REG - Tandem Grp PLC - Half-year Report <Origin Href="QuoteRef">TND.L</Origin>
RNS Number : 1709STandem Group PLC29 September 2017Tandem Group plc
Half Yearly Report
for the six months ended
30 June 2017
CHAIRMAN'S STATEMENT
Results
I am pleased to announce the Group's interim results for the six month period ended 30 June 2017. There was an increase in Group revenue in the six months to 30 June 2017 of approximately 3.1% to 17,651,000 which compared to 17,115,000 in the prior year period.
Gross profit slightly reduced from 5,106,000 to 4,938,000 in the period. As we have previously reported, to compensate for the ongoing pressure on margin from the weak GBP to USD exchange rate we had no alternative but to implement a price increase in the latter part of 2016, negotiated better buying prices with suppliers and where this could not be achieved, re-sourced to new factories.
There was a reduction in operating expenses of 630,000 from 4,812,000 to 4,182,000 in the six months to 30 June 2017 compared to the prior year period. This reflected the reorganisation undertaken in our bicycles division in the second half of 2016 and resultant cost savings.
Operating profit before exceptional costs and credits increased to 756,000 compared to 294,000 in the six months to 30 June 2016.
Principally as a result of the fair value revaluation of our derivative currency contracts, finance costs increased from 304,000 to 337,000 in the six months to 30 June 2017. This fair value charge and finance costs in respect of the pension schemes are shown in non-underlying items.
The profit before taxation after non-underlying items for the period increased to 419,000 in the six month period to 30 June 2017 compared to 196,000 in the prior year period.
The tax charge for the period was 46,000 compared to 62,000 in the prior period. This reflected the tax charge in the Hong Kong business.
Net profit for the period increased to 373,000 compared to 134,000 in the six months to 30 June 2016.
Basic earnings per share in the six months to 30 June 2017 was 7.6 pence per share compared to 2.8 pence per share in the same period in 2016.
Cashand cash equivalents increased from 980,000 at 30 June 2016 to 1,506,000 at 30 June 2017. There were cash inflows from operations of 266,000 which contributed to the improvement.
Net debt reduced from 5,824,000 at 30 June 2016 to 4,292,000 at 30 June 2017 with net assets at 30 June 2017 8,400,000 against 8,048,000 at 30 June 2016.
Sports, leisure and toys
In the six months to 30 June 2017 revenue increased to 12,956,000 compared to 11,037,000 in the prior year period.
There was an increase in operating profit from 562,000 in the period ended 30 June 2016 to 874,000 in the period to 30 June 2017.
The new Cars 3 and Trolls licences performed well during the period and PJ Masks started strongly. Disney Princess, Batman and Paw Patrol also continued to perform ahead of expectation.
In own brands, Stunted and Hedstrom performed particularly well. Revenue from our Airwave gazebo and party tent products exceeded the comparative period last year.
During the period we continued to develop our direct to consumer business with our marketing team focussed on improving brand awareness and the visibility of our products on the various websites from which we sell.
Bicycles and mobility
Revenue in our bicycles, accessories and mobility businesses reduced compared to the previous year period from 6,078,000 to 4,695,000 for the six month period to 30 June 2017. This was anticipated and in line with expectations following the restructuring of the bicycle businesses last year.
Notwithstanding the reduction in revenue, operating profit increased to 125,000 compared to 19,000 in the prior year.
Mobility sales were behind the prior year period, principally due to pricing issues although this has been addressed in the second half of the year.
The new range of Squish lightweight junior bicycles continued to gain momentum and we significantly increased the number of customers stocking the range during the period.
Trading update and outlook
Many retailers have reported that poor weather in July and August has affected sales. We are no exception and this has led to Group revenue for the 38 week period to 22 September being slightly behind the prior year period at approximately 28.2 million compared to 28.8 million in the comparative period last year.
Sports, leisure and toys
Sports, leisure and toys revenue for the 38 week period to 22 September was approximately 21.3 million compared to 19.8 million last year.
A number of national retailer customers are reporting that they are overstocked after the poor summer trading period. It has been reported that the outdoor toy market was 25% behind the prior year in both July and August.
The recent rise in inflation increases our concerns about a general slowing in the economy as we lead up towards the busy Christmas period.
One of our major customers hasfiled for Chapter 11 bankruptcy protection in the US and Canada but this does not apply to its UK operation which continues to trade normally. We are closely monitoring the position.
We are bringing a number of new products to market including an extended range of gazebos, outdoor light up furniture under our "Party Glow" brand and a range of tepees both for children and adults.
Bicycles and mobility
In the bicycles, accessories and mobility businesses revenue for the 38 weeks to 22 September was approximately 6.9 million compared to 9.0 million in the prior year. However, we remain on target with our turnaround plan and expect to make the anticipated cost savings of 1 million that we reported in our trading update in January.
The market remains unquestionably challenging. Our cost base has been adjusted to reflect this following the restructuring of the business. We remain committed to supporting our loyal network of independent bicycle dealers with our Claud Butler, Dawes, British Eagle and Squish brands despite the number of independent bicycle shops continuing to decrease.
We expect to make continued progress with our lightweight children's Squish range of bicycles and are excited by the opportunity to develop the brand further.
There are ongoing opportunities to increase revenue from our corporate brands including Falcon, Elswick, Townsend, Boss and Zombie.
We have re-sourced a number of our own brand Pro Rider mobility scooters which offer better specification at lower prices. In addition, we have added to our distribution portfolio following an agreement with KYMCO. This compliments well with our existing ranges of Pro Rider, Drive Devilbiss, Freerider, Sunrise Medical and TGA Mobility products. Mobility scooter performance has improved in the second half of the year to date.
Dividend
We are declaring an interim dividend of 1.35p per share (2016 - 1.30p per share) payable on or about 13 November 2017 in line with our progressive dividend policy. The ex-dividend date will be 12 October 2017 and the record date 13 October 2017.
MPJ Keene
Chairman
29 September 2017
CONDENSED CONSOLIDATED INCOME STATEMENT
For the 6 months ended 30 June 2017
6 months ended 30 June 2017
Unaudited
6 months ended 30 June 2016 Unaudited
Year ended 31 December 2016
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
2
17,651
-
17,651
17,115
-
17,115
38,414
-
38,414
Cost of sales
(12,713)
-
(12,713)
(12,009)
-
(12,009)
(28,434)
-
(28,434)
Gross profit
4,938
-
4,938
5,106
-
5,106
9,980
-
9,980
Operating expenses
(4,182)
-
(4,182)
(4,812)
-
(4,812)
(8,744)
-
(8,744)
Operating profit before exceptional items
756
-
756
294
-
294
1,236
-
1,236
Exceptional items
-
-
-
-
206
206
-
143
143
Operating profit after exceptional items
756
-
756
294
206
500
1,236
143
1,379
Finance costs
(122)
(215)
(337)
(112)
(192)
(304)
(207)
(258)
(465)
Profit before taxation
634
(215)
419
182
14
196
1,029
(115)
914
Tax (expense)/credit
(46)
-
(46)
(62)
-
(62)
(146)
9
(137)
Net profit for the period
2
588
(215)
373
120
14
134
883
(106)
777
Pence
Pence
Pence
Earnings per share
Basic
3
7.6
2.8
16.0
Diluted
3
7.5
2.7
15.7
All figures relate to continuing operations.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 6 months ended 30 June 2017
6 months
ended
30 June 2017
6 months
ended
30 June
2016
Year ended 31 December
2016
Unaudited
Unaudited
Audited
'000
'000
'000
Profit for the period
373
134
777
Other comprehensive income:
Items that will be reclassified subsequently to profit and loss:
Foreign exchange differences on translation of overseas subsidiaries
(144)
139
322
Items that will not be reclassified subsequently to profit or loss:
Actuarial loss on pension schemes
-
-
(738)
Movement in pension schemes' deferred tax provision
-
-
57
Other comprehensive income for the period
(144)
139
(359)
Total comprehensive income attributable to equity shareholders of Tandem Group plc
229
273
418
All figures relate to continuing operations.
CONDENSED CONSOLIDATED BALANCE SHEET
As at 30 June 2017
At 30 June
2017
At 30 June
2016
At 31
December
2016
Unaudited
Unaudited
Audited
'000
'000
'000
Non current assets
Intangible fixed assets
5,617
5,612
5,625
Property, plant and equipment
3,071
3,206
3,141
Deferred taxation
1,921
1,825
1,918
10,609
10,643
10,684
Current assets
Inventories
7,267
8,121
7,624
Trade and other receivables
6,713
7,379
3,910
Derivative financial asset held at fair value
-
125
117
Cash and cash equivalents
1,506
980
1,101
15,486
16,605
12,752
Total assets
26,095
27,248
23,436
Current liabilities
Trade and other payables
(7,073)
(8,434)
(5,571)
Other liabilities
(3,946)
(4,527)
(3,226)
Derivative financial liability held at fair value
(28)
-
-
Current tax liabilities
(640)
(477)
(133)
(11,687)
(13,438)
(8,930)
Non current liabilities
Other payables
(2)
(6)
(5)
Other liabilities
(1,852)
(2,277)
(2,072)
Pension schemes' deficits
(4,154)
(3,479)
(4,215)
(6,008)
(5,762)
(6,292)
Total liabilities
(17,695)
(19,200)
(15,222)
Net assets
8,400
8,048
8,214
Equity
Share capital
1,503
1,503
1,503
Shares held in treasury
(247)
(295)
(272)
Share premium
286
175
232
Other reserves
3,122
3,083
3,266
Profit and loss account
3,736
3,582
3,485
Total equity
8,400
8,048
8,214
CONDENSED Consolidated statement of changes in equity
As at 30 June 2017
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 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
Net profit for the period
-
-
-
-
-
-
643
643
Retranslation of overseas subsidiaries
-
-
-
-
-
183
-
183
Net actuarial loss on pension schemes
-
-
-
-
-
-
(681)
(681)
Total comprehensive income for period attributable to equity shareholders
-
-
-
-
-
183
(38)
145
Share based payments
-
-
-
-
-
-
5
5
Deferral tax on share options
-
-
-
-
-
-
-
-
Exercise of share options
-
23
57
-
-
-
-
80
Dividends paid
-
-
-
-
-
-
(64)
(64)
Total transactions with owners
-
23
57
-
-
183
(97)
166
At 1 January 2017
1,503
(272)
232
1,036
1,427
803
3,485
8,214
Net profit for the period
-
-
-
-
-
-
373
373
Retranslation of overseas subsidiaries
-
-
-
-
-
(144)
-
(144)
Total comprehensive income for period attributable to equity shareholders
-
-
-
-
-
(144)
373
229
Share based payments
-
-
-
-
-
-
6
6
Exercise of share options
-
25
54
-
-
-
-
79
Dividends paid
-
-
-
-
-
-
(128)
(128)
Total transactions with owners
-
25
54
-
-
(144)
251
186
At 30 June 2017
1,503
(247)
286
1,036
1,427
659
3,736
8,400
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the 6 months ended 30 June 2017
At 30 June
2017
At 30 June
2016
At 31
December
2016
Unaudited
Unaudited
Audited
'000
'000
'000
Cash flows from operating activities
Profit for the period
373
134
777
Adjustments:
Depreciation of property, plant and equipment
78
98
186
Amortisation of intangible fixed assets
8
-
31
Loss/(profit) on sale of property, plant and equipment
1
-
(5)
Waiver of deferred consideration
-
(241)
(651)
Contributions to defined benefit pension schemes
(132)
(130)
(260)
Finance costs
337
304
465
Tax expense
46
62
137
Share based payments
6
8
13
Net cash flow from operating activities before movements in working capital
717
235
693
Change in inventories
356
(1,894)
(1,397)
Change in trade and other receivables
(2,803)
(1,789)
1,558
Change in trade and other payables
1,996
3,299
946
Cash flows from operations
266
(149)
1,800
Interest paid
(122)
(54)
(207)
Tax paid
(40)
(22)
(287)
Net cash flow from operating activities
104
(225)
1,306
Cash flows from investing activities
Acquisition of subsidiaries deferred consideration paid
-
-
(32)
Purchase of intangible fixed assets
-
-
(44)
Purchase of property, plant and equipment
(8)
(42)
(59)
Sale of property, plant and equipment
-
-
5
Net cash flow from investing activities
(8)
(42)
(130)
Cash flows from financing activities
Loan repayments
(204)
(204)
(407)
Finance lease repayments
(13)
(12)
(24)
Change in invoice financing
718
493
(808)
Exercise of share options
78
69
149
Dividends paid
(128)
(121)
(185)
Net cash flow from financing activities
451
225
(1,275)
Net change in cash and cash equivalents
547
(42)
(99)
Cash and cash equivalents at beginning of period
1,101
878
878
Effect of foreign exchange rate changes
(142)
144
322
Cash and cash equivalents at end of period
1,506
980
1,101
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 2017 (including the comparatives for the period ended 30June2016 and the year ended 31 December 2016) were approved by the Board of Directors on 29 September 2017. 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 2016, 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 2016 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 2017 is based on the actuarial valuation under IAS19 at 31 December 2016 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 2017.
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:
Sports, leisure and toys
Bicycles and mobility
Total
'000
'000
'000
6 months ended 30 June 2017
Revenue
12,956
4,695
17,651
Segment result
874
125
999
Unallocated corporate charges
(243)
Operating profit before exceptional items
756
Finance costs
(337)
Profit for the period before taxation
419
Tax expense
(46)
Net profit for the period
373
6 months ended 30 June 2016
Revenue
11,037
6,078
17,115
Segment result
562
19
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
Year ended 31 December 2016
Revenue
26,975
11,439
38,414
Segment result before corporate charges
2,233
124
2,357
Corporate charges
(695)
(363)
(1,058)
Segment result after corporate charges
1,538
(239)
1,299
Unallocated corporate charges
(63)
Operating profit before exceptional items
1,236
Exceptional items
143
Operating profit after exceptional items
1,379
Finance costs
(465)
Profit before taxation
914
Tax expense
(137)
Net profit for the year
777
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 2017
6 months
ended
30 June 2016
Year
ended 31 December
2016
'000
'000
'000
Net profit for the period
373
134
777
Number
Number
Number
Weighted average shares in issue used for basic earnings per share
4,930,187
4,755,880
4,863,496
Weighted average dilutive shares under option
72,775
186,527
84,530
Average number of shares used for diluted earnings per share
5,002,962
4,942,407
4,948,026
Pence
Pence
Pence
Basic earnings per share
7.6
2.8
16.0
Diluted earnings per share
7.5
2.7
15.7
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 Advisers LLP
Tony Rawlinson
James Caithie
Telephone 020 7213 0880
This information is provided by RNSThe company news service from the London Stock ExchangeENDIR LPMLTMBATBFR
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