TANFIELD GROUP PLC
REPORT AND FINANCIAL
STATEMENTS 2009
Registered in England & Wales
Company number 04061965
TANFIELD GROUP PLC FINANCIAL STATEMENTS
REPORT AND FINANCIAL STATEMENTS 2009
SUMMARY OF CONTENTS
Directors, Advisers and Officers
Financial and Business Review
Directors’ Report
Corporate Governance
Directors’ Remuneration Report
Statement of Directors Responsibilities
Independent Auditors Report
Consolidated Income Statement
Consolidated & Company Balance Sheets
Consolidated & Company Statement of Changes in Equity
Consolidated & Company Cash Flow Statement
Accounting Policies
Notes to the Accounts
3
4
6
8
9
11
12
13
14
15
16
17
23
2
TANFIELD GROUP PLC FINANCIAL STATEMENTS
DIRECTORS AND ADVISERS
DIRECTORS
EXECUTIVE
DS Kell
CD Brooks
BJ Campbell
GE Allison
NON‐EXECUTIVE
RRE Stanley
J Pither
Dr JN Bridge
M Groak
C Billiet
JM Wooding
SECRETARY
CD Brooks
REGISTERED OFFICE AND ADVISORS
REGISTERED OFFICE
Vigo Centre
Birtley Road
Washington
Tyne and Wear
NE38 9DA
AUDITORS
Baker Tilly UK Audit LLP
1 St James’ Gate
Newcastle upon Tyne
NE1 4AD
SOLICITORS
Ward Hadaway
Sandgate House
102 Quayside
Newcastle upon Tyne
NE1 6AE
Chief Executive
Finance Director
Managing Director Powered Access
Managing Director Zero Emission Vehicles
(appointed to the board 22 Dec 09 and appointed as Chairman on 1 Jan 10)
Chairman (to 31 December 2009) Non executive Director (from 1 Jan 10)
Chairman
Non executive Director
Non executive Director
Non executive Director
Non executive Director
(appointed 19 June 09)
(resigned 19 June 09)
NOMINATED ADVISOR
Arbuthnot Securities
Arbuthnot House
20 Ropemaker St
London
EC2Y 9AR
NOMINATED BROKERS
Arbuthnot Securities
Arbuthnot House
20 Ropemaker St
London
EC2Y 9AR
REGISTRARS
Capita Registrars
Northern House
Woodsome Park
Fenay Bridge
Hudersfield
HD8 0GA
3
TANFIELD GROUP PLC FINANCIAL STATEMENTS
FINANCIAL AND BUSINESS REVIEW
Key performance indicators for the year end 31 December 2009
Revenue
Operating margin %
EBITDA(before impairments)
Cash
Headcount (No)
Orderbook – Electric vehicles
Orderbook – Powered Access
2009
£000’s
58,159
38%
(18,488)
5,414
653
7,500
2,200
2008
£000’s
145,734
48%
4,528
11,130
1,150
5,000
4,200
%
(60.0)
(10.0)
(508.3)
(51.4)
(43.2)
50.0
(47.6)
CHAIRMAN’S STATEMENT
Trading throughout 2009 was in line with our expectations, with no
improvement in the significant depression in global demand for
aerial work platforms and muted sales of electric commercial
vehicles, caused by lack of credit.
Towards the end of the year, we began to see signs of improvement
in the Zero Emission Vehicles division and I am delighted to report
that this business has continued to gain traction in early 2010. We
see little or no expectation of improvement in the Powered Access
division until 2011 at the earliest and continue to manage the
business accordingly.
As we predicted, 2009 was a tough year for the Group and we
expect 2010 will also be challenging.
The management team has executed a plan to sustain the business
during the economic recession and to prepare it for the eventual
upturn. We continue to prudently manage cash and implement cost
reduction programmes, while retaining core employee skills and
competencies.
With a stable balance sheet and clear strategies to manage the
downturn, I believe Tanfield is well positioned for long term success.
I would like to thank all of our people for their efforts during a
demanding year. The team really pulled together to overcome the
challenges faced by the Group and is focused on preparing Tanfield
for a brighter future.
CHIEF EXECUTIVE’S REVIEW
Summary
Throughout 2009, both our core business units continued to be
adversely impacted by the global economic downturn. In particular,
the lack of access to credit continued to inhibit our customers in the
Zero Emission Vehicles and Powered Access divisions. Turnover
declined 60% to £58m, resulting in a loss of £21m for the year.
We acted decisively at the start of 2009, implementing headcount
reductions coupled with initiatives including shorter working weeks
and periods of unpaid leave. This resulted in a reduction of staff
costs by 42%, while preserving the core skills base of the workforce.
Our strategy remains to focus on cash generation ahead of
profitability and to retain the employees and skills that we will need
to build for future success.
Powered Access: Turnover of £42m (2008: £114m)
Tanfield succeeded in selling excess inventory during 2009 and
machine stocks are now within our target levels. Our overall
performance was in line with that of the wider market and our
peers.
However, market pricing
industry remained
artificially low during the period, as major equipment rental houses
off‐loaded excess stock and competitors offered heavy discounts to
reduce their own inventory levels.
in the aerial
lift
During 2009, Tanfield further expanded and enhanced its global
dealer network, with the appointment of new distributors in Latin
America, North Africa and Europe. The Company also appointed a
national network of sales agents in North America, to target smaller,
family‐owned equipment rental companies.
Throughout the year, our design engineers have focused on
developing new aerial lifts and updating existing models, taking cost
out and enhancing machine performance. The full benefit of these
enhancements however will only be derived when the market
recovers and production runs increase.
Furthermore, a significant amount of the industry’s stock overhang
was utilised during the period, depleting stock at a market level and
improving order transparency.
The overall sector outlook remains challenging, with no sign of any
industry
in 2010. Depressed demand continues,
particularly in North America and Europe.
improvement
However, we are hopeful of increased interest within the newly
developing markets – sales in these areas will only replace some of
the lost demand from mature markets. It is only once these core
markets start to substantially recover however that we will be able
to increase production volumes to an economically attractive level.
Zero Emission Vehicles: Turnover of £15m (2008:
£25m)
Through its Smith Electric Vehicles brand, this division is now
acknowledged worldwide as the leading manufacturer of electric
commercial vehicles. Despite the tough trading environment, the
division stretched its lead over its nearest competitors during the
period, growing UK market share and making inroads into export
markets.
Sales throughout 2009 continued to be disadvantaged by the global
recession. The lack of funding available for leasing or contract hire
4
TANFIELD GROUP PLC FINANCIAL STATEMENTS
as the means of financing for the majority of our customers, was a
major issue and impacted adversely on product sales.
FINANCE DIRECTOR’S REPORT
Tanfield continues to focus on export sales into countries that offer
incentives to stimulate the demand for electric vehicles. The
company has appointed new distributors in Hong Kong, Southern
China and France, adding to existing dealers in The Netherlands and
the Republic of Ireland. We are also supplying an initial 10 Smith
Edison vans to Ford of Europe, which is a partner in a major trial of
electric vehicles in Germany.
In the UK, Tanfield was one of four producers of low carbon vans to
be selected for the Government's Low Carbon Vehicle Procurement
Programme. Tanfield has been commissioned to supply 67% of the
electric vans required for Phase One; more than double the
numbers supplied by its two main competitors combined. We
remain on schedule with the supply of 51 Smith Edison vans to
Sainsbury’s, for its online shopping delivery service in London.
We are now fully engaged in three research and development
projects, part‐funded by the Technology Strategy Board, to improve
electric vehicle efficiencies. Tanfield is also working on a prototype
incorporates a hydrogen fuel cell range
electric vehicle that
extender.
Tanfield’s associate company, Smith Electric Vehicles US Corp
(“SEVUS”), is now established as the leading supplier of electric
commercial vehicles
SEVUS
continues to secure both private and public sector interest in
commercial electric vehicles, while winning substantial support from
US Federal agencies.
in the North American market.
Other: Turnover of £1.4m (2008: £6.3m)
Tanfield’s Engineering business supplies sub‐assemblies and
fabrications to the construction equipment sector. These customers
continued to experience a decline in sales during 2009, reflected in
lower turnover for this business unit.
Outlook
On the 10th of March the company announced that it had received a
non‐binding, conditional offer from SEVUS for the Company's Smith
Electric Vehicle division. The Board granted a 4 month period of
exclusivity to SEVUS to finalise this offer and understands that
progress is being made in line with the proposed offer timeline and
key milestones.
The Board believes that 2010 will signal the return of growth in the
sales of commercial electric vehicles.
Worldwide demand for these products continues to increase and
the division entered 2010 with a healthy order book that is now full
through to the end of the summer.
The outlook for the Powered Access division remains challenging. As
we predicted, the major equipment rental companies have
confirmed they are unlikely to lift their moratorium on spend during
2010. Given that these customers account for an estimated two‐
thirds of all global sales of aerial lifts, we expect the entire aerial
work platform market to remain depressed and highly competitive.
As we continue to focus on cash preservation, Tanfield is not
proposing to pay a dividend for the period. The directors believe
the business remains well positioned with a stable balance sheet
and zero debt.
5
The Revenue for the year of £58.2m (down by £87.5m or 60% on
2008’s revenue of £145.7m) reflected the ongoing poor market
conditions suffered throughout 2009.
Whilst cost base reductions have been implemented wherever
possible, the low level of pricing, particularly in the middle of the
year, resulted in a Loss from Operations of £22.1m (2008 £88.3m).
Post tax losses of associate
In the year, SEV US was incorporated. As yet, SEV US has not been
profitable. The loss reported is limited to the costs of Tanfield’s
investment.
Operating expenses
Whilst the Other operating expenses total reported at £12m
remains the same as 2008, the 2008 figure benefited from foreign
exchange movements and a profit on the sale of property plant and
equipment. The net reduction excluding those items is £4m.
Restructuring costs
The majority of the restructuring costs were carried out during
2008. No significant one off costs were incurred in the period.
Impairment of assets
A further review of the carrying values of the assets was
undertaken. A further impairment of £600k was believed to be
necessary. Impairments in 2008 totalled £89.7m.
Loss from operations
The Loss from Operations in the period was £22.1m (2008 £88.3).
This was a trading loss, whereas the loss in 2008 arose from the
impairments.
Finance expenses
The increased interest cost of the period, excluding the interest rate
collar, of £567k (2008: £397k) was offset by the increase in the value
of the interest rate collar of £127k (2008 cost of £516k).
Loss before tax
Given the Operating Loss, the Loss before Taxation was £22.5m
(2008 £88.8m).
Taxation
Given the losses there was little tax payable. The deferred tax asset
assumptions remain the same so tax
income
statement arising from adjustments to the deferred tax asset is
minimal.
in the
impact
Earnings per share
Loss per share was 28.9p (2008: Loss 119.5p). No dividend has been
declared. (2008: nil)
Net Cash
At 31 December 2009, the Group had cash of £5.4m (2008 £11.1).
Although the business has reported a loss in the period the
operating cash flow was neutral. The cash movement of £5.7m
resulted from the payment of £2.9m deferred consideration for the
Snorkel acquisition and £2.9m fully settling an Invoice Discounting
facility in Australia. The cash allows the business to trade without
exposure to financial covenants from banks or other institutions.
TANFIELD GROUP PLC FINANCIAL STATEMENTS
DIRECTOR’S REPORT
The directors submit their report and the financial statements of Tanfield
Group PLC for the year ended 31 December 2009.
Tanfield Group PLC is a public listed parent company incorporated and
domiciled in England and quoted on AIM.
PRINCIPAL ACTIVITIES
The company’s principal activity is that of a holding company. Tanfield
Group PLC is the parent company of a group engaged mainly in the
powered access, zero emission vehicle industries and engineering.
RESULTS AND DIVIDENDS
The financial result, for the twelve months to 31 December 2009 reflects
the continuing impact on the Tanfield Group plc of the decline in its
global markets and its response to that decline.
Turnover for the twelve month period fell to £58m from £146m for the
full year to December 2008. This reflects twelve months of very poor
trading conditions in 2009, where 2008 showed a marked decline after a
good start to the year.
The loss in the period of £21m arose from trading reflecting the poor
market conditions, where the 2008 loss of £89m was largely a result of
impairments.
As at the end of 2008, a review was undertaken of the carrying value of
assets in the Powered Access division but it was concluded that following
the impairments made in 2008 and current trading conditions, the values
included were still appropriate and no further
impairments were
required.
The balance sheet remains robust, with net assets at the end of
December of £64m (£86m: December 2008). Net Current Assets were
£42m (2008: £62m) with cash balances in excess of £5.4m and no
borrowing. This demonstrates that the company has sufficient working
capital allowing it to work through the current trading conditions.
No dividend has been paid or proposed for the year (2008: £nil). The loss
of £21m (2008: Loss of £89m) has been transferred to reserves.
REVIEW OF THE BUSINESS
The year was dominated by the continuation of the very poor trading
conditions in our main markets and the company’s response to those
trading conditions.
A detailed review of the business is included in the financial and business
review on pages 4 to 5 including the KPIs on page 4.
FUTURE DEVELOPMENTS
The main focus in the short and medium term is one of managing through
the difficult trading conditions, taking all appropriate steps to minimise
costs and preserve cash while retaining skills and resources to respond to
any market improvements when they arise.
Management policies will continue to be reviewed in the light of changing
trading conditions.
6
POLITICAL AND CHARITABLE CONTRIBUTIONS
During the year, the group has made no political or charitable
donations (2008 ‐ £nil).
FINANCIAL INSTRUMENTS
The Group’s financial instruments comprise cash, finance
leases and short term debtors and creditors arising from its
operations. The principal financial instruments used by the
Group are cash balances raised from share issues by the
company and are applied in financing the group’s fixed assets.
The Group has not established a formal policy on the use of
financial instruments but assesses the risks faced by the Group
as economic conditions and the Group’s operations develop.
MARKET VALUE OF LAND AND BUILDINGS
The directors are of the opinion that the market value of
properties at 31 December 2009 would exceed the net book
values included in the financial statements, but they are
unable to quantify this excess in the absence of a professional
valuation, the costs of which are not considered justifiable in
view of the group’s intention to retain ownership of its existing
properties for use in its business for the foreseeable future.
RESEARCH AND DEVELOPMENT
The Group maintains a development programme as continuity
of investment in this area is essential for the maintenance of
the Group’s market position and for future growth.
RISKS AND UNCERTAINTIES
The business is reliant on continued sales within its end
markets, the pricing levels in those markets and the continued
performance of its supply chain. These markets have been
subject to falling demand and future performance in those
markets is uncertain. The group buys the majority of its
powered access components and sells the majority of its
powered access products in US dollars. Whilst that allows a
natural hedge of those products, it does affect pricing in non
US dollar markets, adding to the uncertainty.
EVENTS SINCE THE END OF THE YEAR
There have been no significant events since the end of the
year.
DISABLED PERSONS
The group will employ disabled persons when they appear to
be suitable for a particular vacancy and every effort is made to
ensure that they are given full and fair consideration when
such vacancies arise. Where existing employees become
disabled, it is the Group’s policy wherever practicable to
provide continuing employment under normal terms and
conditions and to provide training and career development to
disabled employees wherever appropriate.
EMPLOYEE INVOLVEMENT
The Group encourages the involvement of its employees
through regular dissemination of information of particular
concerns to employees.
To facilitate this, the company undertakes a Communications
Forum where all employees are represented by a colleague
within their department at regular meetings with senior
managers.
STATEMENT AS TO DISCLOSURE OF INFORMATION TO
AUDITORS
The directors in office on the date of approval of the financial
statements have confirmed that, as far as they are aware,
there is no relevant audit information of which the auditors are
unaware. Each of the directors have confirmed that they have
taken all the steps that they ought to have taken as directors in
order to make themselves aware of any relevant audit
information and to establish that it has been communicated to
the auditor.
DIRECTORS INDEMNITY
Every Director shall be indemnified by the company out of its
own funds.
Approved by the Board of Directors and signed on behalf of the
Board
Director
28 May 2010
TANFIELD GROUP PLC FINANCIAL STATEMENTS
DIRECTORS
The present membership of the board is set out on page 3. C. Billiet
resigned on 19 June 2009. J M Wooding was appointed on 19 June 2009.
J Pither was appointed on 22 Dec 2009.
All directors have the right to acquire shares in the company via the
exercise of options granted under the terms of their service contracts,
copies of which may be inspected by shareholders upon written
application to the company secretary. Details of the directors’ options to
acquire shares are set out in the Directors’ Remuneration Report on
pages 9 to 10.
POLICY ON PAYMENT OF CREDITORS
It is group policy to agree and clearly communicate the terms of payment
as part of the commercial arrangements negotiated with suppliers and
then to pay according to those terms based on the timely receipt of an
accurate invoice. The company supports and the UK based businesses
follow the CBI Prompt Payers Code. A copy of the code can be obtained
from the CBI at Centre Point, 103 New Oxford Street, London WC1A 1DU.
Trade creditor days based on creditors at 31 December 2009 were 87
days. (2008 – 77 days)
SUBSTANTIAL SHAREHOLDINGS
On 31 December 2009 the following held substantial shares in the
company. No other person has reported an interest of more than 3% in
the ordinary shares.
NORTRUST NOMINEES LIMITED
TD WATERHOUSE NOMINEES (EUROPE)
BARCLAYSHARE NOMINEES LIMITED
HSDL NOMINEES LIMITED
UBS PRIVATE BANKING NOMINEES LTD
HSBC GLOBAL CUSTODY NOMINEE (UK)
L R NOMINEES LIMITED
HARGREAVES LANSDOWN (NOMINEES)
PRUDENTIAL CLIENT HSBC GIS NOMINEE
JAMES CAPEL (NOMINEES) LIMITED
No.
9,211,757
6,759,775
5,899,426
4,811,349
4,325,962
3,884,940
3,246,283
2,729,060
2,607,898
2,569,923
%
12.44%
9.13%
7.96%
6.50%
5.84%
5.24%
4.38%
3.68%
3.52%
3.47%
RRE Stanley holds shares of 7.5% which are held through nominee
companies.
DIRECTORS’ INTEREST IN CONTRACTS
No director had a material interest at any time during the year in any
contract of significance, other than a service contract, with the company
or any of its subsidiary undertakings.
AUDITORS
A resolution to reappoint Baker Tilly UK Audit LLP as auditors will be put
to the members at the annual general meeting. Baker Tilly UK Audit LLP
has indicated its willingness to continue in office.
7
TANFIELD GROUP PLC FINANCIAL STATEMENTS
CORPORATE GOVERANCE
Principles of Corporate Governance
The company is committed to high standards of corporate governance.
The Board is accountable to the company’s shareholders for good
corporate governance. The company has partially complied throughout
the year with the code of best practice set out in Section 1 of the
Combined Code 2008 (effective for periods commencing on or after 29
June 2008) appended to the Listing Rules of the Financial Services
Authority.
The role of the Board is to provide entrepreneurial leadership of the
company within a framework of prudent and effective controls, which
enables risk to be assessed and managed. The Board sets the company’s
strategic aims, ensures that the necessary financial and human resources
are in place for the company to meet its objectives and reviews
management performance. The Board sets the company’s values and
standards and ensures that its obligations to its shareholders and others
are understood and met.
Board Structure
During the year the Board comprised the Non‐Executive Chairman and
Chief Executive, three other Executive Directors, and three independent
Non‐Executive Directors. A fourth Non‐Executive director was appointed
in December.
Board Role
The Board is responsible to shareholders for the proper management of
the Group. The Non‐Executive Directors have a particular responsibility to
ensure that the strategies proposed by the Executive Directors are fully
considered. To enable the Board to discharge its duties, all Directors
have full and timely access to all relevant information and there is a
procedure for all Directors, in furtherance of their duties, to take
independent professional advice, if necessary, at the expense of the
Group. The Board has a formal schedule of matters reserved to it. It is
responsible for overall group strategy, approval of major capital
expenditure projects and consideration of significant financing matters.
The Board met on six separate occasions in the year.
Appointment and Induction of Directors
The composition of the Board is kept under review with the aim of
ensuring that the directors collectively possess the necessary skills and
experience to direct the Group’s business activities.
Board Committees
The Board delegates certain matters to its two principal committees,
which deal with remuneration and audit.
Remuneration Committee
The Remuneration Committee comprises John Bridge (Chair) and Martin
Groak.
The Remuneration Committee determines and agrees with the Board the
framework of remuneration for the Executive Directors. The Board itself
determines the remuneration of the Non‐Executive Directors.
There was one remuneration committee meeting in the period which was
fully attended.
The report on Directors’ remuneration is set out on pages 9 to 10.
Audit Committee
The Audit Committee comprised the Non‐Executive Directors Martin
Groak (Chair), Jerry Wooding and John Bridge. Meetings are also
attended, by invitation, by the Group Finance Director.
8
The Audit Committee is responsible for:
Reviewing the scope of external audit, to receive
regular reports from Baker Tilly UK Audit LLP.
Reviewing the half‐yearly and annual accounts prior
to their recommendation to the Board.
Reviewing the Group’s internal financial controls
and risk management systems and processes.
Making recommendations on the appointment, re‐
appointment and removal of external auditors and
approving the terms of engagement.
Reviewing the nature of the work and level of fees
for non‐audit services provided by the external
auditors.
Assessing
effectiveness of the external auditor.
independence, objectivity and
the
The committee met on two occasions during the year and
they were fully attended.
Internal Control
The Board has overall responsibility for the Group’s system of
internal control and risk management and for reviewing the
effectiveness of this system. Such a system can only be
designed to manage, rather than eliminate, the risk of failure
to achieve business objectives and can therefore only provide
reasonable, and not absolute assurance against material
misstatement or loss.
The Board are of the view that due to the current size and
composition of the Group, that it is not necessary to establish
an internal audit function.
Relations with Shareholders
The Company values its dialogue with both institutional and
private investors. Effective two‐way communication with fund
managers, institutional investors and analysts is actively
pursued and this encompasses issues such as performance,
policy and strategy.
Private investors are encouraged to participate in the Annual
General Meeting at which the Chairman presents a review of
the results and comments on current business activity. The
Chairmen of the Audit and Remuneration Committees will be
available at the Annual General Meeting to answer any
shareholder questions.
Notice of Annual General Meeting will be issued in due course.
Going Concern
The directors confirm that they are satisfied that the
Company and Group have adequate resources to continue in
business for the foreseeable future. For this reason, they
continue to adopt the going concern basis in preparing the
financial statements.
Darren Kell
Chief Executive 28 May 2010
TANFIELD GROUP PLC FINANCIAL STATEMENTS
DIRECTORS REMUNERATION REPORT
Remuneration committee
The company has established a Remuneration Committee which is
constituted in accordance with the recommendations of the Combined
Code. The members of the committee are JN Bridge and M Groak who
are both non‐executive directors and the committee is chaired by JN
Bridge.
In determining the directors’ remuneration for the year, the committee
consulted the Chief Executive DS Kell and the Finance Director CD Brooks
about its proposals.
Remuneration policy
The policy of the committee is to reward executive directors in order to
recruit, motivate and retain high quality executives within a competitive
market place.
There are four main elements of the remuneration packages for
executive directors and senior management:
Basic annual salary (including directors’ fees) and benefits;
Annual bonus payments;
Share option incentives; and
Pension arrangements.
Basic salary
Basic salary is reviewed annually in March with increases taking effect
from 1 April. In addition to basic salary, the executive directors also
receive certain benefits in kind, principally private medical insurance.
Annual bonus
The committee establishes the objectives which must be met for each
financial year if a cash bonus is to be paid. The purpose of the bonus is to
reward executive directors and other senior employees for achieving
above average performance which also benefits shareholders. No
bonuses were awarded or paid in relation to 2009 (2008: £nil)
performance.
Share options
The executive and non executive directors have options granted to them
under the terms of the Share Option Scheme. There are no performance
conditions attached to the share options. No share options were
awarded in 2009 (2008: nil).
Pension arrangements
Executive directors are members of a money purchase pension scheme
to which the group contributes. Their dependants are eligible for
dependants’ pension and the payment of a lump sum in the event of
death in service. No other payments to directors are pensionable.
Directors’ contracts
It is the company’s policy that executive directors should have
contracts with an indefinite term providing for a maximum of
one year’s notice. In the event of early termination, the
directors’ contracts provide for compensation up to a
maximum of basic salary for the notice period.
Non executive directors
The fees of non‐executive directors are determined by the
board as a whole having regard to the commitment of time
required and the level of fees in similar companies.
Non‐executive directors are employed on renewable fixed term
contracts not exceeding three years.
Board changes
On 19 June 2009 Colin Billiet stepped down as a non executive
director and was replaced by Jerry Wooding.
On 22 Dec 2009 John Pither was appointed as a Non executive
director and made Chairman on the 1 Jan 2010. Roy Stanley
stepped down as Chairman on 1 Jan 2010.
Directors interests
The interests of directors holding office at the year end in the
company’s ordinary 5p shares at 31 December 2009 and 1
January 2009 are shown below:
RRE Stanley
DS Kell
CD Brooks
BJ Campbell
GE Allison
JN Bridge
M Groak
JM Wooding
Total
Number of shares
2009
5,553,858
340,000
22,491
22,395
20,841
20,508
‐
‐
5,980,093
2008a
5,553,858
340,000
22,491
22,395
20,841
10,508
‐
‐
5,970,093
a For comparative purposes the number of share at 1 January have been restated to
account for the 5 for 1 share consolidation.
The directors, as a group, beneficially own 8% of the company’s
shares.
All directors have the right to acquire shares in the company via
the exercise of options granted under the terms of their service
contracts, copies of which may be inspected by shareholders
upon written application to the company secretary.
9
TANFIELD GROUP PLC FINANCIAL STATEMENTS
DIRECTORS REMUNERATION REPORT continued
Remuneration review
Directors emolument for the financial year were as follows:
RRE Stanley
DS Kell
CD Brooksa
BJ Campbell
GE Allison
JN Bridge
M Groak
C Billietb
JM Woodingc
J Pitherd
Total
a
In addition to CD Brooks’ emoluments he received a loan of £31k which was outstanding at the balance sheet date. The loan is due to be repaid in 2010.
Bonuses
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
Salary
30
206
133
133
79
26
26
13
16
‐
662
Benefits
in kind
18
18
18
18
‐
‐
‐
‐
‐
‐
72
Total
2009
48
224
151
151
79
26
26
13
16
‐
734
Total
2008
287
412
271
271
48
30
30
30
‐
‐
1,379
Pension Total
2009
9
25
15
16
8
‐
‐
‐
‐
‐
73
Pension
Total
2008
18
22
15
31
1
‐
‐
‐
‐
‐
87
b
C Billiet left the company on 19 June 09
c
JM Wooding joined the company on 19 June 09. Mr Wooding is paid through Simkat Consultants.
d
J Pither joined the company on 22 Dec 10.
Directors share options held at 31 December 2009 were as follows:
31 December
2008e
411,334
860,000
Granted/
Lapsed
‐
‐
Exercised
‐
‐
31
December
2009
411,334
860,000
Option
price per
sharee
100p
100p
Date from
which
normally
exercisablef
01/03/2009
02/01/2010
Expiry Date
01/03/2016
02/01/2017
800,000
250,000
200,000
140,000
50,000
320,000
30,000
30,000
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
800,000
100p
02/01/2010
02/01/2017
250,000
200,000
140,000
50,000
320,000
115p
100p
5p
100p
100p
14/06/2009
02/01/2010
14/06/2016
02/01/2017
14/09/2008
01/03/2009
02/01/2010
14/09/2015
01/03/2016
02/01/2017
30,000
100p
01/03/2009
01/03/2016
30,000
100p
01/03/2009
01/03/2016
3,091,334
3,091,334
DS Kell
RRE Stanley
CD Brooks
BJ Campbell
JN Bridge
M Groak
Total
e
Subject to the clauses in the option agreements for adjustment of the option price in the event of a variations in capital or a demerger, the share option price and the number of options have been adjusted to
reflect the 5 for 1 share consolidation. Certain option agreements allow for the option price to reduce in the event of a demerger.
f
Certain share option agreements have a clause that allows the options to be exercised early if market capitalisation exceeds a certain level
g
On 31 December 2009 the market price of the ordinary shares was 27p. The range during 2009 was 24.25p to 82.50p
Approval
This report was approved by the board of directors and authorised for issue on 28 May 2010 and signed on its behalf by:
John Bridge
Chairman of Remuneration Committee
10
TANFIELD GROUP PLC FINANCIAL STATEMENTS
STATEMENT OF DIRECTORS RESPONSIBILITIES
The directors are responsible for preparing the Directors’ Report and the
financial statements in accordance with applicable law and regulations.
UK Company law requires the directors to prepare Group and Company
Financial Statements for each financial year. Under that law the
directors are required to prepare Group financial statements
in
accordance with International Financial Reporting Standards ("IFRS") as
adopted by the European Union (“EU”) and have elected to prepare the
company financial statements in accordance with IFRS as adopted by the
EU.
The group financial statements are required by law and IFRS adopted by
the EU to present fairly the financial position and performance of the
group; the Companies Act 2006 provides in relation to such financial
statements that references in the relevant part of that Act to financial
statements giving a true and fair view are references to their achieving a
fair presentation.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the group’s and
the company’s transactions and disclose with reasonable
accuracy at any time the financial position of the company and
to enable them to ensure that the financial statements comply
with the Companies Act 2006. They are also responsible for
safeguarding the assets of the group and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Tanfield Group plc website.
Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair view.
In preparing each of the group and company financial statements, the
directors are required to:
a.
b.
c.
d.
select suitable accounting policies and then apply them
consistently;
make judgements and estimates that are reasonable and prudent;
state whether they have been prepared in accordance with IFRSs
adopted by the EU;
prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the group and the
company will continue in business.
11
TANFIELD GROUP PLC FINANCIAL STATEMENTS
REPORT OF THE INDEPENDENT AUDITORS
Independent auditors’ report to the members of
Tanfield Group PLC
Opinion on the financial statements
In our opinion
We have audited the group and parent company financial statements
Income
financial statements”) which comprise the Group
(“the
Statement, Group and Parent Company Balance Sheets, the Group and
Parent Company Statements of Recognised Income and Expense, the
Group and Parent Company Statements of Cash Flow and the related
notes. The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union and, as regards the
parent company financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
This report is made solely to the company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the company’s
members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company and the company’s members as a body, for our audit work, for
this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As more fully explained in the Directors’ Responsibilities Statement set
out on page 11, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair
view.
in
accordance with applicable law and International Standards on Auditing
(UK and Ireland). Those standards require us to comply with the Auditing
Practices Board’s (APB’s) Ethical Standards for Auditors.
is to audit the financial statements
Our responsibility
Respective responsibilities of directors and auditors
A description of the scope of an audit of financial statements is provided
on the APB’s website at www.frc.org.uk/apb/scope/UKNP.
the financial statements give a true and fair view of the
state of the group’s and the parent’s affairs as at 31
December 2009 and of the group’s loss for the year then
ended;
the group financial statements have been properly
prepared in accordance with IFRSs as adopted by the
European Union;
the parent financial statements have been properly
prepared in accordance with IFRSs as adopted by the
European Union and as applied in accordance with the
Companies Act 2006; and
the
in
accordance with the requirements of the Companies Act
2006.
statements have been prepared
financial
Opinion on other matter prescribed by the Companies Act
2006
In our opinion the information given in the Directors’ Report for
the financial year for which the financial statements are
prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if,
in our opinion:
adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
the parent company financial statements are not in
agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by
law are not made; or
we have not received all the information and explanations
we require for our audit.
BAKER TILLY UK AUDIT LLP
Chartered Accountants
1 St James’ Gate
Newcastle upon Tyne
NE1 4AD
28 May 2010
12
TANFIELD GROUP PLC FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2009
Revenue
Changes in inventories of finished goods and WIP
Raw materials and consumables used
Staff costs
Depreciation and amortisation expense
Other operating income
Other operating expenses
Restructuring costs
(Loss) profit from operations before impairments
Share of results of associates
Impairment of goodwill
Impairment of intangible assets
Impairment of property, plant & equipment
Impairment of inventories
Impairment of receivables
Loss from operations after impairments
Finance expense
Finance income
Net finance expense
Loss before taxation
Taxation
Net Loss for the year
Attributable to:
Owners of the parent
Non‐controlling interest
Earnings per share
Basic
Diluted
Notes
1
12
2
3
4
4
8
26
5
5
6
7
7
2009
£000's
58,159
(6,358)
(39,945)
(18,645)
(3,007)
‐
(11,648)
‐
(21,444)
(51)
‐
‐
‐
‐
(600)
(22,095)
(567)
207
(360)
(22,455)
1,066
(21,389)
2008
£000's
145,734
4,808
(102,724)
(32,197)
(3,195)
500
(11,221)
(372)
1,333
‐
(31,895)
(12,605)
(83)
(22,185)
(22,894)
(88,329)
(913)
457
(456)
(88,785)
239
(88,546)
(21,388)
(1)
(88,546)
‐
(28.9)p
(28.9)p
(Restated)
(119.5)p
(119.5)p
13
TANFIELD GROUP PLC FINANCIAL STATEMENTS
BALANCE SHEETS (Company registration number 04061965)
AS AT 31 DECEMBER 2009
Non current assets
Goodwill
Intangible assets
Property, plant and equipment
Deferred tax assets
Associate
Trade and other receivables
Investments
Current assets
Inventories
Trade and other receivables
Investments
Current tax assets
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Provisions
Tax liabilities
Obligations under finance leases
Other creditors
Non‐current liabilities
Other creditors
Obligations under finance leases
Deferred tax liabilities
Total liabilities
Equity
Share capital
Share premium
Share option reserve
Special reserve
Merger reserve
Capital reduction reserve
Translation reserve
Profit and loss account
Total parent shareholders’ equity
Minority interests
Total equity and total liabilities
Notes
10
11
9
19
26
15
33
12
15
13
14
16
25
17
18
17
19
20
20
21
21
21
21
21
22
24
Group
2009
£000's
356
13,825
5,200
1,915
‐
900
‐
22,196
44,615
11,878
275
72
5,414
62,254
84,450
16,178
527
45
480
2,553
19,783
‐
156
375
531
20,314
3,704
‐
1,764
66,837
1,534
‐
8,923
(18,625)
64,137
(1)
84,450
2008
£000's
356
15,153
6,346
1,779
‐
1,500
‐
25,134
60,560
20,595
251
‐
11,130
92,536
117,670
19,807
‐
687
565
9,954
31,013
‐
569
307
876
31,889
3,704
138,511
1,653
‐
1,534
7,228
9,290
(76,139)
85,781
‐
117,670
Company
2009
£000's
‐
‐
‐
‐
‐
‐
2,111
2,111
‐
57,468
‐
‐
907
58,375
60,486
1,549
‐
‐
‐
2,228
3,777
‐
‐
‐
‐
3,777
2008
£000's
‐
‐
‐
‐
‐
‐
15,124
15,124
‐
59,732
‐
‐
5,372
65,104
80,228
769
‐
‐
10
5,720
6,499
‐
‐
‐
‐
6,499
3,704
‐
1,764
66,837
1,534
‐
‐
(17,130)
56,709
‐
60,486
3,704
138,511
1,653
‐
1,534
7,228
‐
(78,901)
73,729
‐
80,228
The financial statements on pages 13 to 43 were approved by the board of directors and authorised for issue on 28 May 2009 and are
signed on its behalf by:
Charles Brooks
Group Finance Director
14
TANFIELD GROUP PLC FINANCIAL STATEMENTS
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2009
CONSOLIDATED
At 1 January 2008
Loss for the year
Exchange differences
Share options exercised
Share option provision
At 1 January 2009
Loss for the year
Exchange differences
Share option provision
Cancellation of share premium
account (note 20)
At 31 December 2009
COMPANY
At 1 January 2008
Loss for the year
Exchange differences
Share options exercised
Share option provision
At 1 January 2009
Loss for the year
Exchange differences
Share option provision
Cancellation of share premium
account (note 20)
At 31 December 2009
Share
capital
Share
premium
£000's
3,703
‐
‐
1
‐
3,704
‐
‐
‐
£000's
138,493
‐
‐
18
‐
138,511
‐
‐
‐
Shares
option
reserve
£000's
992
‐
‐
‐
661
1,653
‐
‐
111
Merger
reserve
£000's
1,534
‐
‐
‐
‐
1,534
‐
‐
‐
Capital
reduction
reserve
£000's
7,228
‐
‐
‐
‐
7,228
‐
‐
‐
Special
reserve
Translation
reserve
Retained
earnings
Total
£000's
‐
‐
‐
‐
‐
‐
‐
‐
‐
£000's
879
‐
8,411
‐
‐
9,290
‐
(367)
‐
£000's
12,385
(88,546)
‐
‐
22
(76,139)
(21,388)
‐
‐
£000's
165,214
(88,546)
8,411
19
683
85,781
(21,388)
(367)
111
‐
3,704
(138,511)
‐
‐
1,764
‐
1,534
(7,228)
‐
66,837
66,837
‐
8,923
78,902
(18,625)
‐
64,137
Share
capital
Share
premium
£000's
3,703
‐
‐
1
‐
3,704
‐
‐
‐
£000's
138,493
‐
‐
18
‐
138,511
‐
‐
‐
Shares
option
reserve
£000's
992
‐
‐
‐
661
1,653
‐
‐
111
Merger
reserve
£000's
1,534
‐
‐
‐
‐
1,534
‐
‐
‐
Capital
reduction
reserve
£000's
7,228
‐
‐
‐
‐
7,228
‐
‐
‐
‐
3,704
(138,511)
‐
‐
1,764
‐
1,534
(7,228)
‐
Special
reserve
Translation
reserve
Retained
earnings
Total
£000's
‐
‐
‐
‐
‐
‐
‐
‐
‐
66,837
66,837
£000's
338
‐
(338)
‐
‐
‐
‐
‐
‐
£000's
(700)
(78,223)
‐
‐
22
(78,901)
(17,131)
‐
‐
£000's
151,588
(78,223)
(338)
19
683
73,729
(17,131)
‐
111
‐
‐
78,902
(17,130)
‐
56,709
15
TANFIELD GROUP PLC FINANCIAL STATEMENTS
CASH FLOW STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
Cash flow from operating activities
(Loss) profit before interest and taxation
Depreciation and amortisation
(Gain) on deferred consideration reassessment
(Gain) Loss on disposal of fixed assets
(Gain) Loss on disposal of Intangible assets
Impairment of goodwill
Impairment of intangible assets
Impairment of property, plant and equipment
Impairment of inventories
Impairment of receivables
Loss on intercompany loan write off
Loss on impairment of investments
Operating cash flows before movements in working capital
Decrease (increase) in receivables
(Decrease) increase in payables
(Decrease) Increase in provisions
Decrease (increase) in inventories
Net cash used in operating activities
Interest paid
Income taxes received
Net cash used in operating activities
Cash flow from Investing Activities
Purchase of investments in Associates
Purchase of property, plant and equipment
Payment of deferred consideration
Proceeds from sale of property, plant and equipment
Purchase of investments
Purchase of intangible fixed assets
Interest received
Net cash (used in) / from investing activities
Cash flow from financing activities
(Costs) Proceeds from issuance of ordinary shares
Repayments of obligations under finance leases
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at the start of year
Cash and cash equivalents at the end of the year
16
Group
2009
£000's
2008
£000's
Company
2009
£000's
2008
£000's
(22,095)
3,007
(926)
55
69
‐
‐
‐
‐
600
‐
51
(19,239)
8,668
(2,981)
(2,840)
14,821
(1,571)
(567)
241
(1,897)
(51)
(243)
(2,904)
58
(51)
(544)
207
(3,528)
‐
(504)
(504)
213
(5,716)
11,130
5,414
(88,329)
3,195
‐
(587)
‐
31,895
12,605
83
22,185
22,894
‐
‐
3,941
4,585
(8,140)
2,612
(13,933)
(10,935)
(913)
510
(11,338)
‐
(1,087)
(252)
623
(45)
(6,431)
457
(6,735)
19
(693)
(674)
1,925
(16,822)
27,952
11,130
(17,191)
‐
(926)
‐
‐
‐
‐
‐
‐
‐
3,691
13,064
(1,362)
(1,429)
892
‐
‐
(1,899)
(16)
‐
(1,915)
(51)
‐
(2,904)
‐
‐
‐
77
(2,878)
(78,570)
‐
‐
‐
‐
‐
‐
‐
‐
‐
51,618
34,535
7,583
(29,199)
1,125
‐
‐
(20,491)
(38)
‐
(20,529)
‐
‐
(252)
‐
‐
‐
785
533
‐
(10)
(10)
19
(120)
(101)
339
(4,464)
5,371
907
862
(19,235)
24,607
5,372
TANFIELD GROUP PLC FINANCIAL STATEMENTS
ACCOUNTING POLICIES
(i) Basis of preparation of the financial statements
These consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards as adopted
by the EU (“IFRS”), IFRIC interpretations and the requirements of the
Companies Act applicable to Companies reporting under IFRS. The
financial statements have been prepared under the historical cost
convention, modified for the revaluation of certain financial assets and
liabilities at fair value.
The preparation of financial statements in conformity with IFRS
requires the use of accounting estimates. It also requires management
to exercise its judgement in the process of applying the group’s
accounting policies. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to
the consolidated financial statements, are disclosed below in “Critical
accounting estimates and key judgements”.
(ii) Going Concern
The financial statements have been prepared on the going concern basis,
which assumes that the Group will continue to be able to meet its
liabilities as they fall due for the foreseeable future. The Group has cash
balances is debt free and expects to continue to release further cash
from working capital to fund business needs.
The Group has prepared trading forecasts through to December 2014
which include detailed cash flow calculations. The forecasts are based on
detailed assumptions as to sales performance by month, product mix and
working capital assumptions. The forecasts assume a similar level
turnover in 2010 to 2009 for the Powered Access division but improved
sales levels for Electric Vehicles. The Powered Access forecasts are
underpinned by order intake rates, the Electric Vehicles increase is
supported by order book levels as well as prospects and intake rates.
During 2009, the powered access division released cash from inventories,
this is forecast to continue in the first part of 2010, with the proportion
of sales requiring purchase of new components increasing throughout
the year. These proportions are based on product mix assumptions.
There is inherent uncertainty in any forecast. Such uncertainties include
the lack of visibility regarding sales in the current economic and financial
climate, however the level of orders taken and prospects is more than
adequate to indicate activity levels that support the forecast sales for
2010. Furthermore the company faces additional uncertainties: the risk
that the actions that are planned and being put into effect might take
more time to complete than forecast; the movement in dollar and euro
exchange rates. The Directors feel that a reasonably balanced approach
has been taken to these risks in the forecast.
The Directors are confident that the assumptions underlying their
forecasts are reasonable and that the Group will be able to operate
within its cash balances. Having taken the uncertainties into account the
Board believes that it is appropriate to prepare the financial statements
on the going concern basis. The financial statements do not include any
adjustment to the value of the balance sheet assets or provisions for
further liabilities, which would result should the going concern concept
not be valid.
(iii) Basis of consolidation
The group financial statements consolidate the financial
statements of Tanfield Group plc (‘the company’) and its
subsidiaries, and they incorporate its share of the results of its
associates using the equity method of accounting .
A subsidiary is an entity that is controlled by another
entity, known as the parent. Control is power to
govern the financial and operating policies of an
entity so as to obtain benefits from its activities.
An associate is an entity over which another entity
has significant influence and that is neither a
subsidiary nor an interest in a joint venture.
Significant influence is the power to participate in the
financial and operating policy decisions of an entity
but is not control or joint control over those policies.
The results of subsidiaries acquired or disposed are
consolidated from and up to the date of change of control.
The costs of an acquisition are measured as the fair value of
the assets given, equity instruments issued and liabilities
incurred or assumed at the date of exchange, plus costs directly
attributable to the acquisition. Identifiable assets acquired and
liabilites and contingent liabilities assumed in a business
combination are initially measured at fair value at the
acquisition date irrespective of any minority interest.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used
in line with those used by the group. All intra‐group
transactions, balances, income and expenses are eliminated on
consolidation
Investments in associates are initially recognised at cost.
Subsequent to acquisition, the carrying value of the group’s
share of post acquisition reserves, less any impairment in the
value of individual assets. The income statement reflects the
group’s share of the results of operations after tax of the
associate.
(iv) Revenue
Service revenue is measured at the fair value of the
consideration received or receivable and represents amounts
receivable for goods and services provided in the normal
course of business, net of discounts, VAT and other sales
related taxes.
Revenue from the sale of goods is recognised when goods
are delivered and title has passed.
(v) Leases
Leases are classified as finance leases whenever the terms of
the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as
operating leases.
Assets held under finance leases are recognised as assets of
the Group at their fair value or, if lower, at the present value of
the minimum lease payments, each determined at the
inception of the lease. The corresponding liability to the lessor
is included in the balance sheet as a finance lease obligation.
Lease payments are apportioned between finance charges and
reduction of lease obligation so as to achieve a constant rate of
17
TANFIELD GROUP PLC FINANCIAL STATEMENTS
interest on the remaining balance of the liability. Finance charges are
charged directly against income.
Rentals payable under operating leases are charged to income on a
straight‐line basis over the term of the relevant lease. Benefits received
and receivable as an incentive to enter an operating lease are also spread
on a straight line basis over the lease term.
(vi) Foreign currencies
Transactions in currencies other than sterling, the presentational and
functional currency of the group, are recorded at the rates of exchange
prevailing on the dates of the transactions. At each balance sheet date,
monetary assets and liabilities that are denominated in foreign
currencies are retranslated at the rates prevailing on the balance sheet
date.
Non‐monetary assets and liabilities carried at fair value that are
denominated in foreign currencies are translated at the rates prevailing
at the date when the fair value was determined. Gains and losses arising
on retranslation are included in the income statement for the period,
except for exchange differences on non‐monetary assets and liabilities,
which are recognised directly in equity.
On consolidation, the assets and liabilities of the Group’s overseas
operations are translated at exchange rates prevailing on the balance
sheet date. Income and expense items are translated at the average
exchange rates for the period.
Exchange differences arising, if any, are classified as equity and
transferred to the Group’s translation reserve. Such translation
differences are recognised as income or as expenses in the period in
which the operation is disposed of.
Goodwill and fair value adjustments arising on the acquisition of a
foreign entity are treated as assets and liabilities of the foreign entity and
translated at the closing rate.
(vii) Intangible assets
Identifiable intangible assets are recognised when the group controls the
asset, it is probable that future economic benefits attributable to the
asset will flow to the group and the cost of the asset can be reliably
measured. All intangible assets, other than Goodwill, are amortised over
their useful economic life.
Goodwill
Goodwill arising on consolidation represents the excess of the cost of
acquisition over the Group’s interest in the fair value of the identifiable
assets and liabilities of a subsidiary, associate or jointly controlled entity
at the date of acquisition and is included as a non current asset.
Goodwill is tested annually for impairment and is carried at cost less
accumulated impairment losses. Any impairment is recognised
immediately in the income statement and is not subsequently reversed.
Goodwill is allocated to cash generating units for the purpose of
impairment testing.
On disposal of a subsidiary the attributable amount of goodwill is
included in the determination of the profit or loss on disposal.
Computer Software
Computer software comprises computer software purchased from third
parties and is carried at cost less accumulated amortisation.
Computer Software
Computer software comprises computer software purchased
from third parties and is carried at cost less accumulated
amortisation.
Manufacturing schedules and other intangibles
Manufacturing schedules and other intangible assets have been
brought in on the acquisition of businesses and capitalised at a
fair value. The intangible assets are carried at cost less
accumulated amortisation and impairment losses.
Estimated useful economic lives
The estimated useful economic lives assigned to the principal
categories of intangible assets are as follows:
Computer software 5 years
Manufacturing schedules 10 years
Other intangible assets 2 to 10 years
(viii) Research and development
Research expenditure is recognised as an expense in the period
in which it is incurred.
Development expenditure is recognised in the income
statement in the period in which it is incurred unless it is
probable that economic benefits will flow to the group from
the asset being developed, the cost of the asset can be reliably
measured and technical feasibility can be demonstrated.
Internally‐generated intangible assets are amortised on a
straight‐line basis over their useful lives. (10 to 15 years)
(ix) Plant, property and equipment
Plant, property and equipment is included in the balance sheet
at historical cost, less accumulated depreciation and any
impairment losses.
On disposal of property, plant and equipment, the difference
between sales proceeds and the net book value at the date of
disposal is recorded in the income statement.
Depreciation
Depreciation is charged so as to write off the cost of assets over
their estimated useful lives, using the straight‐line method, on
the following bases:
Plant and Machinery 3‐ 10 years
Short Leasehold Property
Alterations
over the
lifetime of the
lease
Fixtures, fittings and equipment 3‐ 10 years
Motor Vehicles 3‐ 5 years
Assets held under finance leases are depreciated over their
expected useful lives on the same basis as owned assets or,
where shorter, the term of the relevant lease.
18
TANFIELD GROUP PLC FINANCIAL STATEMENTS
(x) Asset Impairment (excluding Goodwill)
At each balance sheet date, the Group reviews the carrying amounts of
its tangible and intangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in
order to determine the extent of the impairment loss. Where the asset
does not generate cash flows that are independent from other assets,
the Group estimates the recoverable amount of the cash‐generating unit
to which the asset belongs. An intangible asset with an indefinite useful
life is tested for impairment annually and whenever there is an indication
that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and
value in use. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre‐tax discount rate that
reflects current market assessments of the time value of money and the
risks specific to the asset for which the estimates of future cash flows
have been adjusted.
If the recoverable amount of an asset (or cash‐generating unit) is
estimated to be less than its carrying amount, the carrying amount of the
asset (cash‐generating unit) is reduced to its recoverable amount. An
impairment loss is recognised as an expense immediately, unless the
relevant asset is carried at a revalued amount, in which case the
impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash‐generating unit) is increased to the revised
estimate of its recoverable amount, but so that the increased carrying
amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset (cash‐
generating unit) in prior years. A reversal of an impairment loss is
recognised as income immediately, unless the relevant asset is carried at
a revalued amount, in which case the reversal of the impairment loss is
treated as a revaluation increase.
(xi) Inventories
Inventories are stated at the lower of cost and net realisable value. Cost
comprises direct materials and, where applicable, direct labour costs and
those overheads that have been incurred in bringing the inventories to
their present location and condition. Cost is calculated using the
weighted average method. Net realisable value represents the estimated
selling price less all estimated costs to completion and costs to be
incurred in marketing, selling and distribution.
(xii) Share based payments
The Group issues equity‐settled share based payments to certain
employees and has applied the requirements of IFRS2 “Share‐based
payments”.
Equity settled share‐based payments are measured at fair value at the
date of the grant. Fair value is measured using a Black‐Scholes model.
The fair value is expensed on a straight line basis over the vesting
period, based on the Group’s estimate of shares that will eventually vest
(xiii) Borrowing costs
All borrowing costs are expensed in the income statement in the period
in which they are incurred.
(xiv) Financial instruments
Recognition of financial assets and financial liabilities
Financial assets and financial liabilities are recognised on the
Group’s balance sheet when the Group has become a party to
the contractual provisions of the instrument.
Financial assets
Trade and other receivables.
Financial assets within Trade and other receivables are initially
recognised at fair value, which is usually the original invoiced
amount and are subsequently carried at amortised cost using
the effective interest method less provisions made for doubtful
receivables.
Trade receivables do not carry any interest and are stated at
their nominal value as reduced by appropriate allowances for
estimated irrecoverable amounts.
Provisions are made specifically where there is evidence of a
risk of non‐payment, taking into account ageing, previous
losses experienced and general economic conditions.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand less short
term bank overdrafts.
Financial liabilities
Financial liabilities and equity
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements
entered into. An equity instrument is any contract that
evidences a residual interest in the assets of the group after
deducting all of its liabilities.
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares are shown in
equity as a deduction from the proceeds received
Trade and other payables
Financial liabilities within Trade and other payables are initially
recorded at fair value, which is usually the original invoiced
amount, and subsequently carried at historical cost.
Loans and other borrowings
Loans and other borrowings are initially recognised at fair value
plus directly attributable transaction costs and are
subsequently carried at amortised cost using the effective
interest method.
Derivative financial instruments and hedge accounting
The Group transacts derivative financial instruments to manage
the underlying exposure to foreign exchange risks and interest
rate risk. The Group does not enter into derivative financial
instruments for speculative purposes. Derivative financial
assets are included in the balance sheet at fair value. Changes
in fair value are recognised directly in equity where they qualify
for hedge accounting because they have been designated as
hedges of future cash flows, otherwise they are recognised in
the income statement as they arise.
19
TANFIELD GROUP PLC FINANCIAL STATEMENTS
(xv) Government grants
Government grants towards staff re‐training costs are recognised as
income over the periods necessary to match them with the related costs
and are deducted in reporting the related expense.
Government grants relating to property, plant and equipment are
treated as deferred income and released to profit and loss over the
expected useful lives of the assets concerned.
(xvi) Post retirement benefits
The group operates a defined contribution scheme which is administered
by an independent trustee. The group contributions are charged to the
income statement as they are incurred.
(xvii) Segmental reporting
A business segment is a group of assets and operations that provide a
product or service and that is subject to risks and returns that are
different from other business segments. For management information
purposes the group is currently separated into two main distinctive
operating units, namely Powered Access Platforms and Electric Vehicles.
All other operations are classed as “other” and include unallocated group
costs.
A geographic segment is a group of assets and operations that provide
a product or service within a particular economic environment and that
is subject to risks and returns that are different from segments operating
in different economic environments.
(xviii) Taxation
The tax expense represents the sum of the tax currently payable and
deferred tax.
The tax currently payable is based on taxable profit for the year.
Taxable profit differs from net profit as reported in the income
statement because it excludes items of income or expense that are
taxable or deductible in other years and it further excludes items that are
never taxable or deductible. The Group’s liability for current tax is
calculated by using tax rates that have been enacted or substantively
enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amount of assets and liabilities in the
financial statements and the corresponding tax bases used in the
computation of taxable profit, and is accounted for using the balance
sheet liability method. Deferred tax liabilities are recognised for all
taxable temporary differences and deferred tax assets are recognised to
the extent that it is probable that taxable profits will be available against
which deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises from
goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction which affects
neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries except where the
Group is able to control the reversal of the temporary difference and it is
probable that the temporary difference will not reverse in the
foreseeable future.
Deferred tax is calculated at the tax rates that are expected to apply to
the period when the asset is realised or the liability is settled. Deferred
tax is charged or credited in the income statement, except when it
relates to items credited or charged directly to equity, in which
case the deferred tax is also dealt with in equity.
The carrying amount of deferred tax assets is reviewed at
each balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available
to allow all or part of the asset to be recovered.
(xix) Termination benefits
Termination benefits (leaver costs) are payable when
employment is terminated before the normal retirement date,
or when an employee accepts voluntary redundancy in
exchange for these benefits. The group recognises termination
benefits when it is demonstrably committed to the affected
employees leaving the group.
(xx) Provisions
Provisions are recognised when the group has a present legal
or constructive obligation as a result of past events, it is
probable that an outflow of resources will be required to settle
the obligation and the amount can be reliably estimated.
(xxi) Investments
Investments are included at cost less amounts written off.
Critical accounting estimates and key
judgements
The preparation of financial statements in conformity with IFRS
requires the use of accounting estimates and assumptions. It
also requires management to exercise judgement in the
process of applying the group’s accounting policies. We
continually evaluate our estimates, assumptions and
judgements based on the most up to date information available
The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are discussed
below.
Goodwill
The recoverable amount of cash generating units are
determined on value in use calculations. These calculations
require the use of estimates, including management’s
expectations of future revenue growth, operating costs and
profit margins for each cash generating unit and a discount rate
in order to calculate present value.
Intangible assets
Amortisation of intangible assets is charged to the income
statement on a straight line basis over the useful economic
lives of each intangible asset. The Directors review the
assumptions made at the time of acquisitions in the light of
current evidence in the market, and estimated useful economic
lives and revisited the carrying value of each intangible asset.
Significant changes in the carrying values assessed are charged
through the income statement as an impairment
20
TANFIELD GROUP PLC FINANCIAL STATEMENTS
Trade receivables
The Group regularly assesses the recoverability of its trade receivables
based on a range of factors including the age of the receivable,
creditworthiness of the customer, any credits required to release
payments, and changes in that customer’s access to credit to fund their
purchases. When determining the recoverability of an account the Group
makes estimations as to the financial condition of each customer, their
importance in providing a route to market, any debt collection strategy in
place and their ability to subsequently make payment or provide other
future revenue benefits.
Warranty Provision
The Group has reviewed the warranties that it has offered with the sales
of its vehicles, and has established a warranty provision to cover the
estimated future warranty costs of products sold over the remaining life
of the warranty. The estimate of future warranty costs assumes that the
recent product developments continue to reduce the warranty support
necessary from that in previous periods.
Inventories
In accordance with IAS2 the group regularly reviews its inventory to
ensure it is carried at the lower of cost or net realisable value. The
management constantly reviews slow moving and obsolete items arising
from changes in the product mix demanded by customers, reductions in
overall volumes, supplier failures and strategic resourcing decisions.
Obsolescence provisions are calculated based on current market
values and future sales of inventories. In situations where market
demand changes, significantly altering production volumes, inventories
are reviewed to ensure that components have a realistic likelihood of
being used in current models in a reasonable timeframe. If this review
identifies significant levels of obsolete inventory, this obsolescence is
charged to the income statement as an impairment.
21
New and amended standards and
interpretations effective from 1 January 2010
not yet adopted by the group
IFRS 3 (Revised) "Business combinations" (effective for
business combinations occurring in accounting periods
beginning on or after 1 July 2009).
This standard continues to apply the acquisition method to
business combinations. However, it introduces a number of
changes that will impact the amount of goodwill recognised,
the reported results in the period that an acquisition occurs,
and future reported results. The Group will apply this standard
from 1 January 2010 as applicable.
(Revised) “Consolidated and separate financial
IAS 27
statements” (Effective 1 January 2010).
IAS 27 (Revised) requires the effects of all transactions with non
controlling interests to be recorded in equity if there is no
change in control. Such transactions will no longer result in
Goodwill or gains or losses being recorded. IAS 27 (Revised)
also specifies that when control is lost, any remaining interest
should be re‐measured to fair value and a gain or loss recorded
through the income statement. The management is currently
assessing the impact on the group’s financial statements.
IFRIC 17 “Distribution of non‐cash assets to owners” (Effective
1 January 2010).
IFRIC 17 provides guidance on how an entity should measure
distributions other than cash when it pays dividends to its
owners. The standard requires the dividend payable to be
measured at the fair value of the assets to be distributed, and
any difference between the fair value and the book value of the
assets is recorded in the income statement. The group does not
expect the adoption of this guidance to have a significant
impact on the group’s financial statements.
TANFIELD GROUP PLC FINANCIAL STATEMENTS
Accounting standards, interpretations and
amendments to published accounts
The Group considered the implications, if any, of the following
amendments to IFRSs during the year ended 31 December 2009.
New and amended standards and interpretations
effective from 1 January 2009 adopted by the group
IFRS 2 (Amendment) "Share‐based payment" (effective for periods
commencing on or after 1 January 2009).
This amendment clarifies that vesting conditions are service conditions
and performance conditions only and that all cancellations, whether by
the entity or by other parties, should receive the same accounting
treatment.
IFRS 8 ‘Operating Segments’ (effective for periods commencing on or
after 1 January 2009).
IFRS 8 requires the identification of operating segments based on
internal reporting to the chief operating decision maker and extends the
scope of IAS14, ‘Segmental Reporting’.
IAS 1 (Revised) "Presentation of financial statements" (effective for
annual periods beginning on or after 1 January 2009).
The new standard separates owner and non‐owner changes in equity.
The statement of changes in equity will include only details of
transactions with owners, with non‐owner changes in equity presented
as a single line. In addition, the Standard introduces the statement of
comprehensive income which presents all items of recognised income
and expense, either in one single statement, or in two linked statements.
IAS 23 (Amendment) "Borrowing costs" (effective for annual periods
beginning on or after 1 January 2009).
This amendment requires an entity to capitalise borrowing costs directly
attributable to the acquisition, construction or production of a qualifying
asset as part of the cost of that asset, removing the option to
immediately expense those borrowing costs. The group currently has no
borrowing costs under IAS23.
IFRS 1 (Amendment) "First‐time adoption of IFRSs" and IAS 27
(Amendment) "Consolidated and Separate Financial Statements"
(effective for annual periods beginning on or after 1 January 2009).
The amendments to IFRS 1 allows an entity to determine the cost of
investments in subsidiaries, jointly controlled entities or associates in its
opening IFRS financial statements in accordance with IAS 27 or using a
deemed cost. The amendment to IAS 27 requires all dividends from a
subsidiary, jointly controlled entity or associate to be recognised in the
income statement in the separate financial statements. The Group will
apply these amendments from 1 January 2009. This had no impact on the
Company as the financial statements were already prepared under IFRS.
22
TANFIELD GROUP PLC FINANCIAL STATEMENTS
NOTES TO THE ACCOUNTS
1. Segmental analysis
Business segments
For management purposes, the Group is currently organised into three operating divisions – Powered Access Platforms, Zero Emission
Vehicles and other operations. These divisions are the basis on which the Group reports its primary segment information.
Principal activities are as follows:
Powered Access Platforms: design and manufacture of powered access equipment
Zero Emission Vehicles: design, manufacture, service and maintenance of electric vehicles
Other: design and manufacture of engineering parts and the group holding company
Intra‐group revenue generated from the sale of products and services is agreed between the relevant business.
Operating results by line of business
2009
2008
Revenue
£000's
41,708
15,057
1,394
58,159
Loss
£000's
(15,457)
(5,427)
(1,160)
(22,044)
(51)
‐
207
(567)
1,066
(21,389)
Revenue
£000's
114,388
25,087
6,259
145,734
2009
£000's
60,562
18,943
2,958
82,463
72
1,915
84,450
(10,792)
(3,675)
(3,175)
(17,642)
(45)
(375)
(24)
(2,228)
(20,314)
Loss
£000's
(82,689)
(1,389)
(3,879)
(87,957)
‐
(372)
457
(913)
239
(88,546)
2008
£000's
86,745
21,389
7,757
115,891
‐
1,779
117,670
(17,389)
(3,674)
(3,102)
(24,165)
(687)
(307)
(27)
(6,703)
(31,889)
Powered Access Platforms
Zero Emission Vehicles
Other
Segment revenue / loss
Share of post tax loss of associate
Restructuring costs
Finance income
Finance costs
Taxation
Loss for the year
Assets and liabilities by line of business1
Assets
Powered Access Platforms
Zero Emission Vehicles
Other2
Total segment assets
Current tax assets
Deferred tax assets
Total assets
Liabilities
Powered Access Platforms
Zero Emission Vehicles
Other
Total segment liabilities
Current tax liabilities
Deferred tax liabilities
Retirement benefit obligations
Deferred consideration2
Total liabilities
1
Intercompany loans have been omitted from the asset and liabilities by line of business summary.
2
The deferred consideration was reduced by cash payments made from “Other”
23
TANFIELD GROUP PLC FINANCIAL STATEMENTS
1. Segmental analysis continued
Geographical information
The analysis of revenue by geographical area is on the basis of the final destination country.
Revenue by geographic area
Entity’s country of domicile – United Kingdom
Europe excluding UK
Americas
Australasia
Other (includes Asia, Africa and rest of the world not classified above)
Total
Total amortisation and depreciation, and capital expenditure by
geographic area
Powered Access equipment
UK
USA
Asia
Australasia
Electric Vehicles
UK
Other
UK
Total
Total assets and capital expenditure are allocated to geographical areas based on the location of the asset
Non current assets (excluding financial instruments and deferred tax assets)
Located in the entity’s country of domicile – United Kingdom
Located In foreign countries in which the Group holds assets:
Americas
Australasia
Other
Total
2. Staff costs
Aggregate remuneration comprised
Wages and Salaries
Share scheme expense
Social Security Costs
Other Pension Costs
Total staff costs
Group
Average monthly number of employees
Production
Head Office, Administration and sales & distribution
Total
Amortisation and
Depreciation
2009
2008
£000's
£000's
854
694
11
80
1,148
220
3,007
723
1,208
4
91
904
265
3,195
2009
£000's
16,451
7,570
15,933
10,973
7,232
58,159
2008
£000's
28,721
25,983
58,349
17,627
15,054
145,734
Capital expenditure
2009
£000's
59
‐
97
89
542
‐
787
2009
£000's
15,707
3,152
430
92
19,381
2009
£000's
16,376
111
1,874
284
18,645
2009
No.
424
229
653
2008
£000's
1,650
442
24
63
5,317
22
7,518
2008
£000's
17,417
3,965
375
98
21,855
2008
£000's
28,756
683
2,431
327
32,197
2008
No.
834
316
1,150
Details of Directors’ fees and salaries, bonuses, pensions, benefits in kind and other benefit schemes together with details in respect of
Directors’ share option plans are given in the Directors Remuneration Report on pages 9 to 10.
24
TANFIELD GROUP PLC FINANCIAL STATEMENTS
3. Depreciation and amortisation
Depreciation of property, plant & equipment
Amortisation of intangible fixed assets
Total depreciation and amortisation charge
Depreciation of property, plant & equipment
‐ owned assets
‐ leased assets
4. Other operating Income & expenses
Other operating income
Grants received
Other operating expenses
Operating lease rentals
Net (profit) on foreign exchange
Auditors' remuneration (see below)
Research and development costs
One off bank charges relating to interest rate swap
(Profit)/Loss on disposal of Intangible assets
(Profit)/Loss on disposal of property, plant & equipment
(Gain) on deferred consideration reassessment
Warranty provisions
Other operating expenses
Total operating expenses
2009
£000's
1,203
1,804
3,007
988
215
2009
£000's
‐
869
1,053
196
42
‐
69
55
(926)
527
9,763
11,648
2008
£000's
1,165
2,030
3,195
894
271
2008
£000's
500
939
(2,433)
228
308
145
‐
(587)
‐
‐
12,621
11,221
Auditors' remuneration
Amounts payable to Baker Tilly UK Audit LLP and their associates in respect of both audit and non audit services are as follows:
Audit Services
statutory audit of parent and consolidated accounts
146
148
2009
£000's
2008
£000's
Other Services
audit of subsidiaries pursuant to legislation, where such services are
provided by Baker Tilly UK Audit LLP
work provided by associates of Baker Tilly UK Audit LLP in respect of
consolidation returns or local legislative requirements
Other services relating to taxation
compliance services
Services relating to Corporate finance
Comprising
Audit services
Non audit services
‐
10
40
‐
196
156
40
‐
30
40
10
228
178
50
The figures presented are for Tanfield Group plc and subsidiaries as if they were a single entity. Tanfield Group plc has taken the exemption
permitted by SI 2005 2417 Reg 5 to omit information about its individual accounts.
The parent of Tanfield Group PLC is exempt from disclosing its income statement. The loss for the year is £17,131k (2008: £78,223k).
25
TANFIELD GROUP PLC FINANCIAL STATEMENTS
5. Finance expense and finance income
Finance expense
Interest on bank overdrafts, loans, financial instruments & invoice discountinga
Interest on obligations under finance leases
Fair value loss on Interest rate swap (note 28)
Total finance expense
a
The Invoice Discounting facility was fully settled and discontinued during the year.
Finance income
Interest on cash and cash equivalents
Fair value gain on Interest rate swap (note 28)
Total finance income
6. Taxation
Analysis of taxation (credit) expense for the year
United Kingdom
Corporation tax at 28% (2008: 28%)
Adjustments in respect of prior periods
Non UK Taxation
Current
Adjustments in respect of prior periods
Total current taxation (credit) expense
Deferred tax
Origination and reversal of temporary differences
Total deferred tax (credit) expense
Total taxation (credit) expense in the income statement
Factors affecting taxation (credit) expense
2009
£000's
494
73
‐
567
2009
£000's
80
127
207
2008
£000's
280
117
516
913
2008
£000's
457
‐
457
2009
£000's
2008
£000's
‐
‐
139
(1,137)
(998)
(68)
(68)
(1,066)
(278)
‐
727
‐
449
(688)
(688)
(239)
The taxation (credit) expense on the (loss) profit for the year differs from the amount computed by applying the corporation tax rate to the
(loss) profit before taxation as a result of the following factors:
(Loss) before taxation
Notional taxation (credit) expense at UK rate of 28% (2008: 28%)
Effects of:
Non (taxable) deductable expenses
Deferred tax asset not recognised in the period
Adjustments in respect of prior periods
Total taxation (credit) expense
2009
£000's
(22,455)
(6,287)
(153)
6,511
(1,137)
(1,066)
2008
£000's
(88,785)
(24,860)
(3,356)
28,455
‐
(239)
26
TANFIELD GROUP PLC FINANCIAL STATEMENTS
7. (Loss) earnings per share
Basic (loss) earning per share is calculated by dividing the loss attributable to equity shareholders by the weighted average number of
shares in issue during the period.
In calculating the dilution per share, share options outstanding and other potential ordinary shares have been taken into account where the
impact of these is dilutive. The average share price during the year, rebased to account for the 5 for 1 share consolidation, was 49.95p
(2008: 43.62p).
The weighted average number of shares were:
Basica
Potential dilutive ordinary shares from share options
Total Diluted
Loss per share
(Loss) attributable to equity shareholders of the parent
Basic (loss) per share (p)
Diluted (loss) per share (p) b
(Loss) earnings per share before one off items
Adjusted (Loss) earnings attributable to equity shareholders of the parent before one off items
Basic (loss) earnings per share (p)
Diluted (loss) earnings per share (p)
2009
Thousands
of shares
74,077
164
74,241
(Restated)
2008
Thousands of
shares
74,077
159
74,236
(21,389)
(28.9)
(28.9)
(21,715)
(29.3)
(29.3)
(88,546)
(119.5)
(119.5)
1,488
200.9
200.4
a
The basic number of shares in 2008 has been restated for comparison purposes from 370,386 thousand to 74,077 thousand shares to account for the 5 for 1 share consolidation which took place on 19 June
2009.
b
IAS33 defines dilution as a reduction in earnings per share or an increase in loss per share resulting from the assumption that options are exercised. As the potential dilutive ordinary shares from share options
reduce the loss per share these share are omitted from the dilutive loss per share calculation.
The earnings attributable to equity shareholders used in the basic (loss) earnings per share calculations were:
Loss attributable to equity shareholders of the parent
Adjustment for One off items:
Impairments
(Gain) on deferred consideration reassessment
Restructuring
(Loss) earnings for the purposes of earnings per share before one off items
2009
£000's
(21,389)
600
(926)
‐
(21,715)
2008
£000's
(88,546)
89,662
‐
372
1,488
The potential dilutive ordinary shares from share options used in the diluted (loss) earnings per share calculations were:
2009
No of share
options
Exercise price
(p)
Average share
price during
the year (p)
Number of shares
deemed issued for
no consideration
180,000
2,901,334
250,000
375,000
120,000
5
100
115
200
300
49.95
49.95
49.95
49.95
49.95
164,284
Antidilutive
Antidilutive
Antidilutive
Antidilutive
164,284
27
No of share
options
Exercise
price (p)
180,000
2,901,334
250,000
450,000
120,000
5
100
115
200
300
2008
Average
share price
during the
year (p)
43.62
43.62
43.62
43.62
43.62
Number of shares
deemed issued for
no consideration
159,367
Antidilutive
Antidilutive
Antidilutive
Antidilutive
159,367
TANFIELD GROUP PLC FINANCIAL STATEMENTS
8. Restructuring costs
Restructuring costs relate to one off costs associated with resizing the business in line with market conditions and consist of employee
related expenses. A summary of these costs are shown below:
Restructuring costs
9. Property, plant and equipment
Group
Cost
At 1 January 2008
Additions
Disposals
Reclassifications
Exchange differences
At 1 January 2009
Additions
Disposals
Exchange differences
At 31 December 2009
Accumulated depreciation
At 1 January 2008
Charge for the year
Disposals
Impairmentsb
Reclassifications
Exchange differences
At 1 January 2009
Charge for the year
Disposals
Exchange differences
At 31 December 2009
Carrying amount
At 31 December 2009
At 31 December 2008
2009
£000's
‐
2008
£000's
372
Land and
buildings
£000's
Plant and
Machinerya
£000's
Fixtures,
Fittings and
equipment
£000's
Motor
Vehicles
£000's
2,373
90
(167)
33
44
2,373
30
(94)
15
2,324
452
131
(167)
‐
‐
2
418
140
(13)
‐
545
6,478
664
(2,292)
127
378
5,355
78
(75)
(126)
5,232
3,693
562
(2,292)
‐
‐
75
2,038
660
(74)
(31)
2,593
1,711
258
(1,031)
(83)
114
969
83
(37)
1
1,016
1,013
248
(1,029)
83
(9)
23
329
236
(37)
5
533
1,779
1,955
2,639
3,317
483
640
906
75
(212)
(77)
16
708
52
(156)
24
628
212
224
(176)
‐
9
5
274
167
(125)
13
329
299
434
Total
£000's
11,468
1,087
(3,702)
‐
552
9,405
243
(362)
(86)
9,200
5,370
1,165
(3,664)
83
‐
105
3,059
1,203
(249)
(13)
4,000
5,200
6,346
a
The carrying amount of the group plant and machinery includes an amount of £1,096k (2008: £1,321k) in respect of assets held under finance leases. The depreciation charge on those assets for 2009 was £215k
(2008: £271k).
b
The impairment related to the impairment of legacy I.T system costs.
28
TANFIELD GROUP PLC FINANCIAL STATEMENTS
10. Goodwill
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs) that are expected to benefit
from that business combination. The smallest groups of assets that generate cash inflows that are largely independent from other groups of
assets have been identified by the group as Snorkel and its subsidiaries, Upright and Smith electric vehicles.
The group performs an annual impairment test or more frequently if there are indications that goodwill might be impaired, based on the
cash generating units (CGUs). Goodwill is allocated to the groups CGUs as follows:
At 1 January 2008
Acquisitions through business combinations
Impairments
Exchange differences
At 1 January 2009
Acquisitions through business combinations
Impairments
Exchange differences
At 31 December 2009
Snorkel
£000's
27,503
‐
(27,510)
7
‐
‐
‐
‐
‐
Upright
£000's
4,385
‐
(4,385)
‐
‐
‐
‐
‐
‐
Smith
Electric
Vehicles Consolidated
£000's
32,244
‐
(31,895)
7
356
‐
‐
‐
356
£000's
356
‐
‐
‐
356
‐
‐
‐
356
In accordance with IAS 36 the Group values Goodwill at the lower of its carrying value or its recoverable amount, where the recoverable
amount is the higher of the value if sold and its value in use. In addition IAS38 requires intangible assets with finite useful lives to follow
the same impairment testing as Goodwill including the use of value in use calculations.
The key assumptions used in performing the impairments test, by CGU, are shown below:
2009
Method of determining recoverable amounts
Discount rate
Growth rates
Gross margins
2008
Method of determining recoverable amounts
Discount rate
Growth rates
Gross margins
Snorkel
£000's
Upright
£000's
Smith
Electric
Vehicles
£000's
Value in use Value in use
9.3%
0‐3%
30%
9.3%
2‐3%
25‐30%
Value in use
9.3%
2‐3%
35%
Value in use Value in use
9.3%
0‐3%
30%
9.3%
2‐3%
25‐30%
Value in use
9.3%
2‐3%
35%
Recoverable amount
The value in use of each CGU is determined using pre tax cash flow projections derived from financial budgets for the next 3 years and are
based on management experience and current trading expectations, extrapolated to a ten year period using conservative growth
assumptions, given current uncertainty.
Discount rate
The discount rate applied to the pre tax cash flow projections reflects managements’ current market assessment of the time value of
money.
Growth rates and margins
Growth rates and gross margins are determined based on the historical rates along with the expected future prospects of the sector in
which the CGU operates.
29
TANFIELD GROUP PLC FINANCIAL STATEMENTS
10. Goodwill continued
Impairments
Based on the value in use calculations, the Group has determined that the value of the Goodwill has been impaired and as such an
impairment charge of £nil (2008: £31.9m, Snorkel £27.5m, Upright £4.4m) has been made to write down the carrying value of the asset.
11. Intangible assets
Group
Cost
At 1 January 2008
Additionsa
Disposals
Exchange differences
At 1 January 2009
Additions
Disposals
Exchange differences
At 31 December 2009
Accumulated depreciation
At 1 January 2008
Charge for the year
Disposals
Impairmentc
Exchange differences
At 1 January 2009
Charge for the year
Disposals
Impairments
Reclassifications
Exchange differences
At 31 December 2009
Carrying amount
At 31 December 2009
At 31 December 2008
Development
Costs
£000's
Manufacturing
schedules
£000's
Other
Intangible
Assetsb
£000's
Computer
Software
£000's
4,508
6,396
‐
‐
10,904
492
‐
‐
11,396
317
451
‐
‐
‐
768
1,114
‐
‐
‐
‐
1,882
11,086
‐
‐
4,206
15,292
‐
‐
‐
15,292
456
456
‐
8,303
3,536
12,751
296
‐
‐
‐
‐
13,047
9,302
‐
(112)
1,776
10,966
‐
(1,480)
‐
9,486
1,635
1,065
(112)
4,302
1,776
8,666
337
(1,480)
‐
‐
‐
7,523
387
35
(135)
3
290
52
(144)
(1)
197
190
58
(135)
‐
1
114
57
(75)
‐
‐
(2)
94
Total
£000's
25,283
6,431
(247)
5,985
37,452
544
(1,624)
(1)
36,371
2,598
2,030
(247)
12,605
5,313
22,299
1,804
(1,555)
‐
‐
(2)
22,546
9,514
10,136
2,245
2,541
1,963
2,300
103
176
13,825
15,153
a
The development costs of £6,396k in the prior year are in relation to the new product developments which included the Ampere and other Zero Emission vehicles.
b
Other intangible assets include trademarks, manufacturing schedules, customer order book and customer lists which arose on previous years business combinations
c
The impairment balance of £12,605k in the prior year is made up of £12,094k provided against the intangible asset created on the acquisition of Snorkel International Inc and £511k relating to the discontinued
Norquip product line.
30
TANFIELD GROUP PLC FINANCIAL STATEMENTS
12. Inventories
In accordance with IAS2 the group regularly reviews its inventory to ensure it is carried at the lower of cost or net realisable value. The
directors consider that the carrying amounts of inventories approximates to their fair value. In 2008 the group impaired inventories by
£22.2m due to slow moving and obsolete items arising from changes in the product mix demanded by customers, reductions in overall
volumes, supplier failures and strategic resourcing decisions. The impairment was allocated directly against stock items and therefore no
general inventory impairment provision account was created.
The group’s inventories comprised:
Raw materials and consumables
Work‐in‐progress
Finished Goods and goods for resale
Total inventories
Changes in inventories of finished goods and WIP can be calculated as:
Total finished goods and WIP at 1 January
Changes in buyback stocks (note 18)
Changes in inventories of finished goods and WIP
Total finished goods and WIP at 31 December
13. Investments
Group & company
At 1 January
Additions
Exchange movements
At 31 December
2009
£000’s
24,095
1,969
18,551
44,615
2009
£000’s
26,895
(17)
(6,358)
20,520
2009
£000’s
251
51
(27)
275
2008
£000’s
33,665
2,087
24,808
60,560
2008
£000’s
22,131
(44)
4,808
26,895
2008
£000’s
120
45
86
251
The investment relates to the current value of a money market investment.
14. Cash and cash equivalents
Cash and cash equivalents comprise cash and short‐term deposits held by the group treasury function. The carrying amount of these assets
approximates their fair value.
The group primarily holds Sterling, US Dollars, Euros, Australian Dollars and New Zealand Dollars. Currency denominated balances are
translated to sterling at the balance sheet date.
Cash and cash equivalents
Group
Company
2009
£000's
5,414
2008
£000's
11,130
2009
£000's
907
2008
£000's
5,372
31
TANFIELD GROUP PLC FINANCIAL STATEMENTS
15. Trade and other receivables
Current
Trade amounts receivable
Allowance for estimated irrecoverable amounts
Amounts due from subsidiary undertakings
Other Taxes
Other debtors and prepayments
Non current
Trade amounts receivablea
Group
2009
£000's
11,178
(717)
‐
426
991
11,878
2008
£000's
21,243
(1,483)
‐
203
632
20,595
Company
2009
£000's
2008
£000's
‐
‐
57,405
‐
63
57,468
59,688
‐
44
59,732
900
1,500
‐
‐
a
In 2008 the group recognised a non current asset of £1.5m relating to managements expectations of future benefits receivable from customers and suppliers due to the impairment of its trade receivables. This
balance has been reduced by £600k in 2009 to reflect the further impairment.
The directors consider that the carrying amounts of Trade and other receivables approximates to their fair value.
The movements in allowances for estimated irrecoverable amounts are as follows:
At 1 January
Amounts charged to the income statement
Utilised in the year
Additions
Exchange differences
At 31 December
Average credit period taken on goods (Days)
Group
2009
£000's
1,483
92
(910)
95
(43)
717
66
2008
£000's
112
1,371
‐
‐
‐
1,483
51
Trade and other receivables are continually monitored and allowances provided against trade receivables consist of both specific
impairments and collective impairments based on the group’s historical loss experiences, debt aging and general economic conditions.
Trade receivables including allowance for estimated irrecoverable amounts are due as follows:
2009
2008
Between 0
and 3
months
£000's
Not past due
£000's
7,641
16,020
2,140
2,915
Between 3
and 6
months
£000's
Past due but not impaired
Between 6
and 12
months
£000's
102
148
467
677
Over 12
months
£000's
111
‐
Total
£000's
10,461
19,760
Amounts past due but not impaired have not been provided against if cash has been received after the balance sheet date, balances can be
offset against supplier accounts or where the management believes cash will be collected due to continuing relationships.
Gross trade receivables that have been specifically impaired during the year amounted to Nil (2008: £21,523k)
The Group’s credit risk is primarily attributable to its trade receivables. The Group has no significant concentration of credit risk, with
exposure spread over a large number of counterparts and customers.
32
TANFIELD GROUP PLC FINANCIAL STATEMENTS
16. Trade and other payables
Current
Trade payables
Social security and other taxes
Accrued expenses
Fair value of Interest rate collar
Deferred Income
Average credit period taken on trade purchases (days)
Group
Company
2009
£000's
7,935
1,751
5,143
345
1,004
16,178
87
2008
£000's
9,314
1,085
8,891
517
‐
19,807
77
2009
£000's
254
1,250
45
‐
‐
1,549
2008
£000's
465
219
85
‐
‐
769
The directors consider that the carrying amounts of Trade and other payables approximates to their fair value.
17. Obligations under finance leases
Assets held under finance lease mainly relate to plant and machinery assets and are secured on those assets. The average lease term is 5
years. For the year ended 31 December 2009, the average effective borrowing rate was 10% (2008: 10%). Interest rates are fixed at the
contract date. The directors consider that the carrying amounts of Obligations under finance leases approximates to their fair value. All
leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
A summary of the outstanding leases is shown below:
Group
Amounts payable under finance leases
Within one year
In the second to fifth years (inclusive)
Less: future finance charges
Total finance lease obligations
Company
Amounts payable under finance leases
Within one year
In the second to fifth years (inclusive)
Less: future finance charges
Total finance lease obligations
Minimum leases
payments
2008
£000's
2009
£000's
Present value of minimum
leases payments
2008
£000's
2009
£000's
523
173
696
(60)
636
640
626
1,266
(132)
1,134
480
156
636
‐
636
565
569
1,134
‐
1,134
Minimum leases
payments
2008
£000's
2009
£000's
Present value of minimum
leases payments
2008
£000's
2009
£000's
‐
‐
‐
‐
‐
10
‐
10
‐
10
‐
‐
‐
‐
‐
10
‐
10
‐
10
33
TANFIELD GROUP PLC FINANCIAL STATEMENTS
18. Other creditors
The directors consider that the carrying amounts of Other creditors approximates to their fair value.
Group
Current
Buyback Lease Liability
Invoice Discountinga
Deferred considerationb
2009
£000's
325
‐
2,228
2,553
2008
£000's
342
2,909
6,703
9,954
Company
2009
£000's
‐
‐
2,228
2,228
2008
£000's
‐
‐
5,720
5,720
a
On the 1 July 2009 the group settled and discontinued its invoice discounting facility with regard to its Australasian operations.
b
Per the terms of the Snorkel purchase agreement the group paid deferred consideration cash of £349k on 31 January 2009 and £2,555k on 31 July 2009.
19. Deferred taxation
Group
At 1 January 2008
(Credit) Charge to the income statement
(Credit) Charge to equity
At 1 January 2009
Deferred tax asset
Deferred tax liability
At 1 January 2009
(Credit) Charge to the income statement
(Credit) Charge to equity
At December 2009
Deferred tax asset
Deferred tax liability
At December 2009
Tax losses
£000's
785
994
‐
1,779
1,779
‐
1,779
136
‐
1,915
1,915
‐
1,915
Other
£000's
Total
£000's
‐
(307)
‐
(307)
‐
(307)
(307)
(68)
‐
(375)
‐
(375)
(375)
785
687
‐
1,472
1,779
(307)
1,472
68
‐
1,540
1,915
(375)
1,540
At 31 December 2009, the group had unused tax losses of £71,165k (2008: £49,237k) available for offset against future profits of the same
trade. A deferred tax asset has been recognised in respect of £6,939k (2008: £6,353k) of such losses. No deferred tax asset has been
recognised in respect of the remaining £64,326k (2008: £42,884k) due to the unpredictability of profit streams which results in an
unrecognized deferred tax asset of £18,011k (£12,007k).
Company
At 1 January 2008
(Credit) Charge to the income statement
(Credit) Charge to equity
At 1 January 2009
Deferred tax asset
Deferred tax liability
At 1 January 2009
(Credit) Charge to the income statement
(Credit) Charge to equity
At December 2009
Deferred tax asset
Deferred tax liability
At December 2009
Tax losses
£000's
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
Other
£000's
Total
£000's
278
(278)
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
278
(278)
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
34
TANFIELD GROUP PLC FINANCIAL STATEMENTS
20. Share capital and share premium
The Company has one class of ordinary shares which carry no right to fixed income
At 1 January 2008
Share options exerciseda
At 1 January 2009
5 for 1 Share consolidationb
Cancellation of Capital reduction reserved
Cancellation of retained lossesd
Cancellation of share premium accountd
At 31 December 2009
Nominal
share
value
1p
1p
1p
5p
‐
‐
5p
Number of shares
370,286,090
100,000
370,386,090
(296,308,872)
‐
‐
Share
capitalc
£000’s
3,703
1
3,704
‐
‐
‐
74,077,218
3,704
Share
premium
£000’s
138,493
18
138,511
‐
7,228
(78,902)
(66,837)
‐
a
On 14 April 2008, 100,000 share options were exercised at a price of 19 pence per share for a total consideration of £19,000.
b
On 19 June 2009 the group reorganized its share capital by undertaking a 1 for 5 consolidation of the Company’s existing 370,686,090 ordinary 1p shares. After the consolidation the company had 74,077,218
5p shares in existence. The costs directly associated with the consolidation have been charged to the share premium account.
c
The authorised share capital of the company throughout 2008 and 2009 was £5,000,000, representing 100,000,000 ordinary shares after the 5 for 1 consolidation.
d
On 19 June 2009 the company’s share premium account was cancelled to eliminate the accumulated deficit on its profit and loss account enabling the Company to pay dividends out of profits generated in the
future earlier than would otherwise be the case. The balances cancelled against the share premium account related to accumulated losses of £78,901,901 and a credit from the capital reduction reserve of
£7,227,827. The net balance of £66,837k remaining in the share premium account was cancelled and transferred to a new reserve account named “Special reserve”.
21. Other reserves
Group
At 1 January 2008
Exchange differences
Recognised in income and expense in the year
At 1 January 2009
Exchange differences
Recognised in income and expense in the year
Cancellation of reserves against share premium account
Cancellation of share premium account (note 20)
At 31 December 2009
e
Shares
option
reserve
£000's
992
661
1,653
‐
111
‐
Merger
reserve
£000's
1,534
‐
‐
1,534
‐
‐
‐
Capital
reduction
reserve
£000's
7,228
‐
‐
7,228
‐
‐
(7,228)
1,764
1,534
‐
The translation reserve is used to record cumulative translation differences on the assets and liabilities of foreign operations.
Company
At 1 January 2008
Exchange differences
Recognised in income and expense in the year
Cancellation of shares options
At 1 January 2009
Exchange differences
Recognised in income and expense in the year
Cancellation of reserves against share premium account
Cancellation of share premium account (note 20)
At 31 December 2009
Shares
option
reserve
£000's
992
661
‐
1,653
‐
111
‐
Merger
reserve
£000's
1,534
‐
‐
‐
1,534
‐
‐
‐
Capital
reduction
reserve
£000's
7,228
‐
‐
‐
7,228
‐
‐
(7,228)
1,764
1,534
‐
35
Special
reserve
£000's
‐
‐
‐
‐
‐
‐
‐
66,837
66,837
Special
reserve
£000's
‐
‐
‐
‐
‐
‐
‐
‐
66,837
66,837
Translation
reservee
£000's
879
8,411
‐
9,290
(367)
‐
‐
‐
8,923
Translation
reserve
£000's
338
(338)
‐
‐
‐
‐
‐
‐
‐
‐
TANFIELD GROUP PLC FINANCIAL STATEMENTS
22. Retained (loss) earnings
At 1 January
(Loss) for the year
Share options credited directly to equity
Cancellation of Retained losses against share premium account
At 31 December
Group
Company
2009
£000’s
(76,139)
(21,388)
‐
78,902
(18,625)
2008
£000’s
12,385
(88,546)
22
‐
(76,139)
2009
£000’s
(78,901)
(17,131)
‐
78,902
(17,130)
2008
£000’s
(700)
(78,223)
22
‐
(78,901)
23. Operating lease arrangements
At the balance sheet date, the Group as a lessee had total commitments under non‐cancellable operating leases, which fall due as follows:
2009
Within one year
In the second to fifth years inclusive
Greater than five years
2008
Within one year
In the second to fifth years inclusive
Greater than five years
a
Other operating leases relate to plant and machinery, Motor vehicles and Office equipment.
Leasehold Property
£000’s
Othera
£000’s
1,193
4,851
15,313
21,357
1,446
5,203
16,707
23,356
416
279
‐
695
976
709
3
1,688
Total
£000’s
1,609
5,130
15,313
22,052
2,422
5,912
16,710
25,044
24. Minority interests
On 20 April 2009, Tanfield Union Limited, a subsidiary in conjunction with Union Engineering Machinery Systems was incorporated in Hong
Kong. The minority interest of 5% relating to Union Engineering Machinery Systems is shown below:
Balance at 1 January
Share of losses
Balance at 31 December
2009
£000’s
‐
(1)
(1)
25. Provisions
The provisions represent the Group’s liability in respect of 12 month warranties granted on Powered Access Platforms and 12‐36 months
warranties in respect of Zero Emission Vehicles. The amount provided represent’s management’s best estimate of the future cash outflows
in respect of those products still within warranty at the balance sheet date.
At 1 January 2009
Additional provision in the year
At 31 December 2009
36
Warranty
provision
£000’s
‐
527
527
TANFIELD GROUP PLC FINANCIAL STATEMENTS
26. Associate
On 5 August 2009, the group acquired 49% of the issued share capital of Smith Electric Vehicles US Corp, a company registered in the US, for
a cash consideration of Nil. Smith Electric Vehicles US Corp’s primary activities involve in the manufacture and distribution of Zero Emission
Vehicles.
In accordance with IAS 28, this investment, along with associated costs of £51k, was accounted for as an associate under the equity method
of accounting.
The directors consider there is no material difference between the book and fair values of assets and liabilities acquired.
The interest in associate in the Group balance sheet as at 31 December 2009 comprised the following:
Property, plant & equipment
Intangible assets
Other assets
Non current assets
Inventories
Cash and cash equivalents
Other
Current assets
Accounts payable
Other
Current liabilities
Convertible debentures
Non current liabilitiesa
Share of net liabilities
Revenue
Expenses
Taxation
Share of post tax results
Reassessment of carrying value of associatea
Share of post tax loss of associate
Balance at 1 January
Investments
Share of post tax loss of associate
Balance at 31 December
172
3
676
747
363
297
(494)
(296)
(3,207)
2009
£000’s
851
1,407
(790)
(3,207)
(1,739)
‐
(1,742)
‐
(1,742)
1,691
(51)
2009
£000’s
‐
51
(51)
‐
a
In accordance with IAS28 the groups share of post tax loss is limited to the original investment value of £51k. The group will begin to recognise the investment in Smith Electric Vehicles US Corp if and when
the associate has net assets exceeding the groups original net investment.
37
TANFIELD GROUP PLC FINANCIAL STATEMENTS
27. Share based payments
IFRS2 requires share based payments to be recognised at fair value. The group measures the fair value of its share based payments to
employees, “share options”, using the Black‐Scholes valuation method.
All share based payments are equity settled and details of the share option activity during 2009 and 2008 is shown below, all 2008 numbers
have been restated to reflect the 5 for 1 share consolidation.
Outstanding at the beginning of the year
Granted
Forfeited
Exercised
Expired
Outstanding at the end of the year
Exercisable
2009
2008
Number of
share
options
3,896,334
‐
(70,000)
‐
‐
3,826,334
1,426,334
Weighted
average
exercise
price
(pence)
Number of
share
options
(Restated)
116
‐
(200)
‐
‐
113
107
3,933,000
‐
‐
(20,000)
(16,667)
3,896,334
180,000
Weighted
average
exercise
price
(pence)
Restated
114
‐
‐
(95)
(120)
116
5
The outstanding options at 31 December 2009 had a weighted average remaining contractual life of 6.79 years (2008: 7.79 years)
The following table relates to share options outstanding and exercisable at 31 December 2009:
Exercise price (pence)
No of share options
No of exercisable options
5p
180,000
180,000
Option exercise prices
115p
250,000
250,000
100p
2,901,334
621,334
200p
375,000
375,000
300p
120,000
nil
Total
3,826,334
1,426,334
Income statement charge
In accordance with IFRS2 the group determined the fair value of its options at ‘grant date’. The group accrues this fair value charge over the
share option vesting period. Share options that are forfeited during the year are credited directly to the share option reserve account.
A charge to the income statement of £111k (2008: £683k) and a credit directly to equity of nil (2008: £22K) have been made during the year
in accordance with IFRS2 ‘Share‐based payments’.
The group uses the Black‐Scholes model to value its share options and the following table summaries the fair values and key assumptions
used in the models inputs.
Weighted average share pricec
Weighted average exercise pricec
Expected volatilitya
Expected lifeb
Risk free rate
Expected dividends
Grant date
110.05p
212.90p
43.2%
3 years
4.6%
‐
a
Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous 3 years.
b
The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non‐transferability, exercise restrictions, and behavioural considerations.
C
The weighted average share and exercise prices have been adjusted to reflect the 5 for 1 share consolidation.
38
TANFIELD GROUP PLC FINANCIAL STATEMENTS
28. Financial risk management
The group’s operations are exposed to various financial risks which are managed by various policies and procedures. The main risk and their
related management are discussed below:
Credit risk management
The group’s exposure to credit risk arises from its trading related receivables and cash deposits with financial institutions.
The group’s credit policy for trading related receivables is applied and managed by each local operation to ensure compliance. The
policy requires that the creditworthiness and financial strength of customers is assessed at inception and on an on going basis. The group
uses external credit checking agencies as well as undertaking its own internal reviews of customer finances. During 2009 the group has
reduced its exposure to credit risk by reducing customer credit limits where the group feels it is appropriate.
Cash and cash equivalents are held with AAA or AA rated banks.
The group’s maximum exposure to credit risk is summarised below:
Trade and other receivables
Cash and cash equivalents
2009
£’000
11,878
5,414
17,292
2008
£’000
20,595
11,130
31,725
The group did not have any financial instruments that would mitigate the credit exposure arising from the financial assets designated at fair
value through profit and loss in either the current or proceeding year.
Liquidity risk management
The group is exposed to liquidity risk arising from having insufficient funds to meet the financing needs of the group.
The group’s liquidity management process includes projecting cash flows and considering the level of liquid assets available to meet
future cash requirements along with monitoring balance sheet liquidity. The Board reviews forecasts, including cash flow forecasts on a
quarterly basis. The group’s subsidiaries review their cash on a daily basis to assess short and medium term requirement, these
assessments ensure the group responds to possible cash constraints in a timely manner. Requests from group companies for operating
finance are met whenever possible from central resources.
Maturity analysis
The table below analyses the Group’s financial liabilities on a contractual gross undiscounted cash flow basis into maturity groupings based
on amounts outstanding at the balance sheet date up to the contractual maturity date.
Finance leases
Trade and other payables
Within 1
year
£’000
480
16,178
16,658
1 to 5
years
£’000
156
‐
156
Over 5
years
£’000
‐
‐
‐
Total
£’000
636
16,178
16,814
Foreign exchange risk management
The group is exposed to movements in foreign exchange rates due to its commercial trading denominated in foreign currencies, the net
assets of its foreign operations into the consolidated statements and foreign currency denominated costs.
Where possible the group uses natural hedging of currencies where customer and purchase currencies are matched. If appropriate the
group can use currency derivative financial instruments such as foreign exchange contracts to reduce exposure. These were not used in the
period.
The material foreign currency denominated costs, include the purchase of components from low cost based countries, principally in US
dollars.
39
TANFIELD GROUP PLC FINANCIAL STATEMENTS
A summary of the sensitivity to foreign exchange movements that the group’s equity pre tax is currently exposed to is detailed below:
Currency
US Dollar
Euro
Australian dollar
New Zealand dollar
Japanese Yen
Singapore dollar
Balance
sheet rate
to GBP
1.59
1.11
1.78
2.22
146.97
2.24
Effect on equity if
Sterling strengthens by
10%
increase (decrease)
£000’s
Effect on equity if
Sterling weakens by
10%
Increase (decrease)
£000’s
(1,603)
(95)
(838)
(31)
(258)
(125)
1,764
116
1,024
39
315
153
Interest rate risk management
The Group is exposed to interest rate risk due to its cash deposits, invoice discounting facilities and interest rate collar. Cash and cash
equivalents are the only interest bearing financial assets held by the Group. The group regularly reviews the short term cash requirements
against the benefit of placing funds on term deposit to ensure the best available rates of interest are obtained.
At 31st December 2009 the group had no borrowings. Future risk is limited to new borrowings if the group were to enter into any borrowing
agreements.
The group manages its exposure to interest rate risk against its obligations under finance leases by fixing the rate of interest over the
term of the lease.
The interest rate collar was taken out when the group had a borrowing facility to protect the group from increases in interest rates. The
risk is limited to the event that rates fall below that at the balance sheet date. In accordance with IAS39 The interest rate collar is not
classified as a hedging instrument.
Details of the collar is summarised below:
Instrument
US Dollar interest rate collar
Notional
principal
$10m
Cap
5.00%
Floor
3.65%
Maturity
date
31 Oct 2012
Derivative
Liability
£000’s
345
The interest payable under the collar is recognized through the income statement £214k (2008: £19k) within Interest on bank
overdrafts, loans, financial instruments and invoice discounting (Note 5). The volatility arising on the collar is also recognized in the income
statement £127k gain (2008: £516k loss) and disclosed separately within finance expenses and finance income (Note 5).
The management believes the current carrying value approximates to the fair value.
Capital management
The Group’s main objective when managing capital is to protect returns to shareholders by ensuring the Group trades profitably in the
future. The Group also aims to maximise its capital structure of debt and equity so as to minimise its cost of capital.
The Group manages its capital with regard to risks inherent in the business and the sector in which it operates by monitoring its gearing
ratio on a regular basis.
The Group considers its capital to include share capital, share premium, special reserve, translation reserve and retained earnings.
40
TANFIELD GROUP PLC FINANCIAL STATEMENTS
29. Contingent liabilities
There are no contingent liabilities of which the Directors are aware.
30. Related party transactions
Group
Transactions between the Company and its subsidiaries and between subsidiaries, which are related parties, have been eliminated on
consolidation. These transactions are a management charge from Tanfield Group PLC to is subsidiaries. The bank hold a cross guarantee in
relation to all the Group Company bank accounts. There are no other related party transactions.
Company
The Company entered into transactions with its subsidiaries as disclosed below.
Net position at 1 January
Management charges
Impairmentsa
Intercompany loan forgivenessb
Other transactions including new loans issued and cash balances received
Net position at 31 December
2009
£000’s
59,688
3,509
(3,691)
‐
(2,101)
57,405
2008
£000’s
81,772
5,567
(7,944)
(43,645)
23,938
59,688
a
During 2009 the company impaired part of its intercompany receivable from SEV Group Limited by £1,046k (2008: £1,643k), Tanfield Engineering Systems Limited Nil (2008: £5,627k), Tanfield Engineering
Systems US (Inc) £161k (2008: £674k), Tanfield Powered Access Limited £504k (2008: Nil) and Snorkel International Inc £1,980k (2008: Nil)
b
During 2008 the company forgave its intercompany loans to Tanfield Engineering Systems Ltd by £43,645k
Remuneration of key personnel
The remuneration of the key management personnel, which includes Directors, is set out below in aggregate for each of the categories
specified in IAS 24 Related Party Disclosures. Further information about the remuneration of individual directors is provided in the
Directors’ Remuneration Report on pages 9 to 10.
Directors emoluments are shown in the table below:
Salaries and short term benefits
Post employment benefits
2009
£000’s
734
73
807
2008
£000’s
1,379
87
1,466
There were no other transactions with Directors during the year. There have been no related party transactions with any Director.
41
TANFIELD GROUP PLC FINANCIAL STATEMENTS
31 Retirement benefits
The Group operates defined contribution retirement benefit plans for all qualifying employees of its construction and leasing divisions in the
UK. The assets of the schemes are held separately from those of the Group in funds under the control of trustees. Where there are
employees who leave the scheme prior to vesting fully in the contributions, the contributions payable by the Group are reduced by the
amount of forfeited contributions.
The employees of the Group’s subsidiary in Australia are members of a state‐managed retirement benefit scheme operated by the
government of Australia. The subsidiary is required to contribute a specified percentage of their payroll costs to the retirement benefit
scheme to fund the benefits. The only obligation of the Group with respect to the retirement benefit scheme is to make the specified
contributions.
The total cost charged to income of £284k (2008:£327k) represents contributions payable to these schemes by the Group at rates specified
in the rules of the schemes. As at 31 December 2009, contributions of £24k (2008: £27k) due in respect of the current reporting period had
not been paid over to the schemes.
32 Financial instruments recognised in the balance sheet
Loans and
receivables
£000’s
2009
Held to
maturity
£000’s
Total
£000’s
Loans and
receivables
£000’s
2008
Held to
maturity
£000’s
Assets
Non‐current financial assets
Trade and other receivables
Current financial assets
Trade and other receivables
Investments
Cash and cash equivalents
Total
Liabilities
Current liabilities
Trade and other payables
Finance leases
Other creditors
Non current liabilities
Finance leases
Total
Total
£000’s
1,500
1,500
19,760
251
11,130
31,141
32,641
Total
‐
‐
‐
251
‐
251
251
Held for
trading
£000’s
£000’s
517
‐
‐
517
‐
‐
517
18,722
565
9,954
29,241
569
569
29,810
900
900
10,461
‐
5,414
15,875
16,775
Other
financial
liabilities
£000’s
14,082
480
2,553
17,115
156
156
17,271
‐
‐
‐
275
‐
275
275
Held for
trading
900
900
10,461
275
5,414
16,150
17,050
Total
£000’s
£000’s
345
‐
‐
345
‐
‐
345
14,427
480
2,553
17,460
156
156
17,616
1,500
1,500
19,760
‐
11,130
30,890
32,390
Other
financial
liabilities
£000’s
18,205
565
9,954
28,724
569
569
29,293
42
TANFIELD GROUP PLC FINANCIAL STATEMENTS
33. Subsidiary undertakings and Associate
The tables below give brief details of the group’s operating subsidiaries and associate at 31 December 2009. All subsidiaries are unlisted.
No subsidiaries are excluded from the group consolidation.
Group Interest
in allotted
capital &
voting rights
100%
100%
100%
100%
100%
100%
100%
100%
100%
95%
100%
100%
100%
100%
74%
100%
100%
100%
100%
100%
100%
100%
Group Interest
in allotted
capital &
voting rights
49%
2009
£000’s
‐
2,111
‐
2,111
Country of
incorporation
UK
UK
US
UK
Singapore
US
AUS
NZ
Netherlands
Hong Kong
UK
US
UK
UK
UK
UK
UK
UK
UK
UK
UK
US
Country of
incorporation
US
2008
£000’s
13,013
2,111
‐
15,124
Subsidiary undertakings
Tanfield Engineering Systems Ltd
SEV Group Ltd
Tanfield Engineering Systems US (Inc)
Tanfield Powered Access Ltd
Tanfield Asia Pacific PTE. Ltd
Snorkel International Inc
Snorkel Australia Limiteda
Snorkel New Zealand Limitedb
Snorkel Europe BV
Tanfield Union LimitedC
Tanfield Group PLC
Snorkel Holdings LLC
Sandco 854 Ltd
E‐Comeleon Ltd
JoeKnowsIt? Ltd
ClickHere Ltd
Express 2 Automotive Ltd
Saxon Specialist Vehicles Ltd
HMH Sheet Metal Fabrications Ltd
Norquip Ltd
YEV Ltd
HBWP Inc
Principal activity
Electric vehicle manufacture
Vehicle Service, Hire & Maintenance
Powered Access
Powered Access
Powered Access
Powered Access
Powered Access
Powered Access
Powered Access
Powered Access
Holding Company
Holding Company
Holding Company
Non Trading
Non Trading
Non Trading
Non Trading
Dormant
Dormant
Dormant
Dormant
Dormant
a
Snorkel Elevating Work Platforms PTY Limited changed its name to Snorkel Australia Limited on 1 September 2009.
b
Snorkel Elevating Work Platforms Limited changed its name to Snorkel New Zealand Limited on 1 September 2009.
Tanfield Union Limited was incorporated on 20 April 2009 in conjunction with Union Engineering machinery systems
c
Associate
Smith Electric Vehicles US Corp
Principal activity
Electric vehicle manufacture
Details of the investments held in the Company accounts are as follows:
Snorkel International Incd
Tanfield Engineering Systems Ltd
Smith Electric Vehicles US Corp
d
The investment in Snorkel International Inc was impaired by £13,013 (2008: £34,535k)
43