TANFIELD
GROUP
PLC
REPORT
AND
FINANCIAL
STATEMENTS
2012
Registered
in
England
&
Wales
Company
number
04061965
1
TANFIELD
GROUP
PLC
FINANCIAL
STATEMENTS
REPORT
AND
FINANCIAL
STATEMENTS
2012
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
3DX
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
NOMINATED
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.)
1
Source:
management
accounts
2012
£000’s
45,072
41%
(13,535)
2,198
506
2011
£000’s
48,305
37%
(13,397)
3,463
469
change
%
(6.7)
4.0
(1.0)
(36.5)
7.9
CHAIRMAN’S
STATEMENT
As
we
predicted,
global
demand
for
aerial
work
platforms
continued
to
grow
significantly
throughout
2012.
We
were
able
to
capitalise
on
this
returning
market
after
successfully
raising
£11m,
net
of
costs,
in
March,
via
a
share
placing.
In
the
ensuing
six
months
we
achieved
monthly
incremental
gains
in
output
and
sales,
leading
to
our
first
break-‐even
month
since
2008.
However,
the
extended
cash-‐to-‐cash
cycle
of
key
markets
in
the
Asia-‐Pacific
region,
combined
with
supply
chain
constraints
put
additional
strain
on
our
working
capital,
so
we
reined
in
production
during
the
final
quarter
in
order
to
rebalance
inventory
and
maintain
cash.
Global
demand
for
our
Snorkel
range
of
aerial
lifts
remains
strong,
pricing
has
improved
and
margins
increased.
Customers
remain
engaged
in
fleet
replacement
programmes
after
ageing
their
fleets
during
the
economic
downturn.
We
continue
to
increase
our
distribution
channels
in
key
markets,
including
both
Latin
America
and
North
America.
Scandinavia
and
Japan
remained
particularly
buoyant
markets.
the
development
of
two
exciting
new
products
that
we
introduced
in
April
2013.
Tanfield
sells
the
Snorkel
brand
of
aerial
work
platforms
through
a
global
network
of
independent
distributors.
In
2012
we
appointed
new
distributors
in
Germany,
France,
Brazil,
Colombia;
as
well
as
more
re-‐sellers
in
North
America.
Zero
Emission
Vehicles
Smith
Electric
Vehicles
US
Corp
(“SEVUS”),
in
which
Tanfield
retains
a
24
per
cent
holding,
successfully
raised
$40m
in
February
2012
to
continue
its
development.
However,
the
company
withdrew
its
planned
Initial
Public
Offering
on
Nasdaq
in
September
2012.
SEVUS
continues
to
progress,
winning
new
customers
in
North
America,
Europe
and
Asia.
We
remain
supportive
of
the
SEVUS
management
strategy,
which
we
believe
will
ultimately
deliver
a
significant
return
on
our
investment.
Outlook
We
expect
global
demand
for
aerial
work
platforms
will
continue
to
grow
during
2013
and
beyond,
although
there
remains
some
level
of
economic
uncertainty
in
the
key
markets
of
North
America
and
the
Eurozone.
I
would
like
to
thank
all
of
our
employees
for
their
efforts
this
year,
particularly
in
achieving
our
first
break-‐even
month
in
October.
I
look
forward
to
working
with
you
all
in
2013.
In
order
to
fully
exploit
the
significant
opportunities
available
in
2013
–
and
to
return
to
profitability
-‐
Tanfield
requires
additional
working
capital,
beyond
the
£2.1m
placing
in
April
2013.
CHIEF
EXECUTIVE’S
REVIEW
Summary
The
fleet
replacement
initiatives
we
first
saw
in
2011
continued
into
2012,
as
equipment
rental
and
plant
hire
companies
revitalised
ageing
fleets
of
aerial
work
platforms.
We
significantly
strengthened
our
supply
chain
during
2012
and
achieved
our
first
month
of
profitability
since
2008.
However
cash
constraints
in
the
final
quarter
meant
that
we
lost
some
momentum
and
losses
for
the
year
reached
£14.5m.
Powered
Access
&
Engineering:
Turnover
of
£45.1m
(2011:
£48.3m)
Demand
grew
for
powered
access
products
in
2012,
outstripping
our
capability
to
supply.
We
continued
to
plan
for
the
future
with
Tanfield
is
not
proposing
to
pay
a
dividend
for
the
period.
As
outlined
in
our
announcements
of
20
February
2013
and
15
April
2013,
The
Board
has
received
a
substantial
number
of
approaches
from
credible
parties
interested
in
purchasing
our
Powered
Access
division
and
the
Snorkel
brand.
Due
to
the
strength
of
this
interest,
in
April
the
Board
of
Directors
appointed
an
M&A
advisory
firm
to
further
explore
and
manage
this
process
to
optimise
value
for
shareholders.
Further
announcements
will
be
made
in
due
course.
4
TANFIELD
GROUP
PLC
FINANCIAL
STATEMENTS
FINANCIAL
AND
BUSINESS
REVIEW
(Continued)
FINANCE
DIRECTOR’S
REPORT
The
Revenue
for
the
year
of
£45.1m
(2011
£48.3m)
reflected
the
difficulty
in
responding
to
the
improved
market
conditions
owing
to
the
constraints
imposed
by
supply
chain
capacity
and
working
capital
constraints
in
2012.
As
in
2011,
the
cost
base
has
been
held
as
low
as
possible
without
damaging
the
overall
group
infrastructure,
and,
in
spite
of
the
lower
turnover
in
the
year,
the
business
reported
a
similar
Loss
before
Tax
investment
and
associate
of
£15.3m
(2011
£15.1m).
Expenses
in
all
categories
were
very
similar
to
2011
and
improved
performance
is
dependent
upon
increased
volumes.
Reassessment
of
the
company’s
holding
in
Smith
Electric
Corp.
During
the
year,
Tanfield’s
holding
in
Smith
Electric
Corp
was
diluted
by
successive
fundraisings.
In
addition,
Tanfield’s
influence
at
board
level
has
reduced,
following
the
appointment
of
further
non-‐
executive
directors.
As
a
result,
Tanfield’s
holding
can
no
longer
be
considered
that
of
an
associate.
It
is
therefore
now
treated
as
an
investment.
As
such,
it
is
now
being
held
at
the
lower
of
cost
and
realisable
value.
Whilst
the
realisable
value
of
a
private
company
is
difficult
to
estimate,
all
valuation
discussions
in
relation
to
recent
fundraisings
by
Smith
Electric
use
valuation
ranges
well
in
excess
of
£1.3m
which
is
the
recorded
cost
of
the
investment.
The
investment
is
valued
at
cost,
£1.3m.
Loss
from
continuing
operations
after
impairments
The
Loss
from
Operations
in
the
period
was
£15.3m
(2011
£15.2m).
This
was
a
trading
loss
reflecting
low
sales
volumes
given
the
constraints
to
revenue.
Finance
income
The
interest
cost
in
the
period
of
£127k
(2011:
£286k)
was
lower
owing
to
higher
cash
balances
in
the
period
and
interest
income
£146k
(on
deferred
consideration
of
£220k
(2011:
£470k))
was
lower
as
2011
benefited
from
interest
on
deferred
consideration
relating
to
the
Smith
sale.
Taxation
In
spite
of
the
consolidated
losses,
a
tax
charge
of
£79k
arose
in
a
specific
fiscal
jurisdiction
(Japan)
in
the
period
(2011
£186k).
There
is
no
brought
forward
deferred
tax
asset,
and
none
was
recognised
in
the
period
resulting
in
no
adjustment
to
deferred
tax,
consistent
with
2011.
Loss
from
continuing
operations
Given
the
above,
Loss
from
continued
operations
was
£14.5m,
(2011
£16.5),
the
most
significant
differences
between
2012
and
2011
being
the
reassessment
of
the
holding
in
Smith
Electric
Vehicles.
Total
comprehensive
income
for
the
year
The
total
comprehensive
income
for
the
year
was
a
loss
of
£15.5m,
(2011
£15.7m),
after
a
£1.0m
charge
(2011
£0.7m
income)
relating
to
currency
translation
differences.
Earnings
per
share
Loss
per
share
from
continuing
operations
was
12.0
pence
(2011:
Loss
17.5
pence).
No
dividend
has
been
declared.
(2011:
nil)
Cash
At
31
December
2012,
the
Group
had
cash
of
£2.2m
(2011:
£3.5m).
Although
the
business
reported
a
loss
of
14.5m
in
the
period,
the
cash
used
was
£1.3m.
The
difference
was
funded
by
issuing
ordinary
shares,
(£13.4m
net,
of
which
£2m
was
loaned
to
Smith)
and
£1.9m
from
working
capital.
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
2012.
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
2012
reflects
improved
market
conditions
constrained
by
supply
chain
capacity
and
working
capital
limitations.
Turnover
for
the
twelve
month
period
was
£45.1m
compared
with
£48.3m
in
the
full
year
to
December
2011.
This
reflects
the
company’s
inability
to
address
the
demand
for
its
products
because
of
constraints
within
the
supply
chain
and
working
capital
limitations.
The
loss
in
the
period
of
£14.5m
(2011:
£16.4m
loss)
arose
from
trading,
reflecting
the
low
sales
volumes.
As
at
the
end
of
2012,
a
review
was
undertaken
of
the
carrying
value
of
assets
in
the
Powered
Access
division
and
it
was
concluded
no
further
impairment
was
required.
The
balance
sheet
remains
robust,
with
total
assets
at
the
end
of
December
of
£43m
(2011:
£45m).
Net
Current
Assets
were
£20.9m
(2011:
£22.6m)
with
cash
balances
of
£2.2m
and
no
borrowing.
The
company
has
identified
sources
of
capital
and
is
in
the
middle
of
a
process
designed
to
ensure
it
has
sufficient
working
capital
that
should
allow
it
to
work
through
the
current
trading
conditions.
No
dividend
has
been
paid
or
proposed
for
the
year
(2011:
£nil).
The
loss
of
£14.5m
(2011:
£16.4m)
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.
The
company
raised
equity
of
£12m
through
a
private
placing
of
its
shares.
This
additional
cash
was
used
to
assist
the
company’s
efforts
to
respond
to
the
increased
demand.
As
a
result
the
company
was
able
to
grow
the
business
to
respond
to
that
demand,
but
were
then
held
back
by
supply
chain
constraints,
which
increased
the
working
capital
required
to
grow
further.
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
entered
into
a
confidential
invoice
discounting
facility
with
Close
Brothers
Invoice
Finance
during
February
2013.
6
POLITICAL
AND
CHARITABLE
CONTRIBUTIONS
During
the
year,
the
group
has
made
no
political
or
charitable
donations
(2011
-‐
£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
2012
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.
The
company
needs
to
raise
additional
capital
to
fund
its
return
to
growth.
The
three
options
as
sources
of
working
capital
are:
Realisation
of
the
value
of
its
Smith
investment;
Equity
injection
from
shareholders;
Sale
of
its
Snorkel
Aerial
Work
Platform
business.
The
success
of
any
of
these
is
uncertain.
The
group
buys
the
majority
of
its
powered
access
components
and
sells
the
majority
of
its
powered
access
products
in
US
dollars.
Whilst
that
allows
a
natural
hedge
of
those
products,
it
does
affect
pricing
in
non
US
dollar
markets,
adding
to
the
uncertainty.
EVENTS
SINCE
THE
END
OF
THE
YEAR
The
company
entered
in
to
a
confidential
invoice
discounting
facility
with
Close
Brothers
Invoice
Finance.
The
company
is
carrying
out
a
sales
process
with
a
Mergers
and
Acquisitions
advisor
for
the
disposal
of
the
Snorkel
Powered
Access
division.
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.
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,
inspected
by
shareholders
upon
written
copies
of
which
may
be
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
2012
were
117
days.
(2011:
100
days)
SUBSTANTIAL
SHAREHOLDINGS
On
31
December
2012
the
following
held
substantial
shares
in
the
company.
No
other
person
has
reported
an
interest
of
more
than
3%
in
the
ordinary
shares.
THE
BANK
OF
NEW
YORK
(NOMINEES)
HSBC
GLOBAL
CUSTODY
NOMINEE
(UK)
VIDACOS
NOMINEES
LIMITED
UBS
PRIVATE
BANKING
NOMINEES
LTD
CHASE
NOMINEES
LIMITED
STATE
STREET
NOMINEES
LIMITED
LYNCHWOOD
NOMINEES
LIMITED
TD
DIRECT
INVESTING
NOMINEES
No.
21,072,650
18,541,854
13,175,899
10,174,079
8,057,664
7,639,944
5,774,455
5,579,301
%
16.34%
14.37%
10.21%
7.89%
6.25%
5.92%
4.48%
4.33%
RRE
Stanley
holds
shares
of
9.8%
which
are
held
through
nominee
companies.
DS
Kell
holds
shares
of
2.7%
which
are
held
through
nominee
companies.
7
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.
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.
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
27
June
2013
TANFIELD
GROUP
PLC
FINANCIAL
STATEMENTS
CORPORATE
GOVERNANCE
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
two
independent
Non-‐Executive
Directors.
In
addition,
until
their
resignation
on
8
March
2012,
two
other
independent
Non-‐Executive
Directors
were
members
of
the
board.
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
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
and
John
Pither.
Meetings
are
also
attended,
by
invitation,
by
the
Group
Finance
Director.
8
The
Audit
Committee
is
responsible
for:
•
•
•
Reviewing
the
scope
of
external
audit,
to
receive
regular
reports
from
Baker
Tilly
UK
Audit
LLP.
Reviewing
the
half-‐yearly
and
annual
accounts
prior
to
their
recommendation
to
the
Board.
Reviewing
the
Group’s
internal
financial
controls
and
risk
management
systems
and
processes.
• Making
recommendations
on
the
appointment,
re-‐
appointment
and
removal
of
external
auditors
and
approving
the
terms
of
engagement.
Reviewing
the
nature
of
the
work
and
level
of
fees
for
non-‐audit
services
provided
by
the
external
auditors.
Assessing
effectiveness
of
the
external
auditor.
independence,
objectivity
and
the
•
•
The
committee
met
on
two
occasions
during
the
year
and
they
were
fully
attended.
Internal
Control
The
Board
has
overall
responsibility
for
the
Group’s
system
of
internal
control
and
risk
management
and
for
reviewing
the
effectiveness
of
this
system.
Such
a
system
can
only
be
designed
to
manage,
rather
than
eliminate,
the
risk
of
failure
to
achieve
business
objectives
and
can
therefore
only
provide
reasonable,
and
not
absolute
assurance
against
material
misstatement
or
loss.
The
Board
are
of
the
view
that
due
to
the
current
size
and
composition
of
the
Group,
that
it
is
not
necessary
to
establish
an
internal
audit
function.
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
options
as
sources
of
additional
working
capital,
as
set
out
on
Page
18,
to
provide
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
27
June
2013
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
2012
and
1
January
2012
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.
RRE
Stanley
DS
Kell
CD
Brooks
BJ
Campbell
M
Groak
J
Pither
Total
Number
of
shares
2012
12,617,661
3,447,811
28,563
106,363
-‐
815,084
17,015,482
2011
12,378,756
3,447,811
28,563
106,363
-‐
815,084
16,776,577
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.
The
directors,
as
a
group,
beneficially
own
13%
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
JN
Bridged
M
Groak
JM
Woodingb
J
Pitherc
Total
a
CD
Brooks
received
a
loan
in
a
previous
year
of
£31k
which
was
outstanding
at
31
December
2012.
Salary
82
311
230
208
4
28
21
33
917
Benefits
in
kind
18
18
18
18
-‐
-‐
-‐
-‐
72
b
Mr
Wooding
is
paid
through
Simkat
Consultants.
Mr
Wooding
resigned
8
March
2012.
c
J
Pither
is
paid
through
Surrey
management
services.
d
JN
Bridge
resigned
8
March
2012.
Directors
share
options
held
at
31
December
2012
were
as
follows:
Bonuses
10
130
80
50
-‐
10
-‐
10
290
Total
2012
110
459
328
276
4
38
21
43
1,279
Pension
Total
Total
2011
83
406
306
246
26
26
25
30
1,158
2012
15
58
15
35
-‐
-‐
-‐
-‐
123
Pension
Total
2011
4
26
15
17
-‐
-‐
-‐
-‐
62
DS
Kell
CD
Brooks
BJ
Campbell
RRE
Stanley
JN
Bridge
M
Groak
J
Pither
31
December
2011f
411,334
860,000
1,800,000
Granted/
Lapsed
-‐
-‐
-‐
Exercised
-‐
-‐
-‐
Option
price
per
sharee,g
1p
1p
27p
Date
from
which
normally
exercisablef
01/03/2009
02/01/2010
21/01/2014
Expiry
Date
01/03/2016
02/01/2017
21/01/2021
1p
1p
27p
5p
1p
1p
27p
1p
1p
1p
27p
14/06/2009
02/01/2010
21/01/2014
14/06/2016
02/01/2017
21/01/2021
14/09/2008
01/03/2009
02/01/2010
21/01/2014
14/09/2015
01/03/2016
02/01/2017
21/01/2021
02/01/2010
01/03/2009
01/03/2009
21/01/2014
02/01/2017
01/03/2016
01/03/2016
21/01/2021
31
December
2012
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
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
250,000
200,000
1,100,000
140,000
50,000
320,000
900,000
800,000
30,000
30,000
200,000
Total
e
Certain
option
agreements
allow
for
the
option
price
to
reduce
in
the
event
of
a
demerger.
f
7,091,334
Certain
share
option
agreements
have
a
clause
that
allows
the
options
to
be
exercised
early
if
market
capitalisation
exceeds
a
certain
level.
g
On
31
December
2012
the
market
price
of
the
ordinary
shares
was
26.88p.
The
range
during
2012
was
22.50p
to
68.25p
Approval
This
report
was
approved
by
the
board
of
directors
and
authorised
for
issue
on
27
June
2013
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
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.
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.
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
We
have
audited
the
group
and
parent
company
financial
statements
(“the
financial
statements”)
on
pages
13
to
41.
The
financial
reporting
framework
that
has
been
applied
in
their
preparation
is
applicable
law
and
International
Financial
Reporting
Standards
(IFRSs)
as
adopted
by
the
European
Union
and,
as
regards
the
parent
company
financial
statements,
as
applied
in
accordance
with
the
provisions
of
the
Companies
Act
2006.
This
report
is
made
solely
to
the
company’s
members,
as
a
body,
in
accordance
with
Chapter
3
of
Part
16
of
the
Companies
Act
2006.
Our
audit
work
has
been
undertaken
so
that
we
might
state
to
the
company’s
members
those
matters
we
are
required
to
state
to
them
in
an
auditor’s
report
and
for
no
other
purpose.
To
the
fullest
extent
permitted
by
law,
we
do
not
accept
or
assume
responsibility
to
anyone
other
than
the
company
and
the
company’s
members
as
a
body,
for
our
audit
work,
for
this
report,
or
for
the
opinions
we
have
formed.
Respective
responsibilities
of
directors
and
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.
Opinion
on
financial
statements
In
our
opinion
•
•
•
•
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
2012
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
financial
statements
have
been
prepared
in
accordance
with
the
requirements
of
the
Companies
Act
2006.
Emphasis
of
matter
–
Going
Concern
In
forming
our
opinion
on
the
financial
statements,
which
is
not
modified,
we
have
considered
the
adequacy
of
disclosures
made
in
the
accounting
policies
on
page
18
of
the
financial
statements
concerning
the
Group’s
and
Parent
Company’s
ability
to
continue
as
a
going
concern.
The
group
incurred
a
loss
of
£14,524,000
during
the
year
ended
31
December
2012
and
in
order
to
continue
as
a
going
concern
for
a
period
of
at
least
one
year
from
the
date
of
approval
of
these
financial
statements
needs
to
raise
additional
working
capital
from
the
sources
detailed
on
page
18
of
the
financial
statements.
This
condition,
along
with
the
other
matters
explained
on
page
18
of
the
financial
statements,
indicates
the
existence
of
a
material
uncertainty
which
may
cast
significant
doubt
about
the
Group’s
and
the
Parent
Company’s
ability
to
continue
as
a
going
concern.
The
financial
statements
do
not
include
the
adjustments
that
would
result
if
the
Group
or
the
Parent
Company
were
unable
to
continue
as
a
going
concern.
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
27
June
2013
12
TANFIELD
GROUP
PLC
FINANCIAL
STATEMENTS
CONSOLIDATED
STATEMENT
OF
COMPREHENSIVE
INCOME
FOR
THE
YEAR
ENDED
31
DECEMBER
2012
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
Loss
from
continuing
operations
before
tax,
investment
and
associate
Reassessment
of
carrying
value
of
associate
Reassessment
of
carrying
value
of
investment
One
off
costs
directly
associated
with
Smiths
investment
Loss
before
taxation
Taxation
Loss
for
the
year
from
continuing
operations
Discontinued
operations
Profit
on
disposal
of
operations
Loss
for
the
year
Other
comprehensive
income,
net
of
tax:
Currency
translation
differences
Total
comprehensive
income
for
the
year
Notes
1
16
3
4
6
5
5
7
2012
£000's
2011
£000's
45,072
2,889
(34,243)
(18,760)
(1,739)
(8,493)
(15,274)
-‐
(15,274)
(127)
146
19
(15,255)
-‐
1,280
(470)
(14,445)
(79)
(14,524)
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)
-‐
(14,524)
173
(16,351)
(958)
(15,482)
694
(15,657)
13
TANFIELD
GROUP
PLC
FINANCIAL
STATEMENTS
CONSOLIDATED
STATEMENT
OF
COMPREHENSIVE
INCOME
(CONTINUED)
FOR
THE
YEAR
ENDED
31
DECEMBER
2012
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)
2012
£000's
2011
£000's
(14,543)
-‐
(14,543)
(16,510)
173
(16,337)
19
(14)
(14,524)
(16,351)
(15,501)
19
(15,643)
(14)
(15,482)
(15,657)
8
8
8
8
(12.0)
(12.0)
(17.5)
(17.5)
-‐
-‐
0.2
0.2
14
TANFIELD
GROUP
PLC
FINANCIAL
STATEMENTS
CONSOLIDATED
AND
COMPANY
BALANCE
SHEETS
(Company
registration
number
04061965)
AS
AT
31
DECEMBER
2012
Group
2012
£000's
2011
£000's
Company
2012
£000's
2011
£000's
Notes
Non
current
assets
Intangible
assets
Property,
plant
and
equipment
Investment
in
Associate
Non
current
Investment
Investments
in
subsidiaries
Current
assets
Inventories
Trade
and
other
receivables
Current
Investments
Current
tax
assets
Deferred
consideration
Cash
and
cash
equivalents
Total
assets
Current
liabilities
Trade
and
other
payables
Provisions
Tax
liabilities
Obligations
under
finance
leases
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
Retained
earnings
Equity
attributable
to
the
owners
of
the
parent
Non
controlling
interests
Total
equity
9
11
15
13
31
16
17
12
10
14
18
24
19
19
20
21
21
23
3,940
2,885
-‐
1,280
-‐
8,105
22,869
9,063
474
-‐
339
2,198
34,943
5,023
3,324
-‐
-‐
-‐
8,347
21,495
10,753
498
-‐
341
3,463
36,550
-‐
-‐
-‐
1,280
10,685
11,965
-‐
19,002
-‐
-‐
339
402
19,743
-‐
-‐
1,280
-‐
1,008
2,288
-‐
27,780
-‐
-‐
341
1,278
29,399
43,048
44,897
31,708
31,687
13,398
577
15
70
14,060
137
375
512
14,572
6,450
14,823
1,885
66,837
1,534
11,168
(74,223)
28,474
2
28,476
13,034
621
189
60
13,904
208
375
583
14,487
4,728
3,097
1,785
66,837
1,534
12,126
(59,680)
30,427
(17)
30,410
1,915
-‐
-‐
-‐
1,915
-‐
-‐
-‐
1,915
6,450
14,823
1,885
66,837
1,534
-‐
(61,736)
29,793
-‐
29,793
2,084
-‐
-‐
-‐
2,084
-‐
-‐
-‐
2,084
4,728
3,097
1,785
66,837
1,534
-‐
(48,378)
29,603
-‐
29,603
Total
equity
and
total
liabilities
43,048
44,897
31,708
31,687
The
financial
statements
on
pages
13
to
41
were
approved
by
the
board
of
directors
and
authorised
for
issue
on
27
June
2013
and
are
signed
on
its
behalf
by:
Charles
Brooks
Group
Finance
Director
15
CONSOLIDATED
AND
COMPANY
STATEMENTS
OF
CHANGES
IN
EQUITY
FOR
THE
YEAR
ENDED
31
DECEMBER
2012
CONSOLIDATED
Balance
at
1
January
2011
Comprehensive
income
Loss
for
the
year
Other
comprehensive
income
Currency
translation
differences
Total
other
comprehensive
income
for
the
year
Total
comprehensive
income
for
the
year
Transactions
with
owners
in
their
capacity
as
owners:-‐
Issue
of
shares
to
settle
deferred
consideration
Share
based
payments
(note
25)
At
31
December
2011
Comprehensive
income
Loss
for
the
year
Other
comprehensive
income
Currency
translation
differences
Total
other
comprehensive
income
for
the
year
Total
comprehensive
income
for
the
year
Transactions
with
owners
in
their
capacity
as
owners:-‐
Issuance
of
new
shares
(note
21)
Share
based
payments
(note
25)
At
31
December
2012
COMPANY
Balance
at
1
January
2011
Comprehensive
income
Loss
for
the
year
Total
comprehensive
income
for
the
year
Transactions
with
owners
in
their
capacity
as
owners:-‐
Issue
of
shares
to
settle
deferred
consideration
Share
based
payments
(note
25)
At
31
December
2011
Comprehensive
income
Loss
for
the
year
Total
comprehensive
income
for
the
year
Transactions
with
owners
in
their
capacity
as
owners:-‐
Issuance
of
new
shares
(note
21)
Share
based
payments
(note
25)
At
31
December
2012
Share
capital
£000's
4,704
Share
premium
£000's
827
Share
option
reserve
£000's
1,764
Attributable
to
the
owners
of
the
parent
Merger
reserve
Special
reservea
Translation
reserve
£000's
1,534
£000's
66,837
£000's
11,432
Retained
earnings
£000's
(42,611)
Non-‐
controlling
interests
£000's
(3)
Total
£000's
44,484
(16,337)
(14)
(16,351)
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
23
1
4,728
2,270
-‐
3,097
-‐
21
1,785
-‐
-‐
1,534
-‐
-‐
66,837
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
1,721
1
6,450
11,726
-‐
14,823
-‐
100
1,885
-‐
-‐
1,534
-‐
-‐
66,837
(57)
(57)
(57)
751
-‐
12,126
-‐
-‐
(16,337)
(751)
19
(59,680)
-‐
(14,543)
(958)
(958)
(958)
-‐
-‐
11,168
-‐
-‐
(14,543)
-‐
-‐
(74,223)
Translation
reserve
Retained
earnings
Share
capital
£000's
4,704
-‐
-‐
23
1
4,728
-‐
-‐
1,721
1
6,450
Share
premium
£000's
827
-‐
-‐
2,270
-‐
3,097
-‐
-‐
11,726
-‐
14,823
Attributable
to
the
owners
of
the
parent
Merger
reserve
Special
reservea
Share
option
reserve
£000's
1,764
£000's
1,534
£000's
66,837
£000's
-‐
-‐
-‐
-‐
21
1,785
-‐
-‐
-‐
100
1,885
-‐
-‐
-‐
-‐
1,534
-‐
-‐
-‐
-‐
1,534
-‐
-‐
-‐
-‐
66,837
-‐
-‐
-‐
-‐
66,837
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
£000's
(33,577)
(14,820)
(14,820)
-‐
19
(48,378)
(13,358)
(13,358)
-‐
-‐
(61,736)
-‐
-‐
(14)
-‐
-‐
(17)
19
-‐
-‐
19
-‐
-‐
2
Non-‐
controlling
interests
£000's
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
(57)
(57)
(16,408)
2,293
41
30,410
(14,524)
(958)
(958)
(15,482)
13,447
101
28,476
Total
£000's
42,089
(14,820)
(14,820)
2,293
41
29,603
(13,358)
(13,358)
13,447
101
29,793
a
The
company’s
special
reserve
relates
to
the
reclassification
of
the
share
premium
account.
16
CONSOLIDATED
AND
COMPANY
CASH
FLOW
STATEMENTS
FOR
THE
YEAR
ENDED
31
DECEMBER
2012
Continuing
and
discontinuing
operations
Loss
before
interest
and
taxation
Depreciation
and
amortization
Loss
on
deferred
consideration
currency
fluctuations
Loss
on
disposal
of
fixed
assets
Profit
on
disposal
of
operations
Impairment
of
receivables
Gain
on
reassessment
of
carrying
value
of
investment
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
Decrease
(increase)
in
receivables
Increase
in
payables
(Decrease)
increase
in
provisions
(Increase)
decrease
in
inventories
Net
cash
(used
in)
operations
Interest
paid
Income
taxes
paid
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
Loan
to
Smith
Electric
Vehicles
US
Corp
Interest
received
Net
cash
(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
2012
£000's
2011
£000's
Company
2012
£000's
2011
£000's
(14,464)
1,739
99
43
-‐
-‐
(1,280)
-‐
-‐
-‐
(13,863)
3,239
788
(44)
(2,105)
(11,985)
(127)
(222)
(12,334)
(310)
-‐
(49)
(57)
(1,935)
131
(2,220)
13,447
-‐
(61)
13,386
(97)
(1,265)
3,463
2,198
(16,349)
1,595
337
128
(173)
250
-‐
1,280
-‐
-‐
(12,932)
(310)
1,537
349
3,910
(7,446)
(286)
(60)
(7,792)
(390)
7,756
(76)
(232)
-‐
453
7,511
-‐
274
(202)
72
35
(174)
3,637
3,463
(13,428)
-‐
99
-‐
-‐
-‐
-‐
-‐
9,787
2,323
(1,219)
944
(169)
-‐
-‐
(444)
-‐
-‐
(444)
-‐
-‐
(12,000)
-‐
(1,935)
56
(13,879)
13,447
-‐
-‐
13,447
-‐
(876)
1,278
402
(15,074)
-‐
337
-‐
(529)
-‐
-‐
-‐
14,666
839
239
(8,479)
519
-‐
-‐
(7,721)
(12)
(8)
(7,741)
-‐
7,756
-‐
-‐
-‐
253
8,009
-‐
-‐
-‐
-‐
-‐
268
1,010
1,278
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.
At
31
December
2012
the
Group
has
cash
balances
of
£2.2m
and
is
debt
free.
A
further
£2.1m
was
raised
by
a
way
of
a
new
share
issue
on
16
April
2013.
The
Group
has
prepared
trading
forecasts
through
to
December
2016
that
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
require
the
introduction
of
additional
working
capital,
beyond
the
£2.1m
raised
on
16
April
2013,
during
the
period
to
December
2013
to
support
the
trading
going
forward.
The
Directors
have
identified
three
options
as
sources
of
working
capital.
These
are:
Realisation
of
the
value
of
its
Smith
investment;
Equity
injection
from
shareholders;
Sale
of
its
Snorkel
Aerial
Work
Platform
business.
The
Directors
continue
to
explore
each
of
these
options
and,
given
the
progress
on
each
of
these,
they
are
confident
that
at
least
one
of
these
will
result
in
the
necessary
working
capital
when
required.
Sensitivities
have
been
prepared
to
demonstrate
the
impact
of
timing
for
each
of
the
options.
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
2013.
Furthermore
the
company
faces
additional
uncertainties:
the
risk
that
the
actions
that
are
planned
and
being
put
into
effect
might
take
more
time
to
complete
than
forecast;
the
movement
in
dollar
and
euro
exchange
rates.
The
Directors
feel
that
a
reasonably
balanced
approach
has
been
taken
to
these
risks
in
the
forecast.
The
Directors
are
confident
that
the
assumptions
underlying
their
forecasts
are
reasonable
and
that
the
Group
will
be
able
to
operate
within
its
cash
balances.
Having
taken
the
uncertainties
into
account
the
Board
believes
that
it
is
appropriate
to
prepare
the
financial
statements
on
the
going
concern
basis.
The
financial
statements
do
not
include
any
adjustment
to
the
value
of
the
balance
sheet
assets
or
provisions
for
further
liabilities,
which
would
result
should
the
going
concern
concept
not
be
valid.
18
(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
initially
measured
at
fair
value
at
the
combination
are
acquisition
date
irrespective
of
any
minority
interest.
Where
necessary,
adjustments
are
made
to
the
financial
statements
of
subsidiaries
to
bring
the
accounting
policies
used
in
intra-‐group
transactions,
balances,
income
and
expenses
are
eliminated
on
consolidation.
Investments
in
associates
are
initially
recognised
at
cost.
Subsequent
to
acquisition,
the
carrying
value
of
the
group’s
share
of
post
acquisition
reserves,
less
any
impairment
in
the
value
of
individual
assets.
The
income
statement
reflects
the
group’s
share
of
the
results
of
operations
after
tax
of
the
associate.
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.
Development
expenditure
income
statement
in
the
period
in
which
it
is
incurred
unless
it
is
probable
that
economic
benefits
will
flow
to
the
group
from
the
asset
being
developed,
the
cost
of
the
asset
can
be
reliably
measured
and
technical
feasibility
can
be
demonstrated.
Internally-‐generated
intangible
assets
are
amortised
on
a
straight-‐line
basis
over
their
useful
lives
(10
to
15
years).
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
over
the
lifetime
of
the
lease
•
Fixtures,
fittings
and
equipment
3-‐
10
years
• Motor
Vehicles
3-‐
5
years
Assets
held
under
finance
leases
are
depreciated
over
their
expected
useful
lives
on
the
same
basis
as
owned
assets
or,
where
shorter,
the
term
of
the
relevant
lease.
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.
20
(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
Financial
instruments
are
classified
according
to
the
substance
of
the
contractual
arrangements
entered
into.
An
equity
instrument
is
any
contract
that
evidences
a
residual
interest
in
the
assets
of
the
group
after
deducting
all
of
its
liabilities.
Ordinary
shares
are
classified
as
equity.
Incremental
costs
directly
attributable
to
the
issue
of
new
shares
are
shown
in
equity
as
a
deduction
from
the
proceeds
received.
Trade
and
other
payables
Financial
liabilities
within
trade
and
other
payables
are
initially
recorded
at
fair
value,
which
is
usually
the
original
invoiced
amount,
and
subsequently
carried
at
historical
cost.
Loans
and
other
borrowings
Loans
and
other
borrowings
are
initially
recognised
at
fair
value
costs
and
are
plus
directly
attributable
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.
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.
(xiix)
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.
(xix)
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.
(xx)
Investments
Investments
are
included
at
cost
less
amounts
written
off.
(xxi)
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
(xxii)
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)
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.
(xvi)
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.
(xvii)
Taxation
The
tax
expense
represents
the
sum
of
the
tax
currently
payable
and
deferred
tax.
The
tax
currently
payable
is
based
on
taxable
profit
for
the
year.
Taxable
profit
differs
from
net
profit
as
reported
in
the
income
statement
because
it
excludes
items
of
income
or
expense
that
are
taxable
or
deductible
in
other
years
and
it
further
excludes
items
that
are
never
taxable
or
deductible.
The
Group’s
liability
for
current
tax
is
calculated
by
using
tax
rates
that
have
been
enacted
or
substantively
enacted
by
the
balance
sheet
date.
Deferred
tax
is
the
tax
expected
to
be
payable
or
recoverable
on
differences
between
the
carrying
amount
of
assets
and
liabilities
in
the
financial
statements
and
the
corresponding
tax
bases
used
in
the
computation
of
taxable
profit,
and
is
accounted
for
using
the
balance
sheet
liability
method.
Deferred
tax
liabilities
are
recognised
for
all
taxable
temporary
differences
and
deferred
tax
assets
are
recognised
to
the
extent
that
it
is
probable
that
taxable
profits
will
be
available
against
which
deductible
temporary
differences
can
be
utilised.
Such
assets
and
liabilities
are
not
recognised
if
the
temporary
difference
arises
from
goodwill
or
from
the
initial
recognition
(other
than
in
a
business
combination)
of
other
assets
and
liabilities
in
a
transaction
which
affects
neither
the
tax
profit
nor
the
accounting
profit.
Deferred
tax
for
taxable
temporary
liabilities
are
recognised
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
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.
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.
Given
the
current
situation,
the
Directors
have
not
conducted
an
impairment
review
based
on
discounted
cash
flows,
but
have
considered
the
value
to
the
business
of
the
assets.
Given
the
introduction
of
capital,
these
assets
will
generate
cash
flows,
and
if
the
division
is
sold,
have
a
value
to
a
purchaser
well
in
excess
of
the
carrying
value.
Investments
The
status
of
the
Group’s
holding
in
Smith
Electric
Corp
was
reviewed.
Given
the
successive
fundraisings
by
Smith
Electric
Corp
during
2012,
the
Group’s
holding
in
Smith
Electric
Corp
has
been
diluted.
In
addition
the
Group’s
influence
at
board
level
within
Smith
Electric
Corp
has
reduced,
following
the
resignation
of
Group
directors
from
the
Smith
Electric
Corp
board
and
additional
non-‐executive
directors
joining
that
board.
Smith
Electric
Corp
continues
to
demonstrate
ability
to
raise
capital
to
fund
its
development,
and
as
a
result
the
Group
considers
its
receivables
from
Smith
Electric
Corp
are
recoverable
in
full.
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.
22
New
and
amended
standards
and
interpretations
effective
from
1
January
2013
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
2013
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
2012.
New
and
amended
standards
and
interpretations
effective
from
1
January
2012
adopted
by
the
group
During
the
year
ended
31
December
2012,
the
Company
has
not
adopted
any
new
IFRS,
IAS
or
amendments
issued
by
the
IASB,
and
interpretations
by
the
IFRS
Interpretations
Committee,
which
have
had
a
material
impact
on
the
Company’s
consolidated
financial
statements.
23
TANFIELD
GROUP
PLC
FINANCIAL
STATEMENTS
NOTES
TO
THE
ACCOUNTS
1.
Revenue
An
analysis
of
the
group’s
revenue
is
as
follows:
Continuing
operations
Total
2.
Segmental
analysis
2012
£000’s
45,072
45,072
2011
£000’s
48,305
48,305
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.
Principal
activities
are
as
follows:
Powered
Access
Platforms:
design
and
manufacture
of
powered
access
equipment
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
Reassessment
of
carrying
value
of
investment
One
off
costs
directly
associated
with
Smiths
IPO
Taxation
Loss
for
the
year
from
continuing
operations
Profit
on
disposal
of
operations
Loss
for
the
year
from
continuing
and
discontinued
operations
Note:
The
£32m
loan
forgiveness
in
2012
given
to
Powered
Access
from
Other
is
excluded
from
the
above
summary.
2012
2011
Revenue
£000's
41,026
4,046
45,072
Revenue
£000's
44,247
4,058
48,305
Loss
£000's
(14,583)
(691)
(15,274)
146
(127)
(15,255)
-‐
1,280
(470)
(79)
(14,524)
-‐
(14,524)
Loss
£000's
(14,353)
(889)
(15,242)
470
(286)
(15,058)
(1,280)
-‐
-‐
(186)
(16,524)
173
(16,351)
24
TANFIELD
GROUP
PLC
FINANCIAL
STATEMENTS
2.
Segmental
analysis
continued
Assets
and
liabilities
by
operating
segment1
Assets
Powered
Access
Platforms
Investment
in
Smiths
Electric
Vehicles
US
incorporated
Loan
to
Smiths
Electric
Vehicles
US
incorporated
Other
Cash
and
cash
equivalents2
Total
segment
assets
Current
tax
assets
Deferred
consideration
Total
assets
Liabilities
Powered
Access
Platforms
Other
Total
segment
liabilities
Current
tax
liabilities
Deferred
tax
liabilities
Retirement
benefit
obligations
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
2012
£000's
35,340
1,280
1,852
2,039
2,198
42,709
-‐
339
43,048
(11,908)
(2,262)
(14,170)
(15)
(375)
(12)
(14,572)
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)
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
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
Revenue
Non-‐current
assets
2012
£000's
5,421
7,727
13,146
8,997
9,781
45,072
2011
£000's
6,426
8,240
13,813
11,922
7,904
48,305
2012
£000's
4,325
-‐
1,978
522
-‐
6,825
2011
£000's
5,444
-‐
2,480
420
3
8,347
Amortisation
and
Depreciation
2012
2011
£000's
1,592
147
1,739
£000's
1,444
151
1,595
Additions
to
non-‐current
assets
2012
£000's
349
18
367
2011
£000's
590
32
622
25
TANFIELD
GROUP
PLC
FINANCIAL
STATEMENTS
3.
Staff
costs
Continuing
operations
Aggregate
remuneration
comprised
Wages
and
Salaries
Share
scheme
expense
Social
Security
Costs
Other
Pension
Costs
Total
staff
costs
In
2012
a
further
£470k
of
staff
related
expenses
have
been
charged
to
‘one
off
costs
directly
associated
with
Smiths
investment’
in
the
consolidated
statement
of
comprehensive
income.
2012
£000's
16,745
110
1,639
266
18,760
Average
monthly
number
of
employees
Production
Head
Office,
Administration
and
sales
&
distribution
Total
2012
No.
318
188
506
2011
£000's
15,123
40
1,786
194
17,143
2011
No.
282
187
469
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.
4.
Depreciation
and
amortisation
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
5.
Finance
expense
and
finance
income
Continuing
operations
Finance
expense
Interest
on
bank
overdrafts,
loans
&
financial
instruments
Interest
on
obligations
under
finance
leases
Total
finance
expense
Finance
income
Interest
on
cash
and
cash
equivalents
Interest
on
deferred
consideration
(note
10)
Fair
value
gain
on
Interest
rate
swap
(note
26)
Total
finance
income
26
2012
£000's
684
1,055
1,739
638
46
2012
£000's
83
44
127
2012
£000's
91
14
41
146
2011
£000's
793
802
1,595
753
40
2011
£000's
276
10
286
2011
£000's
85
220
165
470
TANFIELD
GROUP
PLC
FINANCIAL
STATEMENTS
6.
Other
operating
expenses
Other
operating
expenses
Non
property
related
operating
lease
rentals
Net
loss
(gain)
on
foreign
exchange
Auditors'
remuneration
(see
below)
Other
operating
expenses
Total
operating
expenses
2012
£000's
78
253
199
7,963
8,493
2011
£000's
128
(22)
184
8,171
8,461
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
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
2012
£000's
2011
£000's
65
65
25
44
199
155
44
65
65
10
44
184
140
44
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
£13,358k
(2011:
loss
£14,820k).
27
TANFIELD
GROUP
PLC
FINANCIAL
STATEMENTS
7.
Taxation
Analysis
of
taxation
charge
for
the
year
United
Kingdom
Corporation
tax
at
24.5%
(2011:
26.5%)
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
2012
£000's
2011
£000's
-‐
79
79
-‐
-‐
79
-‐
186
186
-‐
-‐
186
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
24.5%
(2011:
26.5%)
Effects
of:
Non
(taxable)
deductable
expenses
Deferred
tax
asset
not
recognised
in
the
period
Total
taxation
charge
2012
£000's
(15,725)
(3,853)
(715)
4,647
79
2011
£000's
(16,165)
(4,284)
(758)
5,228
186
28
TANFIELD
GROUP
PLC
FINANCIAL
STATEMENTS
8.
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
44.55p
(2011:
39.66p).
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
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
Reassessment
of
carrying
value
of
investment
One
off
costs
directly
associated
with
Smiths
IPO
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
2012
No.
000’s
121,202
2,736
123,938
2012
£000's
(14,543)
-‐
(14,543)
2012
£000's
(14,543)
-‐
(14,543)
-‐
(1,280)
470
-‐
(15,353)
2012
(12.0)
(12.0)
(12.0)
(12.0)
(12.7)
(12.7)
-‐
-‐
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
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.
29
TANFIELD
GROUP
PLC
FINANCIAL
STATEMENTS
9.
Intangible
assets
Group
Cost
At
1
January
2011
Additions
Exchange
differences
Disposals
At
31
December
2011
Additions
Exchange
differences
At
31
December
2012
Accumulated
depreciation
At
1
January
2011
Charge
for
the
year
Exchange
differences
Disposals
At
31
December
2011
Charge
for
the
year
Exchange
differences
At
31
December
2012
Development
Costs
£000's
Manufacturing
schedules
£000's
Other
Intangible
Assetsa
£000's
Computer
Software
£000's
2,127
224
-‐
-‐
2,351
53
-‐
2,404
548
209
-‐
-‐
757
232
-‐
989
13,962
-‐
369
-‐
14,331
-‐
(663)
13,668
11,724
292
320
-‐
12,336
296
(578)
12,054
9,486
2
-‐
(6,458)
3,030
4
-‐
3,034
7,804
281
-‐
(6,458)
1,627
508
-‐
2,135
899
1,403
106
6
-‐
(7)
105
-‐
-‐
105
59
20
-‐
(5)
74
19
-‐
93
12
31
Total
£000's
25,681
232
369
(6,465)
19,817
57
(663)
19,211
20,135
802
320
(6,463)
14,794
1,055
(578)
15,271
3,940
5,023
Carrying
amount
At
31
December
2012
1,614
1,995
At
31
December
2011
a
Other
intangible
assets
include
trademarks,
customer
order
book
and
customer
lists
which
arose
on
previous
years
business
combinations
1,415
1,594
10.
Deferred
consideration
The
sale
and
purchase
agreement
of
the
group’s
electric
vehicle
division
on
1
January
2011
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
movements
in
deferred
consideration
is
shown
below:
Total
consideration
receivable
at
1
Jan
Total
consideration
received
Consideration
received
in
the
form
of
shares
in
SEV
US
Total
interest
receivable
on
outstanding
consideration
Total
interest
received
Effects
of
currency
fluctuations
Deferred
consideration
receivable
net
of
interest
2012
£000’s
341
-‐
-‐
14
-‐
(16)
339
2011
£000’s
9,696
(7,756)
(1,280)
220
(202)
(337)
341
30
TANFIELD
GROUP
PLC
FINANCIAL
STATEMENTS
11.
Property,
plant
and
equipment
Group
Cost
At
1
January
2011
Additions
Disposals
Exchange
differences
At
31
December
2011
Additions
Disposals
Exchange
differences
At
31
December
2012
Accumulated
depreciation
At
1
January
2011
Charge
for
the
year
Disposals
Exchange
differences
At
31
December
2011
Charge
for
the
year
Disposals
Exchange
differences
At
31
December
2012
Carrying
amount
At
31
December
2012
At
31
December
2011
a
Land
and
buildings
£000's
Plant
and
Machinerya
£000's
Fixtures,
Fittings
and
equipment
£000's
Motor
Vehicles
£000's
2,124
12
-‐
3
2,139
32
-‐
(10)
2,161
580
140
-‐
2
722
138
-‐
(5)
855
1,306
1,417
4,986
111
(122)
-‐
4,975
68
(95)
(54)
4,894
3,063
419
(11)
8
3,479
365
(52)
(45)
3,747
1,147
1,496
1,036
228
-‐
6
1,270
63
-‐
(24)
1,309
746
183
-‐
11
940
141
-‐
(20)
1,061
248
330
272
39
(37)
(7)
267
147
-‐
(10)
404
150
51
(22)
7
186
40
-‐
(6)
220
184
81
Total
£000's
8,418
390
(159)
2
8,651
310
(95)
(98)
8,768
4,539
793
(33)
28
5,327
684
(52)
(76)
5,883
2,885
3,324
The
carrying
amount
of
the
group
plant
and
machinery
includes
an
amount
of
£130k
(2011:
£176k)
in
respect
of
assets
held
under
finance
leases.
The
depreciation
charge
on
those
assets
for
2012
was
£46k
(2011:
£40k).
Various
finance
leases
were
fully
settled
in
the
year
and
title
of
the
equipment
obtained.
12.
Current
investments
The
Group
also
holds
a
money
market
investment
relating
to
Japanese
employee’s
retirement
benefits.
The
investment
is
denominated
in
Japanese
Yen
(2012:
£474k,
2011:
£498k).
Group
At
1
January
Additions
Exchange
movements
At
31
December
2012
£000’s
498
49
(73)
474
2011
£000’s
395
76
27
498
13.
Non
current
investment
At
31
December
2012,
the
group
held
a
24%
(2011:
27.22%)
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.
During
the
year,
Tanfield’s
holding
in
Smith
Electric
Corp
was
diluted
by
successive
fundraisings.
In
addition,
Tanfield’s
influence
at
board
level
has
reduced,
following
the
appointment
of
further
non-‐executive
directors.
As
a
result,
Tanfield’s
holding
can
no
longer
be
considered
that
of
an
associate.
It
is
therefore
now
treated
as
an
investment.
As
such,
it
is
now
being
held
as
a
non
current
investment
at
the
lower
of
cost
and
realisable
value
(2012:
£1,280,
2011:
£nil).
Company
Investment
in
Smith
Electric
Vehicles
US
Corp
2012
£000’s
1,280
2011
£000’s
-‐
31
TANFIELD
GROUP
PLC
FINANCIAL
STATEMENTS
14.
Cash
and
cash
equivalents
Cash
and
cash
equivalents
comprise
cash
and
short-‐term
deposits
held
by
the
group
treasury
function.
The
carrying
amount
of
these
assets
approximates
their
fair
value.
The
group
primarily
holds
Sterling,
US
Dollars,
Euros,
Australian
Dollars
and
New
Zealand
Dollars.
Currency
denominated
balances
are
translated
to
sterling
at
the
balance
sheet
date.
Cash
and
cash
equivalents
Group
2012
£000's
2,198
2011
£000's
3,463
Company
2012
£000's
402
2011
£000's
1,278
15.
Associate
At
31
December
2012,
the
group
held
a
24%
(2011:
27.22%)
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.
During
the
year,
Tanfield’s
holding
in
Smith
Electric
Corp
was
diluted
by
successive
fundraisings.
In
addition,
Tanfield’s
influence
at
board
level
has
reduced,
following
the
appointment
of
further
non-‐executive
directors.
As
a
result,
Tanfield’s
holding
can
no
longer
be
considered
that
of
an
associate.
As
such,
it
is
now
being
held
as
a
non
current
investment
at
the
lower
of
cost
and
net
realisable
value
(Note
13).
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
COMPANY
Associate
2011
£000's
23,369
(87,900)
(64,531)
(17,565)
31,912
(33,579)
(9,140)
1,280
7,860
-‐
2011
£000's
1,280
2012
£000's
-‐
16.
Inventories
In
accordance
with
IAS2
the
group
regularly
reviews
its
inventory
to
ensure
it
is
carried
at
the
lower
of
cost
or
net
realisable
value.
The
directors
consider
that
the
carrying
amounts
of
inventories
approximates
to
their
fair
value.
The
group’s
inventories
comprised:
Raw
materials
and
consumables
Work-‐in-‐progress
Finished
Goods
and
goods
for
resale
Inventories
relating
to
continuing
operations
Cost
£000’s
13,859
1,791
10,680
26,330
2012
Provision
£000’s
(3,019)
-‐
(442)
(3,461)
Carrying
value
£000’s
10,840
1,791
10,238
22,869
Cost
£000’s
16,492
1,679
8,097
26,268
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
2011
Provision
£000’s
(4,137)
-‐
(636)
(4,773)
2012
£000’s
9,140
2,889
12,029
Carrying
value
£000’s
12,355
1,679
7,461
21,495
2011
£000’s
11,988
(2,848)
9,140
32
TANFIELD
GROUP
PLC
FINANCIAL
STATEMENTS
17.
Trade
and
other
receivables
Current
Trade
amounts
receivable
Allowance
for
estimated
irrecoverable
amounts
Amounts
due
from
subsidiary
undertakings
Other
Taxes
Loan
to
Smith
Electric
Vehicles
US
Corp
Other
debtors
and
prepayments
Group
2012
£000's
4,718
(265)
-‐
41
1,852
2,717
9,063
2011
£000's
9,658
(587)
-‐
226
-‐
1,456
10,753
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)a
Company
2012
£000's
-‐
-‐
16,378
-‐
1,852
772
19,002
Group
2012
£000's
587
48
(364)
(6)
265
36
2011
£000's
-‐
-‐
27,713
-‐
-‐
67
27,780
2011
£000's
492
208
(100)
(13)
587
69
a
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:
Between
0
and
3
months
£000's
Not
past
due
£000's
Past
due
but
not
impaired
Between
6
and
12
months
£000's
Between
3
and
6
months
£000's
Over
12
months
£000's
2012
2011
3,598
7,572
834
1,365
13
80
8
54
-‐
-‐
Total
£000's
4,453
9,071
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
2012
£345k
(2011:
£1,601k)
of
trade
receivables
net
of
allowance
for
estimated
irrecoverable
amounts
were
denominated
in
Sterling,
£2,272k
(2011:
£3,271k)
in
US
Dollars,
£518k
(2011:
£1,984k)
in
Australian
Dollars,
£416k
(2011:
£1,137k)
in
Japanese
Yen
and
£1,420k
(2011:
£1,078k)
in
other
currencies
including
Euros
and
NZ
Dollars.
33
TANFIELD
GROUP
PLC
FINANCIAL
STATEMENTS
18.
Trade
and
other
payables
The
directors
consider
that
the
carrying
amounts
of
trade
and
other
payables
approximates
to
their
fair
value.
Group
Company
2012
£000's
2011
£000's
2012
£000's
Current
Trade
payables
Social
security
and
other
taxes
Accrued
expenses
Fair
value
of
Interest
rate
collar
Amounts
due
to
subsidiary
undertakings
10,109
671
2,618
-‐
-‐
13,398
117
7,497
607
4,735
195
-‐
13,034
100
137
151
212
-‐
1,415
1,915
2011
£000's
220
205
197
-‐
1,462
2,084
Average
credit
period
taken
on
trade
purchases
(days)a
a
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.
19.
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
Nil
(2011:
£275k).
The
average
lease
term
is
3
years
(2011:
3
years).
For
the
year
ended
31
December
2012,
the
average
effective
borrowing
rate
was
18%
(2011:
18%).
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
20.
Deferred
taxation
Minimum
leases
payments
2011
£000's
2012
£000's
Present
value
of
minimum
leases
payments
2011
£000's
2012
£000's
102
162
264
(57)
207
103
266
369
(101)
268
70
137
207
-‐
207
60
208
268
-‐
268
Tax
losses
£000's
Other
£000's
Total
£000's
Group
(375)
At
1
January
2011
-‐)
Charge
to
the
income
statement
(375)
At
1
January
2012
-‐
Deferred
tax
asset
(375)
Deferred
tax
liability
(375)
At
1
January
2012
-‐
Charge
to
the
income
statement
(375)
At
December
2012
-‐
Deferred
tax
asset
(375)
Deferred
tax
liability
At
December
2012
(375)
At
31
December
2012,
the
group
had
unused
tax
losses
of
£132m
(2011:
£113m).
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
£132m
(2011:
£113m)
due
to
the
unpredictability
of
profit
streams
which
results
in
an
unrecognised
deferred
tax
asset
of
£36,292k
(2011:
£31,325k).
(375)
-‐
(375)
-‐
(375)
(375)
-‐
(375)
-‐
(375)
(375)
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
Company
There
is
no
movement
in
deferred
taxation
in
the
current
or
proceeding
years.
34
TANFIELD
GROUP
PLC
FINANCIAL
STATEMENTS
21.
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
2011
Shares
issued
to
settle
outstanding
deferred
consideration
payable
Share
options
exercised
At
31
December
2011
New
share
issue
13
Feb
2012a
New
share
issue
23
July
2012b
Share
options
exercised
At
31
December
2012
a
Nominal
share
value
5p
5p
5p
5p
5p
5p
5p
5p
Number
of
shares
94,077,218
470,000
20,000
94,567,218
29,268,293
5,135,714
20,000
128,991,225
Share
capitalc
£000’s
4,704
23
1
4,728
1,464
257
1
6,450
Share
premium
£000’s
827
2,270
-‐
3,097
9,930
1,796
-‐
14,823
On
13
Feb
2012
the
group
announced
it
would
issue
29,268,293
new
shares
at
41p
each.
The
successful
fundraising
was
completed
in
two
tranches
on
17
Feb
2012
and
9
March
2012
for
9,407,720
shares
and
19,860,573
shares
respectively.
The
associated
costs
of
£607k
have
been
allocated
to
the
share
premium
account.
b
On
23
July
2012
the
group
issued
5,135,714
new
shares
at
42p
each.
The
associated
costs
of
£104k
have
been
allocated
to
the
share
premium
account.
C
The
authorised
share
capital
of
the
company
throughout
2011
and
Until
8
March
2012
was
£5,000,000,
representing
100,000,000
ordinary
shares.
After
8
March
2012
this
increased
to
£6,463,415,
representing
129,268,293
ordinary
shares.
22.
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:
2012
Within
one
year
In
the
second
to
fifth
years
inclusive
Greater
than
five
years
2011
Within
one
year
In
the
second
to
fifth
years
inclusive
Greater
than
five
years
Leasehold
Property
£000’s
Other
£000’s
2,057
6,650
13,886
22,593
1,366
5,938
15,173
22,477
78
119
-‐
197
84
57
-‐
141
Total
£000’s
2,135
6,769
13,886
22,790
1,450
5,995
15,173
22,618
23.
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
profits
(losses)
Balance
at
31
December
2012
£000’s
(17)
19
2
2011
£000’s
(3)
(14)
(17)
35
TANFIELD
GROUP
PLC
FINANCIAL
STATEMENTS
24.
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
At
31
December
Warranty
provision
2012
£000’s
621
(44)
577
Warranty
provision
2011
£000’s
272
349
621
25.
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
2012
and
2011
are
shown
below.
Outstanding
at
the
beginning
of
the
year
Granted
Forfeited
Exercised
Expired
Outstanding
at
the
end
of
the
year
Exercisable
2012
2011
Number
of
share
options
9,606,334
-‐
(840,000)
(20,000)
-‐
8,746,334
3,196,334
Weighted
average
exercise
price
(pence)
Number
of
share
options
(Restated)
113
-‐
(135)
(5)
-‐
21
10
3,826,334
5,800,000
-‐
(20,000)
-‐
9,606,334
3,806,334
Weighted
average
exercise
price
(pence)
Restated
113
27
-‐
(5)
-‐
61
113
The
outstanding
options
at
31
December
2012
had
a
weighted
average
remaining
contractual
life
of
6.49
years
(2011:
7.38
years)
The
following
table
relates
to
share
options
outstanding
and
exercisable
at
31
December
2012
Exercise
price
(pence)
No
of
share
options
No
of
exercisable
options
Option
exercise
prices
5p
140,000
140,000
1p
2,921,334
2,921,334
27p
5,550,000
-‐
200p
135,000
135,000
Total
8,746,334
3,196,334
Income
statement
charge
In
accordance
with
IFRS2
the
group
determined
the
fair
value
of
its
options
at
‘grant
date’.
The
group
accrues
this
fair
value
charge
over
the
share
option
vesting
period.
Share
options
that
are
forfeited
during
the
year
are
credited
directly
to
the
share
option
reserve
account.
A
charge
to
the
income
statement
of
£100k
(2011:
£40k)
and
a
credit
directly
to
equity
of
£Nil
(2011:
£19k)
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
109%
6.2
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.
36
TANFIELD
GROUP
PLC
FINANCIAL
STATEMENTS
26.
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.
The
group’s
maximum
exposure
to
credit
risk
is
summarised
below:
Trade
and
other
receivables
Cash
and
cash
equivalents
2012
£’000
6,305
2,198
8,503
2011
£’000
9,071
3,463
12,534
The
group
did
not
have
any
financial
instruments
that
would
mitigate
the
credit
exposure
arising
from
the
financial
assets
designated
at
fair
value
through
profit
and
loss
in
either
the
current
or
proceeding
year.
Liquidity
risk
management
The
group
is
exposed
to
liquidity
risk
arising
from
having
insufficient
funds
to
meet
the
financing
needs
of
the
group.
The
group’s
liquidity
management
process
includes
projecting
cash
flows
and
considering
the
level
of
liquid
assets
available
to
meet
future
cash
requirements
along
with
monitoring
balance
sheet
liquidity.
The
Board
reviews
forecasts,
including
cash
flow
forecasts
on
a
quarterly
basis.
The
group’s
subsidiaries
review
their
cash
on
a
daily
basis
to
assess
short
and
medium
term
requirement,
these
assessments
ensure
the
group
responds
to
possible
cash
constraints
in
a
timely
manner.
Requests
from
group
companies
for
operating
finance
are
met
whenever
possible
from
central
resources.
Maturity
analysis
The
table
below
analyses
the
Group’s
financial
liabilities
on
a
contractual
gross
undiscounted
cash
flow
basis
into
maturity
groupings
based
on
amounts
outstanding
at
the
balance
sheet
date
up
to
the
contractual
maturity
date.
2012
Finance
leases
Trade
and
other
payables
2011
Finance
leases
Trade
and
other
payables
Within
1
year
£’000
1
to
5
years
£’000
Over
5
years
£’000
70
13,398
13,468
60
12,839
12,899
137
-‐
137
208
-‐
208
-‐
-‐
-‐
-‐
-‐
-‐
Total
£’000
207
13,398
13,605
268
12,839
13,107
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.
37
TANFIELD
GROUP
PLC
FINANCIAL
STATEMENTS
A
summary
of
the
sensitivity
to
foreign
exchange
movements
that
the
group’s
equity
pre
tax
is
currently
exposed
to
is
detailed
below:
Currency
US
Dollar
Euro
Australian
dollar
New
Zealand
dollar
Japanese
Yen
Balance
sheet
rate
to
GBP
1.62
1.22
1.56
1.97
138.7
Effect
on
equity
if
Sterling
strengthens
by
10%
increase
(decrease)
£000’s
Effect
on
equity
if
Sterling
weakens
by
10%
Increase
(decrease)
£000’s
(809)
(28)
(495)
(79)
(288)
890
34
606
97
353
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
2012
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
settled
on
2
March
2012
but
was
initially
taken
out
when
the
group
had
a
borrowing
facility
to
protect
the
group
from
increases
in
interest
rates.
The
risk
was
limited
to
the
event
that
rates
fall
below
that
at
the
balance
sheet
date.
In
accordance
with
IAS39
the
interest
rate
collar
is
not
classified
as
a
hedging
instrument.
Details
of
the
collar
is
summarised
below:
Instrument
US
Dollar
interest
rate
collar
Notional
principal
$10m
Cap
5.00%
Floor
3.65%
Maturity
date
31
Oct
2012
Derivative
Liability
2012
£000’s
-‐
Derivative
Liability
2011
£000’s
301
The
interest
payable
under
the
collar
is
recognised
through
the
statement
of
comprehensive
income
£36k
(2011:
£216k)
within
Interest
on
bank
overdrafts,
loans
and
financial
instruments
(Note
5).
The
volatility
arising
on
the
collar
is
also
recognised
in
the
statement
of
comprehensive
income
£41k
gain
(2011:
£165k
gain)
and
disclosed
separately
within
finance
expenses
and
finance
income
(Note
5).
The
liability
is
denominated
in
US
Dollars
and
a
currency
exchange
loss
of
£1k
(2011:
£6k
loss)
has
also
been
recognised
in
the
statement
of
comprehensive
income
within
other
operating
expenses.
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.
38
TANFIELD
GROUP
PLC
FINANCIAL
STATEMENTS
27.
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.
2012
£000’s
26,251
3,250
(9,787)
(4,751)
14,963
2011
£000’s
42,908
2,535
(14,666)
(4,526)
26,251
Net
position
at
1
January
Management
charges
Impairments
net
of
intercompany
loan
forgivenessa
Other
transactions
including
new
loans
issued
and
cash
balances
received
Net
position
at
31
December
a
During
2012
the
company
formally
forgave
£32m
of
its
intercompany
receivable
from
Tanfield
Powered
Access
Limited,
£21,831k
of
the
£32m
had
previously
been
impaired
resulting
in
a
net
charge
in
the
year
of
£10,169k
(2011:
£6,677k).
During
2012
the
company
also
wrote
back
previously
impaired
balances
against
Tanfield
Asia
Pacific
PTE.Ltd
£69k
and
Tanfield
Union
£313k.
Transactions
with
its
associate
During
the
year
the
company
loaned
£1,935k
of
cash
to
the
Smith
Electric
Vehicles
US
Corp.
During
the
year
the
group
bought
goods
of
£34k
(2011:
£Nil)
from
its
associate,
Smith
Electric
Vehicles
US
Corp.
During
the
year
the
group
recharged
£800k
(2011:
£860k)
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
December
12
there
was
an
outstanding
balance
due
from
Smiths
Electric
Vehicles
Europe
Ltd
of
£739k
(2011:
£201k)
and
an
outstanding
balance
due
to
Smiths
Electric
Vehicles
Europe
Ltd
of
£34k
(2011:
Nil)
relating
to
the
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.
28.
Retirement
benefits
2012
£000’s
1,433
123
2011
£000’s
1,289
62
1,556
1,351
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
£266k
(2011:£194k)
represents
contributions
payable
to
these
schemes
by
the
Group
at
rates
specified
in
the
rules
of
the
schemes.
As
at
31
December
2012,
contributions
of
£12k
(2011:
£10k)
due
in
respect
of
the
current
reporting
period
had
not
been
paid
over
to
the
schemes.
39
TANFIELD
GROUP
PLC
FINANCIAL
STATEMENTS
29.
Financial
instruments
recognised
in
the
balance
sheet
2012
Assets
Held
to
maturitya
£000’s
-‐
1,754
-‐
1,754
Held
for
tradinga
Total
£000’s
6,305
1,754
2,198
10,257
Total
£000’s
£000’s
-‐
-‐
-‐
-‐
-‐
-‐
12,725
70
12,795
137
137
12,932
Loans
and
receivables
£000’s
9,071
-‐
3,463
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
Held
for
tradinga
Total
£000’s
9,071
498
3,463
13,032
Total
£000’s
£000’s
195
-‐
195
-‐
-‐
195
12,427
60
12,487
208
208
12,695
Loans
and
receivables
£000’s
6,305
-‐
2,198
8,803
Other
financial
liabilities
£000’s
12,725
70
12,795
137
137
12,932
Assets
Current
financial
assets
Trade
and
other
receivables
Investments
Cash
and
cash
equivalents
Total
Liabilities
Current
liabilities
Trade
and
other
payables
Finance
leases
Non
current
liabilities
Finance
leases
Total
a
Assets
and
liabilities
at
fair
value
through
profit
and
loss.
30.
Post
balance
sheet
events
New
share
issue
On
20
March
2013,
the
Board
of
Tanfield
announced
details
of
a
£2.1m
new
share
placing,
advising
that
it
had
successfully
raised
gross
proceeds
of
approximately
£2.1
million
by
way
of
a
placing
of
10,500,000
new
ordinary
shares
of
5p
each
at
a
price
of
20p
per
share
to
institutional
investors
Debt
facility
On
20
February
2013,
the
Group
entered
into
an
asset
backed
debt
facility.
The
debt
facility
is
secured
under
separate
deeds
of
guarantee
and
Indemnity
given
by
Tanfield
Group
PLC,
Snorkel
Holdings
LLC,
Snorkel
International
Inc
and
Tanfield
Powered
Access
Ltd
along
with
an
all
asset
debenture
covering
both
Tanfield
Powered
Access
Ltd
and
Snorkel
International
Inc.
40
TANFIELD
GROUP
PLC
FINANCIAL
STATEMENTS
31.
Subsidiary
undertakings
and
Investments
The
tables
below
give
brief
details
of
the
group’s
operating
subsidiaries
and
investments
at
31
December
2012.
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
LLCa
Tanfield
Asia
Pacific
PTE.
Ltd
SEV
Group
Ltda
E-‐Comeleon
Ltda
Express
2
Automotive
Ltda
HMH
Sheet
Metal
Fabrications
Ltda
Norquip
Ltda
HBWP
Inca
a
Certain
entities
are
not
audited
as
they
are
either
non
trading
or
are
not
required
under
local
laws.
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
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%
Country
of
incorporation
US
UK
US
AUS
NZ
Hong
Kong
UK
US
Singapore
UK
UK
UK
UK
UK
US
Group
Interest
in
allotted
capital
&
voting
rights
24.00%
24.00%
Country
of
incorporation
US
UK
Investments
Smith
Electric
Vehicles
US
Corp
Smith
Electric
Vehicles
Europe
Ltdb
b
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
Principal
activity
Electric
vehicle
manufacture
Electric
vehicle
manufacture
Electric
Vehicles
US
Corp.
Details
of
the
investments
held
in
the
Company
accounts
are
as
follows:
Tanfield
Engineering
Systems
Ltd
Tanfield
Powered
Access
Ltdc
2012
£000’s
1,008
9,677
10,685
2011
£000’s
1,008
-‐
1,008
c
On
20
Dec
2012
the
Company
acquired
12,000
new
shares
in
Tanfield
Powered
Access
Ltd
for
a
consideration
of
£12,000k.
This
investment
has
been
impaired
by
£2,323k
during
the
year.
41