REG - Tanfield Group PLC - Snorkel Investment Update

TanfieldAnnouncement

15/11/2022 10:00

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RNS Number : 4528G  Tanfield Group PLC  15 November 2022

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
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 (the "UK Proceedings")
against its former solicitors acting for the Company at the time of the
Contemplated Transaction.

 

·    On 18 October 2022, the Company announced that it had fully settled
its claim in relation to the UK Proceedings on a no-fault basis for a total of
£6.9m.

 

 

Highlights

 

·    In the third quarter of 2022, Snorkel's sales increased slightly to
US$42.4m, compared to US$42.2m for the third quarter of 2021.  This resulted
in sales for the first 9 months of 2022 being US$131.0m, compared to US$113.9m
for the same period in 2021, an increase of 15.0%.

 

·    The EBITDA for the third quarter of 2022 was a loss of US$3.1m,
compared to a loss of US$2.8m for the third quarter of 2021.  Despite the 15%
increase in sales for the first 9 months of 2022, which amounted to £17.1m of
additional sales, the EBITDA loss for the first 9 months of 2022 increased to
US$10.9m, compared to US$5.3m for the same period in 2021.

 

 

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.

 

In the third quarter of 2022, Snorkel's sales increased slightly to US$42.4m,
compared to US$42.2m for the third quarter of 2021.  While Snorkel's recovery
from the impact of the global COVID-19 pandemic has slowed in the third
quarter, sales for the first 9 months of 2022 increased to US$131.0m, compared
to US$113.9m for the same period in 2021, an increase of 15.0%.

 

The EBITDA for the third quarter of 2022 was a loss of US$3.1m, compared to a
loss of US$2.8m for the third quarter of 2021.  Despite the 15% increase in
sales for the first 9 months of 2022, which amounted to £17.1m of additional
sales, the EBITDA loss for the first 9 months of 2022 increased to US$10.9m,
compared to US$5.3m for the same period in 2021.  While the Board note that
the gross profit margin has increased slightly in the third quarter of 2022 to
6.9%, compared to 2.8% in the second quarter of 2022, the gross profit margin
for the first 9 months of 2022 is only 4.6%.  The Board continues to believe
that the gross profit margins are not in line with the industry averages and
work to investigate this is ongoing.

 

Below is a summary of the consolidated financial statement for the third
quarter and year to date of 2022, including comparative figures for 2021:

 

 US$000's                                     Q3 2022  YTD 2022      Q3 2021  YTD 2021

 Net sales                                    42,422   130,976       42,203   113,920
 Cost of goods sold                           39,487   125,001       40,120   106,246
 Gross profit                                 2,935    5,975         2,083    7,674
                                              6.9%     4.6%          4.9%     6.7%

 Selling, general & administrative costs      4,945    14,814        4,865    12,722
 Foreign currency exchange (gain)/loss        1,125    2,040         36       248

 EBITDA profit/(loss)                         (3,135)  (10,879)      (2,818)  (5,296)

 Depreciation & non-operating costs           650      1,831         671      1,829

 Net profit/(loss)                            (3,785)  (12,710)      (3,489)  (7,125)

 

 

The Board views the year-to-date increase in sales as a positive
development.

 

 

The Company are now focussing on the US Proceedings which are continuing, with
a jury trial currently expected to take place around the summer of 2023.

 

The Board continue to believe that a positive outcome to the US Proceedings is
possible.  So far as it is necessary, the Company will continue to vigorously
defend its position, 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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