TIDMTND
RNS Number : 6396Z
Tandem Group PLC
22 September 2020
Tandem Group plc
(the 'Company' or 'Group')
Interim unaudited results for the six months ended 30 June
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 six months to 30 June
2020.
Highlights
- Revenue increased approximately 6% to GBP 16,927,000 (2019 - GBP16,029,000)
- Gross profit increased to GBP 5,556,000 (2019 - GBP4,911,000)
- Increase in operating profit to GBP1,478,000 (2019 - GBP580,000)
- Profit before tax after non-underlying items was GBP1,409,000 (2019 - GBP370,000)
- Net profit for the period was GBP1,141,000 (2019 - GBP155,000)
- Earnings per share 22.7p (2019 - 3.1p)
- Net assets increased to GBP 15,266,000 (2019 - GBP12,446,000)
- Cash and cash equivalents as at 30 June 2020 of GBP6,322,000 (2019 - GBP3,740,000)
Commenting on the results, Chairman Steve Grant stated "these
are a strong set of results despite the COVID-19 challenges faced
by the Group during the period, with an increase in revenue and a
significant increase in profit reflecting the hard work and
dedication of our loyal staff".
CHAIRMAN'S STATEMENT
Results
Group revenue in the six months to 30 June 2020 increased by
approximately 6% to GBP16,927,000 compared to GBP16,029,000 in the
six months to 30 June 2019.
There was an increase in gross profit from GBP4,911,000 to
GBP5,556,000. Gross profit margin also increased to 32.8% compared
to 30.6% in the prior period principally as a result of strong
demand for a number of products in limited supply and the change in
the mix of business from 'FOB', where stock is shipped from the Far
East, to 'domestic', where we warehouse stock in the UK prior to
despatch to customers.
Operating expenses decreased from GBP4,331,000 to GBP4,078,000
in the six months to 30 June 2020 broadly as a result of a
reduction in third party warehousing requirements, reduced travel
expenses and wage costs.
As a result of the above, there was a significant increase in
operating profit to GBP1,478,000 compared to GBP580,000 in the
prior year period.
Finance costs were GBP69,000 in the six months to 30 June 2020.
This compared to GBP210,000 in the prior period. There was a fair
value credit for foreign currency derivative contracts of GBP66,000
reflecting the part reversal of the year end position which
compared to a charge of GBP54,000 in the prior period. This is
shown in non-underlying items. Non-underlying items also included
finance costs of GBP100,000 in respect of the pension schemes
against GBP85,000 in the six months to 30 June 2019.
The profit before taxation after non-underlying items for the
period was GBP1,409,000 compared to GBP370,000 in the six-month
period to 30 June 2019.
There was a tax charge of GBP268,000 during the period compared
to GBP215,000 in the prior period. This reflected the increased
level of profitability.
Net profit for the period to 30 June 2020 was GBP1,141,000
compared to GBP155,000 in the six months to 30 June 2019.
Basic earnings per share in the six months to 30 June 2020 was
22.7 pence per share compared to 3.1 pence per share in the prior
period.
Net assets at 30 June 2020 increased to GBP15,266,000 against
GBP12,446,000 at 30 June 2019.
Cash and cash equivalents were GBP6,322,000 at 30 June 2020
which compared to GBP3,740,000 at 30 June 2019. This reflected the
profit for the period and also the abnormally low inventory and
working capital levels.
Net cash after borrowings was GBP5,289,000 against net debt of
GBP2,006,000 at 30 June 2019.
Trading update and outlook
As we reported in our AGM Statement on 25 June 2020, despite the
many challenges during the period, the revenue and profitability
growth over the prior year period has been encouraging.
Although Frozen 2 and Spider-Man were ahead of the prior year
period, the majority of our licensed ranges were behind. This was
principally as a result of cautious FOB buying, where product is
purchased in full containers and shipped direct from the country of
origin, by national retailers. FOB revenue from other licences
including Peppa Pig, Batman, Disney Princess, Paw Patrol and Thomas
were behind the prior year although domestic business was
significantly ahead.
Despite lower FOB orders, domestic sales of Kickmaster football
training and Hedstrom outdoor play products were also well ahead of
the prior year.
The Ben Sayers brand performed strongly during the second
quarter following the reopening of golf courses in May .
Although the bicycle business was more challenging at the
beginning of the year, the impact of COVID-19 changed the
landscape. From the second quarter onwards, revenues were at
exceptional levels with significant growth with both independent
bicycle dealers (IBD) and national retail customers. Our greatest
challenge has been to remain in stock and to maintain timely supply
to our customers.
Our range of Squish bikes has continued to increase market share
and was well ahead of the same period in the prior year. In
addition, there was a strong demand for our Dawes and Claud Butler
ranges since the period of lockdown began, benefitting many of our
IBD customers.
We are particularly excited about the growth in ebikes and
growth potential of escooters. We continue to invest in both ranges
utilising our own bicycle brands Dawes and Falcon and our scooter
brands Li-Fe and Wired.
We are very pleased to report a strong performance from our B2C
online businesses, with revenue from many of our outdoor product
ranges including spas, trampolines, outdoor play and football goals
ahead of the prior year. The combination of lockdown and
particularly good weather during the spring months had a very
positive impact.
As we previously reported, the ongoing investment into this part
of the Group contributed to increased visitor traffic and revenue
from our own websites. There was an increase in the number of
visitors from both the Garden & Camping (
www.garden-camping.com ) and the At Home Comforts by Jack
Stonehouse ( www.jackstonehouse.com ) websites of 120% and 180%
respectively which resulted in significant revenue growth from
these channels.
The supply chain, particularly for bicycles, remains under
pressure with strong global demand on suppliers and increased lead
times. Nevertheless, stock availability has improved significantly
during September and is expected to continue into the final quarter
in the lead up to Christmas.
National retailers continue to be cautious in their FOB buying
decisions, impacting on Group revenue which fell behind the prior
year during the summer period. Stock availability is also an issue
which is gradually improving. However, margin from domestic
business has remained strong up to and since the half year, coupled
with lower overheads as a result of the COVID-19 impact.
Our outlook for the remainder of 2020 continues to be broadly
positive, although at this stage it remains difficult to
confidently forecast the full year result . Despite the FOB
challenges, domestic demand remains encouraging.
Dividend
Due to the excellent performance of the Company in the first
half of the year we are doubling the interim dividend to 3.12p per
share (2019 - 1.56p per share) payable on 10 November 2020. Our
dividend strategy continues to be reviewed but it remains our
intention to pay a progressive dividend where profits permit. The
ex-dividend date will be 8 October 2020 and the record date 9
October 2020.
Board changes
As previously announced, Mervyn Keene and Andy Bestwick recently
retired from the Board with Steve Grant appointed as Non-Executive
Chairman and Jim Shears as Group CEO.
Subject to the completion of normal regulatory due diligence
checks, we have appointed Juliet Barratt to the Board as a
Non-Executive Director. We believe that Juliet's B2B and B2C
product, sales and marketing experience as well as the achievements
in her business career to date will complement and enhance the
existing skills on the Board.
Investor presentation
The interim results presentation for investors will be posted on
the Company's website. Investors are encouraged to contact the
Company with any questions about the business by telephone, using
the website or by emailing our dedicated shareholder email address
investorrelations@tandemgroup.co.uk .
Shareholder benefits
There is a facility for shareholders to benefit from an
exclusive 10% discount code on our garden, home and leisure
websites www.garden-camping.com , www.athomecomforts.co.uk and
www.proriderleisure.com by entering the discount code "SH10" on the
checkout page.
Steve Grant
Chairman
22 September 2020
CONDENSED CONSOLIDATED INCOME STATEMENT
For the 6 months ended 30 June 2020
6 months ended 30 June 2020 6 months ended 30 June 2019 Unaudited Year ended 31 December 2019
Unaudited Audited
Note Before Non-underlying After Before Non-underlying After Before Non-underlying After
non-underlying items non-underlying non-underlying items non-underlying non-underlying items non-underlying
items GBP'000 items items GBP'000 items items GBP'000 items
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 16,927 - 16,927 16,029 - 16,029 38,837 - 38,837
Cost of
sales (11,371) - (11,371) (11,118) - (11,118) (27,049) - (27,049)
-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
Gross profit 5,556 - 5,556 4,911 - 4,911 11,788 - 11,788
Operating
expenses (4,078) - (4,078) (4,331) - (4,331) (8,755) - (8,755)
-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
Operating
profit
before
exceptional
items 1,478 - 1,478 580 - 580 3,033 - 3,033
Exceptional
items - - - - - - - (29) (29)
-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
Operating
profit
after
exceptional
items 1,478 - 1,478 580 - 580 3,033 (29) 3,004
Finance
costs (35) (34) (69) (71) (139) (210) (182) (315) (497)
Profit
before
taxation 1,443 (34) 1,409 509 (139) 370 2,851 (344) 2,507
Tax expense (268) - (268) (215) - (215) (425) (48) (473)
Net profit
for the
period 1,175 (34) 1,141 294 (139) 155 2,426 (392) 2,034
============== ============== ============== ============== ============== ============== ============== ============== ==============
Pence Pence Pence
Earnings per
share
Basic 2 22.7 3.1 40.5
============== ============== ==============
Diluted 2 22.0 3.0 39.6
============== ============== ==============
All figures relate to continuing operations.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 6 months ended 30 June 2020
6 months
6 months ended
ended 30 June Year ended 31 December
30 June 2020 2019 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Profit for the period 1,141 155 2,034
Other comprehensive income:
Items that will be reclassified subsequently to profit and loss:
Foreign exchange differences on translation of overseas
subsidiaries 50 13 (24)
Items that will not be reclassified subsequently to profit or loss:
Actuarial gain on pension schemes - - 65
Movement in pension schemes' deferred tax provision - - 24
------------- --------- ----------------------
Other comprehensive income for the period 50 13 65
Total comprehensive income attributable to equity shareholders of
Tandem Group plc 1,191 168 2,099
============= ========= ======================
All figures relate to continuing operations.
CONDENSED CONSOLIDATED BALANCE SHEET
As at 30 June 2020
At 31
At 30 June At 30 June December
2020 2019 2019
Unaudited Unaudited Audited
GBP'000 GBP '000 GBP'000
Non current assets
Intangible fixed assets 5,532 5,574 5,542
Property, plant and equipment 3,536 3,458 3,590
Deferred taxation 1,931 1,776 1,931
---------- ----------- ---------
10,999 10,808 11,063
Current assets
Inventories 2,436 5,735 4,709
Trade and other receivables 6,524 7,123 5,443
Cash and cash equivalents 6,322 3,740 5,037
---------- ----------- ---------
15,282 16,598 15,189
Total assets 26,281 27,406 26,252
========== =========== =========
Current liabilities
Trade and other payables (6,751) (6,240) (5,507)
Borrowings (203) (4,736) (2,394)
Derivative financial liability held at fair value (40) - (106)
Current tax liabilities (827) (304) (657)
---------- ----------- ---------
(7,821) (11,280) (8,664)
Non current liabilities
Borrowings (830) (1,010) (797)
Pension schemes' deficits (2,364) (2,670) (2,480)
---------- ----------- ---------
(3,194) (3,680) (3,277)
Total liabilities (11,015) (14,960) (11,941)
========== =========== =========
Net assets 15,266 12,446 14,311
========== =========== =========
Equity
Share capital 1,503 1,503 1,503
Shares held in treasury (245) (247) (247)
Share premium 294 286 286
Other reserves 3,670 3,657 3,620
Profit and loss account 10,044 7,247 9,149
---------- ----------- ---------
Total equity 15,266 12,446 14,311
========== =========== =========
CONDENSED Consolidated statement of changes in equity
As at 30 June 2020
Shares Capital
held Share redemption Revaluation Profit
Share in premium Merger reserve reserve Translation and loss
capital treasury reserve reserve account Total
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
period - - - - - - - 155 155
Retranslation
of
overseas
subsidiaries - - - - - - 13 - 13
--------- --------- -------- --------- ---------- ------------ ----------- ---------- ----------
Total
comprehensive
income for
period
attributable
to equity
shareholders - - - - - - 13 155 168
Share based
payments - - - - - - - 15 15
Dividends paid - - - - - - - (145) (145)
--------- --------- -------- --------- ---------- ------------ ----------- ---------- ----------
Total
transactions
with owners - - - - - - 13 25 38
--------- --------- -------- --------- ---------- ------------ ----------- ---------- ----------
At 30 June 2019 1,503 (247) 286 1,036 1,427 530 664 7,247 12,446
Net profit for
the
period - - - - - - - 1,879 1,879
Retranslation
of
overseas
subsidiaries - - - - - - (37) - (37)
Net actuarial
loss
on pension
schemes - - - - - - - 89 89
--------- --------- -------- --------- ---------- ------------ ----------- ---------- ----------
Total
comprehensive
income for
period
attributable
to equity
shareholders - - - - - - (37) 1,968 1,931
Share based
payments - - - - - - - 13 13
Dividends paid - - - - - - - (79) (79)
--------- --------- -------- --------- ---------- ------------ ----------- ---------- ----------
Total
transactions
with owners - - - - - - (37) 1,902 1,865
--------- --------- -------- --------- ---------- ------------ ----------- ---------- ----------
At 1 January
2020 1,503 (247) 286 1,036 1,427 530 627 9,149 14,311
Net profit for
the
period - - - - - - - 1,141 1,141
Retranslation
of
overseas
subsidiaries - - - - - - 50 - 50
--------- --------- -------- --------- ---------- ------------ ----------- ---------- ----------
Total
comprehensive
income for
period
attributable
to equity
shareholders - - - - - - 50 1,141 1,191
Share based
payments - - - - - - - 9 9
Exercise of
share
options - 2 8 - - - - - 10
Dividends paid - - - - - - - (255) (255)
--------- --------- -------- --------- ---------- ------------ ----------- ---------- ----------
Total
transactions
with owners - 2 8 - - - - 895 955
--------- --------- -------- --------- ---------- ------------ ----------- ---------- ----------
At 30 June 2020 1,503 (245) 294 1,036 1,427 530 677 10,044 15,266
========= ========= ======== ========= ========== ============ =========== ========== ==========
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the 6 months ended 30 June 2020
At 31
At 30 June At 30 June December
2020 2019 2019
Unaudited Unaudited Audited
GBP'000 GBP '000 GBP'000
Cash flows from operating activities
Profit for the period 1,141 155 2,034
Adjustments:
Depreciation of property, plant and
equipment 55 69 203
Amortisation of intangible fixed assets 10 11 45
Loss/(profit) on sale of property,
plant and equipment 3 (1) -
Contributions to defined benefit pension
schemes (218) (219) (437)
Finance costs 69 210 497
Tax expense 268 215 473
Share based payments 9 15 28
------- ------- -------
Net cash flow from operating activities
before movements in working capital 1,337 455 2,843
Change in inventories 2,273 (1,485) (459)
Change in trade and other receivables (1,081) (2,726) (1,046)
Change in trade and other payables 1,244 1,977 991
Cash flows from operations 3,773 (1,779) 2,329
Interest paid (33) (96) (182)
Tax paid (98) (54) (90)
Net cash flow from operating activities 3,642 (1,929) 2,057
======= ======= =======
Cash flows from investing activities
Purchase of intangible fixed assets - (5) (7)
Purchase of property, plant and equipment (22) (48) (63)
Sale of property, plant and equipment 18 1 -
Net cash flow from investing activities (4) (52) (70)
======= ======= =======
Cash flows from financing activities
Loan repayments (196) (203) (407)
Finance lease repayments (15) (12) 115
Movement in invoice financing (1,947) 1,221 (1,257)
Exercise of share options 10 - -
Dividends paid (255) (145) (224)
Net cash flow from financing activities (2,403) 861 (1,773)
======= ======= =======
Net change in cash and cash equivalents 1,235 (1,120) 214
Cash and cash equivalents at beginning
of period 5,037 4,847 4,847
Effect of foreign exchange rate changes 50 13 (24)
------- ------- -------
Cash and cash equivalents at end of
period 6,322 3,740 5,037
======= ======= =======
NOTES TO THE HALF YEARLY REPORT
1 General information
Tandem Group plc is a public limited company incorporated and
domiciled in the United Kingdom with its shares listed on AIM, the
market of that name operated by the London Stock Exchange.
The principal activity of the Group is the design, development,
distribution and retail of sports, leisure and mobility
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 30 June
2020 (including the comparatives for the period ended 30 June 2019
and the year ended 31 December 2019) were approved by the Board of
Directors on 22 September 2020. 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 434 of the
Companies Act 2006. The Group's statutory financial statements for
the year ended 31 December 2019, 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
Sections 498(2) and 498(3) of the Companies Act 2006. The audit
report in relation to the financial statements for the year ended
31 December 2019 includes an emphasis of matter paragraph drawing
attention to note 1 which refers to the global Coronavirus
pandemic.
This interim financial information has been prepared using the
accounting policies set out in the Group's 2019 statutory accounts.
Copies of the annual statutory accounts and the interim report may
be obtained by writing to the Company Secretary of 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 30 June 2020
is based on the actuarial valuation under IAS19 at 31 December 2019
updated for movements in net defined benefit pension income and
contributions paid during the half year period. A full valuation
for IAS19 financial reporting purposes will be carried out for
incorporation in the audited financial statements for the year
ending 31 December 2020.
2 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:
Year
6 months 6 months ended 31
ended ended December
30 June 2020 30 June 2019 2019
GBP '000 GBP'000 GBP'000
Profit for the period 1,141 155 2,034
============= ================ =========
Number Number Number
Weighted average shares in issue used
for basic earnings per share 5,031,498 5,026,091 5,026,091
Weighted average dilutive shares under
option 151,646 92,590 112,889
Average number of shares used for diluted
earnings per share 5,183,144 5,118,681 5,138,980
============= ================ =========
Pence Pence Pence
Basic earnings per share 22.7 3.1 40.5
============= ================ =========
Diluted earnings per share 22.0 3.0 39.6
============= ================ =========
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014 (MAR).
Enquiries:
Tandem Group plc
Jim Shears, CEO and Company Secretary
Telephone 0121 748 8075
Nominated Adviser
Cairn Financial Advisers LLP
James Caithie / Sandy Jamieson
Telephone 020 7213 0880
Forward Looking Statements
This announcement contains forward-looking statements relating
to expected or anticipated future events and anticipated results
that are forward-looking in nature and, as a result, are subject to
certain risks and uncertainties, such as general economic, market
and business conditions, competition for qualified staff, the
regulatory process and actions, technical issues, new legislation,
uncertainties resulting from potential delays or changes in plans,
uncertainties resulting from working in a new political
jurisdiction, uncertainties regarding the results of exploration,
uncertainties regarding the timing and granting of prospecting
rights, uncertainties regarding the Company's or any third party's
ability to execute and implement future plans, and the occurrence
of unexpected events. Actual results achieved may vary from the
information provided herein as a result of numerous known and
unknown risks and uncertainties and other factors.
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