REG - Tanfield Group PLC - Snorkel Investment Update

TanfieldAnnouncement

18/11/2021 07:00

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RNS Number : 7354S  Tanfield Group PLC  18 November 2021

The information contained within this announcement is deemed by the Company to
constitute inside information under the Market Abuse Regulation (EU) No.
596/2014. Upon the publication of this announcement via a Regulatory
Information Service ("RIS"), this inside information is now considered to be
in the public domain

 

 

Tanfield Group Plc

("Tanfield" or the "Company")

 

Snorkel Investment Update

 

The Board of Tanfield (the "Board") is pleased to update the market on its
investment in Snorkel International Holdings LLC ("Snorkel"), the aerial work
platform business.

 

Investment Background

 

·    Tanfield is a 49% shareholder in the equity of Snorkel following the
joint venture between the Company and Xtreme Manufacturing LLC ("Xtreme") (the
"Contemplated Transaction"), a company owned by Don Ahern of Ahern Rentals
Inc, relating to Snorkel, in October 2013.

 

·    The Snorkel investment is valued at £19.1m.  The outcome of the US
and UK Proceedings referenced below could have an impact on this valuation.

 

·    On 22 October 2019, the Company announced that it had received a
Summons and Complaint, filed in Nevada (the "US Proceedings") by subsidiaries
of Xtreme, relating to the Contemplated Transaction.

 

·    On 24 October 2019, the Company announced it had become necessary to
issue and serve a claim in the English High Court against Ward Hadaway (the
"UK Proceedings"), the solicitor acting for the Company at the time of the
Contemplated Transaction, in order to fully protect the Company's rights
pending the outcome of the US Proceedings.

 

Highlights

 

·    Snorkel continues to recover from the impact of the global COVID-19
pandemic and has seen sales for the third quarter of 2021 increase by around
61% to US$42.2m compared to the third quarter of 2020 when sales were only
US$26.3m.

 

·    Despite sales increasing by around 61%, the EBITDA loss for the third
quarter of 2021 increased to around US$2.8m compared to the third quarter of
2020 when the EBITDA loss was only US$2.0m.

 

Business Update

 

Tanfield is a 49% shareholder in the equity of Snorkel following the joint
venture between the Company and Xtreme, a company owned by Don Ahern of Ahern
Rentals Inc, relating to Snorkel, in October 2013.

 

Snorkel continues to recover from the impact of the global COVID-19 pandemic,
which has impacted its ability to operate as normal, and has seen sales for
the third quarter of 2021 increase by around 61% to US$42.2m compared to the
third quarter of 2020 when sales were only US$26.3m.

 

Despite sales increasing by around 61%, the EBITDA loss for the third quarter
of 2021 increased to around US$2.8m compared to the third quarter of 2020 when
the EBITDA loss was only US$2.0m.  The Board note that the gross profit
margin has reduced to around 4.9% for the third quarter of 2021, compared to
10.4% for the third quarter of 2020.  The Board are unaware of the reason for
the reduction.  The Board remain of the opinion that gross profit margins
generally do not appear to be in line with the industry averages and work to
investigate this is continuing.

 

Below is a summary of the consolidated operating statement for the third
quarter of 2021 and 2020, as well as the year to date figures for 2021 and
2020:

                                              Q3 2021  YTD 2021      Q3 2020  YTD 2020

 US$000's

 Net sales                                    42,203   113,920       26,275   86,517
 Cost of goods sold                           40,120   106,246       23,535   80,133
 Gross profit                                 2,083    7,674         2,740    6,384
                                              4.9%     6.7%          10.4%    7.4%

 Selling, general & administrative costs      4,865    12,722        4,493    14,728
 Foreign currency exchange (gain)/loss        36       248           215      (164)

 EBITDA profit/(loss)                         (2,818)  (5,296)       (1,968)  (8,180)

 Depreciation & non-operating costs           671      1,829         555      1,662

 Net profit/(loss)                            (3,489)  (7,125)       (2,523)  (9,842)

 

The Board views the continued recovery from the impact of COVID-19 during the
first nine months of 2021 as a positive development and is not aware of any
reason why this improving trend should not continue. The Board therefore
anticipates improved results for the full year of 2021, compared to 2020.

 

The US Proceedings and UK Proceedings are continuing, and the Board still
believe that a positive outcome to either/both proceedings is possible.  So
far as it is necessary, the Company will continue to vigorously defend and
advance its position in both proceedings, whilst continuing to seek advice.

 

Further updates will be provided to Shareholders as and when appropriate.

 

 

For further information:

 

Tanfield Group
Plc
020 7220 1666

Daryn
Robinson
 

 

WH Ireland Limited - Nominated Advisor / Broker

James Joyce / Megan Liddell
                                020 7220 1666

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