TIDMTND
RNS Number : 4145T
Tandem Group PLC
25 March 2021
TANDEM GROUP PLC
PRELIMINARY RESULTS FOR THE YEARED 31 DECEMBER 2020
The Board of Tandem Group plc (AIM: TND), designers, developers,
distributors and retailers of sports, leisure and mobility
equipment, announces its results for the year ended 31 December
2020.
Highlights
Ø Revenue decreased approximately 4.6% to GBP37,056,000 (2019 -
GBP38,837,000)
Ø Gross profit increased to GBP12,192,000 (2019 -
GBP11,788,000)
Ø Increase in operating profit before exceptional items to
GBP4,095,000 (2019 - GBP3,033,000)
Ø Profit before tax after non-underlying items was GBP4,004,000
(2019 - GBP2,507,000)
Ø Net profit for the period was GBP3,458,000 (2019 -
GBP2,034,000)
Ø Basic earnings per share 68.5p (2019 - 40.5p)
Ø Net assets increased to GBP16,608,000 (2019 -
GBP14,311,000)
Ø Cash and cash equivalents as at 31 December 2020 of
GBP6,076,000 (2019 - GBP5,037,000)
Ø Net cash as at 31 December 2020 of GBP3,779,000 (2019 -
GBP1,846,000)
Chairman's statement
Introduction
I am pleased to present the results for the year ended 31
December 2020. Despite a reduction in revenue, profitability
increased significantly and it was a further year of development
for the Group.
Results
Group revenue for the year ended 31 December 2020 was
GBP37,056,000 compared to GBP38,837,000 in the year ended 31
December 2019, a reduction of 4.6%.
In the first half of the year revenue increased by approximately
6% as a result of strong growth in cycling and sales of outdoor
products, partially offset by cautious national retailer FOB (where
product is purchased in full containers and shipped direct from the
country of origin) wheeled toy buying.
In the second half of the year revenue in the Summer period and
to the end of Quarter 3 was behind the prior year due to the
ongoing cautious national retailer FOB buying and stock
availability. However, Quarter 4 revenue was approximately 6% ahead
of the prior year which recovered some of the reduction in Quarter
3.
In our character licensed wheeled toy business Peppa Pig,
Batman, Frozen, Paw Patrol and Spiderman all made a significant
contribution to revenue.
In our own branded ranges Hedstrom, Wired, Kickmaster and
Stunted made solid contributions.
Our Ben Sayers golf brand had a particularly successful year
with revenue more than double the prior year. The quality and value
proposition offered from the range enabled us to benefit once
consumers took advantage of golf courses reopening in May 2020.
The impact of COVID-19 led to a material change in the bicycle
market. Consumers were keen to cycle which was very positive for
the business. From Quarter 2 onwards, revenues were at exceptional
levels with significant growth with both independent bicycle
dealers (IBD) and national retailer customers.
Stock availability, although slower than we would have hoped
for, improved towards the end of the year to enable a strong finish
to 2020 for all parts of the cycling businesses from the flagship
Dawes and Claud Butler ranges through to our national retailer
brands, Falcon, Boss, Elswick, Townsend and Zombie.
The continued growth in our lightweight Squish junior bikes
range was particularly pleasing; we increased market share and that
part of the business was ahead of the same period in the prior
year.
The ebikes and escooter ranges continued to grow significantly
in Quarter 3 and Quarter 4, utilising our own bicycle brands Dawes
and Falcon for ebikes and Li-Fe and Wired for escooters.
Our Expressco Direct group of online businesses significantly
increased turnover and profitability, with growth from many of our
outdoor and indoor product ranges.
In the Spring and Summer months our outdoor living, garden
storage and outdoor play ranges were ahead of the prior year. From
Autumn onwards, our ranges of small domestic appliances and
household products performed well.
Group operating profit before exceptionals, finance costs and
taxation was GBP4,095,000 for the year ended 31 December 2020
compared to GBP3,033,000 for the year ended 31 December 2019. This
represented an increase of 35% for the second consecutive year.
Cash and cash equivalents increased to GBP6,076,000 at 31
December 2020 compared to GBP5,037,000 at 31 December 2019. The
overall net cash position improved from GBP1,846,000 at the end of
2019 to GBP3,779,000 at the end of 2020. This was the fifth
consecutive year of increased net cash.
Net assets also increased during the year from GBP14,311,000 at
31 December 2019 to GBP16,608,000 at 31 December 2020.
Further details of operational activities can be found in the
Strategic Review.
Dividend
It is the Board's view that following a further strong year
there is capacity to again increase the dividend.
We are therefore proposing to pay a final ordinary dividend of
5.50 pence per share (year ended 31 December 2019 - 5.04 pence per
share including a special dividend of 2.00 pence per share).
With the addition of the interim dividend of 3.12 pence per
share (year ended 31 December 2019 - 1.56 pence per share), this is
a total dividend of 8.62 pence per share for the year. This
compared to 6.60 pence per share in the year ended 31 December 2019
which included a special dividend of 2.00 pence per share.
As in previous years it is the Board's intention to maintain the
progressive dividend as trading results and funds permit.
Subject to shareholder approval at the Annual General Meeting to
be held on 24 June 2021, the final dividend will be paid on or
around 1 July 2021 to shareholders on the share register as at 14
May 2021. The ex-dividend date will be 13 May 2021.
In accordance with the provision that in any calendar year
should dividend payments exceed pension deficit contributions, an
additional contribution, equal to the excess, is paid into the
scheme, an additional payment of approximately GBP100,000 will be
paid into the Tandem Group Pension Plan.
Employees
In a very challenging year the Board thanks all staff for their
efforts and contribution to the profitability of the businesses in
2020. Our teams remain committed, loyal and hard working and
deserve great credit.
Outlook
We are optimistic about the outlook for 2021. As we reported in
February, we are pleased with the encouraging start to 2021 with
year to date revenue in the 11 weeks to 21 March 2021 approximately
90% ahead of the same period last year, despite a number of
pressures facing the Group.
COVID-19 continues to have an impact on the supply chain and on
our ability to travel overseas. We are being hindered in our
ability to identify and source new products as efficiently as
before and to exhibit our products at the various fairs and shows
that we would normally attend. As we have previously reported both
the Hong Kong and London toy fairs were cancelled in 2021 and the
Nuremburg fair provisionally deferred until Summer.
The freight issues which we reported on in February are showing
signs of improvement. There is now more capacity in the system to
fulfil demand, ports are reporting being less congested and
consequently container costs are reducing. We have continued to
import products during this period to ensure stock availability
although in some cases, due to these costs, we have chosen not to.
We are, however, still paying much higher shipping rates than we
were paying last year but we believe that rates will settle further
in forthcoming months. Clearly this has and will continue to have
an impact on margin as we are not able to pass all these costs on
to our customers albeit we are maximising the opportunities to
mitigate the situation.
Lead times are becoming an increasingly prevalent issue,
particularly with regard to bicycles due to global demand for
components and we are therefore committing to purchases much
further into the future.
The US dollar is currently weaker than previously which is a
positive although Far East costs are under great pressure due to
component and raw material price increases, global demand and the
adverse relationship between the US dollar and Chinese
renminbi.
Notwithstanding these issues the forward order book is
substantially greater than it was at the same time last year, so we
have reason to look forward with some optimism.
We have signed a number of new licences for 2021 and beyond,
including Brandelised Banksy's Graffiti, Baby Shark, CoComelon, Hey
Duggee and Kindi Kids. We believe each of these properties has the
potential to make a solid contribution to the business and initial
feedback from retailers is encouraging. There is a strong
resurgence in Barbie and our classic licences including Batman,
Frozen, Paw Patrol, Peppa Pig and Spiderman continue to perform
well.
Our 2021 range of bicycles has been well received by customers
and the demand for bicycles is showing no sign of abatement. We
have now presold nearly all Squish bicycles for 2021 with an order
book well into 2022 and demand for ebikes is strong. We are
investing more into our cycling business this year with additional
recruitment in the digital marketing area and the full redesign of
all bicycle websites underway. As part of this redesign we will be
enabling 'click and collect' functionality for bicycle purchases
which will be fulfilled by participating independent bicycle
retailers.
We have expanded our Ben Sayers golf range to cater for a wider
range of golfers and we believe that this strategy will be
successful, once golf courses reopen again, in light of the
increased popularity in golf over the last year.
In our online businesses our focus remains on both existing
profitable ranges and being opportunistic to take advantage of new
products that we identify.
The full redesign of our online websites towards the end of 2020
is paying dividends with revenues from Garden Comforts by Garden
& Camping (www.garden-camping.com) and At Home Comforts by Jack
Stonehouse (www.jackstonehouse.com) in particular delivering double
digit revenue growth in 2021 year to date and website visitors well
ahead of the prior year.
We recently announced the acquisition of freehold land next to
our existing Birmingham building. The construction of a new
warehousing and distribution facility will provide us with the
springboard for future growth and, in particular, will help us to
further grow domestic business.
We remain mindful of macro-economic uncertainties and the
challenges that we have highlighted but with an excellent start to
2021 and a very strong order book we expect to achieve turnover
growth and we continue to be confident that we will deliver another
year of profitability to our shareholders.
S J Grant
Chairman
25 March 2021
Strategic report
Operating and Financial Review
Revenue
Group revenue for the year ended 31 December 2020 was
GBP37,056,000 compared to GBP38,837,000 in the prior year.
Increased domestic B2B and B2C business across our sports, leisure,
toy and bicycle ranges helped to partly offset a reduction in FOB
revenues.
Gross profit
Gross profit of GBP11,788,000 in 2019 increased by 3.4% to
GBP12,192,000 in 2020.
The gross profit margin percentage increased from 30.4% to
32.9%. This reflected the strong domestic demand for products
across the ranges and was achieved by controlling supplier cost
prices, re-sourcing product where necessary, discontinuing low
margin product lines and introducing new, more profitable products.
There was also very little discounting necessary during the
year.
Operating expenses
Group operating expenses decreased by 7.5% to GBP8,097,000 in
the year (year ended 31 December 2019 - GBP8,755,000). This was
driven by a reduction in travel, exhibition costs and employment
expenses. In addition, there were reduced third party storage costs
incurred as stock holdings were lower.
Operating profit
Operating profit before exceptional costs was GBP4,095,000 for
the year ended 31 December 2020 compared to GBP3,033,000 in the
prior year.
Exceptional costs and Non-underlying items
Exceptional costs and non-underlying items are material items
which have arisen from unusual non-recurring or non-trading
events.
There were no exceptional costs incurred in the year to 31
December 2020 (year ended 31 December 2019 - GBP29,000).
Other non-underlying items comprised:
-- a fair value adjustment for foreign currency derivative
contracts under IFRS9 of GBP106,000 credit (year ended 31 December
2019 - charge of GBP160,000);
-- pension finance costs under IAS19 of GBP132,000 (year ended
31 December 2019 - GBP155,000); and
-- a deferred tax charge of GBP143,000 (year ended 31 December
2019 - GBP48,000) in respect of pension schemes.
Finance costs
Total net finance costs decreased to GBP91,000 in the year ended
31 December 2020 compared to GBP497,000 in the year ended 31
December 2019.
The Group adopted hedge accounting from 1 January 2020 and, as
such, gains and losses designated as hedges are now reflected in
other comprehensive income rather than in the Consolidated income
statement. In accordance with IFRS9, there was a fair value credit
of GBP106,000 in respect of derivative foreign exchange contracts
entered into prior to us adopting a formal hedging policy which
compared to a charge of GBP160,000 in the prior year.
There was also a significant reduction in interest payable on
bank loans, overdrafts, hire purchase and invoice finance
facilities from GBP149,000 in the prior year to GBP26,000 in
2020.
Interest payable on lease arrangements was GBP39,000 compared to
GBP33,000 in 2019.
Finance costs in respect of the pension schemes provided in line
with IAS19 were GBP132,000 compared to GBP155,000 for the year
ended 31 December 2019.
Taxation
The tax expense for the year ended 31 December 2020 was
GBP546,000 compared to GBP473,000 in the prior year.
The current tax credit, which comprised corporation tax from the
overseas Hong Kong operation and a refund provision for UK research
and development, was GBP98,000 (year ended 31 December 2019 -
charge of GBP604,000). This reduction reflects the increase in
domestic business which enables the brought forward tax losses to
be utilised.
There was a deferred tax charge of GBP644,000 compared to a
credit of GBP131,000 in the prior year as tax losses were
utilised.
Net profit
Net profit for the year ended 31 December 2020 after
non-underlying items, finance costs and taxation was GBP3,458,000
compared to GBP2,034,000 for the year ended 31 December 2019.
Capital expenditure
Total capital expenditure incurred during the year was GBP72,000
excluding the required adjustment of GBP92,000 with respect to
IFRS16 (year ended 31 December 2019 - GBP63,000 excluding
GBP250,000 with respect to IFRS16).
Cash flows, working capital and net cash
Net cash inflow from operating activities before movements in
working capital for the year ended 31 December 2020 was
GBP3,986,000 compared to GBP2,843,000 in the year ended 31 December
2019.
Cash generated from operations was GBP3,100,000 compared to
GBP2,329,000 last year.
Net cash outflows from investing activities were GBP49,000 in
2020 against GBP70,000 in the previous year.
There was a net cash outflow from financing activities of
GBP1,361,000 in 2020 which compared to GBP1,773,000 in 2019.
As a result of these movements the closing cash position at 31
December 2020 was GBP6,076,000 compared to GBP5,037,000 at 31
December 2019.
Net cash, comprising cash and cash equivalents less invoice
financing liabilities and borrowings, was GBP3,779,000 at 31
December 2020 compared to GBP1,846,000 at the end of the previous
year.
Dividends
A final dividend of 5.50 pence per share will be paid, subject
to shareholder approval, compared to 5.04 pence per share for the
year ended 31 December 2019. The prior year included a special
dividend of 2.00 pence per share.
Total dividends paid and proposed for the year ended 31 December
2020 of 8.62 pence per share have increased by over 30%. As the
total dividend will exceed the deficit repair contributions paid to
the Tandem Group Pension Plan, an additional contribution, equal to
the excess of approximately GBP100,000, is expected to be paid into
the scheme.
The dividend cover ratio was 7.9 (year ended 31 December 2019 -
6.1).
As we have previously stated, it continues to be the Group's
policy to progressively increase the dividend payment to
shareholders where trading performance permits.
Earnings per share
Basic earnings per share was 68.5 pence per share for the year
ended 31 December 2020 compared to 40.5 pence per share in the year
ended 31 December 2019. Diluted earnings per share was 64.7 pence
per share compared to 39.6 pence per share in the prior year.
Product range review
B2B
Our B2B business comprises character licensed products which are
mostly wheeled toys, own brand sports and leisure products and
bicycles, sold to both independent and national retailers.
Industry data reported that the toy market showed growth of 5%
in 2020. In our character licensed wheeled toy business we were
impacted by two significant retail accounts who adopted a cautious
FOB buying strategy. This had a major impact on turnover for the
year.
Despite this, our classic licences including Peppa Pig, Batman,
Frozen, Paw Patrol, Spiderman and Thomas all contributed to
licensed revenue.
LOL Surprise and Disney Princess also made valuable
contributions.
Our range of stunt scooters under the Stunted brand and our
Kickmaster football training products were both ahead of the prior
year.
Although FOB revenues for Hedstrom outdoor play products were
behind the prior year, domestic revenues increased
significantly.
uMoVe scooters were ahead of the prior year and Wired escooters
made a good contribution to revenue from a standing start.
Ben Sayers, our golf brand, had a very strong year with revenue
more than doubling over the prior year.
Revenue from our three IBD brands Claud Butler, Dawes and Squish
increased to IBD customers. We were impeded by lack of stock
availability which improved towards the end of the year to enable a
strong finish to 2020.
There was also particularly strong growth from national retailer
brand Falcon for adult and junior bike and our Boss mountain bike
ranges. Our other brands including Elswick for heritage, Townsend
for junior and Zombie for BMX also contributed to the year.
Our ranges of ebikes and escooters continued to grow
significantly, particularly in the second half of the year,
utilising our bicycle brands Dawes and Falcon for ebikes and Li-Fe
and Wired for escooters.
B2C
Our Expressco Direct group of online businesses significantly
increased turnover and profitability, with growth in 2020 from many
of our outdoor and indoor product ranges.
Our outdoor living, garden storage and outdoor play ranges were
well ahead of the prior year. Sales of parasols and trampolines
were especially strong during the Summer months.
From Autumn onwards, our ranges of small domestic appliances
including kitchen products and household furniture ranges performed
well.
It was a more challenging year for mobility scooters as the
COVID-19 lockdown impacted on this demographic. However, sales of
rise and recline chairs were well ahead of the previous year.
As soon as golf courses reopened our electric golf trolley sales
recovered and finished ahead of 2019.
Property and IT
A valuation of the Castle Bromwich property was carried out by
CBRE Ltd in October 2020 in accordance with the RICS Valuation -
Global Standards (incorporating the International Valuation
Standards) and the UK national supplement (the "Red Book"). The
valuation showed a movement in gross carrying amount of
GBP1,050,000 (GBP1,141,000 after depreciation adjustment) which
increased the total valuation of the property to GBP4,200,000. The
uplift in the valuation is reflected through other comprehensive
income in the year.
In addition, a further GBP10,000 of costs have been capitalised
with respect to the acquisition of the freehold land adjacent to
our existing site in Birmingham, as announced on 11 March 2021.
We expect to complete on this transaction in April 2021 and
whilst we continue with our preparations and obtain formal planning
consent, we are finalising a short-term lease with the vendor,
Flogas Britain Ltd, who will remain as a tenant on the site until
30 June 2021, generating a rental income of GBP48,500. From 1 July
2021 we are planning to enter into a 10-year lease at a rent of
GBP44,500 per annum with Flogas Britain Ltd to occupy approximately
0.5 acres of the site, surplus to our development requirements.
Following completion of the land acquisition, as we recently
announced, we anticipate the construction of a new warehousing and
distribution facility will be completed by June 2022. The new
building will more than double existing warehouse capacity in
Birmingham to approximately 160,000 square feet. Aside from the
financial returns of undertaking the project, there are significant
commercial and strategic benefits which we believe will enhance the
Group and help to maximise long term shareholder value.
We are also in the process of implementing a new Enterprise
Resource Planning and finance system across the Group which is
expected to considerably improve operational and distribution
efficiency. It is our objective to go live on or before 1 January
2022.
Pension schemes
The Group operates two defined benefit pension schemes with both
schemes closed to new members. There are no active members in
either scheme.
The deficit of the schemes at 31 December 2020 increased to
GBP4,157,000 compared to GBP2,480,000 at 31 December 2019. Low bond
yields impacted on the assumptions used to calculate the deficit
with a discount rate of 1.60% (31 December 2019 - 2.30%) used in
the IAS19 calculation.
The pension schemes continue to utilise the Group's cash
resources with payments in respect of the schemes totalling
GBP477,000 (year ended 31 December 2019 - GBP506,000). The total
comprised deficit contributions of GBP336,000 and GBP101,000 in
respect of Tandem and Casket schemes respectively (year ended 31
December 2019 - GBP437,000) and government levies and
administration costs of GBP40,000 (year ended 31 December 2019 -
GBP69,000).
The 2019 triennial valuations for both schemes have been
concluded and recovery plan agreed between Company and trustees for
deficit repair contributions to increase by 5% per annum for the
Tandem scheme and level contributions for the Casket scheme which
is better funded.
The Board remain mindful that the recovery plans for both
schemes exceed the Pension Regulator's reported median length of 7
years. However, this continues to be justifiable on the basis that
the employer covenant is stronger and with respect to the Tandem
scheme there is an agreed provision that in any calendar year
should dividend payments exceed deficit contributions paid to the
scheme, an additional contribution equal to the excess will be
made. As a consequence of the total dividend for 2020 this will
lead to an additional contribution of approximately GBP100,000.
Employees
Whilst we have continued to operate our warehouse and sales
administration functions in a COVID secure environment, from March
2020 onwards most of our employees have been working remotely.
Although challenging, they have adapted to this with great
fortitude which has enabled the Group to function as normally as
possible.
We currently employ 73 people and they remain our most important
asset. We express our gratitude to them for their ongoing hard work
and dedication during a difficult period.
J C Shears
Chief Executive Officer
25 March 2021
Consolidated income statement
31 December 2020 31 December 2019
Before After Before After
non-underlying Non-underlying non-underlying non-underlying Non-underlying non-underlying
items items items items items items
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 37,056 - 37,056 38,837 - 38,837
Cost of sales (24,864) - (24,864) (27,049) - (27,049)
--------------- --------------- --------------- --------------- --------------- ---------------
Gross profit 12,192 - 12,192 11,788 - 11,788
Operating expenses (8,097) - (8,097) (8,755) - (8,755)
--------------- --------------- --------------- --------------- --------------- ---------------
Operating profit
before exceptional
costs 4,095 - 4,095 3,033 - 3,033
Exceptional
costs - - - - (29) (29)
--------------- --------------- --------------- --------------- --------------- ---------------
Operating profit
after exceptional
costs 4,095 - 4,095 3,033 (29) 3,004
Finance costs (65) (26) (91) (182) (315) (497)
--------------- --------------- --------------- --------------- --------------- ---------------
Profit before
taxation 4,030 (26) 4,004 2,851 (344) 2,507
Tax expense (403) (143) (546) (425) (48) (473)
--------------- --------------- --------------- --------------- --------------- ---------------
Net profit for
the year 3,627 (169) 3,458 2,426 (392) 2,034
=============== =============== =============== =============== =============== ===============
Earnings per 3 Pence Pence
share
Basic 68.5 40.5
=============== ===============
Diluted 64.7 39.6
--------------- ---------------
Consolidated statement of
comprehensive income
31 December 31 December
2020 2019
GBP'000 GBP'000
Net profit for the year 3,458 2,034
Other comprehensive income:
Items that will be reclassified subsequently
to profit and loss:
Foreign exchange differences on translation
of foreign operations (28) (24)
Forward foreign exchange contracts (410) -
Items that will not be reclassified subsequently
to profit or loss:
Revaluation of property, plant and 1,141 -
equipment
Actuarial (loss)/gain on pension
schemes (1,982) 65
Movement in pension schemes' deferred
tax provision 474 24
------------ ------------
Other comprehensive (loss)/profit for the
year, net of tax (805) 65
------------ ------------
Total comprehensive income for the year
attributable to equity shareholders 2,653 2,099
============ ============
Consolidated balance sheet
31 December 31 December
2020 2019
GBP'000 GBP'000
Non current assets
Intangible fixed assets 5,481 5,542
Property, plant and equipment 4,624 3,590
Deferred taxation 1,761 1,931
------------ ------------
11,866 11,063
------------ ------------
Current assets
Inventories 4,512 4,709
Trade and other receivables 9,971 5,443
Cash and cash equivalents 6,076 5,037
------------ ------------
20,559 15,189
Total assets 32,425 26,252
------------ ------------
Current liabilities
Trade and other payables (8,952) (5,507)
Borrowings (1,562) (2,394)
Derivative financial liability held at
fair value (410) (106)
Current tax liabilities (1) (657)
------------ ------------
(10,925) (8,664)
Non current liabilities
Borrowings (735) (797)
Pension schemes' deficit (4,157) (2,480)
------------ ------------
(4,892) (3,277)
Total liabilities (15,817) (11,941)
------------ ------------
Net assets 16,608 14,311
============ ============
Equity
Share capital 1,503 1,503
Shares held in treasury (240) (247)
Share premium 315 286
Other reserves 4,323 3,620
Profit and loss account 10,707 9,149
------------ ------------
Total equity 16,608 14,311
============ ============
Consolidated statement of changes in equity
Shares Cash Profit
held flow Capital and
Share in Share hedge Merger redemption Revaluation Translation loss
capital treasury premium reserve reserve reserve reserve reserve account Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2019 1,503 (247) 286 - 1,036 1,427 530 651 7,222 12,408
Net profit
for the year - - - - - - - - 2,034 2,034
Re-translation
of overseas
subsidiaries - - - - - - - (24) - (24)
Net actuarial
gain on
pension
schemes - - - - - - - - 89 89
-------- --------- -------- -------- -------- ----------- ------------ ------------ --------- ---------
Total
comprehensive
income for
the year
attributable
to equity
shareholders - - - - - - - (24) 2,123 2,099
Share based
payments - - - - - - - - 28 28
Dividends
paid - - - - - - - - (224) (224)
-------- --------- -------- -------- -------- ----------- ------------ ------------ --------- ---------
Total
transactions
with owners - - - - - - - - (196) (196)
At 1 January
2020 1,503 (247) 286 - 1,036 1,427 530 627 9,149 14,311
Net profit
for the year - - - - - - - - 3,458 3,458
Re-translation
of overseas
subsidiaries - - - - - - - (28) - (28)
Revaluation
of property - - - - - - 1,141 - - 1,141
Forward
contracts - - - (410) - - - - - (410)
Net actuarial
loss on
pension
schemes - - - - - - - - (1,508) (1,508)
-------- --------- -------- -------- -------- ----------- ------------ ------------ --------- ---------
Total
comprehensive
income for
the year
attributable
to equity
shareholders - - - (410) - - 1,141 (28) 1,950 2,653
Share based
payments - - - - - - - - 19 19
Exercise
of share
options - 7 29 - - - - - - 36
Dividends
paid - - - - - - - - (411) (411)
-------- --------- -------- -------- -------- ----------- ------------ ------------ --------- ---------
Total
transactions
with owners - 7 29 - - - - - (392) (356)
-------- --------- -------- -------- -------- ----------- ------------ ------------ --------- ---------
At 31 December
2020 1,503 (240) 315 (410) 1,036 1,427 1,671 599 10,707 16,608
======== ========= ======== ======== ======== =========== ============ ============ ========= =========
Consolidated cash flow statement
31 December 31 December
2020 2019
GBP'000 GBP'000
Cash flows from operating activities
Net profit for the year 3,458 2,034
Adjustments:
Depreciation of property, plant and equipment 245 203
Amortisation of intangible fixed assets 65 45
Profit on sale of property, plant and equipment (1) -
Contribution to defined benefit pension
plans (437) (437)
Finance costs 91 497
Tax expense 546 473
Share based payments 19 28
------------ ------------
Net cash flow from operating activities
before movements in working capital 3,986 2,843
Change in inventories 197 (459)
Change in trade and other receivables (4,528) (1,046)
Change in trade and other payables 3,445 991
------------ ------------
Cash generated from operations 3,100 2,329
Interest paid (65) (182)
Tax paid (558) (90)
------------ ------------
Net cash flows from operating activities 2,477 2,057
Cash flows from investing activities
Purchases of intangible fixed assets (4) (7)
Purchases of property, plant and equipment (72) (63)
Sale of property, plant and equipment 27 -
------------ ------------
Net cash flows from investing activities (49) (70)
Cash flows from financing activities
Loan repayments (314) (407)
Finance lease repayments (80) 115
Movement in invoice financing (592) (1,257)
Exercise of share options 36 -
Dividends paid (411) (224)
------------ ------------
Net cash flows from financing activities (1,361) (1,773)
------------ ------------
Net change in cash and cash equivalents 1,067 214
Cash and cash equivalents at beginning of
year 5,037 4,847
Effect of foreign exchange rate changes (28) (24)
------------ ------------
Cash and cash equivalents at end of year 6,076 5,037
------------ ------------
Notes to the preliminary results
1. General information
The financial information set out in this preliminary
announcement does not constitute statutory accounts as defined in
section 434 of the Companies Act 2006. The Consolidated income
statement, the Consolidated statement of comprehensive income, the
Consolidated balance sheet at 31 December 2020, the Consolidated
statement of changes in equity, the Consolidated cash flow
statement and the associated notes for the period then ended have
been extracted from the Group's financial statements upon which the
auditor's opinion is unqualified and does not include any statement
under section 498 of the Companies Act 2006. The statutory accounts
for the year ended 31 December 2020 will be delivered to the
Registrar of Companies following the Group's Annual General
Meeting.
2. Basis of preparation
The consolidated financial statements of the Group have been
prepared under the historical cost convention and in accordance
with the International Financial Reporting Standards (IFRS) as
adopted by the UK. The principal accounting policies adopted by the
Group, which remain unchanged except for the adoption of formal
hedge accounting for the first time this year, are set out in the
statutory financial statements for the year ended 31 December
2020.
Non-underlying items
Non-underlying items are material items which arise from unusual
non-recurring or non-trading events. They are disclosed in
aggregate on the Consolidated income statement where in the opinion
of the Directors such disclosure is necessary in order to fairly
present the results for the period. Non-underlying items comprise
exceptional costs of Group restructuring, the finance cost and
deferred tax related to the Group's pension schemes calculated in
accordance with IAS19 and the impact of the movement in respect of
the ineffective proportion of the hedged derivative foreign
exchange contracts.
Key areas of estimation uncertainty
Impairment of goodwill
The annual impairment assessment in respect of goodwill requires
estimates of the value in use of cash generating units to which
goodwill has been allocated to be calculated. As a result,
estimates of future cash flows are required, together with an
appropriate discount factor for the purpose of determining the
present value of those cash flows.
Financial instruments valuation
Forward contracts and options are used to minimise the impact of
foreign exchange fluctuations on the Group. An asset or liability
is recognised representing the fair value of the instruments in
place at the year end. The fair value is calculated using certain
estimates and valuation models by reference to significant inputs
including implied volatilities in foreign currency and historical
movements in foreign currency exchange rates.
Pension scheme valuation
The liabilities in respect of defined benefit pension schemes
are calculated by qualified actuaries and reviewed by the Group,
but are necessarily based on subjective assumptions. The principal
uncertainties relate to the estimation of the discount rate, life
expectancies of scheme members, future investment yields and
general market conditions for factors such as inflation and
interest rates. Profits and losses in relation to changes in
actuarial assumptions are taken directly to reserves and therefore
do not impact on the profitability of the business, but the changes
do impact on net assets.
Inventory provisioning
The Group reviews the net realisable value of and demand for its
inventory on an ongoing basis to ensure recorded inventory is
stated at the lower of cost or net realisable value. Factors that
could impact estimated demand and selling prices are the timing and
success of future technological innovations, competitor actions,
suppliers prices and economic trends. If total inventory losses
differ, the Group's consolidated net income in the year would have
improved or declined, depending upon whether the actual results
were better or worse than expected.
Bad debt provision
At each reporting period, the Directors review outstanding debts
and determine appropriate provision levels. The recovery of certain
debts is dependent on the individual circumstances of customers. At
the year end there are a number of debts which remain outstanding
past their due date, which the Directors believe to be
recoverable.
Intangible asset valuation
In attributing value to intangible assets arising on
acquisition, management has made certain assumptions in terms of
cash flows attributable to intellectual property and customer
relationships. The key assumptions relate to the trading
performance of the acquired business, royalty rates applied in the
royalty relief calculation and discount rates applied to calculate
the present value of future cash flows. The Directors consider the
resulting valuation to be a reasonable approximation as to the
value of the intangibles acquired.
Going Concern
The accounts are prepared on the going concern basis unless it
is inappropriate to presume that the Company and the Group will
continue in business. At the date of signing these accounts, the
worldwide COVID-19 pandemic is ongoing. The Group has continued to
trade throughout and is expected to continue trading throughout any
subsequent restrictions which are imposed.
The Group has significant cash reserves and the Board
continually monitor a rolling cashflow forecast for the business as
a whole. Given the Group's low fixed cost base and the facilities
available to it, the Board therefore considers the Group will
continue to be able to meet its liabilities as they fall due.
On that basis, the Directors are confident that they will be
able to manage the business in such a way that it will continue to
operate and trade for at least 12 months from the date of the
signing of the accounts and have therefore prepared these financial
statements on a going concern basis.
Freehold property revaluation
In ascertaining an accurate estimate of the value of freehold
property, the Directors utilise the latest professional valuation
conducted along with available information on local property value
movements since the valuation date.
Key judgements
Deferred tax assets
In determining the deferred tax asset to be recognised the
Directors carefully review the recoverability of these assets on a
prudent basis and reach a judgement based on the best available
information. Estimates and judgements used in the financial
statements are based on historical experience and other assumptions
that the Directors and management consider reasonable and are
consistent with the Group's latest budgeted forecasts where
applicable. Judgements are based on the information available at
each balance sheet date. Although these estimates are based on the
best information available to the Directors, actual results may
ultimately differ from those estimates.
Pension deficit
In accordance with the winding up provisions of the Trust deeds
the Directors have concluded that the Group may not have a
discretionary right to receive returns of contributions if the
schemes were to be in surplus. Accordingly, and where material, any
excess funding has not been recognised on the balance sheet.
Cash flow hedging
In determining the proportion of forward foreign exchange
contracts that are effective hedges against currency fluctuations,
the Directors produce detailed forward forecasts to carefully
determine the requirements of a particular foreign currency to
match future planned supplier payments.
3. Earnings per share
The calculation of earnings per share is based on the net profit
and ordinary shares in issue during the year as follows:
31 December 31 December
2020 2019
GBP'000 GBP'000
Net profit for the year 3,458 2,034
======================= =======================
Weighted average shares in issue (excluding
shares held in treasury) used for basic earnings
per share 5,048,453 5,026,091
Weighted average dilutive shares under option 296,085 112,889
Average number of shares used for diluted earnings
per share 5,344,538 5,138,980
======================= =======================
Pence Pence
Basic earnings per share 68.5 40.5
======================= =======================
Diluted earnings per share 64.7 39.6
======================= =======================
4. Dividend
The Directors are proposing a final dividend of 5.50 pence per
ordinary share (year ended 31 December 2019 - 5.04 pence per share
which included a special dividend of 2.00 pence per share) payable
to shareholders on the register on 14 May 2021 and will be paid on
or around 1 July 2021.
5. Annual report and accounts and final results presentation
The annual report and accounts will be posted to shareholders
shortly and, along with the final results presentation, will be
available on the Company's website, www.tandemgroup.co.uk .
6. Annual General Meeting
The Annual General Meeting will be held on 24 June 2021. At this
juncture we are hopeful that we will be able to hold a physical
meeting at 35 Tameside Drive, Castle Bromwich, Birmingham, B35 7AG.
However, we will keep shareholders informed as the position becomes
clearer.
For further information contact:
Tandem Group plc
Jim Shears, Chief Executive
David Rock, Company Secretary
Telephone 0121 748 8075
Nominated Adviser
Cairn Financial Advisers LLP
James Caithie
Sandy Jamieson
Telephone 020 7213 0880
This announcement contains inside information for the purposes
of the UK Market Abuse Regulation and the Directors of the Company
are responsible for the release of this announcement.
Forward-Looking Statements
Certain statements made in this announcement are forward-looking
statements. These forward-looking statements are not historical
facts but rather are based on the Company's current expectations,
estimates, and projections about its industry; its beliefs; and
assumptions. Words such as 'anticipates,' 'expects,' 'intends,'
'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions
are intended to identify forward-looking statements. These
statements are not guarantees of future performance and are subject
to known and unknown risks, uncertainties, and other factors, some
of which are beyond the Company's control, are difficult to
predict, and could cause actual results to differ materially from
those expressed or forecasted in the forward-looking statements.
The Company cautions security holders and prospective security
holders not to place undue reliance on these forward-looking
statements, which reflect the view of the Company only as of the
date of this announcement. The forward-looking statements made in
this announcement relate only to events as of the date on which the
statements are made. The Company will not undertake any obligation
to release publicly any revisions or updates to these
forward-looking statements to reflect events, circumstances, or
unanticipated events occurring after the date of this announcement
except as required by law or by any appropriate regulatory
authority.
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END
FR ZZGZFMDLGMZZ
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