2nd Jun 2014 10:29
LONDON (Alliance News) - Tanfield Group PLC Monday said it swung to a pretax profit in 2013 due to positive adjustments in the fair value of its investments, and it outlined a new investment strategy and detailed plans to raise money to acquire and fund new investments in the technology sector.
In a statement, the AIM-listed investment company said it made a GBP7.4 million pretax profit in 2013, compared with a GBP13.4 million pretax loss in 2012. Revenue fell to GBP2.2 million, from GBP3.3 million, while staff costs and other operating expenses fell to GBP3.3 million, from GBP4.6 million. Although the loss relating to intercompany loan forgiveness widened to GBP17.1 million, from GBP9.8 million, Tanfield's results were boosted by a GBP27.0 million gain on the fair value of its investments.
Tanfield, formerly a manufacturing entity until it ran into trouble in the recession, currently has two passive investments. It disposed of most of Smith Electric Vehicles in 2009, followed by the majority stake in the Snorkel division in October 2013, though it currently owns 24% of Smith and 49% of Snorkel. Tanfield's current goal for the two passive investments is to hold on to them until they can return as much value as possible to shareholders. Tanfield values its stake in Snorkel at GBP36.28 million, while Smith, which is likely to seek a full listing on a US national exchange, has a GBP1.28 million carrying value.
In proposals to adopt a broader investment policy, Tanfield said it intends to ring fence its current funds to preserve the "continuity and value" in its existing investments. Therefore, it would raise money to acquire and fund any new investments, adding that it will use a "small proportion" of its shares and cash, excluding existing funds, to acquire or invest in businesses in the technology sector.
With the proposals subject to shareholder approval, Tanfield said it also intends to issue a circular in the near future with details of an open offering to all shareholders of up to GBP2.0 million at the same time as giving notice of its annual general meeting.
"It is with some mixed emotions that I review the past twelve months but with a certain optimism that I look to the future. Those twelve months need to be put into the context of the past five years. The context is that the company went through the most difficult trading period and the deepest recession ever experienced in its market for industrial products," Chairman Jon Pither said in a statement.
"Tanfield Group has gone through a radical structural change from being a strong manufacturing entity to being an investment company. This process of change is a response to the circumstances that the company faced during those five difficult years. We have managed to survive with a reasonable level of shareholder value intact and I am confident that our investments have the potential to provide a future return to shareholders," Pither added.
Tanfield shares were Monday quoted at 17.57 pence, up 8.1%.
By Samuel Agini; [email protected]; @samuelagini
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