, Peppa Pig and Nerf, will make a
positive contribution in both Toys, Sports & Leisure and Bicycles
divisions.
Early signs from Independent Bike Dealers (IBD) customers are that many have
surplus stocks and consumer demand in our Bicycle division has been slow. We
still see good growth potential from Squish and an opportunity to grow
business with our corporate customers. In 2022, we plan to introduce the
bicycle 'click and collect' functionality for bicycle purchases to be
fulfilled by participating IBDs which was delayed in 2021 due to stock
availability issues.
We have started the year in a strong stock position in our Home & Garden
division and we expect trading to increase as the weather improves subject to
the macro-economic issues discussed above. We have continued to recruit
heavily following the relocation of this part of the Group from Northampton to
Birmingham.
The construction of our new warehousing and distribution facility, which will
double our existing Birmingham storage capacity to 160,000 square feet, is
progressing as anticipated and we are on track for occupancy in Q4 2022.
In summary, we have entered 2022 with a degree of caution given the challenges
that we along with many other businesses face, however, we are confident in
our current strategy for the Group.
S J Grant
Chairman
28 March 2022
Strategic report
Operating and Financial Review
Revenue
Group revenue for the year ended 31 December 2021 was £40,917,000 compared to
£37,056,000 in the prior year. As we have previously reported, revenue is
now split into four main segments. There have been some reclassifications of
products at the year end, in particular, character bikes are now included
within Bicycles (previously within Toys, Sports & Leisure), and electric
golf trolleys are included within eMobility (previously Toys, Sports &
Leisure).
2021 2020
(£000s) (£000s)
Toys, Sports & Leisure 16,492 14,372
eMobility 6,990 4,493
Bicycles 10,191 11,576
Home & Garden 7,244 6,615
40,917 37,056
Gross profit
Gross profit of £11,018,000 in 2020 increased by 9.4% to £12,051,000 in
2021.
Carriage outward costs of £1,105,000 have been included in cost of sales in
the current year, having previously been disclosed in operating expenses. This
has impacted the presentation of gross margin. The comparative year has also
been restated to reflect the carriage outward costs of £1,174,000.
On this basis, the gross profit margin percentage decreased marginally from
29.7% to 29.5%. This reflects the already reported increases in supplier
cost prices and inbound freight costs, however, carefully considered price
rises during the year and minimising costs where possible helped to offset
these increases.
Operating expenses
Group operating expenses, restated to exclude carriage outward costs as
referred to above, increased by 2.7% to £7,112,000 in the year (year ended 31
December 2020 - £6,923,000). This was driven by increases in several areas,
notably insurance where the insurance market has hardened, professional fees
where we have changed Nominated Advisor and Broker commission due to increased
turnover levels in certain parts of the Group. These were partly offset by
savings in rent costs due to third party storage savings where stock holding
was lower during the year, rental income from part of our Birmingham site and
further reduced travel related costs due to COVID-19 related restrictions.
Operating profit
Operating profit was £4,939,000 for the year ended 31 December 2021 compared
to £4,095,000 in the prior year.
Non-underlying items
Non-underlying items comprised:
· a fair value adjustment for foreign currency derivative contracts
under IFRS9 of £nil (year ended 31 December 2020 - credit of £106,000);
· pension finance costs under IAS19 of £127,000 (year ended 31
December 2020 - £132,000); and
· a deferred tax charge of £375,000 (year ended 31 December 2020 -
£143,000) in respect of pension schemes.
Finance costs
Total net finance costs increased to £207,000 in the year ended 31 December
2021 compared to £91,000 in the year ended 31 December 2020.
The Group adopted hedge accounting from 1 January 2020 and, as such, gains and
losses designated as hedges where effective, are now reflected in other
comprehensive income rather than in the Consolidated Income Statement. In
accordance with IFRS9, there was no adjustment in the year ended 31 December
2021 in respect of derivative foreign exchange contracts entered into prior to
adopting a formal hedging policy (year ended 31 December 2020 fair value
credit of £106,000).
There was an increase in interest payable on bank loans, overdrafts, hire
purchase and invoice finance facilities from £26,000 in the prior year to
£63,000 in 2021 due to the borrowings for the land purchase in Birmingham.
Interest payable on lease arrangements was £17,000 compared to £39,000 in
2020.
Finance costs in respect of the pension schemes provided in line with IAS19
were £127,000 compared to £132,000 for the year ended 31 December 2020.
Taxation
The tax expense for the year ended 31 December 2021 was £906,000 compared to
£546,000 in the prior year.
The current tax charge, which comprised corporation tax from the overseas Hong
Kong operation net of a refund provision for UK research and development, was
£220,000 (year ended 31 December 2020 - credit of £98,000).
There was a deferred tax charge of £686,000 compared to £644,000 in the
prior year as tax losses were utilised.
A reduction in the actuarial losses on the pension schemes would be expected
to result in a tax charge in the Statement of Comprehensive Income, however
due to the future tax rate change from 19% to 25%, it resulted in a credit of
£248,000 (year ended 31 December 2020 - credit of £474,000).
Net profit
Net profit for the year ended 31 December 2021 after non-underlying items,
finance costs and taxation was £3,826,000 compared to £3,458,000 for the
year ended 31 December 2020, an increase of 11%.
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA)
EBITDA was £5,199,000 for the year ended 31 December 2021, an increase of 18%
compared to £4,405,000 in the prior year.
Capital expenditure
Total capital expenditure incurred during the year was £3,386,000 (year ended
31 December 2020 - £164,000 inclusive of IFRS16 adjustment, £92,000
excluding IFRS16 adjustment). This was mainly in relation to the purchase of
land in Birmingham, initial warehouse construction costs and expenditure on
the new Enterprise Resource Planning (ERP) system. An agreement for an initial
expenditure of £850,000 was entered into prior to the year end for initial
construction related works to be completed on the warehouse project.
Cash flows, working capital and net cash
Net cash inflow from operating activities before movements in working capital
for the year ended 31 December 2021 was £4,682,000 compared to £3,986,000 in
the year ended 31 December 2020.
Cash generated from operations was £2,239,000 compared to £3,100,000 last
year.
Net cash outflows from investing activities were £3,384,000 in 2021 against
£49,000 in the previous year due to the capital expenditure referred to
above.
There was a net cash inflow from financing activities of £1,479,000 in 2021
which compared to an outflow of £1,361,000 in 2020. The net inflow was due
to new loans and increases in invoice financing.
As a result of these movements the closing cash position at 31 December 2021
was £6,367,000 compared to £6,076,000 at 31 December 2020.
Net cash, comprising cash and cash equivalents less invoice financing
liabilities and borrowings, was £2,326,000 at 31 December 2021 compared to
£3,779,000 at the end of the previous year.
Dividends
A final dividend of 6.57 pence per share will be paid for the year ended 31
December 2021 subject to shareholder approval, compared to 5.50 pence per
share in the previous year.
Total dividends paid and proposed for the year ended 31 December 2021 of 10.00
pence per share (year ended 31 December 2020 - 8.62 pence per share) have
increased by 16%. As the total dividend will exceed the deficit repair
contributions paid to the Tandem Group Pension Plan, in accordance with a
previous agreement with the pension scheme trustees an additional contribution
equal to the excess of approximately £175,000, is expected to be paid into
the scheme.
The dividend cover ratio is 7.4 (year ended 31 December 2020 - 7.9).
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 73.8 pence per share for the year ended 31
December 2021 compared to 68.5 pence per share in the year ended 31 December
2020. Diluted earnings per share was 70.1 pence per share compared to 64.7
pence per share in the prior year.
Product range review
For the year ended 31 December 2021, turnover has been split into four
segments, Toys, Sports & Leisure, eMobility, Bicycles, and Home &
Garden.
Toy, Sports & Leisure
The Toys, Sports & Leisure business comprises character licenced products
which are mainly wheeled toys (excluding character bikes) and own brand sports
and leisure products, sold to both independent and national retailers.
Overall revenue increased by 15% compared to the previous year. FOB sales
improved by 42% on the year ended 31 December 2020, in which some buyers had
remained cautious, however, domestic sales fell by 12%.
Industry data reported that the toy market showed a decline of 3% in 2021.
COVID-19 restrictions limited the development of new licences in the market,
however the Group has still managed to secure some exciting new licences such
as Disney Pixar Lightyear, Bluey, Rainbow High and Molcar.
Despite this, some of our classic licences such as Paw Patrol, Peppa Pig, and
Barbie still outperformed the prior year, along with Nerf which more than
doubled in revenue.
Hedstrom, Stunted and uMoVe also grew and finished ahead of the prior year.
Ben Sayers, our golf brand, continued to perform significantly well, with
revenue growth of 23% over the prior year.
eMobility
Our eMobility includes sales of electric scooters, bikes, golf trolleys and
mobility scooters. This division grew by 56% in the year.
Electric bikes, trolleys and scooters all outperformed the prior year revenue
figures, escooter sales revenue in particular more than doubled.
Mobility scooter sales remained challenging due to COVID-19 continuing to
impact this demographic in 2021.
Bicycles
Revenue from the bicycle business includes both child and adult bicycles,
along with licensed character bikes, but excludes any electric powered
bicycles.
Although overall revenue declined by 12%, revenue from our increasingly
popular Squish branded lightweight children's bicycles again had a strong year
and improved by 31% on the prior year. Our other brands, Claud Butler and
Dawes, finished behind mainly due to stock availability issues.
There was also strong growth in our Falcon and Elswick brands, however
declines in Boss, Townsend and Zombie sales in the second half of the year
compared to the prior year comparative.
Home & Garden
Our Home & Garden segment includes sales of outdoor living products and
homeware items, mostly sold from our online platforms.
There was an increase in revenue of nearly 10% compared to the prior year.
Our gazebo and party tent ranges performed strongly in the first half of the
year following a warm spell at the end of March and the sunniest April on
record for the UK. Garden storage products improved throughout the year but
particularly so in the second half of the year.
We were also pleased by the contributions from various home products,
traditionally stronger in the second half of the year.
Property and IT
A valuation of the Castle Bromwich property was carried out by CBRE Ltd in
October 2020 in accordance with the RICS Valuation - Global Standards
(incorporating the International Valuation Standards) and the UK national
supplement (the "Red Book"). This valuation was used to revalue the property
as at 31 December 2020. The Directors are of the opinion that there has been
no material change since this date and the valuation remains valid at 31
December 2021.
Costs of £3,250,000 have been capitalised with respect to the acquisition of
the freehold land adjacent to our existing site in Birmingham, and preliminary
works conducted with regards to the construction of the new warehouse.
From 1 July 2021 we entered into a 10-year lease at a rent of £44,500 per
annum with Flogas Britain Ltd to occupy approximately 0.5 acres of the site,
surplus to our development requirements.
As previously reported, formal planning permission was granted on 23 December
2021, and we anticipate that the construction of the new warehousing and
distribution facility will be completed in Quarter 4 of 2022. The new
building will more than double existing warehouse capacity in Birmingham to
approximately 160,000 square feet. Aside from the financial returns of
undertaking the project, there are significant commercial and strategic
benefits which we believe will enhance the Group and help to maximise long
term shareholder value.
To minimise business disruption, the implementation of the new ERP and finance
system across the Group has been slightly delayed but will go live in Quarter
2 2022. This is expected to considerably improve distribution efficiency as
well as operational planning and management reporting.
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.
The deficit of the schemes at 31 December 2021 reduced to £2,086,000 compared
to £4,157,000 at 31 December 2020. Improved bond yields were the main
driver for the reduction of the deficit with a discount rate of 2.1% compared
to 1.6% at 31 December 2020.
The pension schemes continue to utilise the Group's cash resources with
payments in respect of the schemes totalling £590,000 (year ended 31 December
2020 - £477,000). The total comprised deficit contributions of £449,000
and £101,000 in respect of Tandem and Casket schemes respectively (year ended
31 December 2020 - £437,000) and government levies and administration costs
of £40,000 (year ended 31 December 2020 - £40,000).
The next triennial valuations are due as at 1 October 2022 and will be
finalised during 2023.
The Board remain mindful that the recovery plans set following the 2019
triennial valuations for both schemes exceed the Pension Regulator's reported
median length of 7 years. However, this continues to be justifiable on the
basis that the employer covenant is stronger and with respect to the Tandem
scheme there is an agreed provision that in any calendar year should dividend
payments exceed deficit contributions paid to the scheme, an additional
contribution equal to the excess will be made. As a consequence of the total
dividend in the year ended 31 December 2020, in 2021 the additional
contribution made to the scheme was £109,000. For the year ended 31 December
2021 this will lead to an additional contribution of approximately £175,000
payable in 2022, subject to shareholder approval of the proposed final 2021
dividend.
Employees
We have continued to operate our onsite warehouse and sales administration
functions in a COVID secure environment and have also allowed a degree of
remote working where possible.
We currently employ a modest 78 colleagues in the Group and they remain our
most coveted and important asset. Their ongoing dedication has resulted in
the Group continuing to function as normal and perform exceptionally well
during the year.
Strategy
Our strategic objective is to invest further in our direct-to-consumer
offering (particularly home & garden categories) and grow our eMobility
division more rapidly as the sector continues to evolve, whilst continuing to
generate strong and solid profits in our Toys, Sports & Leisure and
Bicycle divisions. We will achieve this by continuing to enter into licence
agreements for the most successful character toy licences and to develop new
and interesting own brand product ranges which offer both quality and value to
the consumer.
Principal risks and uncertainties
The management of the business and the nature of the Group's strategy are
subject to a number of risks and uncertainties. The principal risks facing
the business are set out as follows:
Suppliers
In order to achieve competitively priced products the Group has outsourced
production, mainly to countries in Asia. Risks and uncertainties of this
strategy include management issues at the factories, the possibility of
changes in import duties, the potentially significant cost of freight and
shipping delays. We manage this risk by having a local office in Hong Kong
with a team that works closely with the factories and we develop contingency
plans should the need arise to make changes.
Fluctuations in currency exchange rates
A significant amount of the Group's purchases are made in US dollars. As a
Group, we are therefore exposed to foreign currency fluctuations. The Group
manages its foreign exchange risk with forward foreign exchange contracts and
has adopted formal hedge accounting. If these activities do not mitigate the
exposure, then the results and the financial condition of the Group may be
adversely affected.
Licences
A number of the Group's brands are used under licence from global licensors.
The licences are generally for between two and three years. If the licences
are not renewed the Group would have to seek alternative licences in order to
avoid a reduction in revenue.
Competition
The companies in the Group operate in highly competitive markets. As a
result there is constant pressure on margins and the additional risk of being
unable to meet customers' expectations. Policies of supply chain management
and product development are in place to mitigate such risks.
Volatility in financial markets may require further cash contributions to our
pension fund
The Group has commitments under defined benefit pension schemes. The Group
is obliged to make contributions to the schemes based on actuarial valuations,
which in turn are based on long-term assumptions to calculate scheme
liabilities. Volatility of the financial markets can also affect the value
of the assets in the schemes. This may lead to a requirement to increase the
cash contributed by the Group to the schemes. If the Group is required to
make significant additional contributions, the financial position of the Group
may be materially affected with a significant reduction in operating cash
flows. In turn, this may adversely impact future developments of the
business.
Financial risks
The main risks arising from the Group's financial instruments are interest
rate risk, liquidity risk, credit risk and foreign currency risk. The Board
reviews and agrees policies for managing each of these risks.
Warehouse project
Whilst we have mitigated many of the risks associated with the construction of
the new warehouse, including a full financial assessment of the project, along
with planning permission without any pre-commencement conditions attached,
there is a risk that costs are greater than we anticipate or the project is
impacted by a force majeure event that delays or suspends construction.
J C Shears
Chief Executive Officer
28 March 2022
Consolidated income statement
31 December 2021 31 December 2020 (restated)
Before non-underlying items Non-underlying items After non-underlying items Before non-underlying items Non-underlying items After non-underlying items
Note £'000 £'000 £'000 £'000 £'000 £'000
Revenue 3 40,917 - 40,917 37,056 - 37,056
Cost of sales (28,866) - (28,866) (26,038) - (26,038)
Gross profit 12,051 - 12,051 11,018 - 11,018
Operating expenses (7,112) - (7,112) (6,923) - (6,923)
Operating profit 4,939 - 4,939 4,095 - 4,095
Finance costs (80) (127) (207) (65) (26) (91)
Profit before taxation 4,859 (127) 4,732 4,030 (26) 4,004
Tax expense (531) (375) (906) (403) (143) (546)
Net profit for the year 4,328 (502) 3,826 3,627 (169) 3,458
Earnings per share 4 Pence Pence
Basic 73.8 68.5
Diluted 70.1 64.7
Consolidated statement of comprehensive income
31 December 2021 31 December 2020
£'000 £'000
Net profit for the year 3,826 3,458
Other comprehensive income:
Items that will be reclassified subsequently to profit and loss:
Foreign exchange differences on translation of foreign operations 6 (28)
Forward foreign exchange contracts 236 (410)
Items that will not be reclassified subsequently to profit or loss:
Revaluation of property, plant and equipment - 1,141
Actuarial gain/(loss) on pension schemes 1,648 (1,982)
Movement in pension schemes' deferred tax provision 248 474
Other comprehensive profit/(loss) for the year, net of tax 2,138 (805)
Total comprehensive income for the year attributable to equity shareholders 5,964 2,653
Consolidated balance sheet
31 December 2021 31 December 2020
£'000 £'000
Non current assets
Intangible fixed assets 5,454 5,481
Property, plant and equipment 7,775 4,624
Deferred taxation 1,323 1,761
14,552 11,866
Current assets
Inventories 8,064 4,512
Trade and other receivables 10,243 9,971
Derivative financial asset held at fair value 225 -
Cash and cash equivalents 6,367 6,076
24,899 20,559
Total assets 39,451 32,425
Current liabilities
Trade and other payables (10,333) (8,952)
Borrowings (2,010) (1,562)
Derivative financial liability held at fair value - (410)
Current tax liabilities (252) (1)
(12,595) (10,925)
Non current liabilities
Borrowings (2,031) (735)
Pension schemes' deficit (2,086) (4,157)
(4,117) (4,892)
Total liabilities (16,712) (15,817)
Net assets 22,739 16,608
Equity
Share capital 1,503 1,503
Shares held in treasury (192) (240)
Share premium 474 315
Other reserves 4,964 4,323
Profit and loss account 15,990 10,707
Total equity 22,739 16,608
Consolidated statement of changes in equity
Share capital Shares held in treasury Share premium Cash flow hedge reserve Merger reserve Capital redemption reserve Revaluation reserve Translation reserve Profit and loss account Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2020 1,503 (247) 286 - 1,036 1,427 530 627 9,149 14,311
Net profit for the year - - - - - - - - 3,458 3,458
Re-translation of overseas subsidiaries - - - - - - - (28) - (28)
Revaluation of property - - - - - - 1,141 - - 1,141
Forward contracts - - - (410) - - - - - (410)
Net actuarial loss on pension schemes - - - - - - - - (1,508) (1,508)
Total comprehensive income for the year attributable to equity shareholders - - - (410) - - 1,141 (28) 1,950 2,653
Exercise of share options - 7 29 - - - - - - 36
Share based payments - - - - - - - - 19 19
Dividends paid - - - - - - - - (411) (411)
Total transactions with owners - - - - - - - - (392) (356)
At 1 January 2021 1,503 (240) 315 (410) 1,036 1,427 1,671 599 10,707 16,608
Net profit for the year - - - - - - - - 3,826 3,826
Re-translation of overseas subsidiaries - - - - - - - 6 - 6
Forward contracts - - - 236 - - - - - 236
Net actuarial gain on pension schemes - - - - - - - - 1,896 1,896
Total comprehensive income for the year attributable to equity shareholders - - - 236 - - - 6 5,722 5,964
Share based payments - - - - - - - - 33 33
Reclassified to cost of inventory - - - 399 - - - - - 399
Exercise of share options - 48 159 - - - - - - 207
Dividends paid - - - - - - - - (472) (472)
Total transactions with owners - 48 159 399 - - - - (439) 167
At 31 December 2021 1,503 (192) 474 225 1,036 1,427 1,671 605 15,990 22,739
Consolidated cash flow statement
31 December 2021 31 December 2020
£'000 £'000
Cash flows from operating activities
Net profit for the year 3,826 3,458
Adjustments:
Depreciation of property, plant and equipment 230 245
Amortisation of intangible fixed assets 30 65
Profit on sale of property, plant and equipment - (1)
Contribution to defined benefit pension plans (550) (437)
Finance costs 207 91
Tax expense 906 546
Share based payments 33 19
Net cash flow from operating activities before movements in working capital 4,682 3,986
Change in inventories (3,552) 197
Change in trade and other receivables (272) (4,528)
Change in trade and other payables 1,381 3,445
Cash generated from operations 2,239 3,100
Interest paid (80) (65)
Tax received / (paid) 31 (558)
Net cash flows from operating activities 2,190 2,477
Cash flows from investing activities
Purchases of intangible fixed assets (3) (4)
Purchases of property, plant and equipment (3,386) (72)
Sale of property, plant and equipment 5 27
Net cash flows from investing activities (3,384) (49)
Cash flows from financing activities
New loans / Loan repayments 1,463 (314)
Finance lease repayments (199) (80)
Movement in invoice financing 480 (592)
Exercise of share options 207 36
Dividends paid (472) (411)
Net cash flows from financing activities 1,479 (1,361)
Net change in cash and cash equivalents 285 1,067
Cash and cash equivalents at beginning of year 6,076 5,037
Effect of foreign exchange rate changes 6 (28)
Cash and cash equivalents at end of year 6,367 6,076
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 2021, 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 2021 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 UK. 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 2021.
Restatement
Cost of sales has been adjusted such that outward carriage costs have been
reclassified from operating expenses. This has led to an increase in cost of
sales and a reduction in operating expenses of £1,105,000 (31 December 2020
£1,174,000).
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 the finance cost and deferred tax related to the
Group's pension schemes calculated in accordance with IAS19 and the impact of
the movement in respect of the ineffective proportion of the hedged derivative
foreign exchange contracts.
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.
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.
Going Concern
The accounts are prepared on the going concern basis unless it is
inappropriate to presume that the Company and the Group will continue in
business.
The Group has significant cash reserves and the Board continually monitor a
rolling cashflow forecast for the business as a whole. The construction of the
new warehouse will be financed by a mix of cash and new facilities. Given the
Group's low fixed cost base and the facilities available to it, the Board
therefore considers the Group will continue to be able to meet its liabilities
as they fall due.
On that basis, the Directors are confident that they will be able to manage
the business in such a way that it will continue to operate and trade for at
least 12 months from the date of the signing of the accounts and have
therefore prepared these financial statements on a going concern basis.
Freehold property revaluation
In ascertaining an accurate estimate of the value of freehold property, the
Directors utilise the latest professional valuation conducted along with
available information on local property value movements since the valuation
date.
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.
Cash flow hedging
In determining the proportion of forward foreign exchange contracts that are
effective hedges against currency fluctuations, the Directors produce detailed
forward forecasts to carefully determine the requirements of a particular
foreign currency to match future planned supplier payments.
3. Segmental analysis
Due to the integration of a number of functions across the Group it is not
possible to accurately report operating segments in full, however for the year
ended 31 December 2021, turnover has been analysed into four key segments
being Toys, Sports & Leisure, eMobility, Bicycles and Home & Garden.
2021 2020
(£000s) (£000s)
Toys, Sports & Leisure 16,492 14,372
eMobility 6,990 4,493
Bicycles 10,191 11,576
Home & Garden 7,244 6,615
40,917 37,056
4. 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 2021 31 December 2020
£'000 £'000
Net profit for the year 3,826 3,458
Weighted average shares in issue (excluding shares held in treasury) used for 5,187,776 5,048,453
basic earnings per share
Weighted average dilutive shares under option 267,988 296,085
Average number of shares used for diluted earnings per share 5,455,764 5,344,538
Pence Pence
Basic earnings per share 73.8 68.5
Diluted earnings per share 70.1 64.7
5. Dividend
The Directors are proposing a final dividend of 6.57 pence per ordinary share
(year ended 31 December 2020 - 5.50 pence per share) payable to shareholders
on the register on 13 May 2022 and will be paid on or around 30 June 2022.
6. Annual report and accounts and final results presentation
The annual report and accounts will be posted to shareholders shortly and,
along with the final results presentation, will be available on the Company's
website, www.tandemgroup.co.uk (http://www.tandemgroup.co.uk) .
7. Annual General Meeting
The Annual General Meeting will be held at 11:00 on 23 June 2022 at 35
Tameside Drive, Castle Bromwich, Birmingham, B35 7AG.
This announcement contains inside information for the purposes of the UK
Market Abuse Regulation and the Directors of the Company are responsible for
the release of this announcement.
Forward-Looking Statements
Certain statements made in this announcement are forward-looking statements.
These forward-looking statements are not historical facts but rather are based
on the Company's current expectations, estimates, and projections about its
industry; its beliefs; and assumptions. Words such as 'anticipates,'
'expects,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar
expressions are intended to identify forward-looking statements. These
statements are not guarantees of future performance and are subject to known
and unknown risks, uncertainties, and other factors, some of which are beyond
the Company's control, are difficult to predict, and could cause actual
results to differ materially from those expressed or forecasted in the
forward-looking statements. The Company cautions security holders and
prospective security holders not to place undue reliance on these
forward-looking statements, which reflect the view of the Company only as of
the date of this announcement. The forward-looking statements made in this
announcement relate only to events as of the date on which the statements are
made. The Company will not undertake any obligation to release publicly any
revisions or updates to these forward-looking statements to reflect events,
circumstances, or unanticipated events occurring after the date of this
announcement except as required by law or by any appropriate regulatory
authority.
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