TIDMTAN
RNS Number : 9486M
Tanfield Group PLC
26 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 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 first quarter of 2022, Snorkel continued to see a
recovery following the impact of the global COVID-19 pandemic with
sales of US$41.7m, compared to US$31.4m for the same period in
2021, an increase of 32.7%.
-- Despite a 32.7% increase in sales, the EBITDA loss for the
first quarter of 2022 increased to US$3.5m, compared to US$2.6m for
the same period in 2021, largely as a result of the gross profit
margin dropping yet further to 4.1%.
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 first quarter of 2022 increase by 32.7%
to US$41.7m as compared to sales in the first quarter of 2021 of
US$31.4m.
Despite the increase in sales in the first quarter of 2022, the
EBITDA loss for the period increased to US$3.5m as compared to
US$2.6m in the first quarter of 2021. The Board once again note
that the gross profit margin has reduced to around 4.1% for the
first quarter of 2022, compared to 6.4% for the first quarter of
2021. The Board is unaware of the reason for the reduction and
continues to believe that the gross profit margins achieved
generally do not appear to be in line with the industry averages.
There is currently ongoing work to investigate this but due to the
deficiencies in the documents produced by Snorkel / Xtreme in
relation to the US Proceedings, as reported on 10 May 2022, this
continues to cause delays.
Below is a summary of the quarterly consolidated operating
statement for the first quarter 2022, including comparative figures
for the previous 5 years:
US$000's Q1 2022 Q1 2021 Q1 2020 Q1 2019 Q1 2018 Q1 2017
Net sales 41,706 31,431 43,423 51,604 44,535 34,878
Cost of goods sold 39,993 29,407 39,746 45,732 38,924 30,097
Gross profit 1,713 2,024 3,677 5,872 5,611 4,781
-------- -------- -------- -------- -------- --------
Gross profit margin 4.1% 6.4% 8.5% 11.4% 12.6% 13.7%
Selling, general, admin
&
currency costs 5,192 4,655 5,637 6,827 6,269 4,403
EBITDA (3,479) (2,631) (1,960) (955) (658) 378
Depreciation & non-operating
costs 543 567 584 619 641 688
Net loss (4,022) (3,198) (2,544) (1,574) (1,299) (310)
-------- -------- -------- -------- -------- --------
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 increase to sales as a positive development
and is not aware of any reason why this improving trend should not
continue.
As reported on 10 May 2022, the US Proceedings and UK
Proceedings are continuing, and t he Board still believes that a
positive outcome to either or both proceedings is possible. So far
as it is necessary, 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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END
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