REG - Tandem Grp PLC - Half Yearly Report <Origin Href="QuoteRef">TND.L</Origin>

TandemAnnouncement

29/10/2014 13:02

RNS Number : 0836S
Tandem Group PLC
19 September 2014
TANDEM GROUP PLC
("Tandem" or the "Group")

HALF YEARLY REPORT
The Board of Tandem announces its half yearly report for the six months to 30 June 2014.
CHAIRMAN'S STATEMENT
Results
Group revenue in the six months to 30 June 2014 was 13,735,000 compared to 11,251,000 in the six months to 30 June 2013. Gross profit increased from 3,370,000 in 2013 to 4,051,000 in 2014.
There was an increase in operating expenses to 3,881,000 in the six months to 30 June 2014 against 3,661,000 in the six months to 30 June 2013 to support the increased level of activity. However, we continue to carefully monitor and control overhead expenditure across the businesses.
The operating profit before exceptional costs was 170,000 (six months to 30 June 2013 - loss 291,000). There were exceptional costs incurred during the period of 73,000 (six months to 30 June 2013 - 58,000) in respect of staff changes in the Claud Butler business in Scunthorpe.
Finance costs in the six months to 30 June 2014 were 156,000 compared to 149,000 in 2013. In addition, finance income was 272,000 (six months to 30 June 2013 - nil). This related to a fair value adjustment for foreign currency derivative contracts, effectively the partial unwinding of the charge incurred during the year ended 31 December 2013. 
The profit before taxation for the period was 213,000 which compared to a loss of 498,000 in the six month period to 30 June 2013.
The tax expense for 2014 was 73,000 compared to tax income of 23,000 in 2013. This reflected the related deferred tax charge on the derivative contract adjustment and a tax charge in the Hong Kong business.
Net profit for the period was 140,000 (six months to 30 June 2013 - loss 475,000).
Basic earnings per share in the six months to 30 June 2014 was 3.00p compared to a loss of 10.21p per share in the prior period.
Cash and cash equivalents were 2,124,000 at 30 June 2014 compared to an overdraft of 5,000 at 30 June 2013. Net debt reduced from 5,681,000 at 30 June 2013 to 3,804,000 at 30 June 2014. This was primarily as a result of a reduction in inventories due to the timing of shipments.
Bicycles and accessories
Revenue from our bicycle and accessories businesses increased by 3.8% to 7,463,000 (2013 - 7,187,000). 
Operating profit was 159,000 (2013 - 157,000).
Performance in our Dawes bicycles businesses was ahead of the previous period. The introduction of a new lightweight range of 'Academy' junior cycles, which were used for the British Triathlon Trust's summer cycling events programme across the country, has proved very successful.
In the Claud Butler business, a number of independent customers have moved away from the value end of the market choosing instead to replace lower price point product on the shop floor with higher specification bicycles. As a result, some of this business has been taken on by national retailers.
Our national retailer bicycles business, under the Falcon, Townsend, Elswick, Boss, Zombie and British Eagle brands, continued to show significant growth during the period, reinforcing our belief about elements of the independent sector. In addition, as we previously reported, the compelling value proposition coupled with an expanding customer base helped to enhance performance. 
Sports, leisure and toys
Revenue from our sports, leisure and toy businesses grew by 54.3% from 4,064,000 in the six months to 30 June 2013 to 6,272,000 in the six months to 30 June 2014. 
Operating profit in the sports, leisure and toys businesses for the period to 30 June 2014 was 186,000 compared to an operating loss of 318,000 in the same period last year. 
Our own brands Hedstrom and Stunted were significantly ahead of the prior period. Revenue from licensed product ranges including Peppa Pig, One Direction and Thomas the Tank Engine was also greater than the previous period.
Trading update and outlook
Group revenue for the 37 week period to 12 September was approximately 21.0 million compared to 19.6 million in the comparative period last year. However, the 11 week period to 12 September 2014 has been more challenging, despite a period of reasonable weather. 
 
In the bicycles and accessories businesses revenue for the 37 weeks to 12 September was approximately 11.2 million against a similar figure in the prior year.
After a positive start to the year, the leisure bicycle market has been challenging in recent months. Although some areas of the bicycle market continue to perform strongly, in particular higher priced road bikes, our sector of the cycling market remains highly competitive.
We are continuing to grow our corporate bicycle business. During the period we have introduced new product ranges and expanded the number of customer accounts which has increased turnover. We believe there is further scope to offer our national customers a value for money range of products to satisfy both retailer listings and their promotional activities. 
Sports, leisure and toys revenue for the 37 week period to 12 September was approximately 9.8 million compared to 8.3 million last year.
In our sports, leisure and toys businesses we reported that at this time last year selections with national retailers had increased for Spring/Summer 2014. We are pleased to report that our selections for 2015 have so far been equally encouraging and we expect to build on the progress that we have made during 2014.
As we expected, the exceptional trading performance in the sports, leisure and toys businesses during this period last year has been difficult to emulate. Notwithstanding this, our order books are in line with the previous year which is encouraging.
The acquisition of Pro Rider was completed in August 2014. Pro Rider is a leading UK online retailer of mobility scooters, associated mobility products, electric bicycles and electric golf trolleys. We have already started to realise synergies between the two businesses with a number of joint projects underway. New websites will be launched shortly which will separate the mobility category from sports and leisure. This will enable greater focus on each area of the business. We believe there is potential for growth in the mobility sector and sports and leisure is a sector already well known to us. We are using our existing sourcing, importing and quality control expertise in both our UK and Hong Kong offices to assist and develop the business. We expect Pro Rider to make a strong contribution to trading performance in the remainder of 2014 and beyond.
Dividend
We are declaring an interim dividend of 1.20p per share (2013 - 1.15p per share) to shareholders payable on or about 31 October 2014. The ex-dividend date will be 1 October 2014 and the record date 3 October 2014.
MPJ Keene
Chairman
19 September 2014


CONDENSED CONSOLIDATED INCOME STATEMENT
For the 6 months ended 30 June 2014

Note
6 months
ended
30 June 
2014
 6 months
ended
30 June 
2013
Year
ended 31 December
2013


Unaudited
Unaudited
Audited


'000
'000
'000










Revenue

13,735
11,251
28,347





Cost of sales

(9,684)
(7,881)
(20,061)
Gross profit

4,051
3,370
8,286





Operating expenses

(3,881)
(3,661)
(7,314)
Operating profit/(loss) before exceptional costs

170
(291)
972





Exceptional costs

(73)
(58)
(142)
Operating profit/(loss) after exceptional costs

97
(349)
830





Finance income

272
-
-
Finance costs

(156)
(149)
(814)
Profit/(loss)before taxation

213
(498)
16





Tax (expense)/income

(73)
23
338


Net profit/(loss) for the period

140
(475)
354












Pence
Pence
Pence
Earnings/(loss) per share




Basic 
3
3.00
(10.21)
7.63










Diluted
3
2.95
(10.07)
7.54
All figures relate to continuing operations.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME  
For the 6 months ended 30 June 2014

6 months
ended
30 June 2014
6 months
ended
30 June
2013
Year ended 31 December
2013

Unaudited
Unaudited
Audited

'000
'000
'000




Profit/(loss) for the period 
140
(475)
354 




Other comprehensive income: 



Items that will be reclassified subsequently to profit and loss:
Foreign exchange differences on translation of overseas subsidiaries
 (78)
 140
 (53)
Items that will not be reclassified subsequently to profit or loss:
Actuarial loss on pension schemes
 -
 -
 (16)
Movement in pension schemes' deferred tax provision
- 
- 
(128)
Other comprehensive income for the period
(78)
140
(197) 

Total comprehensive income attributable to equity shareholders of Tandem Group plc
62
(335)
157




All figures relate to continuing operations.


CONDENSED CONSOLIDATED BALANCE SHEET
As at 30 June 2014

At 30 June
2014
 At 30 June
2013
At 31
December
2013


Unaudited
Unaudited
Audited


'000
'000
'000





Non current assets




Intangible fixed assets

2,236
2,236
2,236
Property, plant and equipment

3,371
3,151
3,128
Deferred taxation

1,890
1,749
1,947


7,497
7,136
7,311





Current assets




Inventories

5,104
7,302
3,827
Trade and other receivables

6,279
6,218
5,374
Cash and cash equivalents

2,124
-
2,925


13,507
13,520
12,126





Total assets

21,004
20,656
19,437





Current liabilities
Bank overdraft

-
(5)
-
Trade and other payables

(5,405)
(5,992)
(3,557)
Other liabilities

(4,577)
(4,111)
(4,636)
Derivative financial liability held at fair value

(245)
-
(516)
Current tax liabilities

(489)
(369)
(222)


(10,716)
(10,477)
(8,931)
Non current liabilities
Borrowings

(1,351)
(1,565)
(1,405)
Pension schemes' deficits

(3,340)
(3,418)
(3,461)


(4,691)
(4,983)
(4,866)


Total liabilities

(15,407)
(15,460)
(13,797)


Net assets

5,597
5,196
5,640










Equity




Share capital

1,503
1,503
1,503
Shares held in treasury

(336)
(336)
(336)
Share premium

84
84
84
Other reserves

2,652
2,923
2,730
Profit and loss account

1,694
1,022
1,659
Total equity

5,597
5,196
5,640







CONDENSED Consolidated statement of changes in equity
As at 30 June 2014

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 2013
1,503
(361)
13
1,036
1,427
320
1,624
5,562
Net loss for the period 
-
-
-
-
-
-
(475)
(475)
Retranslation of overseas subsidiaries
-
-
-
-
-
140
-
140
Total comprehensive income for period attributable to equity shareholders
-
 -
-
-
-
140
(475)
(335)
Share based payments
-
-
-
-
-
-
3
3
Exercise of share options
-
25
71
-
-
-
(26)
70
Dividends paid
-
-
-
-
-
- 
(104)
(104)
Total transactions with owners
-
25
71
-
-
140
(602)
(366)
At 30 June 2013
1,503
(336)
84
1,036
1,427
460
1,022
5,196









Net profit for the period 
-
-
-
-
-
-
829
829
Retranslation of overseas subsidiaries
-
-
-
-
-
(193)
-
(193)
Net actuarial loss on pension schemes
-
-
-
-
-
-
(144)
(144)
Total comprehensive income for period attributable to equity shareholders
-
-
-
-
-
(193)
685
492
Share based payments
-
-
-
-
-
-
5
5
Dividends paid
-
-
-
-
-
-
(53)
(53)
Total transactions with owners
-
-
-
-
-
(193)
637
444
At 1 January 2014
1,503
(336)
84
1,036
1,427
267
1,659
5,640









Net profit for the period
-
-
-
-
-
-
140
140
Retranslation of overseas subsidiaries
-
-
-
-
-
(78)
-
(78)
Total comprehensive income for period attributable to equity shareholders
-
-
-
-
-
(78)
140
62
Share based payments
-
-
-
-
-
- 
3
3
Dividends paid
-
- 
-
-
-
-
(108)
(108)
Total transactions with owners
-
-
-
-
-
(78)
35
(43)
At 30 June 2014
1,503
(336)
84
1,036
1,427
189
1,694
5,597











CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the 6 months ended 30 June 2014

6 months
ended
30 June 2014
 6months
ended
30 June 2013
Year
ended 31 December
2013

Unaudited
Unaudited
Audited

'000
'000
'000
Cash flows from operating activities



Profit/(loss) before taxation for the period
213
(498)
16
Adjustments:



Depreciation of property, plant and equipment
72
57
116
Finance income
(272)
-
-
Finance costs
156
149
814
Share based payments
3
3
8
Net cash flow from operating activities before movements in working capital
172
(289)
954




Change in inventories
(1,277)
(2,519)
956
Change in trade and other receivables
(1,120)
(1,389)
(870)
Change in trade and other payables
2,094
2,863
589
Cash flows from operations
(131)
(1,334)
1,629
Interest paid
(46)
(66)
(151)
Taxation paid
(10)
(31)
(62)
Net cash flow from operating activities
(187)
(1,431)
1,416




Cash flows from investing activities



Purchase of property, plant and equipment
(315)
(2,860)
(2,896)
Sale of property, plant and equipment
-
-
4
Net cash flow from investing activities
(315)
(2,860)
(2,892)




Cash flows from financing activities



New loans 
-
1,610
1,610
Loan repayments 
(54)
(45)
(98)
Change in invoice financing 
(59)
1,117
1,535
Exercise of share options
-
70
70
Dividends paid
(108)
(104)
(157)
Net cash flow from financing activities
(221)
2,648
2,960




Net change in cash and cash equivalents
(723)
(1,643)
1,484
Cash and cash equivalents at beginning of period
2,925
1,498
1,498
Effect of foreign exchange rate changes 
(78)
140
(57)
Cash and cash equivalents at end of period
2,124
(5)
2,925


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 and leisure 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 2014 (including the comparatives for the period ended 30June2013 and the year ended 31 December 2013) were approved by the Board of Directors on 19 September 2014 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 31December 2013, 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 2013 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 2014 is based on the actuarial valuation under IAS19 at 31 December 2013 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 2014.

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:

Bicycles and accessories 
Sports, leisure and toys
Total

'000
'000
'000
6 months to 30 June 2014







Revenue
7,463
6,272
13,735




Segment result
159
186
345
Unallocated corporate expenses


(175)
Operating profit before exceptional costs


170
Exceptional costs


(73)
Operating profit after exceptional costs


97
Finance income


272
Finance costs


(156)
Profit for the period before taxation


213
Tax expense


(73)
Net profit for the period


140
6 months to 30 June 2013







Revenue
7,187
4,064
11,251




Segment result
157
(318)
(161)
Unallocated corporate expenses


(130)
Operating loss before exceptional costs


(291)
Exceptional costs


(58)
Operating loss after exceptional costs


(349)
Finance costs


(149)
Loss for the period before taxation


(498)
Tax income


23
Net loss for the period


(475)








Year to 31 December 2013







Revenue
15,149
13,198
28,347




Segment result before management charges
476
1,038
1,514
Management charges
(188)
(346)
(534)
Segment result after management charges 
288
692
980
Unallocated corporate expenses


(8)
Operating profit before exceptional costs


972
Exceptional costs


(142)
Operating profit after exceptional costs


830
Finance costs


(814)
Profit before taxation


16
Tax income


338
Net profit for the year


354
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 2014
 6 months
ended
30 June 2013
Year 
ended 31 December
2013

'000
'000
'000




Net profit/(loss) for the period 
140
(475)
354





Number
Number
Number
Weighted average shares in issue used for basic earnings per share
4,669,754
4,653,156
4,637,337
Weighted average dilutive shares under option
68,140
63,727
60,245
Average number of shares used for diluted earnings per share
4,737,894
4,716,883
4,697,582





Pence
Pence
Pence




Basic earnings/(loss) per share
3.00
(10.21)
7.63




Diluted earnings/(loss) per share
2.95
(10.07)
7.54
4 POST BALANCE SHEET EVENT
On 1 August 2014 the Company acquired 100% of the share capital of mobility and leisure products business, Pro Rider Limited (formerly Pro Rider Mobility Ltd).
The initial consideration for the acquisition was 2.5 million satisfied in cash with additional consideration also to be paid in cash, subject to Pro Rider fulfilling certain profitability criteria. The acquisition was funded from the Company's existing cash resources.
Enquiries:
Tandem Group plc
Steve Grant, Chief Executive
Jim Shears, Group Finance Director and Company Secretary
Telephone 0121 748 8075
Nominated Adviser
Cairn Financial Advisers
Tony Rawlinson
Telephone 020 7148 7901

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