REG - Tandem Grp PLC - Half-year Report

TandemAnnouncement

22/09/2020 07:01

RNS Number : 6396Z
  
Tandem Group PLC
  
22 September 2020
  
 

Tandem Group plc 
(the 'Company' or 'Group')
 
Interim unaudited results for the six months ended 30 June 2020 
The Board of Tandem Group plc (AIM: TND), designers, developers, distributors and retailers of sports, leisure and mobility equipment, announces its results for the six months to 30 June 2020.
 
Highlights
 
-     Revenue increased approximately 6% to £16,927,000 (2019 - £16,029,000)
-     Gross profit increased to £5,556,000 (2019 - £4,911,000)
-     Increase in operating profit to £1,478,000 (2019 - £580,000)
-     Profit before tax after non-underlying items was £1,409,000 (2019 - £370,000)
-     Net profit for the period was £1,141,000 (2019 - £155,000)
-     Earnings per share 22.7p (2019 - 3.1p)
-     Net assets increased to £15,266,000 (2019 - £12,446,000)
-     Cash and cash equivalents as at 30 June 2020 of £6,322,000 (2019 - £3,740,000)
 
Commenting on the results, Chairman Steve Grant stated "these are a strong set of results despite the COVID-19 challenges faced by the Group during the period, with an increase in revenue and a significant increase in profit reflecting the hard work and dedication of our loyal staff". 
 
CHAIRMAN'S STATEMENT
 
Results
Group revenue in the six months to 30 June 2020 increased by approximately 6% to £16,927,000 compared to £16,029,000 in the six months to 30 June 2019.  
 
There was an increase in gross profit from £4,911,000 to £5,556,000.  Gross profit margin also increased to 32.8% compared to 30.6% in the prior period principally as a result of strong demand for a number of products in limited supply and the change in the mix of business from 'FOB', where stock is shipped from the Far East, to 'domestic', where we warehouse stock in the UK prior to despatch to customers. 
 
Operating expenses decreased from £4,331,000 to £4,078,000 in the six months to 30 June 2020 broadly as a result of a reduction in third party warehousing requirements, reduced travel expenses and wage costs.
 
As a result of the above, there was a significant increase in operating profit to £1,478,000 compared to £580,000 in the prior year period.  
 
Finance costs were £69,000 in the six months to 30 June 2020.  This compared to £210,000 in the prior period.  There was a fair value credit for foreign currency derivative contracts of £66,000 reflecting the part reversal of the year end position which compared to a charge of £54,000 in the prior period.  This is shown in non-underlying items.  Non-underlying items also included finance costs of £100,000 in respect of the pension schemes against £85,000 in the six months to 30 June 2019.
 
The profit before taxation after non-underlying items for the period was £1,409,000 compared to £370,000 in the six-month period to 30 June 2019.
 
There was a tax charge of £268,000 during the period compared to £215,000 in the prior period.  This reflected the increased level of profitability.
 
Net profit for the period to 30 June 2020 was £1,141,000 compared to £155,000 in the six months to 30 June 2019.
 
Basic earnings per share in the six months to 30 June 2020 was 22.7 pence per share compared to 3.1 pence per share in the prior period.
 
Net assets at 30 June 2020 increased to £15,266,000 against £12,446,000 at 30 June 2019.
Cash and cash equivalents were £6,322,000 at 30 June 2020 which compared to £3,740,000 at 30 June 2019.  This reflected the profit for the period and also the abnormally low inventory and working capital levels.
 
Net cash after borrowings was £5,289,000 against net debt of £2,006,000 at 30 June 2019.
 
 
Trading update and outlook
As we reported in our AGM Statement on 25 June 2020, despite the many challenges during the period, the revenue and profitability growth over the prior year period has been encouraging.
 
Although Frozen 2 and Spider-Man were ahead of the prior year period, the majority of our licensed ranges were behind.  This was principally as a result of cautious FOB buying, where product is purchased in full containers and shipped direct from the country of origin, by national retailers.  FOB revenue from other licences including Peppa Pig, Batman, Disney Princess, Paw Patrol and Thomas were behind the prior year although domestic business was significantly ahead.
Despite lower FOB orders, domestic sales of Kickmaster football training and Hedstrom outdoor play products were also well ahead of the prior year.
The Ben Sayers brand performed strongly during the second quarter following the reopening of golf courses in May.
Although the bicycle business was more challenging at the beginning of the year, the impact of COVID-19 changed the landscape.  From the second quarter onwards, revenues were at exceptional levels with significant growth with both independent bicycle dealers (IBD) and national retail customers.  Our greatest challenge has been to remain in stock and to maintain timely supply to our customers.
Our range of Squish bikes has continued to increase market share and was well ahead of the same period in the prior year. In addition, there was a strong demand for our Dawes and Claud Butler ranges since the period of lockdown began, benefitting many of our IBD customers.
We are particularly excited about the growth in ebikes and growth potential of escooters.  We continue to invest in both ranges utilising our own bicycle brands Dawes and Falcon and our scooter brands Li-Fe and Wired.
We are very pleased to report a strong performance from our B2C online businesses, with revenue from many of our outdoor product ranges including spas, trampolines, outdoor play and football goals ahead of the prior year.  The combination of lockdown and particularly good weather during the spring months had a very positive impact.  
As we previously reported, the ongoing investment into this part of the Group contributed to increased visitor traffic and revenue from our own websites.  There was an increase in the number of visitors from both the Garden & Camping (www.garden-camping.com) and the At Home Comforts by Jack Stonehouse (www.jackstonehouse.com) websites of 120% and 180% respectively which resulted in significant revenue growth from these channels.
The supply chain, particularly for bicycles, remains under pressure with strong global demand on suppliers and increased lead times.  Nevertheless, stock availability has improved significantly during September and is expected to continue into the final quarter in the lead up to Christmas. 
 
National retailers continue to be cautious in their FOB buying decisions, impacting on Group revenue which fell behind the prior year during the summer period.  Stock availability is also an issue which is gradually improving. However, margin from domestic business has remained strong up to and since the half year, coupled with lower overheads as a result of the COVID-19 impact.  
 
Our outlook for the remainder of 2020 continues to be broadly positive, although at this stage it remains difficult to confidently forecast the full year result. Despite the FOB challenges, domestic demand remains encouraging.
 
Dividend
Due to the excellent performance of the Company in the first half of the year we are doubling the interim dividend to 3.12p per share (2019 - 1.56p per share) payable on 10 November 2020.  Our dividend strategy continues to be reviewed but it remains our intention to pay a progressive dividend where profits permit.  The ex-dividend date will be 8 October 2020 and the record date 9 October 2020. 
 
Board changes
As previously announced, Mervyn Keene and Andy Bestwick recently retired from the Board with Steve Grant appointed as Non-Executive Chairman and Jim Shears as Group CEO.
 
Subject to the completion of normal regulatory due diligence checks, we have appointed Juliet Barratt to the Board as a Non-Executive Director. We believe that Juliet's B2B and B2C product, sales and marketing experience as well as the achievements in her business career to date will complement and enhance the existing skills on the Board.
 
Investor presentation
The interim results presentation for investors will be posted on the Company's website.  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@tandemgroup.co.uk.
 
Shareholder benefits
There is 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.
 
 
Steve Grant
Chairman
22 September 2020

 
 
 
CONDENSED CONSOLIDATED INCOME STATEMENT
For the 6 months ended 30 June 2020




 


 


 


 


 


 


 




 


 


6 months ended 30 June 2020
Unaudited
 


6 months ended 30 June 2019 Unaudited
 


Year ended 31 December 2019
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


 


16,927


-


16,927


16,029


-


16,029


38,837


-


38,837




 


 


 


 


 


 


 


 


 


 


 




Cost of sales


 



(11,371)




-




(11,371)




(11,118)




-




(11,118)




(27,049)




-




(27,049)





Gross profit


 


5,556


-


5,556


4,911


-


4,911


11,788


-


11,788




 


 


 


 


 


 


 


 


 


 


 




Operating expenses


 



(4,078)




-




(4,078)




(4,331)




-




(4,331)




(8,755)




-




(8,755)





Operating profit before exceptional items


 


1,478


 
-


1,478


580


 
-


580


 
3,033


-


3,033




 


 


 


 


 


 


 


 


 


 


 




Exceptional items


 



-




-




-




-




-




-




-




(29)




(29)





Operating profit after exceptional items


 


1,478


-


1,478


580


-


580


 
3,033


(29)


3,004




Finance costs


 


(35)


(34)


(69)


(71)


(139)


(210)


(182)


(315)


(497)




 


 



 




 




 




 




 




 




 




 




 





Profit before taxation


 


1,443


 
(34)


1,409


509


 
(139)


370


 
2,851


(344)


2,507




 


 


 


 


 


 


 


 


 


 


 




Tax expense


 


(268)


-


(268)


(215)


-


(215)


(425)


(48)


(473)




 


 



 




 




 




 




 




 




 




 




 





Net profit for the period


 
 



1,175




 
(34)




1,141




294




 
(139)




155




 
2,426




(392)




2,034





 


 


 


 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 


 


 


 




 


 


 


 


Pence


 


 


Pence


 


 


Pence




Earnings per share


 


 


 


 


 


 


 


 


 


 




Basic 


2


 


 



22.7



 


 



3.1



 


 



40.5





 


 


 


 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 


 


 


 




Diluted


2


 


 



22.0



 


 



3.0



 


 



39.6




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



 
 
 
 
 
 
All figures relate to continuing operations.
 
 
 
 
 
 
 
 
 
 
 
 
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME         
For the 6 months ended 30 June 2020
 
 




 


6 months
ended
30 June 2020


 6 months
ended
30 June
2019


Year ended 31 December
2019




 


Unaudited


Unaudited


Audited




 


£'000


£'000


£'000




 


 


 


 




Profit for the period 


1,141


155


2,034




 


 


 


 




Other comprehensive income: 


 


 


 




Items that will be reclassified subsequently to profit and loss:
Foreign exchange differences on translation of overseas subsidiaries


50


13


(24)




 


 


 


 




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


 


 


 




Actuarial gain on pension schemes


-


-


65




Movement in pension schemes' deferred tax provision



-




-




24





Other comprehensive income for the period


50


13


65




 



 




 




 





Total comprehensive income attributable to equity shareholders of Tandem Group plc



1,191




168




2,099





 


 


 


 




 
 
All figures relate to continuing operations.
 
 
CONDENSED CONSOLIDATED BALANCE SHEET
As at 30 June 2020




 
 
 
 


 


At 30 June
2020


  At 30 June
2019


At 31
December
2019




 


 


Unaudited


Unaudited


Audited




 


 


£'000


£'000


£'000




 


 


 


 


 




 


 


 


 


 




 


 


 


 


 




Non current assets


 


 


 


 




Intangible fixed assets


 


5,532


5,574


5,542




Property, plant and equipment


 


3,536


3,458


3,590




Deferred taxation


 



1,931




1,776




1,931





 


 


10,999


10,808


11,063




 


 


 


 


 




Current assets


 


 


 


 




Inventories


 


2,436


5,735


4,709




Trade and other receivables


 


6,524


7,123


5,443




Cash and cash equivalents


 



6,322




3,740




5,037





 


 


15,282


16,598


15,189




 


 


 


 


 




Total assets


 



26,281




27,406




26,252





 


 


 


 


 




Current liabilities


 


 


 


 




Trade and other payables


 


(6,751)


(6,240)


(5,507)




Borrowings


 


(203)


(4,736)


(2,394)




Derivative financial liability held at fair value


 


(40)


-


(106)




Current tax liabilities


 



(827)




(304)




(657)





 


 


(7,821)


(11,280)


(8,664)




 
Non current liabilities


 


 


 


 




Borrowings


 


(830)


(1,010)


(797)




Pension schemes' deficits


 



(2,364)




(2,670)




(2,480)





 


 


(3,194)


(3,680)


(3,277)




 


 



 




 




 





Total liabilities


 



(11,015)




(14,960)




(11,941)





 


 


 


 


 




Net assets


 



15,266




12,446




14,311





 


 


 


 


 




 


 


 


 


 




Equity


 


 


 


 




Share capital


 


1,503


1,503


1,503




Shares held in treasury


 


(245)


(247)


(247)




Share premium


 


294


286


286




Other reserves


 


3,670


3,657


3,620




Profit and loss account


 



10,044




7,247




9,149





Total equity


 



15,266




12,446




14,311





 


 


 


 


 




 
 
 
 
CONDENSED Consolidated statement of changes in equity
As at 30 June 2020
 




 


 
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 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


 




 


 


 


 


 


 


 


 


 


 


 




Net profit for the period 


-


-


-


-


-


-


-


1,879


1,879


 




Retranslation of overseas subsidiaries


-


-


-


-


-


-


(37)


-


(37)


 




Net actuarial loss on pension schemes



-




-




-




-




-




-




-




89




89



 




Total comprehensive income for period attributable to equity shareholders


-


-


-


-


-


-


(37)


1,968


1,931


 




Share based payments


-


-


-


-


-   


-   


-


13


13


 




Dividends paid



-




-




-




-




-




-




-




(79)




(79)



 




Total transactions with owners



-




-




-




-




-




-




(37)




1,902




1,865



 




At 1 January 2020


1,503


(247)


286


1,036


1,427


530


627


9,149


14,311


 




 


 


 


 


 


 


 


 


 


 


 




Net profit for the period


-


-


-


-


-


-


-


1,141


1,141


 




Retranslation of overseas subsidiaries



-




-




-




-




-




-




50




-




50



 




Total comprehensive income for period attributable to equity shareholders


-


-


-


-


-


-


50


1,141


1,191


 




Share based payments


-


-


-


-


-   


-   


-


9


9


 




Exercise of share options


-


2


8


-


-   


-  


-


-


10


 




Dividends paid



-




-




-




-




-   




-  




-




(255)




(255)



 




Total transactions with owners



-




2




8




-




-




-




-




895




955



 




At 30 June 2020



1,503




(245)




294




1,036




1,427




530




677




10,044




15,266



 




 


 


 


 


 


 


 


 


 


 


 



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



 
 
 
 
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the 6 months ended 30 June 2020
 




 
 
 
 


 


At 30 June
2020


  At 30 June
2019


At 31
December
2019




 


 


Unaudited


Unaudited


Audited




 


 


£'000


£'000


£'000




 




Cash flows from operating activities


 


 


 




Profit for the period


1,141


155


2,034




Adjustments:


 


 


 




Depreciation of property, plant and equipment


55


69


203




Amortisation of intangible fixed assets


10


11


45




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


 
3


 
(1)


-




Contributions to defined benefit pension schemes


(218)


(219)


(437)




Finance costs


69


210


497




Tax expense


268


215


473




Share based payments



9




15




28





Net cash flow from operating activities before movements in working capital


1,337


455


2,843




 


 


 


 




Change in inventories


2,273


(1,485)


(459)




Change in trade and other receivables


(1,081)


(2,726)


(1,046)




Change in trade and other payables


1,244


1,977


991




Cash flows from operations



3,773




(1,779)




2,329





Interest paid


(33)


(96)


(182)




Tax paid


(98)


(54)


(90)




Net cash flow from operating activities



3,642




(1,929)




2,057





 


 


 


 




Cash flows from investing activities


 


 


 




Purchase of intangible fixed assets


-


(5)


(7)




Purchase of property, plant and equipment


(22)


(48)


(63)




Sale of property, plant and equipment


18


1


-




Net cash flow from investing activities



(4)




(52)




(70)





 


 


 


 




Cash flows from financing activities


 


 


 




Loan repayments 


(196)


(203)


(407)




Finance lease repayments


(15)


(12)


115




Movement in invoice financing 


(1,947)


1,221


(1,257)




Exercise of share options


10


-


-




Dividends paid


(255)


(145)


(224)




Net cash flow from financing activities



(2,403)




861




(1,773)





 


 


 


 




Net change in cash and cash equivalents


1,235


(1,120)


214




Cash and cash equivalents at beginning of period


5,037


4,847


4,847




Effect of foreign exchange rate changes 



50




13




(24)





Cash and cash equivalents at end of period



6,322




3,740




5,037





 
 
 
 
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 2020 (including the comparatives for the period ended 30 June 2019 and the year ended 31 December 2019) were approved by the Board of Directors on 22 September 2020.  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 2019, 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. The audit report in relation to the financial statements for the year ended 31 December 2019 includes an emphasis of matter paragraph drawing attention to note 1 which refers to the global Coronavirus pandemic.
This interim financial information has been prepared using the accounting policies set out in the Group's 2019 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 2020 is based on the actuarial valuation under IAS19 at 31 December 2019 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 2020.

 
 
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 2020


    6 months
ended
30 June 2019


Year 
ended 31 December
2019




 


£'000


£'000


£'000




 


 


 


 




Profit for the period 



1,141




155




2,034





 


 


 


 




 


Number


Number


Number




Weighted average shares in issue used for basic earnings per share


5,031,498


5,026,091


5,026,091




Weighted average dilutive shares under option


151,646


92,590


112,889




Average number of shares used for diluted earnings per share



5,183,144




5,118,681




5,138,980





 


 


 


 




 


Pence


Pence


Pence




 


 


 


 






Basic earnings per share



22.7




3.1




40.5





 


 


 


 




Diluted earnings per share



22.0




3.0




39.6





 
 
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 (MAR).
 
Enquiries:
Tandem Group plc
Jim Shears, CEO and Company Secretary
Telephone 0121 748 8075
 
Nominated Adviser
Cairn Financial Advisers LLP
James Caithie / Sandy Jamieson
Telephone 020 7213 0880
 
 
Forward Looking Statements
This announcement contains forward-looking statements relating to expected or anticipated future events and anticipated results that are forward-looking in nature and, as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, competition for qualified staff, the regulatory process and actions, technical issues, new legislation, uncertainties resulting from potential delays or changes in plans, uncertainties resulting from working in a new political jurisdiction, uncertainties regarding the results of exploration, uncertainties regarding the timing and granting of prospecting rights, uncertainties regarding the Company's or any third party's ability to execute and implement future plans, and the occurrence of unexpected events. Actual results achieved may vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors.
 

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