Tanfield Group PLC Snorkel Investment Update (3664J)
August 16 2019 - 10:00AM
UK Regulatory
TIDMTAN
RNS Number : 3664J
Tanfield Group PLC
16 August 2019
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 Tanfield Group Plc and Xtreme
Manufacturing LLC, a company owned by Don Ahern of Ahern Rentals
Inc ("Ahern"), relating to Snorkel, in October 2013.
-- As reported in the 2018 Interim Results, the Board impaired
the Snorkel investment value from GBP36.3m to GBP19.1m.
-- Snorkel's growth trend continues with sales in the second
quarter of 2019 increasing by around 18% to US$60.8m (Q2 2018:
US$51.8m).
-- In November 2018 the Company announced it had received a call
option notice over its interest in Snorkel which the Board rejected
as being invalid. This continues to be the position and discussions
are ongoing.
Business Update
Tanfield is a 49% shareholder in the equity of Snorkel following
the joint venture between Tanfield Group Plc and Xtreme
Manufacturing LLC ("Xtreme"), a Company owned by Don Ahern of Ahern
Rentals Inc ("Ahern"), relating to Snorkel, in October 2013.
Snorkel has provided the latest management account information
for the business. Snorkel's sales in the second quarter of 2019
were US$60.8m (Q2 2018: US$51.8m), an increase of 18% in comparison
to the same period in 2018. The gross profit margin for the period
saw an increase to 13% compared to the average in 2018 of 12.4%.
Following the Q1 2019 results, where the gross profit margin
reduced to 11.4%, the Board were informed by Snorkel that it was
likely the reduced margin would continue. The Board is therefore
happy to see that this does not appear to be the case and welcomes
the increased margin this quarter. However, due to this volatility
the Board is unable to provide an opinion at this juncture on the
gross profit margin expectation for the remainder of 2019. Selling,
general & administrative costs for the quarter have reduced
slightly to US$6.1m compared to US$6.6m in the first quarter of
2019. This is still however, an increase of 17% when compared to
the average quarterly costs in H2 2018 which were US$5.2m. The
operating loss, excluding depreciation, was US$1.8m (Q2 2018:
US$1.0m).
The combined results for the first half of 2019 shows sales of
US$112.5m (2018: US$96.3m), an increase of around 17% with an
average gross profit margin of 12.2% (2018: 12.7%). Selling,
general and administrative costs increased to US$12.7m (2018:
US$11.5m). The operating loss, excluding depreciation dropped to
US$1.1m (2018: US$1.5m) despite the 17% sales increase due to the
reduced gross profit margin and increased to selling, general and
administrative costs.
The Board is of the opinion that growth in sales may continue in
2019 but it is unable to give an opinion on operating
profitability.
Below is a summary of the consolidated operating statement for
the second quarter of 2019, as well as the second quarter of 2018,
along with the half year figures for 2018 and 2019:
US$000's Q2 2019 H1 2019 Q2 2018 Q1 2018
Net sales 60,848 112,452 51,766 96,302
Cost of goods sold 52,950 98,682 45,109 84,033
Gross profit 7,897 13,770 6,658 12,269
-------- -------- -------- --------
13.0% 12.2% 12.9% 12.7%
Selling, general & administrative
costs 6,119 12,718 5,609 11,458
Operating profit/(loss) excl
depreciation 1,779 1,052 1,049 811
Depreciation & non-operating
costs 730 1,577 453 1,515
Net profit/(loss) 1,049 (525) 596 (704)
-------- -------- -------- --------
For further information:
Tanfield Group Plc 020 7220 1666
Daryn Robinson
WH Ireland Limited - Nominated Advisor / Broker
James Joyce / Lydia Zychowska 020 7220 1666
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END
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