REG - Tandem Grp PLC - Half Yearly Report

TandemAnnouncement

30/09/2019 07:05

RNS Number : 0370O
Tandem Group PLC
30 September 2019
 


 
  
 
Tandem Group plc
 
Half Yearly Report
for the six months ended
30 June 2019
 
 
 
 
CHAIRMAN'S STATEMENT
 
Results
Trading performance improved in the six months to 30 June 2019 with Group revenue increasing by approximately 27% to £16,029,000 compared to £12,670,000 in the six months to 30 June 2018. 
 
There was an increase in gross profit from £3,779,000 to £4,911,000.  Gross profit margin also increased to 30.6% compared to 29.8% in the prior period.  We continue to work hard to maintain our profit margins.
 
Operating expenses increased from £3,997,000 to £4,331,000 in the six months to 30 June 2019 broadly as a result of the increased revenue.
 
Operating profit was £580,000 compared to an operating loss of £218,000 in the six months to 30 June 2018.  There were no exceptional costs incurred during the period (six months ended 30 June 2018 - £45,000).
 
Finance costs were significantly higher at £210,000 in the six months to 30 June 2019.  This compared to £85,000 in the prior period.  There was a fair value charge for foreign currency derivative contracts of £54,000 compared to a credit of £55,000 in the prior period.  This is shown in non-underlying items.  Non-underlying items also included finance costs of £85,000 in respect of the pension schemes against £60,000 in the six months to 30 June 2018.
 
The profit before taxation after non-underlying items for the period was £370,000 compared to a loss of £348,000 in the six month period to 30 June 2018.
 
There was a tax charge of £215,000 during the period compared to £8,000 in the prior period.  This reflected the increased level of business undertaken from our Far East operations.
 
Net profit for the period was £155,000 compared to a loss £356,000 in the six months to 30 June 2018.
 
Basic earnings per share in the six months to 30 June 2019 was 3.1 pence per share compared to a loss of 7.1 pence per share in the prior period.
 
Net assets at 30 June 2019 increased to £12,446,000 against £10,625,000 at 30 June 2018.
Cash and cash equivalents were £3,740,000 at 30 June 2019 which compared to £957,000 at 30 June 2018.  The timing of creditor payments, utilisation of invoice finance facilities and ongoing careful management of inventories helped to improve this position.
 
There was a 43% reduction in net debt from £3,508,000 at 30 June 2018 to £2,006,000 at 30 June 2019.
 
 
Trading update and outlook
As we reported in our AGM Statement on 27 June 2019, it has been an encouraging year so far for the Group with significant revenue and profitability growth over the prior year period.
 
Our licensed properties including LOL Surprise!, Peppa Pig and Paw Patrol have continued to perform strongly since the half year.  Our new Disney licences, including Spider-Man and, most notably, Toy Story and Frozen, have also performed well.  Disney Princess is ahead of the prior year.  We remain enthusiastic about the cinema release of Frozen 2 in November 2019 which should bring further growth.
As previously reported, the majority of our own brands including Kickmaster, U-Move and Wired are ahead of the prior year.  Hedstrom has continued to perform very well with significant growth since 30 June over the corresponding period.
Our investment into the Ben Sayers brand delivered double digit growth in the first half of the year which has improved further still going into the second half.
Performance from our bicycles brands remains mixed.  Our Squish lightweight junior range continues to be significantly up against the same period in the prior year.  We reported that Squish had been a particular success story at the half year, gaining market share and greater consumer brand awareness.  This has been sustained in the second half and Squish is now recognised as a leading supplier to the lightweight junior cycle market.
Other independent bicycle dealer (IBD) sales from our Dawes and Claud Butler brands continue to be more challenging against a backdrop of declining traditional IBD customers following closures of a number of retailers coupled with falling consumer bicycle demand, particularly in the leisure market.  We remain focussed on maintaining a strong and compelling offering to our IBD customers, despite these significant headwinds.
National retailer bicycle sales, from our Falcon, Boss, Townsend, Elswick and Zombie brands, which were tracking at similar levels to last year as at June 2019, have weakened slightly in the period since due to strong August 2018 comparatives.
Our online and direct-to-consumer activities continue to progress in a number of product areas albeit hampered by reduced gazebo revenue from a major online platform, the mixed August weather and overall economic environment.  As we previously stated, the retail climate has been increasingly challenging for certain product groups. 
Notwithstanding this, we are very pleased with the growth from our flagship website, Garden Comforts (www.garden-camping.com), which has shown significant growth this year.  In addition, it has been a strong summer period for our mobility business, Pro Rider Mobility (www.proridermobility.com).
The improvements that we previously reported ranging from refinements in search engine optimisation and more focussed 'pay per click' advertising to an enriched website/mobile shopping experience and a more responsive customer service function have helped to grow certain channels.
The potential threats on the horizon that we previously alluded to remain in place.  Whilst we shouldn't seek to 'blame' Brexit, we remain cautious as to the impact that it will have, should it materialise soon, with potentially uncertain future import duty rates and with regards to consumer spending which is discretionary for the type of products that we supply. 
Weak sterling, and therefore a correspondingly stronger US dollar, is also likely to effect the cost of future imports.
We previously stated that the longevity and success of most licences is limited and transient.  Whilst we continue to seek new, exciting and profitable properties there is no guarantee of this.
Despite these threats we look forward to the rest of the year with some confidence and expect to deliver a satisfactory result to our stakeholders for the full year.
 
Dividend
Due to the strong performance of the Company in the first half of the year we are declaring an interim dividend of 1.56p per share (2018 - 1.42p per share) payable on or about 11 November 2019.  This represents an increase of 10% over the prior year.  We will continue to review our dividend strategy and pay a progressive dividend where profits permit.  The ex-dividend date will be 10 October 2019 and the record date 11 October 2019.  
 
Board change
We have announced the appointment of Mark Taylor as a non executive director of the Company who joins with effect from 1 October.
 
Mark served as a Partner with Grant Thornton for 19 years and has considerable experience in the areas of corporate transactions, governance as well as audit and financial reporting.
 
In addition, Mark brings a wealth of pensions knowledge and is currently Chairman of the Grant Thornton Pensions Fund.
 
 
Investor presentation
A presentation for investors has been posted on the Company's website and may be found here.  This sets out detailed information about the Group for existing, new and potential investors.  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@tanddemgroup.co.uk.
 
 
Shareholder benefits
We have added 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.
 
 
Mervyn Keene
Chairman
30 September 2019

 
 
 
CONDENSED CONSOLIDATED INCOME STATEMENT
For the 6 months ended 30 June 2019




 


 


 


 


 


 


 




 


 


6 months ended 30 June 2019
Unaudited
 


6 months ended 30 June 2018 Unaudited
 


Year ended 31 December 2018
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


 


16,029


-


16,029


12,670


-


12,670


32,511


-


32,511




 


 


 


 


 


 


 


 


 


 


 




Cost of sales


 



(11,118)




-




(11,118)




(8,891)




-




(8,891)




(22,262)




-




(22,262)





Gross profit


 


4,911


-


4,911


3,779


-


3,779


10,249


-


10,249




 


 


 


 


 


 


 


 


 


 


 




Operating expenses


 



(4,331)




-




(4,331)




(3,997)




-




(3,997)




(8,002)




-




(8,002)





Operating profit/(loss) before exceptional items


 


580


 
-


580


(218)


 
-


(218)


 
2,247


-


2,247




 


 


 


 


 


 


 


 


 


 


 




Exceptional items


 



-




-




-




-




(45)




(45)




-




(218)




(218)





 
Operating profit/(loss) after exceptional items


 


580


-


580


(218)


(45)


(263)


 
2,247


(218)


2,029




Finance costs


 


(71)


(139)


(210)


(80)


(5)


(85)


(166)


9


(157)




 


 



 




 




 




 




 




 




 




 




 





Profit/(loss) before taxation


 


509


 
(139)


370


(298)


 
(50)


(348)


 
2,081


(209)


1,872




 


 


 


 


 


 


 


 


 


 


 




Tax expense


 


(215)


-


(215)


(8)


-


(8)


(195)


(55)


(250)




 


 



 




 




 




 




 




 




 




 




 





 
Net profit/(loss) for the period


 
 



294




 
(139)




155




(306)




 
(50)




(356)




 
1,886




(264)




1,622





 


 


 


 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 


 


 


 




 


 


 


 


Pence


 


 


Pence


 


 


Pence




Earnings/(loss) per share


 


 


 


 


 


 


 


 


 


 




Basic


2


 


 



3.1



 


 



(7.1)



 


 



32.3





 


 


 


 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 


 


 


 




Diluted


2


 


 



3.0



 


 



(7.0)



 


 



32.1




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



  
All figures relate to continuing operations.
 
 
 
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME      
For the 6 months ended 30 June 2019
 
 




 


6 months
ended
30 June 2019


 6 months
ended
30 June
2018


Year ended 31 December
2018




 


Unaudited


Unaudited


Audited




 


£'000


£'000


£'000




 


 


 


 




Profit/(loss) for the period


155


(356)


1,622




 


 


 


 




Other comprehensive income:


 


 


 




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


13


45


102




 


 


 


 




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


 


 


 




Actuarial loss on pension schemes


-


-


(222)




Movement in pension schemes' deferred tax provision



-




- 




37





Other comprehensive income for the period


13


45


(83)




 



 




 




 





Total comprehensive income attributable to equity shareholders of Tandem Group plc



168




(311)




1,539





 


 


 


 




 
 
All figures relate to continuing operations.
 
 
CONDENSED CONSOLIDATED BALANCE SHEET
As at 30 June 2019




 
 
 
 


 


At 30 June
2019


  At 30 June
2018


At 31
December
2018




 


 


Unaudited


Unaudited


Audited




 


 


£'000


£'000


£'000




 


 


 


 


 




 


 


 


 


 




 


 


 


 


 




Non current assets


 


 


 


 




Intangible fixed assets


 


5,574


5,588


5,580




Property, plant and equipment


 


3,458


3,532


3,480




Deferred taxation


 



1,776




1,800




1,776





 


 


10,808


10,920


10,836




 


 


 


 


 




Current assets


 


 


 


 




Inventories


 


5,735


6,164


4,250




Trade and other receivables


 


7,123


5,572


4,397




Derivative financial asset held at fair value


 


-


-


54




Cash and cash equivalents


 



3,740




957




4,847





 


 


16,598


12,693


13,548




 


 


 


 


 




Total assets


 



27,406




23,613




23,384





 


 


 


 


 




Current liabilities


 


 


 


 




Trade and other payables


 


(6,240)


(5,655)


(4,266)




Other liabilities


 


(4,736)


(3,048)


(3,542)




Current tax liabilities


 



(304)




(68)




(143)





 


 


(11,280)


(8,771)


(7,951)




Non current liabilities
Other payables


 


-


(1)


-




Other liabilities


 


(1,010)


(1,417)


(1,198)




Pension schemes' deficits


 



(2,670)




(2,799)




(2,827)





 


 


(3,680)


(4,217)


(4,025)




 


 



 




 




 





Total liabilities


 



(14,960)




(12,988)




(11,976)





 


 


 


 


 




Net assets


 



12,446




10,625




12,408





 


 


 


 


 




 


 


 


 


 




Equity


 


 


 


 




Share capital


 


1,503


1,503


1,503




Shares held in treasury


 


(247)


(247)


(247)




Share premium


 


286


286


286




Other reserves


 


3,657


3,587


3,644




Profit and loss account


 



7,247




5,496




7,222





Total equity


 



12,446




10,625




12,408





 


 


 


 


 




 
CONDENSED Consolidated statement of changes in equity
As at 30 June 2019
 




 


 
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 2018


1,503


(247)


286


1,036


1,427


530


549


5,984


11,068




 


 


 


 


 


 


 


 


 


 




Net loss for the period


-


-


-


-


-


-


-


(356)


(356)




Retranslation of overseas subsidiaries



-




-




-




-




-




-




45




-




45





Total comprehensive income for period attributable to equity shareholders


-


-


-


-


-


-


45


(356)


(311)




Share based payments


-


-


-


-


-


-


-


6


6




Dividends paid



-




-




-




-




-




-




-




(138)




(138)





Total transactions with owners



-




-




-




-




-




-




45




(488)




(443)





At 30 June 2018


1,503


(247)


286


1,036


1,427


530


594


5,496


10,625




 


 


 


 


 


 


 


 


 


 




Net profit for the period


-


-


-


-


-


-


-


1,978


1,978




Retranslation of overseas subsidiaries


-


-


-


-


-


-


57


-


57




Net actuarial loss on pension schemes



-




-




-




-




-




-




-




(185)




(185)





Total comprehensive income for period attributable to equity shareholders


-


-


-


-


-


-


57


1,793


1,850




Share based payments


-


-


-


-


-


-


-


5


5




Dividends paid



-




-




-




-




-




-




-




(72)




(72)





Total transactions with owners



-




-




-




-




-




-




57




1,726




1,783





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





 


 


 


 


 


 


 


 


 


 



 
 
 
 
 
 
 
 
 
 
 
 
 
 



 
 
 
 
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the 6 months ended 30 June 2019
 




 
 
 
 


 


At 30 June
2019


  At 30 June
2018


At 31
December
2018




 


 


Unaudited


Unaudited


Audited




 


 


£'000


£'000


£'000




 




Cash flows from operating activities


 


 


 




Profit/(loss) for the period


155


(356)


1,622




Adjustments:


 


 


 




Depreciation of property, plant and equipment


69


73


139




Amortisation of intangible fixed assets


11


10


41




Profit on sale of property, plant and equipment


(1)


-


(5)




Contributions to defined benefit pension schemes


(219)


(189)


(423)




Finance costs


210


85


157




Tax expense


215


8


250




Share based payments



15




6




11





Net cash flow from operating activities before movements in working capital


455


(363)


1,792




 


 


 


 




Change in inventories


(1,485)


(2,163)


(407)




Change in trade and other receivables


(2,726)


(1,033)


142




Change in trade and other payables


1,977


1,343


111




Cash flows from operations



(1,779)




(2,216)




1,638





Interest paid


(96)


(80)


(166)




Tax paid


(54)


(47)


(153)




Net cash flow from operating activities



(1,929)




(2,343)




1,319





 


 


 


 




Cash flows from investing activities


 


 


 




Purchase of intangible fixed assets


(5)


(1)


(24)




Purchase of property, plant and equipment


(48)


(56)


(70)




Sale of property, plant and equipment


1


1


6




Net cash flow from investing activities



(52)




(56)




(88)





 


 


 


 




Cash flows from financing activities


 


 


 




Loan repayments


(203)


(204)


(408)




Finance lease repayments


(12)


(13)


(27)




Movement in invoice financing


1,221


(190)


303




Dividends paid


(145)


(138)


(210)




Net cash flow from financing activities



861




(545)




(342)





 


 


 


 




Net change in cash and cash equivalents


(1,120)


(2,944)


889




Cash and cash equivalents at beginning of period


4,847


3,856


3,856




Effect of foreign exchange rate changes



13




45




102





Cash and cash equivalents at end of period



3,740




957




4,847





 
 
 
 
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 2019 (including the comparatives for the period ended 30 June 2018 and the year ended 31 December 2018) were approved by the Board of Directors on 30 September 2019.  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 2018, 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 2018 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 2019 is based on the actuarial valuation under IAS19 at 31 December 2018 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 2019.

 
 
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 2019


    6 months
ended
30 June 2018


Year
ended 31 December
2018




 


£'000


£'000


£'000




 


 


 


 




Profit/(loss) for the period



155




(356)




1,622





 


 


 


 




 


Number


Number


Number




Weighted average shares in issue used for basic earnings per share


5,026,091


5,026,091


5,026,091




Weighted average dilutive shares under option


92,590


27,968


25,005




Average number of shares used for diluted earnings per share



5,118,681




5,054,059




5,051,096





 


 


 


 




 


Pence


Pence


Pence




 


 


 


 




Basic earnings/(loss) per share



3.1




(7.1)




32.3





 


 


 


 




Diluted earnings/(loss) per share



3.0




(7.0)




32.1





 
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 & Broker
Cairn Advisers LLP
Tony Rawlinson
James Caithie
Telephone 020 7213 0880
 
 
 
 




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