TIDMTAN
RNS Number : 8316K
Tanfield Group PLC
10 May 2022
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 & Legal Proceedings 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 the Company and Xtreme
Manufacturing LLC ("Xtreme") (the "Contemplated Transaction"), a
company owned by Don Ahern of Ahern Rentals Inc, relating to
Snorkel, in October 2013 .
-- T he Snorkel investment is valued at GBP19.1m. The outcome of
the US and UK Proceedings referenced below could have an impact on
this valuation.
-- On 22 October 2019, the Company announced that it had
received a Summons and Complaint, filed in Nevada (the "US
Proceedings") by subsidiaries of Xtreme, relating to the
Contemplated Transaction .
-- On 24 October 2019, the Company announced it had become
necessary to issue and serve a claim in the English High Court
against Ward Hadaway (the "UK Proceedings"), the solicitor acting
for the Company at the time of the Contemplated Transaction, in
order to fully protect the Company's rights pending the outcome of
the US Proceedings.
-- On 26 February 2021, Ward Hadaway was granted permission to
join Foulston Siefkin, Tanfield's US based law firm who were
retained in 2013 to draft the documents governed by US law relating
to the Contemplated Transaction, into the UK Proceedings. As a
result, the Company amended its claim to include Foulston Siefkin
as a second defendant.
Highlights
-- In the final quarter of 2021, Snorkel continued to see a
recovery following the impact of the global COVID-19 pandemic with
sales of US$41.0m, compared to US$24.2m for the same period in
2020, an increase of 69.2%.
-- The full year sales of Snorkel in 2021 were US$155.0m,
compared to US$110.8m in 2020, an increase of 39.9%.
-- Both the US and UK Proceedings are continuing. The US
Proceedings trial window is currently scheduled to begin in
February 2023, with the UK Proceedings trial set for November
2022.
Business Update
Tanfield is a 49% shareholder in the equity of Snorkel following
the joint venture between the Company and Xtreme, a company owned
by Don Ahern of Ahern Rentals Inc, relating to Snorkel, in October
2013 .
Snorkel continues to recover from the impact of the global
COVID-19 pandemic, which impacted its ability to operate as normal,
and has seen sales for the fourth quarter of 2021 increase by 69.2%
to US$41.0m as compared to sales in the fourth quarter of 2020 of
US$24.2m. Sales for the full year of 2021 increased by 39.9% to
US$155.0m as compared to US$110.8m in 2020.
Despite the increase in sales in the fourth quarter of 2021, the
EBITDA loss for the period remained consistent at US$4.3m as
compared to US$4.4m in the fourth quarter of 2020. The Board once
again note that the gross profit margin has reduced yet further to
around 1.5% for the fourth quarter of 2021, compared to 6.6% for
the fourth quarter of 2020. Furthermore, the gross profit margin
for the full year of 2021 has reduced to 5.4%, compared to 7.2% in
2020. The Board are unaware of the reason for the reduction and
continue to believe that the gross profit margins generally do not
appear to be in line with the industry averages. There is currently
ongoing work to investigate this.
Below is a summary of the consolidated operating statements for
the last 5 years:
US$000's 2021 2020 2019 2018 2017
Net sales 154,951 110,764 220,844 200,507 165,811
Cost of goods sold 146,651 102,783 195,437 175,684 144,828
Gross profit 8,301 7,981 25,408 24,823 20,982
Gross profit margin 5.4% 7.2% 11.5% 12.4% 12.7%
Selling, general, admin
& currency costs 17,861 20,565 25,496 21,859 19,621
EBITDA (9,560) (12,584) (89) 2,964 1,361
Depreciation & non-operating
costs 2,448 2,240 2,456 3,364 2,360
Net loss (12,008) (14,824) (2,544) (400) (999)
The Board is not able to determine when the market for Snorkel's
equipment will return to previous levels. However, it views the
ongoing recovery and increases to sales as a positive development
and is not aware of any reason why this improving trend should not
continue. The Board expects to receive the results for the first
quarter of 2022 shortly and will provide a further update at that
time.
US & UK Proceedings
Further to the update on 31 January 2022, there are still
ongoing deficiencies in the documents produced by Snorkel / Xtreme
in the US Proceedings which continue to cause delays. Despite the
Board's best efforts to have Snorkel / Xtreme resolve these
deficiencies, it nevertheless became necessary to move back the US
Proceedings trial window once more until after the UK Proceedings
trial in November 2022. The US Proceeding trial window is therefore
currently scheduled to begin in February 2023.
On 31 January 2022, the Company announced that it had amended
its claim in the UK Proceedings to include Foulston Siefkin as a
second defendant. Following this amendment, further pleadings have
been exchanged and the claim continues to progress towards trial in
November 2022. One of the next stages before trial is the
preparation of expert accountancy evidence which seeks to value the
Snorkel division at the time of the Contemplated Transaction. The
Company has recently, as part of its disclosure obligations,
provided the defendants with an appraisal report of the tangible
and intangible assets of Snorkel at the time of the Contemplated
Transaction, prepared in 2014 by independent experts in the field
for Xtreme, which the Board understand is the basis for the $45.5m
net fair market value that Snorkel / Xtreme declared was
contributed by Tanfield as part of the Contemplated Transaction.
The Board therefore continues to believe that the value of the
Snorkel division at the time of the Contemplated Transaction was
substantial.
The Board believes that a positive outcome to either or both of
the US and UK Proceedings is a reasonable expectation, and the
Company will continue to vigorously defend and advance its position
in both proceedings, whilst continuing to seek advice.
Further updates will be provided to Shareholders as and when
appropriate.
For further information:
Tanfield Group Plc 020 7220 1666
Daryn Robinson
WH Ireland Limited - Nominated Advisor / Broker
James Joyce / Megan Liddell 020 7220 1666
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