TANFIELD GROUP PLC
REPORT AND FINANCIAL
STATEMENTS 2011
Registered in England & Wales
Company number 04061965
TANFIELD GROUP PLC FINANCIAL STATEMENTS
REPORT AND FINANCIAL STATEMENTS 2011
SUMMARY OF CONTENTS
Directors, Advisers and Officers
Financial and Business Review
Directors’ Report
Corporate Governance
Directors’ Remuneration Report
Statement of Directors’ Responsibilities
Report of the Independent Auditor
Consolidated Statement of Comprehensive Income
Consolidated & Company Balance Sheets
Consolidated & Company Statements of Changes in Equity
Consolidated & Company Cash Flow Statements
Accounting Policies
Notes to the Accounts
3
4
6
8
9
11
12
13
15
16
17
18
24
2
TANFIELD GROUP PLC FINANCIAL STATEMENTS
DIRECTORS AND ADVISERS
DIRECTORS
EXECUTIVE
DS Kell
CD Brooks
BJ Campbell
NON-EXECUTIVE
J Pither
RRE Stanley
M Groak
SECRETARY
CD Brooks
REGISTERED OFFICE AND ADVISORS
REGISTERED OFFICE
Vigo Centre
Birtley Road
Washington
Tyne and Wear
NE38 9DA
AUDITOR
Baker Tilly UK Audit LLP
1 St James’ Gate
Newcastle upon Tyne
NE1 4AD
SOLICITOR
Ward Hadaway
Sandgate House
102 Quayside
Newcastle upon Tyne
NE1 6AE
Chief Executive
Finance Director
Managing Director Powered Access
Chairman
Non executive Director
Non executive Director
NOMINATED ADVISOR
WH Ireland
24 Martin Lane
londno
London
EC4R 0DR
BROKER
WH Ireland
24 Martin Lane
Londno
London
EC4R 0DR
REGISTRAR
Capita IRG plc
Bourne House
34 Beckenham
Beckenham
Kent
BR3 4TH
3
TANFIELD GROUP PLC FINANCIAL STATEMENTS
FINANCIAL AND BUSINESS REVIEW
Financial highlights
Key performance indicators
Continuing operations
Revenue
Gross margin on materials1
EBITDA(before impairments, associates & disposals)
Cash
Headcount (Average no.)
Order book – Powered Access
1
Source: management accounts
2011
£000’s
48,305
37%
(13,397)
3,463
469
30,500
2010
£000’s
43,500
29%
(14,082)
3,637
428
7,700
change
%
11.0
8.0
4.9
(4.8)
9.6
296.1
CHAIRMAN’S STATEMENT
Demand for aerial lifts began to return in key markets during 2011
and grew as the year progressed, clearly demonstrated by the order
book brought into 2012.
Bottlenecks within the supply chain slowed our rate of growth, but
Tanfield still made progress towards a break-even position. The
Company has recently raised additional funds to eliminate
significant supply chain constraints and the Board is confident that
this will accelerate Tanfield’s growth in 2012.
The sale of Smith Electric Vehicles at the start of the year allowed
the Board to fully focus its attention on the Powered Access division,
which sells its products under the Snorkel brand. We cross-trained
our workforce in anticipation of a ramp up in production and
invested in new product development. Both strategies will stand us
in good stead as the aerial lift industry maintains its growth curve in
2012 and beyond.
I would like to thank all of our employees for their efforts during
year that delivered progress but also fresh challenges; and I look
forward to working with you in 2012.
CHIEF EXECUTIVE’S REVIEW
Summary
During the recession, many of the major rental companies
embarked on de-fleeting programmes to improve utilisation rates
and suspended capital expenditure, preferring instead to age their
powered access fleets. A return to growth in the equipment rental
and plant hire sector in 2011 drove renewed appetite for aerial work
platforms. However, demand outstripped supply throughout the
year, as the supply chain struggled to regain capacity it lost during
the downturn. Overall, Tanfield grew turnover by 11 per cent to
£48.3m, narrowing the loss from continuing operations before
impairment to £15.0m for the year.
Powered Access & Engineering: Turnover of
£48.3m (2010: £43.5m)
Customers began to return in key markets in early 2011 and we
delivered an increase in sales of 25% in the first half. Demand
further increased in the second half of the year, but we were unable
to accelerate our production capacity due to weakness in the
industry’s supply chain. This is evidenced both in our sales growth
for the year and the £30.5m order book we carried into 2012 –
almost four times the order book at the end of 2010.
We continued to execute our strategy of enhancing the Snorkel
product portfolio, launching a new range of boom lifts that share a
common chassis. We have appointed a dedicated team to target
Latin America, which continues to experience strong growth in the
adoption of aerial work platforms; and strengthened our sales team
in North America. Snorkel sells through a worldwide network of
independent distributors. In 2011 we appointed new distributors in
China, Czech Republic, Romania and Turkey.
Zero Emission Vehicles
Tanfield successfully completed the sale of the Smith Electric
Vehicles division to its associate company, Smith Electric Vehicles US
Corp (“SEVUS”), on 1 January 2011. The assets of the UK entity were
sold to SEVUS for $15m, payable in 20 equal monthly instalments.
All payments due to date have been met in line with our
expectations. On 7 March 2011 SEVUS completed a private placing
to raise $58m, triggering a pre-payment of the deferred
consideration totalling $5m and entitling SEVUS to a 203 day
repayment holiday in respect of the deferred consideration.
On 24 October 2011, SEVUS completed a private placing to raise
$30m, triggering a payment of further deferred consideration, plus
accrued interest, of approximately $5.6m. At the same time,
Tanfield converted $1.99m of deferred consideration
into a
convertible note and warrant that converted into a new class of
preferred equity securities
in SEVUS on 3 November 2011.
Subsequently Tanfield held 5,259,192 ordinary shares in SEVUS
which represented, on a fully diluted basis, approximately 27.22 per
cent of the enlarged ordinary share capital of SEVUS.
On 14 February 2012, SEVUS announced an additional private
placement of $40m. On the assumption that the Placing
is
subscribed in full, Tanfield’s holding is diluted to 24.13 per cent of
the enlarged ordinary share capital of SEVUS.
SEVUS continued to execute its business development strategy
throughout 2011. It strengthened its Board of Directors; expanded
its customer base in North America and Europe; established a joint
venture to build all-electric school buses and announced it was
4
TANFIELD GROUP PLC FINANCIAL STATEMENTS
FINANCIAL AND BUSINESS REVIEW
(Continued)
opening a second production facility in the Bronx, New York.
In February 2012, the UK Government approved the Smith Edison
all-electric 3.5t light commercial vehicle for the Plug-In Van Grant.
This allows fleets to purchase Smith Edison vehicles at an £8,000
discount to the list price, thereby significantly increasing the value
proposition for the Edison.
Outlook
In March 2012, Tanfield completed a £12m placing, the net
proceeds of which have provided additional working capital to allow
significant reductions in Snorkel product lead times. This influx of
working capital allows the Company to place larger orders with its
principal suppliers, make investments in strategic supply channels
and, where necessary, offer incentives to prioritise supply chain
commitments from key supply chain partners.
We begin 2012 with an extremely healthy order book and a clear
strategy to realise this as sales. Despite the ongoing economic
uncertainty in some key markets, we believe that replacement of
aged equipment alone will deliver growth this year.
Working capital is critical to the Company’s growth strategy this
year. Tanfield is therefore not proposing to pay a dividend for the
period. The directors believe the business is now well positioned to
deliver growth and a return to profitability.
FINANCE DIRECTOR’S REPORT
The 11% increase in revenue for the year to £48.3m (2010 £43.5m)
reflected the improved market conditions constrained by supply
chain capacity and working capital constraints in 2011.
As in 2010, the cost base has been held as low as possible without
damaging the overall Group infrastructure. The limited growth in
the year resulted in the business reporting a reduced loss before tax
and results from associate of £15.1m (2010 £16.7m). Expenses in
all categories were very similar to 2010 and improved performance
is dependent upon increased volumes.
Reassessment of carrying value of associate
The holding in Smith Electric Vehicles Corp was increased in the year
by participating in its Series C fundraising through conversion of
$1.99m (£1.28m) of the deferred consideration owed by Smith
Electric Vehicles Corp to Tanfield following the sale of Smith Electric
Vehicles UK on 1 January 2011 into equity. Subsequently Smith
Electric Vehicles Corp has issued a Series D fundraising. Applying
the Series D valuation to the additional stake would value that stake
at $2.6m (£1.6m). We are required to account for our investment in
this associate at cost less our share of accumulated losses. Given
that Smith Electric Vehicles Corp is a start up, its cumulative losses
exceed our stake and is therefore valued at nil in our consolidated
accounts. This results in a full write down of our additional
investment in the year of £1.28m (2010 nil).
Loss from operations
The Loss from Operations before impairments in the period was
£14.99m (2010 £15.83). This was a trading loss reflecting low sales
volumes given the constraints to growth.
Finance income
The level of finance income in the period of £470k (2010: £108k)
benefited from an increase in the value of the interest rate collar of
£165k and interest income on deferred consideration of £220k.
Taxation
In spite of the consolidated losses, a tax charge of £186k arose in a
specific fiscal jurisdiction (Japan) in the period (2010 £35k). There is
no brought forward deferred tax asset, and none was recognised in
the period resulting in no adjustment to deferred tax (2010 charge
£1,915k).
Loss from continuing operations
Given the above, loss from continuing operations was £16.5m,
(2010 £18.6m), the most significant differences between 2011 and
2010 being the lower trading loss, and deferred tax charge offset by
the reassessment of the investment in Smith Electric Vehicles.
Discontinued Operations
The Smith Electric Vehicles division was sold on 1 January 2011
resulting in a profit on disposal recognised in the year of £173k.
There was no trading impact from that discontinued operation in
2011 (2010: Loss for the year £5.4m).
Total comprehensive income for the year
The total comprehensive income for the year was a loss of £15.7m,
(2010: £21.5m), after reduced benefit from currency translation
differences of £0.7m (2010: £2.5m).
Earnings per share
Loss per share from continuing operations was 17.5p (2010: Loss
23.2p). No dividend has been declared (2010: nil).
Valuation of associate
Our associate, Smith Electric Vehicles US Corp is valued at cost less
any cumulative losses, with a minimum value of nil, and is therefore
valued at nil. During the year Smith Electric Vehicles raised new
equity at a valuation that would value the Tanfield Group plc stake
in this associate at £54.0m.
Net Cash
At 31 December 2011, the Group had cash of £3.5m (2010: £3.6m).
Although the business has reported a loss of £16.4m in the period,
the net cash used was £0.2m. This difference was funded largely by
£7.8m of installments of consideration from its sale of the Smith
Electric Vehicles division to its associate on 1 January 2011 and a
further reduction in working capital in the period, specifically
inventory. Since the year end the business has raised £12m before
expenses in a private placing of its shares. The additional cash will
allow an increase in working capital to fund growth. Given absence
of any charges against the company’s assets, if necessary, asset
based borrowing capacity should be available to accelerate the
growth.
5
TANFIELD GROUP PLC FINANCIAL STATEMENTS
DIRECTORS’ REPORT
The directors submit their report and the financial statements of Tanfield
Group PLC for the year ended 31 December 2011.
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 industry and engineering.
RESULTS AND DIVIDENDS
The financial result, for the twelve months to 31 December 2011 reflects
improved market conditions constrained by supply chain capacity and
working capital limitations.
Turnover for the twelve month period was £48.3m compared with
£43.5m in the full year to December 2010. This reflects limited increase in
volumes in response to the increased demand for products in 2011, in
contrast with the very poor conditions experienced in 2010.
The loss in the period of £16.4m (2010: £24.0m loss) arose from trading,
reflecting the low sales volumes.
As at the end of 2011, a review was undertaken of the carrying value of
assets in the Powered Access division and it was concluded that a further
£250k of trade receivable impairments was required.
The balance sheet remains robust, with total assets at the end of
December of £45m (2010: £63m). Net Current Assets were £22.6m (2010:
£35.2m) with cash balances of £3.5m 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 (2010: £nil). The loss
of £16.4m (2010: £24.0m) has been transferred to reserves.
REVIEW OF THE BUSINESS
The year showed an increase in demand for the companies products and
the company examined ways in which to respond cautiously to that
demand, given the uncertainty of the sustainability of that increased
demand.
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 company raised equity of £12m through a private placing of its
shares. This additional cash will be used to fund working capital and the
supply chain to reduce the constraints on the company’s responses to the
increased demand for its products.
6
POLITICAL AND CHARITABLE CONTRIBUTIONS
During the year, the group has made no political or charitable
donations (2010 - £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 property,
plant and equipment. 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 2011 would exceed the net book
values included in the financial statements. 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 a sustained period of low demand and future
performance in those markets is uncertain.
However, after raising additional funding in 2012 the biggest
risk to the group in meeting its short term targets is the freeing
up of the supply chain to reduce lead times and therefore
increasing revenue allowing the group to return to profit.
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
On 8 March 2012, the company raised £12m before costs in a
private placing of its shares to be used to fund growth,
additional sales volumes should allow the business to return to
profit.
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.
TANFIELD GROUP PLC FINANCIAL STATEMENTS
DIRECTORS’ REPORT (Continued)
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.
DIRECTORS
The present membership of the board is set out on page 3. Geoff Allison
resigned as a director following the sale of the Electric Vehicle division by
the group on 1 Jan 2011. Dr JM Bridge and JN Wooding resigned on 8
March 2012.
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 2011 were 100
days. (2010: 83 days)
SUBSTANTIAL SHAREHOLDINGS
On 31 December 2011 the following held substantial shares in the
company. No other person has reported an interest of more than 3% in
the ordinary shares.
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.
INFORMATION TO
STATEMENT AS TO DISCLOSURE OF
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
Charles Brooks
Director
No.
%
11 April 2012
UBS PRIVATE BANKING NOMINEES LTD
10,771,784
11.39%
HSBC GLOBAL CUSTODY NOMINEE (UK)
THE BANK OF NEW YORK (NOMINEES)
VIDACOS NOMINEES LIMITED
TD DIRECT INVESTING NOMINEES
BARCLAYSHARE NOMINEES LIMITED
STRAND NOMINEES LIMITED
6,548,593
5,757,190
5,731,993
5,698,544
4,427,630
3,707,320
6.92%
6.09%
6.06%
6.03%
4.68%
3.92%
RRE Stanley holds shares of 13.1% which are held through nominee
companies. DS Kell holds shares of 3.7% which are held through nominee
companies.
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 the UK Corporate
Governance Code (effective for periods commencing on or after 29 June
2010) 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, two other Executive Directors, and four independent
Non-Executive Directors.
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
During the year the Remuneration Committee comprised John Bridge
(Chair) and Martin Groak. After 8 March 2012 the remuneration
committee comprised of Roy Stanley and John Pither.
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
During the year the Audit Committee comprised the Non-Executive
Directors Martin Groak (Chair), Jerry Wooding and John Bridge. After 8
March 2012 the Audit Committee comprised of Martin Groak and John
Pither. Meetings are also attended, by invitation, by the
Group Finance Director.
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.
institutional
investors and analysts
Relations with Shareholders
The Company values its dialogue with both institutional and
private investors. Effective two-way communication with fund
managers,
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 11 April 2012
8
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 during the year were JN Bridge
and M Groak and the committee was chaired by JN Bridge. After 8
March 2012 the committee was comprised of Roy Stanley and John
Pither.
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:
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 8 March 2012 JN Bridge and JM Wooding resigned as
directors.
Basic annual salary (including directors’ fees) and benefits;
Annual bonus payments;
Share option incentives; and
Pension arrangements.
Directors interests
The interests of directors holding office at the year end in the
company’s ordinary 5p shares at 31 December 2011 and 1
January 2011 are shown below:
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.
Performance bonuses were paid as set out in the table on page 10.
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. Share options were awarded as
set out in the table on page 10.
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.
RRE Stanley
DS Kell
CD Brooks
BJ Campbell
JN Bridge
M Groak
J Pither
JM Wooding
Total
Number of shares
2011
12,378,756
3,447,811
28,563
106,363
76,044
-
815,084
31,209
16,883,830
2010
12,378,756
3,447,811
28,563
106,363
76,044
-
815,084
31,209
16,883,830
The directors, as a group, beneficially own 18% 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 Allisonb
JN Bridgee
M Groak
JM Woodingc
J Pitherd
Total
a
CD Brooks received a loan in a previous year of £31k which was outstanding at 31 December 2011.
Salary
65
280
206
188
-
26
26
25
30
846
Benefits
in kind
18
18
18
18
-
-
-
-
-
72
Bonuses
-
108
82
40
10
-
-
-
-
240
Total
2011
83
406
306
246
10
26
26
25
30
1,158
Pension Total
Total
2010
54
273
183
183
110
26
26
25
30
910
2011
4
26
15
17
-
-
-
-
-
62
Pension
Total
2010
4
25
15
17
10
-
-
-
-
71
b
GE Allison transferred to Smith Electric Vehicles Europe Limited on 1 January 2011 as part of the electric vehicles division disposal.
c
Mr Wooding is paid through Simkat Consultants. Mr Wooding resigned 8 March 2012.
d
J Pither is paid through Surrey management services.
e
JN Bridge resigned 8 March 2012.
Directors share options held at 31 December 2011 were as follows:
31 December
2010f
411,334
860,000
-
250,000
200,000
-
140,000
50,000
320,000
-
800,000
30,000
30,000
-
Granted/
Lapsed
-
-
1,800,000
-
-
1,100,000
-
-
-
900,000
-
-
-
200,000
3,091,334
4,000,000
31
December
2011
411,334
860,000
1,800,000
250,000
200,000
1,100,000
140,000
50,000
320,000
900,000
800,000
30,000
30,000
200,000
7,091,334
Exercised
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Option
price per
sharef
1p
1p
27p
1p
1p
27p
5p
1p
1p
27p
1p
1p
1p
27p
Date from
which
normally
exercisableg
01/03/2009
02/01/2010
21/01/2014
14/06/2009
02/01/2010
21/01/2014
14/09/2008
01/03/2009
02/01/2010
21/01/2014
02/01/2010
01/03/2009
01/03/2009
21/01/2014
Expiry Date
01/03/2016
02/01/2017
21/01/2021
14/06/2016
02/01/2017
21/01/2021
14/09/2015
01/03/2016
02/01/2017
21/01/2021
02/01/2017
01/03/2016
01/03/2016
21/01/2021
DS Kell
CD Brooks
BJ Campbell
RRE Stanley
JN Bridge
M Groak
J Pither
Total
f
Certain option agreements allow for the option price to reduce in the event of a demerger. As a result of the Electric Vehicle disposal on 1 Jan 2011 certain options reduced their price to 1p.
g
Certain share option agreements have a clause that allows the options to be exercised early if market capitalisation exceeds a certain level.
h
On 31 December 2011 the market price of the ordinary shares was 41p. The range during 2011 was 22.00p to 53.75p
Approval
This report was approved by the board of directors and authorised for issue on 11 April 2012 and signed on its behalf by:
Roy Stanley
Chairman of Remuneration Committee
10
TANFIELD GROUP PLC FINANCIAL STATEMENTS
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
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 group and 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
the company 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.
The directors are responsible for preparing the Directors’ Report and the
financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare Group and Company
Financial Statements for each financial year. The directors are required
by the AIM rules of the London Stock Exchange to prepare Group
financial statements in accordance with International Financial Reporting
Standards ("IFRS") as adopted by the European Union (“EU”) and have
elected under company law to prepare the company financial statements
in accordance with IFRS as adopted by the EU.
The financial statements are required by law and IFRS adopted by the EU
to present fairly the financial position of the group and company and the
financial 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.
Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair view of
the state of affairs of the group and the company and of the profit and
loss of the group for that period.
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 AUDITOR
Independent auditor’s 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
(“the financial statements”) on pages 13-43. 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
in accordance with the provisions of the
statements, as applied
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 auditor
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. Our responsibility is to audit and express an opinion on the
financial statements 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.
Scope of the audit of the financial statements
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/private.cfm.
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 2011 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.
ALAN AITCHISON (Senior Statutory Auditor)
For and on behalf of BAKER TILLY UK AUDIT LLP, Statutory
Auditor
Chartered Accountants
1 St James’ Gate
Newcastle upon Tyne
NE1 4AD
11 April 2012
12
TANFIELD GROUP PLC FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2011
Continuing operations
Revenue
Changes in inventories of finished goods and WIP
Raw materials and consumables used
Staff costs
Depreciation and amortisation expense
Other operating expenses
Loss from continuing operations before impairments
Impairment of receivables
Loss from continuing operations after impairments
Finance expense
Finance income
Net finance income (expense)
Loss from continuing operations before tax and associate
Reassessment of carrying value of associate
Loss before taxation
Taxation
Loss for the year from continuing operations
Discontinued operations
Profit on disposal of operations
Loss for the year from discontinued operations
Loss for the year
Other comprehensive income, net of tax:
Currency translation differences
Total comprehensive income for the year
Notes
2011
£000's
2010
£000's
1
18
6
7
8
9
9
17
10
4
3
48,305
(2,848)
(33,250)
(17,143)
(1,595)
(8,461)
(14,992)
(250)
(15,242)
(286)
470
184
(15,058)
(1,280)
(16,338)
(186)
(16,524)
43,500
(7,689)
(27,025)
(14,747)
(1,745)
(8,121)
(15,827)
(650)
(16,477)
(294)
108
(186)
(16,663)
-
(16,663)
(1,950)
(18,613)
173
-
(16,351)
-
(5,375)
(23,988)
694
(15,657)
2,509
(21,479)
13
TANFIELD GROUP PLC FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2011
Loss for the year attributable to:
Owners of the parent
From continuing operations
From discontinued operations
Non-controlling interest
From continuing operations
Loss for the year
Total comprehensive income for the year attributable to:
Owners of the parent
Non-controlling interest
Total comprehensive income for the year
Loss per share
Loss per share from continuing operations
Basic (p)
Diluted (p)
Loss per share from discontinued operations
Basic (p)
Diluted (p)
2011
£000's
2010
£000's
(16,510)
173
(16,337)
(18,611)
(5,375)
(23,986)
(14)
(2)
(16,351)
(23,988)
(15,643)
(14)
(21,477)
(2)
(15,657)
(21,479)
11
11
11
11
(17.5)
(17.5)
(23.2)
(23.2)
0.2
0.2
(6.7)
(6.7)
14
TANFIELD GROUP PLC FINANCIAL STATEMENTS
CONSOLIDATED AND COMPANY BALANCE SHEETS (Company registration number 04061965)
AS AT 31 DECEMBER 2011
Notes
Group
2011
£000's
2010
£000's
Company
2011
£000's
2010
£000's
Non current assets
Intangible assets
Property, plant and equipment
Associate
Trade and other receivables
Investments in subsidiaries
Current assets
Inventories
Trade and other receivables
Investments
Current tax assets
Deferred consideration
Cash and cash equivalents
Assets classified as held for sale
Total assets
Current liabilities
Trade and other payables
Provisions
Tax liabilities
Obligations under finance leases
Other creditors
Liabilities directly associated with assets classified as held for
sale
Non-current liabilities
Obligations under finance leases
Deferred tax liabilities
Total liabilities
Equity
Share capital
Share premium
Share option reserve
Special reserve
Merger reserve
Translation reserve
Profit and loss account
Equity attributable to the owners of the parent
Non controlling interests
Total equity
13
14
17
19
34
18
19
15
5
16
3
20
27
21
22
3
21
23
24
24
26
5,023
3,324
-
-
-
8,347
21,495
10,753
498
-
341
3,463
36,550
-
36,550
44,897
13,034
621
189
60
-
13,904
-
5,546
3,879
-
250
-
9,675
25,408
10,510
395
11
-
3,637
39,961
13,194
53,155
62,830
11,293
272
83
197
2,294
14,139
3,832
-
-
1,280
-
1,008
2,288
-
27,780
-
-
341
1,278
29,399
-
29,399
31,687
2,084
-
-
-
-
2,084
-
-
-
-
-
1,847
1,847
-
42,971
-
-
-
1,010
43,981
-
43,981
45,828
1,445
-
-
-
2,294
3,739
-
13,904
17,971
2,084
3,739
208
375
583
14,487
4,728
3,097
1,785
66,837
1,534
12,126
(59,680)
30,427
(17)
30,410
-
375
375
18,346
4,704
827
1,764
66,837
1,534
11,432
(42,611)
44,487
(3)
44,484
-
-
-
2,084
4,728
3,097
1,785
66,837
1,534
-
(48,378)
29,603
-
29,603
-
-
-
3,739
4,704
827
1,764
66,837
1,534
-
(33,577)
42,089
-
42,089
Total equity and total liabilities
44,897
62,830
31,687
45,828
The financial statements on pages 13 to 43 were approved by the board of directors and authorised for issue on 11 April 2012 and are signed on its behalf by:
Charles Brooks Group Finance Director
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CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2011
Continuing operations
Loss before interest and taxation
Depreciation and amortisation
Loss on deferred consideration currency fluctuations
Loss on disposal of fixed assets
Profit on disposal of operations
Impairment of receivables
Loss on reassessment of carrying value of associate
Loss on intercompany loan write off
Loss on impairment of investments
Operating cash flows before movements in working capital
(Increase) decrease in receivables
Increase (decrease) in payables
Increase (decrease) in provisions
Decrease in inventories
Net cash (used in) operations – continuing operations
Discontinued operations
Loss before interest and taxation
Depreciation and amortisation
Loss on disposal of fixed assets
Operating cash flows before movements in working capital
Decrease in receivables
Decrease in payables
Increase in provisions
Decrease in inventories
Net cash from operations – discontinued operations
Cash used in operations
Interest paid
Income taxes (paid) received
Net cash used in operating activities
Cash flow from Investing Activities
Purchase of property, plant and equipment
Receipt of deferred consideration
Purchase of investments
Purchase of intangible fixed assets
Exclusivity agreement cash received
Interest received
Net cash from (used in) from investing activities
Cash flow from financing activities
Proceeds from issuance of ordinary shares net of costs
New obligations under finance leases in the period
Repayments of obligations under finance leases
Net cash from financing activities
Effect of exchange rate changes on cash and cash equivalents
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at the start of year
Cash and cash equivalents at the end of the year
Group
2011
£000's
2010
£000's
Company
2011
£000's
2010
£000's
(16,349)
1,595
337
128
(173)
250
1,280
-
-
(12,932)
(310)
1,537
349
3,910
(7,446)
-
-
-
-
-
-
-
-
-
(7,446)
(286)
(60)
(7,792)
(390)
7,756
(76)
(232)
-
453
7,511
-
274
(202)
72
35
(174)
3,637
3,463
(16,477)
1,745
-
23
-
650
-
-
-
(14,059)
611
(2,656)
(28)
13,111
(3,021)
(5,369)
655
11
(4,703)
1,194
(197)
300
3,410
4
(3,017)
(300)
80
(3,237)
(313)
-
(70)
(375)
491
108
(159)
1,827
-
(458)
1,369
250
(1,777)
5,414
3,637
(15,074)
-
337
-
(529)
-
-
14,666
839
239
(8,479)
519
-
-
(7,721)
(16,493)
-
-
-
-
-
-
18,038
264
1,809
(3,543)
(596)
-
-
(2,330)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(12)
(8)
(7,741)
-
(14)
-
(2,344)
-
7,756
-
-
-
253
8,009
-
-
-
-
-
268
1,010
1,278
-
-
-
-
491
60
551
1,827
-
-
1,827
69
103
907
1,010
Note: Cashflows arising from discontinued operations are operating activities £Nil outflow (2010: £2k outflow), Investing activities £Nil outflow (2010: £356k outflow) and Financing activities £Nil outflow
(2010: £20k outflow).
17
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 and is debt free.
The Group has prepared trading forecasts through to December 2015
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 an increase in
turnover in 2012 to 2015. This increase is underpinned by the increase in
order intake rates and the accumulated order backlog. In March 2012
the Group has raised a further £11.2m through the issuance of equity
(note 33), ensuring it has the resources to respond to increased demands
on working capital arising from increased activity. This cash allows
significant headroom in all sensitivities to the forecasts.
Although the Group again released cash from inventories during 2011,
useable inventory still remains higher than necessary. It is therefore
expected that this usage of inventory will continue, resulting in working
capital growing at a lower rate than would otherwise be necessary to
support the forecast growth. Given the cash raised, sensitivities have
been prepared that demonstrate that the business would still be viewed
as a going concern even if this was not the case.
There is inherent uncertainty in any forecast. Such uncertainties include
the lack of visibility regarding the sustainability of current levels of order
intake in the current economic and financial climate, however the level
of orders taken, accumulated order backlog and order prospects is more
than adequate to indicate activity levels that support the forecast sales
for 2012. 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
18
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
is neither a
has significant
influence and that
subsidiary nor an
joint venture.
interest
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.
in a
results of subsidiaries acquired or disposed are
The
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
liabilities 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
intra-group
in
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. In accordance with IAS28 the groups share of post
tax loss is limited to its investment.
line with those used by the group.
All
(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
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.
income
Development expenditure
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).
is recognised
in the
(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
Leasehold Land & Buildings
the
over
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.
TANFIELD GROUP PLC FINANCIAL STATEMENTS
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 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
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
recognised
losses. Any
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.
impairment
impairment
is
Computer Software
Computer software comprises computer software purchased from third
parties and is carried at cost less accumulated amortisation.
19
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
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.
impairment
(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 fair value
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.
liabilities and equity
Financial liabilities
Financial liabilities and equity
instruments are classified
Financial
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
costs and are
subsequently carried at amortised cost using the effective
interest method.
transaction
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 in the income statement as they
arise.
20
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.
(xxii) Disposal groups held for sale
Disposal groups held for sale are measured at the lower of their
carrying amount and fair value less cost to sell and presented
separately in the balance sheet from other assets and liabilities.
Disposal groups are classified as held for sale if their carrying
amount will be recovered through a sale transaction rather
than through continuing use. This condition is regarded as met
only when the sale is highly probable, the disposal group is
available
its present condition,
management are committed to the sale and expect the
disposal group to qualify for recognition as a completed sale
within one year from the date of classification.
immediate sale
for
in
(xxiii) Functional and presentational currencies
The consolidated financial statements are presented in sterling
which is also the functional currency of the company.
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
IFRS 8 provides segmental information for the Group on the basis of
information reported to the chief operating decision-maker for decision-
making purposes. The Group considers that the role of chief operating
decision-maker is performed by the Tanfield Group PLC’S board of
directors.
(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.
for taxable temporary
liabilities are recognised
Deferred tax
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
21
TANFIELD GROUP PLC FINANCIAL STATEMENTS
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.
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.
In assessment of the carrying value the directors undertook an
impairment review. This impairment review is sensitive to the revenue
growth anticipated in fulfilling the anticipated demand.
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
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.
changes,
Share based payments
The fair value of share options granted are recognised as an
employee expense after taking into account the group’s best
estimate of the number of awards expected to vest allowing for
non market and service conditions. Fair value is measured at
the date of grant and is spread over the vesting period of the
award. The fair value of options and awards granted is
measured using the Black Scholes model. Any proceeds
received are credited to share capital and share premium when
the options are exercised. The group has applied IFRS 2 ‘Share
based payment’ to all options.
22
New and amended standards and
interpretations effective from 1 January 2012
not yet adopted by the group
The group currently adopts all relevant accounting standards
that have been endorsed by the EU. There are various
standards that are expected to be endorsed in 2012 which the
group believes will have no significant impact on the group’s
financial position or results for the current or prior years but
may
future transactions or
arrangements.
impact the accounting
for
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 2011.
New and amended standards and interpretations
effective from 1 January 2011 adopted by the group
IAS 24 (Revised) ‘Related Party Disclosures’ (Effective 1 January 2011).
The revised standard clarifies the definition of a related party and
provides some exceptions for government related entities.
IFRIC14
Amendment to
Requirement’ (Effective 1 January 2011).
This requirement permits a voluntary prepayment of a minimum funding
requirement to be recognised as an asset.
‘prepayments of a Minimum Funding
interpretation, which
IFRIC 19 ‘Extinguishing Financial Liabilities with Equity Instruments’
(Effective 1 January 2011).
This
is applied retrospectively, clarifies the
accounting when an entity renegotiates the terms of its debt with the
result that the liability is settled in part or in full by the debtor issuing its
own equity instrument to the creditor.
IFRS 7 ’Financial Instruments: Disclosures’ (Effective 1 January 2011)
These amendments are intended to provide improved disclosure around
the nature and risks arising from financial instruments.
23
TANFIELD GROUP PLC FINANCIAL STATEMENTS
NOTES TO THE ACCOUNTS
1. Revenue
An analysis of the group’s revenue is as follows:
Continuing operations
Discontinued operations
2. Segmental analysis
2011
£000’s
48,305
-
48,305
2010
£000’s
43,500
14,296
57,796
Operating segments
For management purposes, the Group is currently organised into two continuing operating divisions – Powered Access Platforms and other
operations. These divisions are the basis on which the Group reports its segment information along with the groups discontinued
operations.
Principal activities are as follows:
Powered Access Platforms: design and manufacture of powered access equipment
Discontinued operations: 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
Powered Access Platforms
Other
Segment revenue / loss
Finance income
Finance costs
Loss from continuing operations before tax and associate
Reassessment of carrying value of associate
Taxation
Loss for the year from continuing operations
Profit on disposal of operations
Net loss from discontinued operations
Loss for the year from continuing and discontinued operations
2011
2010
Revenue
£000's
44,247
4,058
48,305
Revenue
£000's
41,033
2,467
43,500
Loss
£000's
(14,353)
(889)
(15,242)
470
(286)
(15,058)
(1,280)
(186)
(16,524)
173
-
(16,351)
Loss
£000's
(14,962)
(1,515)
(16,477)
108
(294)
(16,663)
-
(1,950)
(18,613)
-
(5,375)
(23,988)
24
TANFIELD GROUP PLC FINANCIAL STATEMENTS
2. Segmental analysis continued
Assets and liabilities by operating segment1
Assets
Powered Access Platforms
Discontinued operations retained assets
Discontinued operations held for sale
Other
Cash and cash equivalents2
Total segment assets
Current tax assets
Deferred consideration
Total assets
Liabilities
Powered Access Platforms
Discontinued operations held for sale
Other
Total segment liabilities
Current tax liabilities
Deferred tax liabilities
Retirement benefit obligations
Deferred consideration
Total liabilities
1
Intercompany loans have been omitted from the asset and liabilities by line of business summary.
2
Cash and cash equivalents have been omitted from the assets and liabilities by line of business summary
Geographical information
2011
£000's
39,373
-
-
1,720
3,463
44,556
-
341
44,897
(11,706)
-
(2,207)
(13,913)
(189)
(375)
(10)
-
(14,487)
2010
£000's
42,828
1,262
13,194
1,898
3,637
62,819
11
-
62,830
(9,418)
(3,832)
(2,334)
(15,584)
(83)
(375)
(10)
(2,294)
(18,346)
The Group’s revenue from external customers and information about its segment assets (non current assets excluding investments in
associated, deferred tax assets and other financial assets) by geographical location are detailed below:
Continuing operations only
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
Other segment information
Powered Access equipment
Other
Total for continuing operations
Discontinued operations
Total for continuing and discontinuing operations
Revenue
Non-current assets
2011
£000's
6,426
8,240
13,813
11,922
7,904
48,305
2010
£000's
3,523
6,354
13,961
10,813
8,849
43,500
Amortisation and
Depreciation
2011
2010
£000's
1,444
151
1,595
-
1,595
£000's
1,567
178
1,745
655
2,400
2011
£000's
5,444
-
2,480
420
3
8,347
2010
£000's
5,927
-
2,958
464
76
9,425
Additions to non-current
assets
2011
£000's
590
32
622
-
622
2010
£000's
307
14
321
367
688
25
TANFIELD GROUP PLC FINANCIAL STATEMENTS
3. Assets held for sale and discontinued operations
On 1 January 2011 group entered into a sale agreement with Smith Electric Vehicle US Corp to dispose of the group’s Zero Emission Vehicle
operations. The disposal was in the form of a business and asset purchase and specifically excluded trade receivables and cash.
The results of the discontinued operations, which have been included in the income statement, were as follows:
Revenue
Expenses
Loss before tax
Attributable tax expense
Net loss from discontinued operations
Note: Expenses include allocated net finance costs of £Nil (2010: £6k)
The major classes of assets and liabilities comprising the operations classified as held for sale are as follows:
Goodwill
Intangible assets
Property, plant and equipment
Inventories
Other debtors & prepayments
Total assets classified as held for sale
Trade and other payables
Provisions
Other creditors
Total liabilities associated with assets classified as held for sale
Net assets of disposal group
2011
£000's
-
-
-
-
-
2010
£000's
14,296
19,671
(5,375)
-
(5,375)
2010
£000’s
356
7,592
656
4,365
225
13,194
2,988
527
317
3,832
9,362
4. Profit on disposal of electric vehicle division
On 1 January 2011 the group sold the net assets shown in note 3 for a total consideration of USD 15m. A summary of the profit on disposal
shown in the statement of comprehensive income is as follows:
Total consideration receivable
Less legal costs directly associated with the sale
Total consideration net of costs
Net assets sold (note 3)
Profit on disposal of electric vehicle division
£000’s
9,696
(161)
9,535
(9,362)
173
5. Deferred consideration
The sale and purchase agreement of the group’s electric vehicle division (note 3) allowed for USD 14.25m of the total USD 15.0m
consideration to be deferred with interest payable to the group at 4% above the base rate of Barclays Bank PLC on the outstanding balance.
A summary of the outstanding consideration which is payable on or before August 2012 is shown below:
Total consideration receivable
Total consideration received
Consideration received in the form of shares in SEV US (Note 17)
Total interest receivable on outstanding consideration
Total interest received
Effects of currency fluctuations
Deferred consideration receivable net of interest
26
£000’s
9,696
(7,756)
(1,280)
220
(202)
(337)
341
TANFIELD GROUP PLC FINANCIAL STATEMENTS
6. Staff costs
Continuing operations
Aggregate remuneration comprised
Wages and Salaries
Share scheme expense
Social Security Costs
Other Pension Costs
Total staff costs
Average monthly number of employees
Production
Head Office, Administration and sales & distribution
Total
2011
£000's
15,123
40
1,786
194
17,143
2011
No.
282
187
469
2010
£000's
12,938
-
1,640
169
14,747
2010
No.
265
163
428
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.
7. Depreciation and amortisation
Continuing and discontinued operations
Depreciation of property, plant & equipment
Amortisation of intangible fixed assets
Total depreciation and amortisation charge
Depreciation of property, plant & equipment
- owned assets
- leased assets
Continuing operations
Depreciation of property, plant & equipment
Amortisation of intangible fixed assets
Total depreciation and amortisation charge
Depreciation of property, plant & equipment
- owned assets
- leased assets
8. Other operating expenses
Other operating expenses
Non property related operating lease rentals
Net (gain) loss on foreign exchange
Auditors' remuneration (see below)
Other operating expenses
Total operating expenses
27
2011
£000's
793
802
1,595
753
40
2011
£000's
793
802
1,595
753
40
2011
£000's
128
(22)
184
8,171
8,461
2010
£000's
1,042
1,358
2,400
925
117
2010
£000's
941
804
1,745
824
117
2010
£000's
325
45
205
7,546
8,121
TANFIELD GROUP PLC FINANCIAL STATEMENTS
8. Other operating expenses (continued)
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
130
155
2011
£000's
2010
£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
Comprising
Audit services
Non audit services
-
10
44
184
140
44
-
10
40
205
165
40
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, Tanfield Group PLC, is exempt from disclosing its income statement. The loss for the year is £14,820k (2010: loss £16,447).
9. Finance expense and finance income
Continuing operations
Finance expense
Interest on bank overdrafts, loans & financial instruments
Interest on obligations under finance leases
Fair value loss on Interest rate swap (note 29)
Total finance expense
Finance income
Interest on cash and cash equivalents
Interest on deferred consideration (note 5)
Fair value gain on Interest rate swap (note 29)
Total finance income
2011
£000's
276
10
-
286
2011
£000's
85
220
165
470
2010
£000's
255
29
10
294
2010
£000's
108
-
-
108
28
TANFIELD GROUP PLC FINANCIAL STATEMENTS
10. Taxation
Analysis of taxation charge for the year
United Kingdom
Corporation tax at 26.5% (2010: 28%)
Non UK Taxation
Current
Total current taxation charge
Deferred tax
Origination and reversal of temporary differences
Total deferred tax charge
Total taxation charge in the income statement
Factors affecting taxation charge
2011
£000's
2010
£000's
-
186
186
-
-
186
-
35
35
1,915
1,915
1,950
The taxation charge on the loss for the year differs from the amount computed by applying the corporation tax rate to the loss before
taxation as a result of the following factors:
Loss before taxation
Notional taxation charge at UK rate of 26.5% (2010: 28%)
Effects of:
Non (taxable) deductable expenses
Deferred tax asset not recognised in the period
Adjustments in respect of prior periods
Total taxation charge
2011
£000's
(16,165)
(4,284)
(758)
5,228
-
186
2010
£000's
(22,038)
(6,171)
(94)
8,114
101
1,950
29
TANFIELD GROUP PLC FINANCIAL STATEMENTS
11. Loss per share
Basic loss 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 was 39.66p (2010: 24.95p).
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings per share
Effect of dilutive potential ordinary shares from share options
Weighted average number of ordinary shares for the purposes of diluted earnings per share
Earnings
From continuing and discontinuing operations
Earnings for the purposes of basic earning per share being net profit attributable to owners of the parent
Potential dilutive ordinary shares from share options
Earnings for the purposes of diluted earnings per share
From continuing operations
Earnings for the purposes of basic earning per share being net profit attributable to owners of the parent
Adjustment to exclude the loss for the period from discontinued operations
Profit on disposal of discontinued operations
Loss for the purposes of earnings per share from continuing operations
Adjustment for one off items:
Reassessment of carrying value of associate
Impairment of receivables
Loss for the purposes of earnings per share before one off items
Loss per share from continuing and discontinued operations
Basic (p)
Diluted (p)a
Loss per share from continuing operations
Basic (p)
Diluted (p)a
Loss per share from continuing operations before one off items
Basic (p)
Diluted (p)a
Loss per share from discontinued operations
Basic (p)
Diluted (p)a
2011
No.
000’s
94,339
140
94,479
2011
£000's
(16,337)
-
(16,337)
2011
£000's
(16,337)
-
(173)
(16,510)
1,280
250
(14,980)
2011
(17.3)
(17.3)
(17.5)
(17.5)
(15.9)
(15.9)
0.2
0.2
2010
No.
000’s
80,183
143
80,326
2010
£000's
(23,986)
-
(23,986)
2010
£000's
(23,986)
5,375
-
(18,611)
-
650
(17,961)
2010
(29.9)
(29.9)
(23.2)
(23.2)
(22.4)
(22.4)
(6.7)
(6.7)
a
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.
30
TANFIELD GROUP PLC FINANCIAL STATEMENTS
12. 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 and Smith electric vehicles.
The group performed an annual impairment test or more frequently if there were indications that goodwill might be impaired, based on the
cash generating units (CGUs). Goodwill was allocated to the groups CGUs as follows:
At 1 January 2010
Reclassified as held for sale
At 31 December 2010 and 31 December 2011
Smith
Electric
Vehicles
£000's
356
(356)
-
Consolidated
£000's
356
(356)
-
Snorkel
£000's
-
-
-
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.
On 1 January 2011 the Electric Vehicle business was sold for a value in excess of the carrying value of assets.
13. Intangible assets
Group
Cost
At 1 January 2010
Additions
Exchange differences
Reclassified as held for sale
At 31 December 2010
Additions
Exchange differences
Disposals
At 31 December 2011
Accumulated depreciation
At 1 January 2010
Charge for the year
Exchange differences
Reclassified as held for sale
At 31 December 2010
Charge for the year
Exchange differences
Disposals
At 31 December 2011
Carrying amount
At 31 December 2011
At 31 December 2010
Development
Costs
£000's
Manufacturing
schedules
£000's
Other
Intangible
Assetsa
£000's
Computer
Software
£000's
11,396
371
-
(9,640)
2,127
224
-
-
2,351
1,882
747
-
(2,081)
548
209
-
-
757
1,594
1,579
15,292
-
(1,330)
-
13,962
-
369
-
14,331
13,047
301
(1,624)
-
11,724
292
320
-
12,336
9,486
-
-
-
9,486
2
-
(6,458)
3,030
7,523
281
-
-
7,804
281
-
(6,458)
1,627
1,995
2,238
1,403
1,682
197
6
-
(97)
106
6
-
(7)
105
94
29
-
(64)
59
20
-
(5)
74
31
47
Total
£000's
36,371
377
(1,330)
(9,737)
25,681
232
369
(6,465)
19,817
22,546
1,358
(1,624)
(2,145)
20,135
802
320
(6,463)
14,794
5,023
5,546
a
Other intangible assets include trademarks, customer order book and customer lists which arose on previous years business combinations
31
TANFIELD GROUP PLC FINANCIAL STATEMENTS
14. Property, plant and equipment
Group
Cost
At 1 January 2010
Additions
Disposals
Reclassification
Exchange differences
Reclassified as held for sale
At 31 December 2010
Additions
Disposals
Exchange differences
At 31 December 2011
Accumulated depreciation
At 1 January 2010
Charge for the year
Disposals
Exchange differences
Reclassified as held for sale
At 31 December 2010
Charge for the year
Disposals
Exchange differences
At 31 December 2011
Carrying amount
At 31 December 2011
At 31 December 2010
a
Land and
buildings
£000's
Plant and
Machinerya
£000's
Fixtures,
Fittings and
equipment
£000's
Motor
Vehicles
£000's
2,324
12
(15)
223
28
(448)
2,124
12
-
3
2,139
545
154
(11)
3
(111)
580
140
-
2
722
1,417
1,544
5,232
154
-
(256)
55
(199)
4,986
111
(122)
-
4,975
2,593
551
-
22
(103)
3,063
419
(11)
8
3,479
1,496
1,923
1,016
44
(16)
33
49
(90)
1,036
228
-
6
1,270
533
238
(7)
27
(45)
746
183
-
11
940
330
290
628
102
(72)
-
35
(421)
272
39
(37)
(7)
267
329
99
(53)
18
(243)
150
51
(22)
7
186
81
122
Total
£000's
9,200
312
(103)
-
167
(1,158)
8,418
390
(159)
2
8,651
4,000
1,042
(71)
70
(502)
4,539
793
(33)
28
5,327
3,324
3,879
The carrying amount of the group plant and machinery includes an amount of £176k (2010: £732k) in respect of assets held under finance leases. The depreciation charge on those assets for 2011 was £40k
(2010: £117k). Various finance leases were fully settled in the year and title of the equipment obtained.
15. Current investments
The investment relates to the current value of a money market investment denominated in Japanese Yen.
Group
At 1 January
Additions
Exchange movements
At 31 December
2011
£000’s
395
76
27
498
2010
£000’s
275
70
50
395
16. 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
2011
£000's
3,463
2010
£000's
3,637
2011
£000's
1,278
2010
£000's
1,010
32
TANFIELD GROUP PLC FINANCIAL STATEMENTS
17. Associate
At 31 December 2011, the group held a 27.22% (2010: 49%) share of the issued share capital of Smith Electric Vehicles US Corp, a company
registered in the US. Smith Electric Vehicles US Corp’s primary activities involve the manufacture and distribution of Zero Emission Vehicles.
In accordance with IAS 28 this investment has been accounted for as an associate under the equity method of accounting. In the
consolidated financial statements.
During the year the group converted $1.99m (£1.28m) of deferred consideration related to Smith Electric Vehicles US Corp’s acquisition of
the Smith Electric Vehicles business on 1 January 2011 (note 3) into a new class of preferred equity securities.
In the consolidated accounts we are required to account for our investment in the associate at cost less any cumulative losses. Given that
Smith Electric Vehicles Corp is a start up, its cumulative losses exceed our stake and is therefore valued at nil in our consolidated accounts.
The entity accounts for the associate at historic cost less impairment. Based on the fact that during the year Smith Electric Vehicles raised
new equity at a valuation that would value the Tanfield Group PLC stake in the associate at £54m the directors consider the investment
unimpaired and is therefore carried at its additional cost of £1.28m.
The directors consider there is no material difference between the book and fair values of assets and liabilities acquired.
GROUP
Aggregate amounts relating to associates
Total assets
Total liabilities
Net assets / (liabilities)
Group’s share of net assets / (liabilities) of associate
Total revenue
Profit / (loss)
Group’s share of profit / (loss) of associate
Reassessment of carrying value of associate - preferred equity securities
Reassessment of carrying value of associate- othera
Share of post tax loss of associate
2011
£000's
23,369
(87,900)
(64,531)
(17,565)
31,912
(33,579)
(9,140)
1,280
7,860
-
2010
£000's
18,566
(35,148)
(16,582)
(8,125)
9,150
(13,605)
(6,666)
-
6,666
-
COMPANY
Associate
a
In accordance with IAS28 the groups share of post tax loss is limited to its investment. The group will begin to recognise the investment in Smith Electric Vehicles US Corp if and when the associate has net
assets exceeding the group’s net investment.
b
The year end of Smith Electric Vehicles US Corp (30 Sept) differs from that of the Tanfield Group as the Group holds no significant influence over its Associate on such decisions.
2011
£000's
1,280
2010
£000's
-
18. Inventories
In accordance with IAS2 the group regularly reviews its inventory to ensure it is carried at the lower of cost or net realizable value. The
directors consider that the carrying amounts of inventories approximates to their fair value.
The group’s inventories comprised:
Raw materials and consumables
Work-in-progress
Finished Goods and goods for resale
Inventories relating to continuing operations
Inventories relating to discontinued operations
Total inventories
Cost
£000’s
16,492
1,679
8,097
26,268
-
26,268
2011
Provision
£000’s
(4,137)
-
(636)
(4,773)
-
(4,773)
Carrying
value
£000’s
12,355
1,679
7,461
21,495
-
21,495
Cost
£000’s
17,067
1,257
11,484
29,808
4,365
34,173
Changes in inventories of finished goods and WIP can be calculated as:
Total finished goods and WIP at 1 January
Changes in inventories of finished goods and WIP
Total finished goods and WIP at 31 December
2010
Provision
£000’s
(3,647)
-
(753)
(4,400)
-
(4,400)
2011
£000’s
11,988
(2,848)
9,140
Carrying
value
£000’s
13,420
1,257
10,731
25,408
4,365
29,773
2010
£000’s
19,677
(7,689)
11,988
33
TANFIELD GROUP PLC FINANCIAL STATEMENTS
19. 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
Company
2011
£000's
9,658
(587)
-
226
1,456
10,753
2010
£000's
9,949
(492)
-
462
591
10,510
2011
£000's
-
-
27,713
-
67
27,780
2010
£000's
-
-
42,908
-
63
42,971
-
250
-
-
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 £250k in 2011 (2010: £650k) 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
Exchange differences
At 31 December
Average credit period taken on goods (Days)b
Group
2011
£000's
492
208
(100)
(13)
587
69
2010
£000's
717
136
(376)
15
492
79
b
Debtor days are calculated as Trade amounts receivable net of allowance for estimated irrecoverable amounts over total sales in the period from continuing operations only multiplied by 365 days.
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:
2011
2010
Between 0
and 3
months
£000's
1,365
2,050
Not past due
£000's
7,572
7,230
Past due but not impaired
Between 6
and 12
months
£000's
54
95
Between 3
and 6
months
£000's
80
82
Over 12
months
£000's
-
-
Total
£000's
9,071
9,457
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.
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.
At 31 December £1,601k (2010: £2,064k) of trade receivables net of allowance for estimated irrecoverable amounts were denominated in
Sterling, £3,271k (2010: £3,218k) in US Dollars, £1,984k (2010: £1,339k) in Australian Dollars, £1,137k (2010: £1,885k) in Japanese Yen and
£1,078k (2010: £951k) in other currencies including Euros and NZ Dollars.
34
TANFIELD GROUP PLC FINANCIAL STATEMENTS
20. Trade and other payables
The directors consider that the carrying amounts of trade and other payables approximates to their fair value.
Current
Trade payables
Social security and other taxes
Accrued expenses
Fair value of Interest rate collar
Amounts due to subsidiary undertakings
Othera
Average credit period taken on trade purchases (days)b
Group
Company
2011
£000's
7,497
607
4,735
195
-
-
13,034
100
2010
£000's
4,605
704
5,128
365
-
491
11,293
83
2011
£000's
220
205
197
-
1,462
-
2,084
2010
£000's
376
548
30
-
-
491
1,445
a
Other balance of £491k in 2010 related to cash received by the Tanfield Group in relation to an extended exclusivity period given to Smith Electric Vehicles US Corp in relation to the sale of the Electric Vehicle
business. This cash was deducted from the total consideration receivable on the sale of the Electric Vehicle business on 1 January 2011.
b
Creditor days have been calculated as trade payables and accrued expenses over changes in inventories of finished goods and WIP, raw materials and consumables used and other operating expenses
multiplied by 365 days. The calculation includes only continuing operations.
21. Obligations under finance leases
Assets held under finance lease mainly relate to plant and machinery assets and are secured on those assets. During the year the group
entered into new lease agreements with a capital value of £275k (2010: Nil).
The average lease term is 3 years (2010: 5 years). For the year ended 31 December 2011, the average effective borrowing rate was 18%
(2010: 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
Minimum leases
payments
2010
£000's
2011
£000's
Present value of minimum
leases payments
2010
£000's
2011
£000's
103
266
369
(101)
268
214
-
214
(17)
197
60
208
268
-
268
197
-
197
-
197
22. Other creditors
The deferred consideration was settled during the year with the issue of 470,000 ordinary shares. These shares had a nominal value of £24k,
the remaining balance of £2,270k has been transferred to the share premium account. The directors consider that the carrying amounts of
Other creditors approximates to their fair value.
Current
Deferred consideration payable
Group
2011
£000's
-
-
2010
£000's
2,294
2,294
35
Company
2011
£000's
-
-
2010
£000's
2,294
2,294
TANFIELD GROUP PLC FINANCIAL STATEMENTS
23. Deferred taxation
Group
At 1 January 2010
Charge to the income statement
At 1 January 2011
Deferred tax asset
Deferred tax liability
At 1 January 2011
Charge to the income statement
At December 2011
Deferred tax asset
Deferred tax liability
At December 2011
Tax losses
£000's
1,915
(1,915)
-
-
-
-
-
-
-
-
-
Other
£000's
(375)
-
(375)
-
(375)
(375)
-
(375)
-
(375)
(375)
Total
£000's
1,540
(1,915)
(375)
-
(375)
(375)
-
(375)
-
(375)
(375)
At 31 December 2011, the group had unused tax losses of £113m (2010: £93m). The losses have arisen in various jurisdictions and various
locations and will be relived against future profits from these locations. No deferred tax asset has been recognised in respect of the
remaining £113m (2010: £93m) due to the unpredictability of profit streams which results in an unrecognised deferred tax asset of £31,325k
(2010: £26,097k).
Company
There is no movement in deferred taxation in the current or proceeding years.
24. Share capital and share premium
The Company has one class of ordinary shares which carry no right to fixed income. All shares are fully paid up.
At 1 January 2010
Rights issuea
At 31 December 2010
Shares issued to settle outstanding deferred
consideration payable (note 22)
Share options exercised
At 31 December 2011
a
Nominal
share
value
5p
5p
5p
5p
5p
5p
Number of shares
74,077,218
20,000,000
94,077,218
470,000
20,000
94,567,218
Share
capitalb
£000’s
3,704
1,000
4,704
23
1
4,728
Share
premium
£000’s
-
827
827
2,270
-
3,097
On 1 Oct 2010 the group raised £2,000,000 by way of a 10p preemptive rights offer. The associated costs of £173,000 have been allocated to the share premium account.
b
The authorised share capital of the company throughout 2010 and 2011 was £5,000,000, representing 100,000,000 ordinary shares.
25. Operating lease arrangements
At the balance sheet date, the Group as a lessee had future aggregate minimum lease payments under non-cancellable operating leases,
which fall due as follows:
2011
Within one year
In the second to fifth years inclusive
Greater than five years
2010
Within one year
In the second to fifth years inclusive
Greater than five years
Leasehold Propertyc
£000’s
Other
£000’s
1,366
5,938
15,173
22,477
1,207
4,665
14,402
20,274
84
57
-
141
193
63
-
256
Total
£000’s
1,450
5,995
15,173
22,618
1,400
4,728
14,402
20,530
c
The leasehold property balances mainly relate to the Group’s facilities in Washington, England and Kansas ,USA which have non-cancellable leases signed up to 2031 and 2018 respectively.
36
TANFIELD GROUP PLC FINANCIAL STATEMENTS
26. Non controlling interests
The group owns 95% of Tanfield Union Limited, a subsidiary in conjunction with Union Engineering Machinery Systems. 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
2011
£000’s
(3)
(14)
(17)
2010
£000’s
(1)
(2)
(3)
27. Provisions
The provisions represent the Group’s liability in respect of 12 month warranties granted on Powered Access Platforms. 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
Net movement in provision - continuing operations
Net movement in provision - discontinued operations
Reclassified as held for resale
At 31 December
Warranty
provision
2011
£000’s
272
349
-
-
621
Warranty
provision
2010
£000’s
527
(28)
300
(527)
272
28. 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 2011 and 2010 are shown below.
Outstanding at the beginning of the year
Granted
Forfeited
Exercised
Expired
Outstanding at the end of the year
Exercisable
2011
2010
Number of
share
options
3,826,334
5,800,000
-
(20,000)
-
9,606,334
3,806,334
Weighted
average
exercise
price
(pence)
Number of
share
options
(Restated)
113
27
-
(5)
-
61
113
3,826,334
-
-
-
-
3,826,334
3,606,334
Weighted
average
exercise
price
(pence)
Restated
113
-
-
-
-
113
101
The outstanding options at 31 December 2011 had a weighted average remaining contractual life of 7.38 years (2010: 5.79 years)
The following table relates to share options outstanding and exercisable at 31 December 2011
Exercise price (pence)
No of share options
No of exercisable options
1p
2,901,334
2,901,334
5p
160,000
160,000
Option exercise prices
115p
250,000
250,000
27p
5,800,000
-
200p
375,000
375,000
300p
120,000
120,000
Total
9,606,334
3,806,334
37
TANFIELD GROUP PLC FINANCIAL STATEMENTS
28. Share based payments (continued)
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 £40k (2010: £Nil) and a credit directly to equity of £19k (2010: £Nil) 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 exercise price
Expected volatilitya
Expected lifeb
Risk free rate
Expected dividends
Grant date
27
4.9%
3 years
2.5%
0.0%
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.
29. 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.
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
2011
£’000
9,071
3,463
12,534
2010
£’000
9,457
3,637
13,094
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.
38
TANFIELD GROUP PLC FINANCIAL STATEMENTS
29. Financial risk management (continued)
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.
2011
Finance leases
Trade and other payables
2010
Finance leases
Trade and other payables
Within 1
year
£’000
1 to 5
years
£’000
Over 5
years
£’000
60
12,839
12,899
197
10,928
11,125
208
-
208
-
-
-
-
-
-
-
-
-
Total
£’000
268
12,839
13,107
197
10,928
11,125
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.
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
1.55
1.19
1.52
2.00
119.6
2.00
Effect on equity if
Sterling strengthens by
10%
increase (decrease)
£000’s
Effect on equity if
Sterling weakens by
10%
Increase (decrease)
£000’s
(747)
(81)
(525)
(87)
(266)
-
822
99
641
106
325
-
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 31 December 2011 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.
39
TANFIELD GROUP PLC FINANCIAL STATEMENTS
29. Financial risk management (continued)
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
2011
£000’s
301
Derivative
Liability
2010
£000’s
365
The interest payable under the collar is recognised through the statement of comprehensive income £216k (2010: £221k) within
Interest on bank overdrafts, loans and financial instruments (Note 9). The volatility arising on the collar is also recognised in the statement
of comprehensive income £165k gain (2010: £10k loss) and disclosed separately within finance expenses and finance income (Note 7).
The liability is denominated in US Dollars and a currency exchange loss of £6k (2010: £10k loss) has also been recognised in the
statement of comprehensive income within other operating expenses.
The interest rate collar was settled on 2 March 2012 (note 33).
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.
No gearing is currently calculated as the Group currently has no borrowings
40
TANFIELD GROUP PLC FINANCIAL STATEMENTS
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 its subsidiaries. The bank hold a cross guarantee in
relation to all the Group Company bank accounts.
Company
The Company entered into transactions with its subsidiaries as disclosed below.
Net position at 1 January
Management charges
Impairmentsa
Other transactions including new loans issued and cash balances received
Net position at 31 December
2011
£000’s
42,908
2,535
(14,666)
(4,526)
26,251
2010
£000’s
57,405
2,227
(18,038)
1,314
42,908
a
During 2011 the company impaired part of its intercompany receivable from Tanfield Engineering Systems US (Inc) £nil (2010: £599k), Tanfield Powered Access Limited £6,677k (2010: £9,023k), Tanfield Union
Ltd £Nil (2010: £314k), SEV Group Limited by £10k (2010: £253k), Tanfield Asia Pacific PTE.Ltd £498k (2010: £416k) and Snorkel International Inc £7,481k (2010: £7,433k)
Transactions with its associate
During the year the company received £7,756k of cash in relation to the Electric vehicle division sale consideration (Note 5)
During the year the group sold goods of £Nil (2010: £247k) to its associate, Smith Electric Vehicles US Corp. These transactions are
included within discontinued operations in the statement of comprehensive income.
During the year the group recharged £860k (2010: Nil) to Smith Electric Vehicles Europe Ltd for property related costs. These
transactions have been deducted from other operating expense in the statement of comprehensive income. At 31 Dec 11 there was an
outstanding balance due from Smiths Electric Vehicles Europe Ltd of £201k relating to these transactions.
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 including NI
Post employment benefits
Transactions with directors
There were no other transactions with Directors during the year.
31. Retirement benefits
2011
£000’s
1,289
62
1,351
2010
£000’s
1,028
71
1,099
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 £194k (2010:£169k) represents contributions payable to these schemes by the Group at rates specified
in the rules of the schemes. As at 31 December 2011, contributions of £10k (2010: £10k) due in respect of the current reporting period had
not been paid over to the schemes.
41
TANFIELD GROUP PLC FINANCIAL STATEMENTS
32. Financial instruments recognised in the balance sheet
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
a
Assets and liabilities at fair value through profit and loss.
33. Post balance sheet events
Loans and
receivables
£000’s
-
-
9,071
-
3,463
12,534
12,534
Other
financial
liabilities
£000’s
12,232
60
-
12,292
208
208
12,500
2011
Assets
Held to
maturitya
£000’s
-
-
-
498
-
498
498
Held for
tradinga
Total
£000’s
Loans and
receivables
£000’s
-
-
9,071
498
3,463
13,032
13,032
Total
250
250
9,457
-
3,637
13,094
13,344
Other
financial
liabilities
£000’s
10,224
197
2,294
12,715
-
-
12,715
£000’s
£000’s
195
-
-
195
-
-
195
12,427
60
-
12,487
208
208
12,695
2010
Assets
Held to
maturitya
£000’s
-
-
-
395
-
395
395
Held for
tradinga
Total
£000’s
250
250
9,457
395
3,637
13,489
13,739
Total
£000’s
£000’s
365
-
-
365
-
-
365
10,589
197
2,294
13,080
-
-
13,080
New share issue
On 13 February 2012, the Board of Tanfield announced details of a £12m conditional Placing, advising that it had conditionally raised gross
proceeds of approximately £12 million by way of a placing of 29,268,293 new ordinary shares of 5p each at a price of 41p per share to
institutional and other investors (the “Placing Shares”). 9,407,720 shares were issued under existing authorities and admitted to trading on
17 February 2012. The issue of the remaining 19,860,573 shares, was conditional on shareholder approval which was duly passed at the
General meeting on 8 March 2012.
Further to Admission of the 29,268,293 Placing Shares, the total number shares in issue, and at the date of this report, is 123,835,511.
Settlement of interest rate collar
On 2 March 2012 the group settled its interest rate collar liability (note 29) at a value of $236.5k. The mark to market gain between 31 Dec
2011 and the settlement date will be recognised in the 2012 financial statements.
42
TANFIELD GROUP PLC FINANCIAL STATEMENTS
34. Subsidiary undertakings and Associates
The tables below give brief details of the group’s operating subsidiaries and associates at 31 December 2011. All subsidiaries are unlisted.
No subsidiaries are excluded from the group consolidation.
Subsidiary undertakings
Tanfield Engineering Systems US (Inc)
Tanfield Powered Access Ltd
Snorkel International Inc
Snorkel Australia Limited
Snorkel New Zealand Limited
Tanfield Union Limited
Tanfield Engineering Systems Ltd
Snorkel Holdings LLC
Tanfield Asia Pacific PTE. Ltd
IPS Australia Limited
SEV Group Ltd
E-Comeleon Ltd
Express 2 Automotive Ltd
HMH Sheet Metal Fabrications Ltd
Norquip Ltd
HBWP Inc
Principal activity
Powered Access
Powered Access
Powered Access
Powered Access
Powered Access
Powered Access
Engineering
Holding Company
Non Trading
Non Trading
Non Trading
Non Trading
Non Trading
Dormant
Dormant
Dormant
Group Interest
in allotted
capital &
voting rights
100%
100%
100%
100%
100%
95%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Group Interest
in allotted
capital &
voting rights
27.22%
27.22%
Country of
incorporation
US
UK
US
AUS
NZ
Hong Kong
UK
US
Singapore
AUS
UK
UK
UK
UK
UK
US
Country of
incorporation
US
UK
Associates
Smith Electric Vehicles US Corp
Smith Electric Vehicles Europe Ltda
a
Principal activity
Electric vehicle manufacture
Electric vehicle manufacture
Smith Electric Vehicle Europe Ltd is a 100% owned subsidiary of Smith Electric Vehicles US Corp . The groups interest in Smith Electric Vehicles Europe Ltd is held indirectly through its investment in Smith
Electric Vehicles US Corp.
Details of the investments held in the Company accounts are as follows:
Tanfield Engineering Systems Ltdb
Smith Electric Vehicles US Corp
b The investment in Tanfield Engineering Systems Ltd has been impaired by £839k (2010: £264k)
2011
£000’s
1,008
-
1,008
2010
£000’s
1,847
-
1,847
43