22nd Oct 2008 07:00
Tandem Group plc
Chairman's interim statement
Six months ended 31 July 2008
The Group increased profit before tax by 34.6% to £451,000 for the six months ended 31 July 2008, compared to £335,000 in the same period last year. Group revenue decreased by 0.2% from £18,052,000 to £18,020,000. No dividend is proposed.
BICYCLES AND ACCESSORIES
Revenue in our bicycles and accessories businesses of £10,141,000 was 2.9% ahead of last year (2007: £9,859,000). Considering the poor weather and the uncertain economic climate this was an encouraging result. With the increased sales and tight control of margins and overheads, the operating profit increased 7.7% to £605,000 (2007: £562,000).
The Group continues to be a leading supplier of cycles in the UK with its brands including Claud Butler, Dawes, Falcon, Optima, British Eagle and Townsend.
A new range of BMX bikes under the Dirty brand was successfully launched to the trade in September.
SPORTS, LEISURE AND TOYS
Revenue from our sports, leisure and toys businesses was 3.8% down on last year at £7,879,000 (2007: £8,193,000). Operating profit increased by 85.7% to £234,000 (2007: £126,000).
Sales volumes were ahead of last year, but direct deliveries to our customers arranged by our Hong Kong office eliminated certain charges which would have been included in revenue.
Encouraging levels of sales have been achieved from new licences such as Ben 10 and In The Night Garden.
SUMMARY
Continuing firm control of cash flow resulted in finance costs reducing by 45.1% to £95,000 (2007: £173,000).
Cancellation of the parent company's share premium account was completed on 18 August 2008. This enabled the Company to purchase 1,600,000 of its own shares on 20 August 2008. A proforma summarised consolidated balance sheet showing the effects of these transactions is shown on page 9 of this interim report.
It is difficult to accurately forecast future trading in the current economic climate. A large amount of the Group's purchases are paid for in US dollars. The current rate of exchange is approximately 17% below this time last year. Increases in raw material and labour costs in Asia, alongside the additional currency expense, means that we will need to achieve higher prices to maintain our margins.
The Board would like to thank all management and employees for their contribution in increasing the Group's profitability in very difficult times. The established team of management and staff are fully aware of the challenges ahead and are working hard to continue the progress that the Group has made.
Graham Waldron
Chairman
22 October 2008
Tandem Group plc
Unaudited consolidated income statement
Six months ended 31 July 2008
|
Note |
6 months ended 31 July 2008 |
6 months ended 31 July 2007 |
Year ended 31 January 2008 |
|||||||
|
£'000 |
£'000 |
£'000 |
||||||||
|
Revenue |
18,020 |
18,052 |
34,878 |
|||||||
|
Cost of sales |
(12,285) |
(12,586) |
(23,753) |
|||||||
|
Gross profit |
5,735 |
5,466 |
11,125 |
|||||||
|
Distribution expenses |
(3,158) |
(3,091) |
(6,021) |
|||||||
|
Administrative expenses |
(2,031) |
(1,869) |
(3,752) |
|||||||
|
Operating profit |
546 |
506 |
1,352 |
|||||||
|
Finance costs |
(95) |
(173) |
(280) |
|||||||
|
Finance income |
- |
2 |
33 |
|||||||
|
Profit before taxation |
451 |
335 |
1,105 |
|||||||
|
Tax expense |
(46) |
(1) |
- |
|||||||
|
Net profit for the period |
405 |
334 |
1,105 |
|||||||
|
Pence |
Pence |
Pence |
||||||||
|
Earnings per share |
||||||||||
|
Basic |
3 |
1.08 |
0.89 |
2.94 |
||||||
|
Diluted |
3 |
1.06 |
0.89 |
2.91 |
||||||
All figures relate to continuing operations.
Tandem Group plc
Unaudited consolidated balance sheet
Six months ended 31 July 2008
|
Note |
At 31 July 2008 |
At 31 July 2007 |
At 31 January 2008 |
||||||
|
£'000 |
£'000 |
£'000 |
|||||||
|
Non current assets |
|||||||||
|
Goodwill |
2,661 |
2,677 |
2,661 |
||||||
|
Property, plant and equipment |
543 |
522 |
510 |
||||||
|
Deferred taxation |
955 |
1,167 |
970 |
||||||
|
Pension scheme surplus |
308 |
- |
264 |
||||||
|
4,467 |
4,366 |
4,405 |
|||||||
|
Current assets |
|||||||||
|
Inventories |
6,131 |
5,994 |
5,582 |
||||||
|
Trade and other receivables |
7,870 |
7,929 |
5,556 |
||||||
|
Cash and cash equivalents |
2,815 |
2,357 |
2,389 |
||||||
|
16,816 |
16,280 |
13,527 |
|||||||
|
Total assets |
21,283 |
20,646 |
17,932 |
||||||
|
Current liabilities |
|||||||||
|
Trade and other payables |
(9,600) |
(8,829) |
(7,792) |
||||||
|
Financial liabilities |
(3,372) |
(4,194) |
(2,300) |
||||||
|
Current tax liabilities |
(401) |
(352) |
(326) |
||||||
|
(13,373) |
(13,375) |
(10,418) |
|||||||
|
Non current liabilities |
|||||||||
|
Pension scheme deficit |
(502) |
(1,457) |
(546) |
||||||
|
Deferred taxation |
(74) |
- |
(74) |
||||||
|
(576) |
(1,457) |
(620) |
|||||||
|
Total liabilities |
(13,949) |
(14,832) |
(11,038) |
||||||
|
Net assets |
7,334 |
5,814 |
6,894 |
||||||
|
Equity |
|||||||||
|
Share capital |
4 |
1,503 |
1,503 |
1,503 |
|||||
|
Share premium |
4 |
5,258 |
5,258 |
5,258 |
|||||
|
Other reserves |
4 |
2,452 |
2,455 |
2,426 |
|||||
|
Profit and loss account |
4 |
(1,879) |
(3,402) |
(2,293) |
|||||
|
Total equity |
7,334 |
5,814 |
6,894 |
||||||
Tandem Group plc
Unaudited consolidated statement of recognised income and expense
Six months ended 31 July 2008
|
6 months ended 31 July 2008 |
6 months ended 31 July 2007 |
Year ended 31 January 2008 |
||||||
|
£'000 |
£'000 |
£'000 |
||||||
|
Foreign exchange differences on translation of overseas subsidiaries |
26 |
24 |
(5) |
|||||
|
Actuarial gain on pension schemes |
- |
595 |
1,281 |
|||||
|
Movement in pension schemes' deferred tax provision |
- |
(204) |
(562) |
|||||
|
Net income recognised directly in equity |
26 |
415 |
714 |
|||||
|
Net profit for the period |
405 |
334 |
1,105 |
|||||
|
Total recognised income and expense |
431 |
749 |
1,819 |
|||||
Tandem Group plc
Unaudited consolidated cash flow statement
Six months ended 31 July 2008
|
6 months ended 31 July 2008 |
6 months ended 31 July 2007 |
Year ended 31 January 2008 |
|||||
|
£'000 |
£'000 |
£'000 |
|||||
|
Cash flows from operating activities |
|||||||
|
Net profit for the period |
405 |
334 |
1,105 |
||||
|
Adjustments: |
|||||||
|
Depreciation of property, plant and equipment |
96 |
59 |
152 |
||||
|
Goodwill impairment |
- |
- |
16 |
||||
|
(Profit)/loss on sale of property, plant and equipment |
(2) |
1 |
(11) |
||||
|
Finance costs |
95 |
173 |
280 |
||||
|
Finance income |
- |
(2) |
(33) |
||||
|
Tax expense |
46 |
1 |
- |
||||
|
Taxation paid |
(14) |
(18) |
(89) |
||||
|
Share based payments |
9 |
3 |
13 |
||||
|
Fair value adjustments of forward contracts |
- |
78 |
(42) |
||||
|
Net cash inflow from operating activities before movements in working capital |
635 |
629 |
1,391 |
||||
|
(Increase)/decrease in inventories |
(549) |
(318) |
94 |
||||
|
Increase in trade and other receivables |
(2,299) |
(2,511) |
(225) |
||||
|
Increase in trade and other payables |
1,744 |
2,655 |
1,203 |
||||
|
Cash (utilised)/generated from operations |
(469) |
455 |
2,463 |
||||
|
Cash flows from investing activities |
|||||||
|
Purchases of property, plant and equipment |
(133) |
(180) |
(259) |
||||
|
Sale of property, plant and equipment |
6 |
1 |
11 |
||||
|
Net cash used in investing activities |
(127) |
(179) |
(248) |
||||
|
Cash flows from financing activities |
|||||||
|
Increase/(decrease) in invoice financing |
1,072 |
1,659 |
(115) |
||||
|
Interest paid |
(76) |
(154) |
(257) |
||||
|
Net cash from/(used in) financing activities |
996 |
1,505 |
(372) |
||||
|
Net increase in cash and cash equivalents |
400 |
1,781 |
1,843 |
||||
|
Cash and cash equivalents at beginning of period |
2,389 |
551 |
551 |
||||
|
Effect of foreign exchange rate changes |
26 |
25 |
(5) |
||||
|
Cash and cash equivalents at end of period |
2,815 |
2,357 |
2,389 |
Tandem Group plc
Notes to the interim report
Six months ended 31 July 2008
1 general information
Tandem Group plc is a public limited company incorporated and domiciled in the United Kingdom with its shares listed on the Alternative Investment Market of the London Stock Exchange.
The principal activity of the Group is the manufacture and distribution of sports and leisure 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 31 July 2008 (including the comparatives for the periods ended 31 July 2007 and 31 January 2008) were approved by the board of directors on 22 October 2008. 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 240 of the Companies Act 1985. The Group's statutory financial statements for the year ended 31 January 2008, 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 Section 237(2) of the Companies Act 1985.
This interim financial information has been prepared using the accounting policies set out in the Group's 2008 statutory accounts. Copies of the annual statutory accounts and the interim report may be obtained by writing to 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 31 July 2008 is based on the actuarial valuation under IAS19 at 31 January 2008 updated for movements in net defined benefit pension income and contributions paid during the half year period. The deferred tax effect of movements in the net retirement benefit obligation has also been recognised in the half year. A full valuation for IAS19 financial reporting purposes will be carried out for incorporation in the audited financial statements for the year ending 31 January 2009.
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:
|
Bicycles and accessories |
Sports, leisure and toys |
Total |
|||||
|
£'000 |
£'000 |
£'000 |
|||||
|
6 months to 31 July 2008 |
|||||||
|
Revenue |
10,141 |
7,879 |
18,020 |
||||
|
Segment result |
605 |
234 |
839 |
||||
|
Unallocated corporate expenses |
(293) |
||||||
|
Operating profit |
546 |
||||||
|
Finance costs |
(95) |
||||||
|
Finance income |
- |
||||||
|
Result for the period before taxation |
451 |
||||||
|
Tax expense |
(46) |
||||||
|
Net result for the period |
405 |
||||||
|
6 months to 31 July 2007 |
|||||||
|
Revenue |
9,859 |
8,193 |
18,052 |
||||
|
Segment result |
562 |
126 |
688 |
||||
|
Unallocated corporate expenses |
(182) |
||||||
|
Operating profit |
506 |
||||||
|
Finance costs |
(173) |
||||||
|
Finance income |
2 |
||||||
|
Result for the period before taxation |
335 |
||||||
|
Tax expense |
(1) |
||||||
|
Net result for the period |
334 |
||||||
|
Year ended 31 January 2008 |
|||||||
|
Revenue |
18,675 |
16,203 |
34,878 |
||||
|
Segment result |
1,176 |
800 |
1,976 |
||||
|
Unallocated corporate expenses |
(624) |
||||||
|
Operating profit |
1,352 |
||||||
|
Finance costs |
(280) |
||||||
|
Finance income |
33 |
||||||
|
Result for the period before taxation |
1,105 |
||||||
|
Tax income |
- |
||||||
|
Net result for the period |
1,105 |
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 31 July 2008 |
6 months ended 31 July 2007 |
Year ended 31 January 2008 |
|||||
|
£'000 |
£'000 |
£'000 |
|||||
|
Net profit for the period |
405 |
334 |
1,105 |
||||
|
Weighted average shares in issue used for basic earnings per share |
37,584,412 |
37,584,412 |
37,584,412 |
||||
|
Weighted average dilutive shares under option |
3,540,000 |
460,000 |
2,834,726 |
||||
|
Number of shares that would have been issued at fair value |
(2,854,770) |
(402,450) |
(2,415,422) |
||||
|
Average number of shares used for diluted earnings per share |
38,269,642 |
37,641,962 |
38,003,716 |
||||
|
Pence |
Pence |
Pence |
|||||
|
Basic earnings per share |
1.08 |
0.89 |
2.94 |
||||
|
Diluted earnings per share |
1.06 |
0.89 |
2.91 |
4 RECONCILIATION OF MOVEMENTS IN CAPITAL AND RESERVES
|
Share capital |
Share premium account |
Other reserves |
Profit and loss account |
Total |
|||||||
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|||||||
|
At 1 February 2007 |
1,503 |
5,258 |
2,431 |
(4,130) |
5,062 |
||||||
|
Total recognised income and expense |
- |
- |
24 |
725 |
749 |
||||||
|
Share based payments |
- |
- |
- |
3 |
3 |
||||||
|
At 31 July 2007 |
1,503 |
5,258 |
2,455 |
(3,402) |
5,814 |
||||||
|
Total recognised income and expense |
- |
- |
(29) |
1,099 |
1,070 |
||||||
|
Share based payments |
- |
- |
- |
10 |
10 |
||||||
|
At 31 January 2008 |
1,503 |
5,258 |
2,426 |
(2,293) |
6,894 |
||||||
|
Total recognised income and expense |
- |
- |
26 |
405 |
431 |
||||||
|
Share based payments |
- |
- |
- |
9 |
9 |
||||||
|
At 31 July 2008 |
1,503 |
5,258 |
2,452 |
(1,879) |
7,334 |
5 POST BALANCE SHEET EVENTS
The Company obtained shareholder approval to cancel its share premium account at an Extraordinary General Meeting held on 21 July 2008. Implementation of the cancellation was subject to approval of the High Court which was confirmed and effective on 18 August 2008. Following this approval, on 20 August 2008, the Company purchased 1,600,000 of its own shares at a price of 12.7 pence and transferred them into treasury.
A proforma summarised consolidated balance sheet is set out below to illustrate the effects of the share cancellation and the purchase of own shares as if it had occurred at 31 July 2008:
|
PROFORMA SUMMARISED CONSOLIDATED BALANCE SHEET AT 31 JULY 2008 |
|||||||
|
Proforma |
Adjustments |
At 31 July 2008 as reported |
|||||
|
£'000 |
£'000 |
£'000 |
|||||
|
Non current assets |
4,467 |
- |
4,467 |
||||
|
Current assets |
16,613 |
203 |
16,816 |
||||
|
Total assets |
21,080 |
203 |
21,283 |
||||
|
Current liabilities |
(13,373) |
- |
(13,373) |
||||
|
Non current liabilities |
(576) |
- |
(576) |
||||
|
Total liabilities |
(13,949) |
- |
(13,949) |
||||
|
Net assets |
7,131 |
203 |
7,334 |
||||
|
Equity |
|||||||
|
Share capital |
1,503 |
- |
1,503 |
||||
|
Shares held in treasury |
(203) |
203 |
- |
||||
|
Share premium |
- |
5,258 |
5,258 |
||||
|
Other reserves |
2,452 |
- |
2,452 |
||||
|
Profit and loss account |
3,379 |
(5,258) |
(1,879) |
||||
|
Total equity |
7,131 |
203 |
7,334 |
||||
For further information contact:
Tandem Group plc Mervyn Keene 01733 211399
KBC Peel Hunt Ltd (Nominated Adviser and Broker) David Anderson 020 7418 8900
Deon Veltdman
Related Shares:
Tandem Group