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

TandemAnnouncement

30/09/2016 07:07

RNS Number : 2690L
Tandem Group PLC
30 September 2016
Tandem Group plc
Half Yearly Report
for the six months ended
30 June 2016
CHAIRMAN'S STATEMENT
Results
In the six months to 30 June 2016 Group revenue increased by approximately 10% to 17,115,000 compared to 15,585,000 in the six months to 30 June 2015. This incorporated a full period of contribution from the E.S.C (Europe) Ltd acquisition. Gross profit was 5,106,000 compared with 5,052,000 in 2015. 
There was an increase in operating expenses from 4,288,000 to 4,812,000 in the six months to 30 June 2016 principally due to the acquisition.
Operating profit was 500,000 compared to 764,000 in the six months to 30 June 2015. There was an exceptional credit of 206,000 during the period (six months to 30 June 2015 - nil) relating to the release of over-provided deferred consideration from the ESC and Pro Rider acquisitions.
Finance costs were 304,000 in the six months to 30 June 2016. This compared to 420,000 in the prior period. There was a fair value charge for foreign currency derivative contracts of 122,000 compared to a charge of 230,000 in the prior year. This is shown in non-underlying items. Non-underlying items also included finance costs of 70,000 in respect of the pension schemes against 85,000 in the six months to 30 June 2015.
The profit before taxation after non-underlying items for the period was 196,000 compared to 344,000 in the six month period to 30 June 2015.
There was a tax charge of 62,000 during the period compared to a credit of 11,000 in the prior period. The previous period included a tax credit relating to deferred tax on the foreign currency derivative contracts.
Net profit for the period was 134,000 compared to 355,000 in the six months to 30 June 2015.
Basic earnings per share in the six months to 30 June 2016 reduced to 2.82 pence per share compared to 7.60 pence per share in the prior period.
Net assets at 30 June 2016 were 8,048,000 against 6,843,000 at 30 June 2015.
Cashand cash equivalents were 980,000 at 30 June 2016 which compared to an overdraft of 545,000 at 30 June 2015. The timing of creditor payments, improved supplier terms and careful management of inventories helped to improve this position.
Net debt reduced from 6,164,000 at 30 June 2015 to 5,824,000 at 30 June 2016.
Sports, leisure and toys
Revenue from our sports, leisure and toy businesses was 11,037,000 compared to 7,188,000 in the six months to 30 June 2015 which was an increase of 54%. This included the contribution from the ESC business acquired in September 2015. 
Operating profit in the sports, leisure and toys businesses for the period to 30 June 2016 was 562,000 compared to 435,000 in the same period last year. 
As stated in our announcement of 19 April 2016, we have invested heavily in our direct to consumer business to recruit the appropriate personnel, to improve our order processing and fulfilment systems and to redevelop all websites.  Although sales were in line with our expectations thisinvestment has impacted on profitability during the period.
We have been very encouraged by the performance from our toys business which outperformed the overall outdoor toy sector during the period.
In respect of import duty matters previously reported with regards to the ESC business, there were no further developments to report and the position remains under review.
Bicycles, accessories and mobility
Revenue from our bicycles, bicycle accessories and mobility businesses reduced to 6,078,000 compared to 8,397,000 last year. 
A significant national retailer bicycle promotion last year was not repeated this year.
Operating profit was 19,000 compared to 597,000 in the period to 30 June 2015.
Mobility sales and profitability were marginally behind and this was adversely impacted by an HMRC demand for retrospective import duty which we previously reported and which has meant retail prices have been increased to compensate. 
Despite it being obvious that our mobility scooters are designed solely for the use by disabled persons, it is HMRC and the European Commission's view that because a mobility scooter may be purchased by an able bodied person it is subject to a 10 per cent rate of duty. Whilst we believe that this is fundamentally wrong, after taking legal advice we are of the opinion that there is limited chance of a successful and cost effective appeal against the ruling. 
The vendor of the Pro Rider business has settled all liabilities up to the date of inspection in February 2016.
We are aware that HMRC are actively targeting all competitors and we will continue to push to ensure that there is a level playing field in this sector.
Trading update and outlook
Group revenue for the 38 week period to 23 September was approximately 28.8 million compared to 25.1 million in the comparative period last year. In the 12 week period from 30 June to 23 September 2015, Group revenue was approximately 21% ahead of the prior year period. 
 
Sports, leisure and toys
Sports, leisure and toys revenue for the 38 week period to 23 September was approximately 19.8 million compared to 13.3 million last year.
We are encouraged by our prospects for the forthcoming Christmas trading period. 
Batman, Paw Patrol, Shopkins and Finding Dory are performing strongly along with, in particular, our own brand Kickmaster.
By Christmas we expect to have relaunched all our direct to consumer websites, re-engineered our order processing and despatch operation and our employee recruitment programme will be complete. We expect to be in a resilient position to take the business forward in 2017.
Bicycles, accessories and mobility
In the bicycles, accessories and mobility businesses revenue for the 38 weeks to 23 September was approximately 9.0 million compared to 11.8 million in the prior year.
As we have previously reported it has been a particularly challenging period for the UK leisure cycling market. This has further been impacted by significant promotional activity by certain large competitors over recent months and an oversupply of product in the market.
US Dollar
The challenging environment has also been exacerbated by the weakness in sterling following the outcome of the EU Referendum vote. Although we hedge a proportion of our future US dollar requirement, we have had no alternative but to increase prices to mitigate this impact.
Dividend
We are declaring an interim dividend of 1.30p per share (2015 - 1.25p per share) payable on or about 14 November 2016 in line with our progressive dividend policy. The ex-dividend date will be 13 October 2016 and the record date 14 October 2016. 
MPJ Keene
Chairman
30 September 2016
CONDENSED CONSOLIDATED INCOME STATEMENT
For the 6 months ended 30 June 2016
6 months ended 30 June 2016
Unaudited
6 months ended 30 June 2015 Unaudited
Year ended 31 December 2015
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
17,115
-
17,115
15,585
-
15,585
34,385
-
34,385
Cost of sales
(12,009)
-
(12,009)
(10,533)
-
(10,533)
(24,265)
-
(24,265)
Gross profit
5,106
-
5,106
5,052
-
5,052
10,120
-
10,120
Operating expenses
(4,812)
-
(4,812)
(4,288)
-
(4,288)
(8,700)
(140)
(8,840)
Operating profit before exceptional items
294
-
294
764
-
764
1,420
(140)
1,280
Exceptional items
-
206
206
-
-
-
-
7
7
Operating profit after exceptional items
294
206
500
764
-
764
1,420
(133)
1,287
Finance costs
(112)
(192)
(304)
(105)
(315)
(420)
(206)
(36)
(242)
Profit before taxation
182
14
196
659
(315)
344
1,214
(169)
1,045
Tax (expense)/credit
(62)
-
(62)
(35)
46
11
(128)
84
(44)
Net profit for the period
120
14
134
624
(269)
355
1,086
(85)
1,001
Pence
Pence
Pence
Earnings per share
Basic 
3
2.82
7.60
21.31
Diluted
3
2.71
7.30
20.27
All figures relate to continuing operations.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME  
For the 6 months ended 30 June 2016
6 months
ended
30 June 2016
6 months
ended
30 June
2015
Year ended 31 December
2015
Unaudited
Unaudited
Audited
'000
'000
'000
Profit for the period 
134
355
1,001
Other comprehensive income: 
Items that will be reclassified subsequently to profit and loss:
Foreign exchange differences on translation of overseas subsidiaries
139
(12)
51
Items that will not be reclassified subsequently to profit or loss:
Deferred tax credit on share based payments
-
-
75
Actuarial gain on pension schemes
-
-
423
Movement in pension schemes' deferred tax provision
-
-
(223)
Other comprehensive income for the period
139
(12)
326
Total comprehensive income attributable to equity shareholders of Tandem Group plc
273
343
1,327
All figures relate to continuing operations.
CONDENSED CONSOLIDATED BALANCE SHEET
As at 30 June 2016
At 30 June
2016
 At 30 June
2015
At 31
December
2015
Unaudited
Unaudited
Audited
'000
'000
'000
Non current assets
Intangible fixed assets
5,612
4,107
5,612
Property, plant and equipment
3,206
3,352
3,267
Deferred taxation
1,825
2,036
1,825
10,643
9,495
10,704
Current assets
Inventories
8,121
7,983
6,227
Trade and other receivables
7,379
6,306
5,468
Derivative financial asset held at fair value
125
-
246
Cash and cash equivalents
980
-
878
16,605
14,289
12,819
Total assets
27,248
23,784
23,523
Current liabilities
Bank overdraft
-
(545)
-
Trade and other payables
(8,434)
(6,325)
(5,001)
Other liabilities
(4,527)
(4,185)
(4,034)
Derivative financial liability held at fair value
-
(88)
-
Current tax liabilities
(477)
(306)
(559)
(13,438)
(11,449)
(9,594)
Non current liabilities
Other payables
(6)
(38)
(8)
Other liabilities
(2,277)
(1,434)
(2,494)
Pension schemes' deficits
(3,479)
(4,020)
(3,608)
(5,762)
(5,492)
(6,110)
Total liabilities
(19,200)
(16,941)
(15,704)
Net assets
8,048
6,843
7,819
Equity
Share capital
1,503
1,503
1,503
Shares held in treasury
(295)
(328)
(316)
Share premium
175
130
127
Other reserves
3,083
2,881
2,944
Profit and loss account
3,582
2,657
3,561
Total equity
8,048
6,843
7,819
CONDENSED Consolidated statement of changes in equity
As at 30 June 2016
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 2015
1,503
(336)
84
1,036
1,427
430
2,442
6,586
Net profit for the period 
-
-
-
-
-
-
355
355
Retranslation of overseas subsidiaries
-
-
-
-
-
(12)
-
(12)
Total comprehensive income for period attributable to equity shareholders
-
-
-
-
-
(12)
355
343
Share based payments
-
-
-
-
-
-
2
2
Exercise of share options
-
8
46
-
-
-
(29)
25
Dividends paid
-
-
-
-
-
-
(113)
(113)
Total transactions with owners
-
8
46
-
-
(12)
215
257
At 30 June 2015
1,503
(328)
130
1,036
1,427
418
2,657
6,843
Net profit for the period 
-
-
-
-
-
-
646
646
Retranslation of overseas subsidiaries
-
-
-
-
-
63
-
63
Net actuarial gain on pension schemes
-
-
-
-
-
-
200
200
Total comprehensive income for period attributable to equity shareholders
-
-
-
-
-
63
846
909
Share based payments
-
-
-
-
-
-
12
12
Deferral tax on share options
-
-
-
-
-
-
75
75
Exercise of share options
-
12
(3)
-
-
-
29
38
Dividends paid
-
-
-
-
-
-
(58)
(58)
Total transactions with owners
-
12
(3)
-
-
63
904
976
At 1 January 2016
1,503
(316)
127
1,036
1,427
481
3,561
7,819
Net profit for the period
-
-
-
-
-
-
134
134
Retranslation of overseas subsidiaries
-
-
-
-
-
139
-
139
Total comprehensive income for period attributable to equity shareholders
-
-
-
-
-
139
134
273
Share based payments
-
-
-
-
-
-
8
8
Exercise of share options
-
21
48
-
-
-
-
69
Dividends paid
-
-
-
-
-
-
(121)
(121)
Total transactions with owners
-
21
48
-
-
139
21
229
At 30 June 2016
1,503
(295)
175
1,036
1,427
620
3,582
8,048
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the 6 months ended 30 June 2016
At 30 June
2016
 At 30 June
2015
At 31
December
2015
Unaudited
Unaudited
Audited
'000
'000
'000
Cash flows from operating activities
Profit before taxation for the period
196
344
1,045
Adjustments:
Depreciation of property, plant and equipment
98
97
193
Amortisation of intangible fixed assets
-
5
16
Finance costs
304
420
242
Share based payments
8
2
14
Net cash flow from operating activities before movements in working capital
606
868
1,510
Change in inventories
(1,894)
(2,911)
(137)
Change in trade and other receivables
(1,789)
291
1,814
Change in trade and other payables
2,928
471
(1,476)
Cash flows from operations
(149)
(1,281)
1,711
Interest paid
(54)
(78)
(108)
Tax paid
(22)
(23)
(120)
Net cash flow from operating activities
(225)
(1,382)
1,483
Cash flows from investing activities
Acquisition of subsidiary net of cash acquired
-
-
(2,057)
Acquisition of subsidiaries deferred consideration paid
-
-
(290)
Purchase of intangible fixed assets
-
-
(39)
Purchase of property, plant and equipment
(42)
(119)
(132)
Sale of property, plant and equipment
-
-
6
Net cash flow from investing activities
(42)
(119)
(2,512)
Cash flows from financing activities
New loans
-
-
1,500
Loan repayments 
(204)
(54)
(182)
Finance lease repayments
(12)
(11)
(23)
Change in invoice financing 
493
(684)
(1,136)
Exercise of share options
69
25
63
Dividends paid
(121)
(113)
(171)
Net cash flow from financing activities
225
(837)
51
Net change in cash and cash equivalents
(42)
(2,338)
(978)
Cash and cash equivalents at beginning of period
878
1,805
1,805
Effect of foreign exchange rate changes 
144
(12)
51
Cash and cash equivalents/(overdraft) at end of period
980
(545)
878
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, 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 2016 (including the comparatives for the period ended 30June2015 and the year ended 31 December 2015) were approved by the Board of Directors on 30 September 2016. 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 2015, 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 2015 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 2016 is based on the actuarial valuation under IAS19 at 31 December 2015 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 2016.
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, accessories and mobility 
Sports, leisure and toys
Total
'000
'000
'000
6 months ended 30 June 2016
Revenue
6,078
11,037
17,115
Segment result
19
562
581
Unallocated corporate charges
(287)
Operating profit before exceptional items
294
Exceptional items
206
Operating profit after exceptional items
500
Finance costs
(304)
Profit for the period before taxation
196
Tax expense
(62)
Net profit for the period
134
6 months ended 30 June 2015
Revenue
8,397
7,188
15,585
Segment result
597
435
1,032
Unallocated corporate charges
(268)
Operating profit
764
Finance costs
(420)
Profit for the period before taxation
344
Tax credit
11
Net profit for the period
355
Year ended 31 December 2015
Revenue
15,478
18,907
34,385
Segment result before corporate charges
895
1,300
2,195
Corporate charges
(331)
(512)
(843)
Segment result after corporate charges 
564
788
1,352
Unallocated corporate charges
(72)
Operating profit before exceptional items
1,280
Exceptional items
7
Operating profit after exceptional items
1,287
Finance costs
(242)
Profit before taxation
1,045
Tax expense
(44)
Net profit for the year
1,001
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 2016
 6 months
ended
30 June 2015
Year 
ended 31 December
2015
'000
'000
'000
Net profit for the period 
134
355
1,001
Number
Number
Number
Weighted average shares in issue used for basic earnings per share
4,755,880
4,670,908
4,696,752
Weighted average dilutive shares under option
186,527
192,444
241,974
Average number of shares used for diluted earnings per share
4,942,406
4,863,352
4,938,726
Pence
Pence
Pence
Basic earnings per share
2.82
7.60
21.31
Diluted earnings per share
2.71
7.30
20.27
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 (MAR).
Enquiries:
Tandem Group plc
Steve Grant, Chief Executive
Jim Shears, Group Finance Director and Company Secretary
Telephone 0121 748 8075
Nominated Adviser
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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