REG - Tandem Grp PLC - Half Yearly Report
15/09/2022 07:00
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RNS Number : 5180Z Tandem Group PLC 15 September 2022
Tandem Group plc
(the 'Company' or 'Group')
Interim results for the six months ended 30 June 2022
The Board of Tandem Group plc (AIM: TND), designers, developers, distributors
and retailers of sports, leisure and mobility equipment, announces its
unaudited interim results for the six months to 30 June 2022.
Summary
· Peter Kimberley appointed as Chief Executive Officer in May 2022
· New warehouse project remains on track to be completed before the
year end
· Continued investment in eMobility sector, with successful launch of
eMobility website new Electric Life website (www.electriclife.co.uk
(http://www.electriclife.co.uk) ).
· Group revenue in the six months to 30 June 2022 of £12.9 million
(H1 2021: £19.3 million)
· Gross profit of £4.4 million (H1 2021: £6.1 million), with an
increase in gross margin, to 34.0%, primarily as a result of foreign exchange
movements
· Profit before taxation of £0.3 million (H1 2021: £1.9 million)
· Basic earnings per share of 5.8 pence (H1 2021: 31.2 pence per
share)
· Maintained proposed interim dividend of 3.43 pence per ordinary
share
· Cash and cash equivalents of £3.2 million as at 30 June 2022
· Net debt after borrowings as at 30 June 2022 of £1.5 million
· Despite prevailing economic challenges, there have been encouraging
signs, not least from the securing of a significant number of new customer
accounts, and recent targeted product promotions have yielded good results.
· As a result of management actions taken, profit after tax for the
full year ending 31 December 2022 remains in line with market expectations.
Enquiries:
Tandem Group plc
Peter Kimberley, CEO
David Rock, Company Secretary
Telephone 0121 748 8075
Nominated Adviser
Cenkos Securities plc (Nominated Adviser and Broker)
Ben Jeynes / Dan Hodkinson - Corporate Finance
Michael Johnson / Russell Kerr - Sales
Telephone 020 7397 8900
CHAIRMAN'S STATEMENT
Results
Group revenue in the six months to 30 June 2022 decreased by approximately 33%
to £12.9 million compared to £19.3 million in the six months to 30 June
2021.
There was a 28% decrease in gross profit from £6.1 million to £4.4
million. Gross profit margin increased to 34.0% compared to 31.5% in the
prior period primarily as a result of favourable foreign exchange variances.
Operating expenses decreased by 7% from £4.1 million to £3.8 million in the
six months to 30 June 2022 due to the active management of costs following the
reduced levels of turnover.
As a result of the above, there was a significant decrease in operating profit
before exceptional expenses to £0.6 million compared to £2.0 million in the
prior year period.
Finance costs were £0.12 million in the six months to 30 June 2022. This
compared to a cost of £0.10 million in the prior year period, and is the
result of increased borrowing levels to fund the building of the new
warehouse.
Exceptional costs were £0.2 million, primarily in relation to redundancies,
restructuring and professional costs relating to the consolidation of
operations of the Group.
Profit before taxation for the period was £0.3 million compared to £1.9
million last year.
There was no tax charge during the period compared to £0.3 million in the
prior period. This reflected the decreased level of profitability and the
capital allowances from the new warehouse build.
Net profit for the period to 30 June 2022 was £0.3 million compared to £1.6
million in the six months to 30 June 2021.
Basic earnings per share in the six months to 30 June 2022 was 5.8 pence per
share compared to 31.2 pence per share in the prior period.
Net assets at 30 June 2022 increased to £23.0 million against £22.7 million
at 31 December 2021.
Cash and cash equivalents were £3.2 million at 30 June 2022 which compared to
£5.9 million at 30 June 2021. Higher levels of inventories are the primary
reason for the reduction, which have increased to £8.6 million compared to
£5.2 million at 30 June 2021 due to the slowdown in sales.
Net debt after borrowings was £1.5 million against a net cash position of
£2.1 million at 30 June 2021. The movement was the result of expenditure
relating to our new warehouse construction in the period as well as the higher
level of stock holding.
Trading update
Peter Kimberley has settled in well as CEO, bringing a new approach and new
opportunities as he sets his vision and strategy for the Group.
The Company's Toys, Sports & Leisure division reduced by approximately 6%
during the year. This follows the reclassification of character licensed
bicycles from the Toys, Sports & Leisure division to the Bicycles
division, as announced in our Preliminary Results for the year ended 31
December 2021 ("FY21").
The Bicycles division comprises all bicycle turnover from independent bicycle
dealers (IBD), national retailers and online customers for bicycles but
excludes electric bicycles.
Both IBD and national retailer sales continued to be challenging, being 55%
behind that of the prior period. However, bicycle sales since 30 June 2022 to
the end of August 2022 were ahead of the same period last year. As we reported
in our AGM Trading Statement, the Bicycle division benefitted from
unprecedented demand created by COVID-19 lockdowns. We continue to target new
accounts together with promotions and special offers.
In eMobility, results remained challenging, with turnover in this division
down 34% compared to the prior period. We remain confident that eMobility is
the division which has the largest potential for the Group, and believe that
continued pressures on both fuel prices and climate change will encourage the
use of cheaper and cleaner modes of transport in the form of electrically
powered alternatives.
We are demonstrating our commitment to this area through the investment in our
new on-site retail shop as announced in our AGM Trading Statement, and we have
successfully launched our new Electric Life website (www.electriclife.co.uk
(http://www.electriclife.co.uk) ). We are continuing to invest in new products
in this division, as government legislates and invests in alternative
transport infrastructure, promoting consumers to adopt electrified means of
transport such as e-mopeds, e-bikes and e-scooters. We are well positioned to
take advantage of this increased demand.
Our Home & Garden division has also continued to experience a decline and
was 55% behind the prior period. The reduction in discretionary consumer
spending has hit this division particularly hard.
Outlook
There are a number of key economic factors which are affecting the
discretionary spending power of consumers, primarily the cost-of-living
crisis. Rising energy and fuel costs, coupled with high inflation and
increasing interest rates, are expected to outstrip wage inflation, leaving
consumers uncertain. This is clearly impacting all areas of our business, and
many other businesses alike.
Despite these challenges, there have been encouraging signs, not least from
the securing of a significant number of new customer accounts during the
period and since the period end, and recent targeted product promotions have
yielded good results.
We continue to expect B2C to be a growth area for the business in the future
and therefore we are maintaining our investment in key websites and personnel
in this area; who will work across all of the business divisions, and we
remain focussed on new product development.
We are seeing higher levels of engagement through our social media channels
following the strengthening of the Digital Marketing team, with an organic
engagement uplift resulting in an increase of our B2C followers by 8% since
mid-July, and our B2B social channel followers by 853% in the last 90 days.
This will generate more awareness of the Group's activities.
We have also seen an uplift in efficiency and optimisation, for example our
Return on Advertising Spend (ROAS) has improved by 87% across four of our
websites, with our Cost per Acquisition decreasing by 35%. We are
consolidating our websites to improve our customer experience, which will also
deliver operational efficiencies.
In August we saw encouraging levels of participation in our B2C eCommerce site
www.electriclife.co.uk (http://www.electriclife.co.uk) , which has
contributed to revenue; with further developments planned for the coming
months.
Whilst rental scooters continue to be a success in many UK cities and towns,
the UK government is still working through fully legalising the use of
privately owned e-scooters.
Group revenue for the 8 months to 31 August 2022 was approximately £18.0
million compared to £27.6 million for same period in the prior year. Although
this is a reduction of 35%, at the end of April turnover was 43% behind that
of the prior period, so we are encouraged that the decline has been slowed. We
continue to target full year profit after tax of £0.9 million.
The outlook for the remainder of 2022 remains uncertain, however, the Board
are working to navigate the Group through these challenging times, and we
remain confident that the Group will emerge in a good position through strong
leadership, tight controls on costs, and being well positioned to drive
growth, particularly through our offering of more affordable means of travel.
Dividend
Due to the performance in the first half of the year, we are declaring an
interim dividend at the same level to that of the prior period, 3.43p per
share (2021 - 3.43p per share) payable on or about 15 November 2022. We will
continue to review our dividend strategy and pay a progressive dividend where
profits permit. The ex-dividend date will be 6 October 2022 and the record
date will be 7 October 2022.
Property update
We are pleased to report that the new warehouse project remains on track to be
completed before the year end, having only suffered minor delays due to
material shortages. The new warehouse will centralise our operations leading
to a significant reduction in our overheads, providing the Group with
additional capacity, and enhancing operational efficiencies and improving
customer service.
We are further happy to report that formal planning permission has been
received on our new retail shop which will be located at our Castle Bromwich
premises. Work is due to begin shortly on the shop fit; and completion is
expected during quarter four. The retail shop will showcase the largest range
of electric powered mobility and leisure products in the UK, such as
e-scooters, e-bikes, e-motorbikes, electric golf trolleys and more.
We plan to have our commercial properties revalued prior to the year end,
where we expect to see an uplift in value.
Investor presentation
The interim results presentation for investors will be posted on the Company's
website in due course. 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.
Steve Grant
Chairman
15 September 2022
CONDENSED CONSOLIDATED INCOME STATEMENT
For the 6 months ended 30 June 2022
6 months ended 6 months ended 30 June 2021 Year ended 31 December 2021
30 June 2022 Unaudited Audited
Unaudited £'000 £'000
£'000
Revenue 12,913 19,262 40,917
Cost of sales (8,527) (13,196) (28,866)
Gross profit 4,386 6,066 12,051
Operating expenses (3,792) (4,063) (7,112)
Operating profit before exceptional costs 594 2,003 4,939
Exceptional costs (172) - -
Operating profit after exceptional costs 422 2,003 4,939
Finance costs (115) (96) (207)
Profit before taxation 307 1,907 4,732
Tax expense - (305) (906)
Net profit for the period 307 1,602 3,826
Pence Pence Pence
Earnings per share
Basic 2 5.8 31.2 73.8
Diluted 2 5.6 29.6 70.1
(#_ftn1)
All figures relate to continuing operations.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 6 months ended 30 June 2022
6 months 6 months Year ended 31 December
ended ended 2021
30 June 2022 30 June
2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Profit for the period 307 1,602 3,826
Other comprehensive income:
Items that will be reclassified subsequently to profit and loss: 23 (11) 6
Foreign exchange differences on translation of overseas subsidiaries
Forward foreign exchange contracts 261 78 236
Items that will not be reclassified subsequently to profit or loss:
Actuarial gain on pension schemes - - 1,648
Movement in pension schemes' deferred tax provision - - 248
Other comprehensive income for the period 284 67 2,138
Total comprehensive income attributable to equity shareholders of Tandem Group 591 1,669 5,964
plc
All figures relate to continuing operations.
CONDENSED CONSOLIDATED BALANCE SHEET
As at 30 June 2022
At 30 June At 30 June At 31
2022 2021 December
2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Non current assets
Intangible fixed assets 5,454 5,483 5,454
Property, plant and equipment 10,003 7,717 7,775
Deferred taxation 1,323 1,761 1,323
16,780 14,961 14,552
Current assets
Inventories 8,577 5,244 8,064
Trade and other receivables 6,065 8,533 10,243
Derivative financial asset held at fair value 319 36 225
Cash and cash equivalents 3,229 5,850 6,367
18,190 19,663 24,899
Total assets 34,970 34,624 39,451
Current liabilities
Trade and other payables (5,050) (8,039) (10,333)
Borrowings (897) (1,634) (2,010)
Current tax liabilities (201) (306) (252)
(6,148) (9,979) (12,595)
Non current liabilities
Borrowings (3,867) (2,072) (2,031)
Pension schemes' deficits (1,920) (4,005) (2,086)
(5,787) (6,077) (4,117)
Total liabilities (11,935) (16,056) (16,712)
Net assets 23,035 18,568 22,739
Equity
Share capital 1,503 1,503 1,503
Shares held in treasury (151) (192) (192)
Share premium 647 466 474
Other reserves 5,080 4,758 4,964
Profit and loss account 15,956 12,033 15,990
Total equity 23,035 18,568 22,739
CONDENSED Consolidated statement of changes in equity
As at 30 June 2022
Merger reserve Translation Profit Total
Share Cash flow hedge reserve reserve and loss
capital Shares held in treasury Capital redemption reserve account
Share premium Revaluation reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2021 1,503 (240) 315 (410) 1,036 1,427 1,671 599 10,707 16,608
Net profit for the period - - - - - - - - 1,602 1,602
Retranslation of overseas subsidiaries - - - - - - - (11) - (11)
Forward contracts - - - 78 - - - - - 78
Total comprehensive income for period attributable to equity shareholders - - - 78 - - - (11) 1,602 1,669
Share based payments - - - - - - - - 15 15
Exercise of share options - 48 151 - - - - 199
- -
Reclassified to cost of inventory - - - 368 - - - - - 368
Dividends paid - - - - - - - - (291) (291)
Total transactions with owners - 48 151 368 - - - - (276) 291
At 30 June 2021 1,503 (192) 466 36 1,036 1,427 1,671 588 12,033 18,568
Net profit for the period - - - - - - - - 2,224 2,224
Retranslation of overseas subsidiaries - - - - - - - 17 - 17
Forward contracts - - - 158 - - - - - 158
Net actuarial gain on pension schemes - - - - - - - - 1,896 1,896
Total comprehensive income for period attributable to equity shareholders - - - 158 - - - 17 4,120 4,295
Share based payments - - - - - - - - 18 18
Exercise of share options - - 8 - - - - - - 8
Reclassified to cost of inventory - - - 31 - - - - - 31
Dividends paid - - - - - - - - (181) (181)
Total transactions with owners - - 8 31 - - - - (163) (124)
At 1 January 2022 1,503 (192) 474 225 1,036 1,427 1,671 605 15,990 22,739
Net profit for the period - - - - - - - - 307 307
Retranslation of overseas subsidiaries - - - - - - - 23 - 23
Forward contracts - - - 261 - - - - - 261
Total comprehensive income for period attributable to equity shareholders - - - 261 - - - 23 307 591
Share based payments - - - - - - - - 13 13
Exercise of share options - 41 173 - - - - - - 214
Reclassified to cost of inventory - - - (168) - - - - - (168)
Dividends paid - - - - - - - - (354) (354)
Total transactions with owners - 41 173 (168) - - - - (341) (295)
At 30 June 2022 1,503 (151) 647 318 1,036 1,427 1,671 628 15,956 23,035
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the 6 months ended 30 June 2022
At 30 June At 30 June At 31
2022 2021 December
2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Cash flows from operating activities
Profit for the period 307 1,602 3,826
Adjustments:
Depreciation of property, plant and equipment 78 65 230
Amortisation of intangible fixed assets - 1 30
Contributions to defined benefit pension schemes (225) (218) (550)
Finance costs 115 96 207
Tax expense - 305 906
Share based payments 13 15 33
Net cash flow from operating activities before movements in working capital 288 1,866 4,682
Change in inventories (513) (732) (3,552)
Change in trade and other receivables 4,178 1,438 (272)
Change in trade and other payables (5,283) (913) 1,381
Cash flows from operations (1,330) 1,659 2,239
Interest paid (57) (28) (80)
Tax paid (51) - 31
Net cash flow from operating activities (1,438) 1,631 2,190
Cash flows from investing activities
Purchase of intangible fixed assets - (3) (3)
Purchase of property, plant and equipment (2,307) (3,158) (3,386)
Sale of property, plant and equipment - - 5
Net cash flow from investing activities (2,307) (3,161) (3,384)
Cash flows from financing activities
New loans 2,075 1,425 1,550
Loan repayments (70) (44) (87)
Finance lease repayments (37) (65) (199)
Movement in invoice financing (1,244) 93 480
Exercise of share options 214 197 207
Dividends paid (354) (291) (472)
Net cash flow from financing activities 584 1,315 1,479
Net change in cash and cash equivalents (3,161) (215) 285
Cash and cash equivalents at beginning of period 6,367 6,076 6,076
Effect of foreign exchange rate changes 23 (11) 6
Cash and cash equivalents at end of period 3,229 5,850 6,367
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 2022 (including
the comparatives for the period ended 30 June 2021 and the year ended 31
December 2021) were approved by the Board of Directors on 15 September 2022.
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 2021,
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 2021 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 2022 is based on
the actuarial valuation under IAS19 at 31 December 2021 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 2022.
Exceptional costs include redundancy, termination and professional costs
relating to the consolidation of operations of the Group.
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 6 months Year
ended ended ended 31 December
30 June 2022 30 June 2021 2021
£'000 £'000 £'000
Profit for the period 307 1,602 3,826
Number Number Number
Weighted average shares in issue used for basic earnings per share 5,323,089 5,133,189 5,187,776
Weighted average dilutive shares under option 160,461 272,778 267,988
Average number of shares used for diluted earnings per share 5,483,550 5,405,967 5,455,764
Pence Pence Pence
Basic earnings per share 5.8 31.2 73.8
Diluted earnings per share 5.6 29.6 70.1
This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014 (as amended), which forms part of domestic UK law
pursuant to the European Union (Withdrawal) Act 2018. Upon publication of this
announcement via a Regulatory Information Service, this inside information is
now considered to be in the public domain.
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.
(#_ftnref1)
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