TANFIELD GROUP PLC
REPORT AND FINANCIAL
STATEMENTS 2014
Registered in England & Wales
Company number 04061965
TANFIELD GROUP PLC FINANCIAL STATEMENTS
REPORT AND FINANCIAL STATEMENTS 2014
SUMMARY OF CONTENTS
Directors and Advisers
Strategic Report
Directors’ Report
Corporate Governance
Directors’ Remuneration Report
Statement of Directors’ Responsibilities
Report of the Independent Auditor
Statement of Comprehensive Income
Balance Sheet
Statement of Changes in Equity
Cash Flow Statement
Accounting Policies
Notes to the Accounts
2
3
6
8
9
11
12
13
14
15
16
17
20
1
TANFIELD GROUP PLC FINANCIAL STATEMENTS
DIRECTORS AND ADVISERS
DIRECTORS
NON-EXECUTIVE
J Pither
RRE Stanley
M Groak
SECRETARY
D Robinson
REGISTERED OFFICE AND ADVISORS
REGISTERED OFFICE
Sandgate House
102 Quayside
Newcastle upon Tyne
NE1 3DX
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
REGISTRAR
Capita IRG Plc
Bourne House
34 Beckenham
Beckenham
Kent
BR3 4TH
Chairman
Non executive Director
Non executive Director
Appointed 25 April 2014
NOMINATED ADVISOR
WH Ireland
24 Martin Lane
Londno
London
EC4R 0DR
NOMINATED BROKER
WH Ireland
24 Martin Lane
Londno
London
EC4R 0DR
NOMINATED BROKER
Peterhouse Corporate Finance Plc
3rd Floor
New Liverpool House
15 Eldon Street
London
EC2M 7LD
2
TANFIELD GROUP PLC FINANCIAL STATEMENTS
STRATEGIC REPORT
CHAIRMAN’S STATEMENT
During the year both of the investments made progress which
the Board feels brings the realisation of value a step closer. The
current combined value per share of investments is 33p per
share.
NON-EXECUTIVES' REVIEW
Background
The Company is defined as an investment company with two
passive investments. This definition resulted from the disposal
of Smith Electric Vehicles in 2009 and the disposal of Snorkel in
October 2013. Tanfield Group Plc currently owns 5.76% of
Smith Electric Vehicles Corp. ("Smith") and 49% of Snorkel
International Holdings LLC ("Snorkel").
OVERVIEW
Snorkel
Tanfield continues to own 49% of Snorkel, which it has held
since the disposal of the business in October 2013. The
business continued to make steady progress through 2014 in a
number of key areas. Production during 2014 increased from
recent years and the business took advantage of the general
uplift in the market for its products. Following a significant level
of working capital invested into the Snorkel business since its
disposal, currently in excess of $45 million, supplier constraints
have reduced, allowing both production and the spares business
to improve. This has resulted in Snorkel being able to more
effectively support its machines in the field. As a result the
order book rose to higher levels than when the business was
disposed of.
Ahern Rental, a related company through
ownership of Snorkel, has absorbed the full costs of certain
Snorkel assembly and distribution centres as well as
consolidating a number of functions onto one site. This
strategic restructuring has had the benefit of extending Ahern's
reach whilst maintaining Snorkel distribution at a reduced cost,
lowering the breakeven level of turnover of the business. The
Snorkel business is going through a process of redesigning its
catalogue of equipment with a view to
increasing the
commonality of parts, reducing build cost and improving
functionality for the end user. Snorkel is competing for an
increasing market share in a very aggressive environment. Its
product development program together with cost and price
reductions positions Snorkel in this highly competitive market.
Snorkel is targeting to turn over about $150m in 2015. As
expected and indicated in previous announcements the business
made a loss through the winter. In the early part of this year the
turnover of the business was cycling, on average, at
approximately $9 million per month. It is understood that the
break even of the business is between $10 and $11 million per
month, depending upon the mix of products sold. Through the
winter months the order book in Europe was, as expected,
relatively flat, although better than in previous years. The
European order book has subsequently lifted, although still
being impacted by the continuing need to re-establish the
Snorkel brand after the severe downturn in the market over the
previous five years. The order book in the U.S. supported by
orders from Ahern Rentals is much stronger. The sales teams
both in Europe and USA have been substantially increased. The
Board of Tanfield recognises that Mr Don Ahern, the owner of
Extreme and Ahern Rentals has continued to make positive
statements about Snorkel in trade magazine articles and has
firmly established his commitment to the business by the level
of the investment in working capital and in new product
development of $50 million.
Valuation of Snorkel holding
The Board of Tanfield has taken a view of the carrying value of
its 49% holding and its preferred interest holding (Loan note)
that takes account of risks in the industrial global markets and
the normal cycles that operate within these markets. The range
of potential valuation can be broad. The valuation has, to an
extent, a time driven element. The agreement for the valuation
formula to be triggered is over a five year period. At the end of
2014 there were four years left to run on this aspect of the
agreement. If the formula is not triggered within the 5 year time
frame Tanfield will still retain 49% of the equity. The decision
has been made to maintain its valuation of £36.3m ($60.1m).
This valuation has been assessed against a number of criteria
using discounted cash flow in relation to the sale and purchase
agreement and its valuation formula:
Level of investment in working capital.
•
• Capital investment.
• Production capacity.
• Order Book.
• Market conditions.
• Historical capability of the business to ramp up output.
The valuation has not been adjusted for foreign currency
fluctuations due to the uncertain nature of future foreign
currency markets. Based on the exchange rate at 31 December
2014, the $60.1m valuation would convert to £38.5m and based
on the exchange rate at 1 June 2015, it would convert to
£39.5m. This represents approximately 27p per share.
3
TANFIELD GROUP PLC FINANCIAL STATEMENTS
STRATEGIC REPORT (Continued)
Smith
In October 2013 Smith completed a restructuring exercise that
saw it convert debt to equity. As a result of this, the Company's
equity shareholding went from 24% to 5.76% (excluding
warrants).
During the year Smith continued to pursue a business strategy
of combined manufacturing and licensing of its technology and
has made significant progress towards this goal since the year
end. In May 2015 it executed a conditional agreement to form
an exclusive joint venture ("the JV") with strategic partner and
investor FDG Electric Vehicles Limited ("FDG"). FDG is an
international company listed on the Hong Kong Stock Exchange
and is a vertically integrated electric vehicle manufacturer
engaged in the R&D, production and distribution of all-electric
vehicles. Under the terms of the JV, Smith will invest the Smith
brand, licence for Newton™ EV design and IP while FDG will
invest $15M in cash and $30m in assets, licence for commercial
EV design and IP. The New Joint Venture entity will be
responsible for US product development, sales and marketing
and Smith will be responsible for manufacturing and maintain
its right to territories outside of the USA. The agreement is
conditional on certain conditions precedent including , inter-
alia, necessary government approvals and FDG due diligence.
Smith will hold 20 million shares out of a total of 42.5 million
which represents a holding of 47%. Under the terms of the JV
agreement Smith will distribute all the shares in the JV to its
common stockholders on a pro rata basis, of which Tanfield
currently hold 5.76%. The Board views these developments as
positive and believes the joint forces of Smith and FDG and the
combined investment in EV technology presents significant
opportunities in a developing EV market.
to meeting
The Smith Board is still following a strategy of a public listing.
On the completion of the merger with ABSR leading to a listing
on the OTC, Smith intends to apply for a Listing on a US national
exchange. Subject
listing
requirements, it is proposed that Smith will apply to list on NYSE
or NASDAQ upon completion of a subsequent underwritten
offering of $40 million of which FDG is contractually committed
to providing $30 million. This is in order to satisfy the waiver of
the one year seasoning requirement, a regulation relating
primarily to applicant companies that have previously been
traded on another exchange, and the reporting of information.
the applicable
Valuation of Smith holding
Based on the most recent valuation where Smith have raised
funds, the Company's 5.76% holding would be valued at £7.0m
($10.7m). The Board also believes, based on the valuation of
the JV that has been agreed between the JV parties
in
contributing their respective assets, subject to the JV agreement
completing, that this will represent approximately £1.5m
($2.3m) of value to Tanfield giving a combined valuation of
approximately £8.5m
represent
approximately 6p per share.
($13.0m). This
could
Despite Smith recently raising funds based on the valuation
above, there remains no active market in these shares and the
disposal of Tanfield's shares at those values is not possible at
this time. Therefore, the Board is of the opinion that it is correct
to continue to value the investment at cost. The realisation
value may be higher than its carrying value but because of the
uncertainty attached the Board feels it is correct to maintain this
position. As a result of the debt conversion, this sees the balance
sheet carrying value
increase from £1.3m ($2.0m) at 31
December 2013 to £4.8m ($7.4m) at 31 December 2014.
It has been agreed by Smith Board that all the warrants granted
to Tanfield are now exercisable at a maximum price of $0.31
cents. It is understood from Smith that it still intends to pursue a
listing on a US stock exchange.
in
Strategy of Tanfield Board of Directors
relation to its Investments
Although the Board cannot predict the timeframe for the return
of value in its investments, the Directors believe that its two
investments will result in a return of value to shareholders over
time. The strategy of the Company in relation to these
investments is to return as much as possible of the realised
value to shareholders as the events occur and circumstances
allow, subject to compliance with any legal requirements
associated with such distributions.
The Board takes the view that while there has been progress
made by both Snorkel and Smith, there is still a risk of failure.
The Board will continue to fulfil its obligation to its shareholders
in seeking to optimise the value on its investments.
The Investments are defined as passive investments and in line
with this definition Tanfield does not hold Board seats in either
Snorkel or Smith. There is no limit on the amount of time the
existing Investments may be held by the Company.
Finance income
The interest cost in the period of £91k (2013: £80k) was incurred
from loan interest charged during the period and interest
income of £624k
received on deferred
consideration and loans with Smith and bank balances.
(2013: £48k)
Taxation
There is no tax charge for the period under review. There is no
brought forward deferred tax asset, and none was recognised in
the period resulting in no adjustment to deferred tax, consistent
with 2013.
Loss from operations
Loss from operations was £0.4m, (2013: £7.4m profit), the most
significant difference between 2014 and 2013 being the
adjustment to fair value of investments of £27.0m in 2013 and
reduced staff costs in 2014 following the resignation of the
executive director's.
4
TANFIELD GROUP PLC FINANCIAL STATEMENTS
STRATEGIC REPORT (Continued)
Profit per share
Profit per share from continuing operations was 0.1 pence
(2013: 5.4 pence). No dividend has been declared. (2013: nil)
Cash
At 31 December 2014, the Company had cash of £0.4m (2013:
£0.4m).
Approved by the Board of Directors and signed on behalf of the
Board
Roy Stanley
Non-Executive Director
19 June 2015
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 2014.
Tanfield Group Plc is a public listed company incorporated and
domiciled in England and quoted on AIM.
PRINCIPAL ACTIVITIES
The company’s principal activity is that of an investment
company.
RESULTS AND DIVIDENDS
The financial result, for the year to 31 December 2014 reflects
the changes to the principal activity of the company to that of
an investment company.
Turnover for the year was nil compared with £2.2m in 2013. The
operating loss before impairments in the year of £0.4m (2013:
£1.1m) arose from operating costs.
The balance sheet remains consistent with prior years with total
assets at the end of the year of £41.6m (2013: £41.2m). Net
Current Assets were £0.4m (2013: £1.7m) following the
conversion of Smith debt to common stock equity with cash
balances of £0.4m. The directors believe the Company has
sufficient working capital to allow it to continue through to
realising value from one of its investments.
No dividend has been paid or proposed for the year (2013: £nil).
The profit of £0.1m (2013: £7.4m) has been transferred to
reserves.
FINANCIAL INSTRUMENTS
The Company’s financial instruments comprise cash, current
debtors and current and non current creditors arising from its
operations. The principal financial instruments used by the
Company are cash balances raised from share issues by the
company. The Company has not established a formal policy on
the use of financial instruments but assesses the risks faced by
the Company as economic conditions and the Company’s
operations develop.
RISKS AND UNCERTAINTIES
The business believes it has sufficient cash funds to continue in
business for the foreseeable future through to the realisation
of value from one of its investments. It recognises that its
investments have a level of risk associated with them and is
reliant on the continued performance within their respective
markets.
DIRECTORS
The present membership of the board is set out on page 2.
All directors have the right to acquire shares in the company via
the exercise of options granted under the terms of their service
contracts, copies of which may be inspected by shareholders
upon written application to the company secretary. Details of
the directors’ options to acquire shares are set out in the
Directors’ Remuneration Report on pages 9 to 10.
POLICY ON PAYMENT OF CREDITORS
It is Company 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 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 2014
were 67 days (2013: 71 days).
SUBSTANTIAL SHAREHOLDINGS
On 31 December 2014 the following held substantial shares in
the company. No other person has reported an interest of more
than 3% in the ordinary shares.
No.
%
HSBC GLOBAL CUSTODY NOMINEE (UK)
47,719,312
33.20%
CHASE NOMINEES LIMITED
10,675,506
7.43%
THE BANK OF NEW YORK (NOMINEES)
9,887,239
6.88%
RATHBONE NOMINEES LIMITED
9,875,212
6.87%
HARGREAVES LANSDOWN (NOMINEES)
7,594,763
5.28%
FOREST NOMINEES LIMITED
7,385,179
5.14%
VIDACOS NOMINEES LIMITED
7,348,488
5.11%
RRE Stanley holds shares of 8.9% which are held through
nominee companies.
DIRECTORS’ INTEREST IN CONTRACTS
No director had a material interest at any time during the year in
any contract of significance, other than a service contract, with
the company or any of its subsidiary undertakings.
AUDITOR
A resolution to reappoint Baker Tilly UK Audit LLP as auditor will
be put to the members at the annual general meeting. Baker
Tilly UK Audit LLP has indicated its willingness to continue in
office.
INFORMATION TO
STATEMENT AS TO DISCLOSURE OF
AUDITORS
The directors in office on the date of approval of the financial
statements have confirmed that, as far as they are aware, there
is no relevant audit information of which the auditor is 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.
6
TANFIELD GROUP PLC FINANCIAL STATEMENTS
DIRECTORS’ REPORT (Continued)
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
Roy Stanley
Non-Executive Director
19 June 2015
7
TANFIELD GROUP PLC FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
Principles of Corporate Governance
The Company is committed to high standards of corporate
is accountable to the Company’s
governance. The board
shareholders for good corporate governance. The Company has
complied substantially throughout the period with the
corporate governance guidelines for smaller quoted companies
issued by the Quoted Company Alliance and details are
provided below.
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 two independent Non-Executive Directors.
Board Role
The Board is responsible to shareholders for the proper
management of the Company. The Non-Executive Directors
have a particular responsibility to ensure that the strategy is
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 Company. The Board has a formal schedule
of matters reserved to it. 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 Company’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
The Remuneration Committee
Stanley and Jon Pither.
determined and agreed with the Board the framework of
remuneration for 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 of Martin
Groak and Jon Pither.
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 Company’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 Company’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 Company, that it is not necessary to establish
an internal audit function.
Relations with Shareholders
The Company values its dialogue with both institutional and
private investors. Effective two-way communication with fund
managers, institutional investors and analysts is actively pursued
and this encompasses issues such as performance, policy and
strategy.
Private investors are encouraged to participate in the Annual
General Meeting at which the Chairman presents a review of the
results and comments on current business activity.
The
Chairmen of the Audit and Remuneration Committees will be
available at the Annual General Meeting to answer any
shareholder questions.
Notice of Annual General Meeting will be issued in due course.
Going Concern
The directors confirm that they are satisfied that the Company
has 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.
Roy Stanley
Non-Executive Director
19 June 2015
8
TANFIELD GROUP PLC FINANCIAL STATEMENTS
DIRECTORS’ REMUNERATION
REPORT
Remuneration committee
The company has established a Remuneration Committee which
is constituted in accordance with the recommendations of the
Combined Code. The members of the committee during the
year were RRE Stanley and J Pither and the committee was
chaired by J Pither.
Remuneration policy
There were four main elements of the remuneration packages
for directors:
Basic annual salary (including directors’ fees) and
benefits;
Annual bonus payments;
Share option incentives; and
Pension arrangements.
Basic salary
The basic salary of the directors is reviewed annually 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.
Annual bonus
The committee established the objectives which must be met
for each financial year if a cash bonus was to be paid. The
purpose of the bonus was to reward directors for achieving
above average performance which also benefits shareholders.
Share options
The 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
Some directors were members of a money purchase pension
scheme to which the company contributed. No other payments
to directors were pensionable.
Directors interests
The interests of directors holding office at the year end in the
company’s ordinary 5p shares at 31 December 2014 and 1
January 2014 are shown below:
RRE Stanley
M Groak
J Pither
Total
Number of shares
2014
12,799,479
-
1,015,084
13,814,563
2013
12,617,661
-
815,084
13,432,745
The directors, as a group, beneficially own 9.6% 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 emoluments for the financial year were as follows:
RRE Stanley
DS Kella
CD Brooksb
BJ Campbellc
M Groak
J Pitherd
Total
a
DS Kell resigned on 5 November 2013
b
c
CD Brooks resigned on 5 November 2013
BJ Campbell resigned on 5 November 2013
d
J Pither is paid through Surrey Management Services.
Salary
30
-
-
-
25
38
93
Benefits
in kind
-
-
-
-
-
-
-
Total
2014
30
-
-
-
25
38
93
Directors share options held at 31 December 2014 were as follows:
Pension Total
Total
2013
97
342
238
217
28
36
958
2014
16
-
-
-
-
-
16
Pension
Total
2013
16
61
36
39
-
-
152
31 December
2013
Granted/
Lapsed
Exercised
31 December
2014
800,000
30,000
200,000
1,030,000
-
-
-
-
-
-
200,000
200,000
800,000
30,000
-
830,000
Option
price per
sharee
Date from
which
normally
exercisable
Expiry Date
5p
5p
5p
02/01/2010
01/03/2009
21/01/2014
02/01/2017
01/03/2016
21/01/2021
RRE Stanley
M Groak
J Pither
Total
e
On 31 December 2014 the market price of the ordinary shares was 20.50p. The range during 2014 was 13.50p to 20.50p
Approval
This report was approved by the board of directors and authorised for issue on19 June 2015 and signed on its behalf by:
Roy Stanley
Non-Executive Director
10
TANFIELD GROUP PLC FINANCIAL STATEMENTS
STATEMENT OF DIRECTORS’
RESPONSIBILITIES
The directors are responsible for preparing the Strategic Report
and the Directors’ Report and the financial statements in
accordance with applicable law and regulations.
Company
law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have elected to prepare the financial statements of the
company in accordance with International Financial Reporting
Standards ("IFRS") as adopted by the European Union (“EU”).
The financial statements are required by law and IFRS as
adopted by the EU to present fairly the financial position and
performance of the company. The Companies Act 2006 provides
in relation to such financial statements that references in the
relevant part of that Act to financial statements giving a true
and fair view are references to their achieving a fair
presentation.
Under company law the directors must not approve the
financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the company and of
the profit or loss of the company for that period.
In preparing the financial statements, the directors are required
to:
a.
b.
c.
d.
select suitable accounting policies and then apply them
consistently;
make judgements and accounting estimates that are
reasonable and prudent;
state whether they have been prepared in accordance
with IFRS as adopted by the EU;
prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
company will continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company’s
transactions and disclose with reasonable accuracy at any time
the financial position of the company and enable them to ensure
the
statements
that
Companies Act 2006. They are also responsible for safeguarding
the assets of the company and hence for taking reasonable steps
for the prevention and detection of
fraud and other
irregularities.
comply with
financial
the
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.
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 financial statements on pages 13 to 27.
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.
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
in the Directors’ Responsibilities
As more fully explained
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 Financial Reporting Council’s website at
http://www.frc.org.uk/auditscopeukprivate
Opinion on financial statements
In our opinion the financial statements:
give a true and fair view of the state of the company’s
affairs as at 31 December 2014 and of its profit for the year
then ended;
have been properly prepared in accordance with IFRSs as
adopted by the European Union; and
have been prepared in accordance with the provisions of
the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and
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, or
returns adequate for our audit have not been received
from branches not visited by us; or
the 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
19 June 2015
12
TANFIELD GROUP PLC FINANCIAL STATEMENTS
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2014
Notes
2014
£000's
2013
£000's
Revenue
Staff costs
Other operating income
Other operating expenses
Loss from operations before impairments
Impairment of Investments
Intercompany loan forgiveness
Adjustment to fair value of investments
(Loss)/profit from operations after impairments
Finance expense
Finance income
Net finance income/(expense)
Profit from operations before tax
Taxation
Profit & total comprehensive income for the year attributable to equity
shareholders
Earnings per share
Earnings per share from operations
Basic (p)
Diluted (p)
1
2
4
3
3
5
6
6
-
(111)
18
(296)
(389)
-
-
-
(389)
(91)
624
533
144
-
144
2,223
(2,606)
-
(679)
(1,062)
(1,357)
(17,141)
26,984
7,424
(80)
48
(32)
7,392
-
7,392
0.1
0.1
5.4
5.3
13
TANFIELD GROUP PLC FINANCIAL STATEMENTS
BALANCE SHEET (Company registration number 04061965)
AS AT 31 DECEMBER 2014
Non current assets
Non current Investments
Current assets
Trade and other receivables
Deferred consideration
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Non-current liabilities
Other payables
Deferred tax liabilities
Total liabilities
Equity
Share capital
Share premium
Share option reserve
Special reserve
Merger reserve
Retained earnings
Total equity attributable to equity shareholders
Notes
7
10
8
9
11
11
12
13
13
2014
£000's
41,053
41,053
131
-
369
500
2013
£000's
37,563
37,563
2,902
349
375
3,626
41,553
41,189
135
135
1,565
-
1,565
1,700
7,187
16,455
845
66,837
1,534
(53,005)
39,853
1,885
1,885
-
-
-
1,885
6,975
16,262
1,904
66,837
1,534
(54,208)
39,304
Total equity and total liabilities
41,553
41,189
The financial statements on pages 13 to 27 were approved by the board of directors and authorised for issue on19 June 2015 and
are signed on its behalf by:
Roy Stanley
Non-Executive Director
14
TANFIELD GROUP PLC FINANCIAL STATEMENTS
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2014
At 1 January 2013
Comprehensive income
Profit for the year
Total comprehensive income for
the year
Transactions with owners in their
capacity as owners:-
Issuance of new shares (note 13)
Share based payments (note 14)
At 31 December 2013
Comprehensive income
Profit for the year
Total comprehensive income for
the year
Transactions with owners in their
capacity as owners:-
Issuance of new shares (note 13)
Share based payments (note 14)
At 31 December 2014
Share
capital
Share
premium
£000's
6,450
£000's
14,823
Share
option
reserve
£000's
1,885
Merger
reserve
Special
reservea
Retained
earnings
Total
£000's
1,534
£000's
66,837
£000's
(61,736)
£000's
29,793
-
-
-
-
-
-
-
-
-
-
7,392
7,392
7,392
7,392
525
-
6,975
1,439
-
16,262
-
19
1,904
-
-
1,534
-
-
66,837
-
136
(54,208)
-
-
-
-
-
-
-
-
-
-
144
144
212
-
7,187
193
-
16,455
-
(1,059)
845
-
-
1,534
-
-
66,837
-
1,059
(53,005)
1,964
155
39,304
144
144
405
-
39,853
a
The company’s special reserve relates to the reclassification of the share premium account.
15
TANFIELD GROUP PLC FINANCIAL STATEMENTS
CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2014
(Loss)/profit before interest and taxation
Loss on deferred consideration currency fluctuations
Adjustment to fair value of investment
Loss on intercompany loan write off
Loss on impairment of investments
Operating cash flows before movements in working capital
Decrease/(increase) in receivables
(Decrease)/increase in payables
Net cash from/(used in) operations
Interest paid
Net cash from/(used in) operating activities
Cash flow from Investing Activities
Interest received
Net cash (used in)/from investing activities
Cash flow from financing activities
Proceeds from issuance of ordinary shares net of costs
Net cash from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the start of year
Cash and cash equivalents at the end of the year
2014
£000's
(389)
55
-
-
-
(334)
109
(186)
(411)
-
(411)
-
-
405
405
(6)
375
369
2013
£000's
7,424
27
(26,650)
17,141
1,357
(701)
(1,513)
270
(1,944)
(80)
(2,024)
34
34
1,963
1,963
(27)
402
375
16
TANFIELD GROUP PLC FINANCIAL STATEMENTS
ACCOUNTING POLICIES
(i) Basis of preparation of
statements
the
financial
These 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 company’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 Company will continue
to be able to meet its liabilities as they fall due for the
foreseeable future. At 31 December 2014 the Company has
cash balances of £0.4m and, apart from director loans, is debt
free.
The Directors are confident that the cash balances will be
sufficient to see the Company continue until it realises the value
of one of its investments and that the assumptions underlying
their opinion are reasonable and that the Company will be able
its cash balances. Having taken the
to operate within
uncertainties
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 assumption not be valid.
into account the Board believes that
it
(iii) Revenue
All revenue relates to management recharges and is recognised
when the recharges are made.
in
than
sterling,
currencies other
(iv) Foreign currencies
the
Transactions
presentational currency of the company, 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.
(v) Share based payments
The Company 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 Company’s estimate of shares that
will eventually vest.
(vi) Borrowing costs
All borrowing costs are expensed in the income statement in the
period in which they are incurred.
(vii) Financial instruments
Recognition of financial assets and financial liabilities
Financial assets and financial liabilities are recognised on the
Company’s balance sheet when the Company has become a
party to the contractual provisions of the instrument.
Financial assets
Investments
Investments are included at either cost less amounts written off
or fair value where applicable.
Trade and other receivables
Financial assets within trade and other receivables are initially
recognised at fair value, which is usually the original invoiced
amount and are subsequently carried at fair value
less
provisions made for doubtful receivables.
Trade receivables do not carry any interest and are stated at
their nominal value as reduced by appropriate allowances for
estimated irrecoverable amounts.
Provisions are made specifically where there is evidence of a
risk of non-payment, taking into account ageing, previous losses
experienced and general economic conditions.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand less short
term bank overdrafts.
liabilities and equity
Financial liabilities
Financial liabilities and equity
instruments are classified
Financial
according to the substance of the contractual arrangements
entered into. An equity instrument is any contract that
evidences a residual interest in the assets of the Company 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.
17
(xi) 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 Company recognises termination
benefits when it is demonstrably committed to the affected
employees leaving the Company.
(x) Provisions
Provisions are recognised when the Company 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.
(xi) 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
ACCOUNTING POLICIES (continued)
(viii) Segmental reporting
IFRS 8 provides segmental information for the Company on the
basis of information reported to the chief operating decision-
maker for decision-making purposes. The Company considers
that the role of chief operating decision-maker is performed by
the Tanfield Group PLC’S board of directors.
(ix) 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 Company’s liability for current tax is calculated
by using tax rates that have been enacted or substantively
enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable
on differences between the carrying amount of assets and
liabilities in the financial statements and the corresponding tax
bases used in the computation of taxable profit, and is
accounted for using the balance sheet
liability method.
Deferred tax liabilities are recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against
which deductible temporary differences can be utilised. Such
assets and liabilities are not recognised if the temporary
difference arises from goodwill or from the initial recognition
(other than in a business combination) of other assets and
liabilities in a transaction which affects neither the tax profit nor
the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries except where
the Company is able to control the reversal of the temporary
difference and it is probable that the temporary difference will
not reverse in the foreseeable future.
Deferred tax is calculated at the tax rates that are expected
to apply to the period when the asset is realised or the liability
is settled. Deferred tax is charged or credited in the income
statement, except when it relates to items credited or charged
directly to equity, in which case the deferred tax is also dealt
with in equity.
The carrying amount of deferred tax assets is reviewed at
each balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available
to allow all or part of the asset to be recovered.
18
and
amended
New
and
interpretations effective from 1 January 2015
not yet adopted by the Company
standards
The Company currently adopts all relevant accounting
standards that have been endorsed by the EU. There are
various standards that are expected to be endorsed in 2015
which the Company believes will have no significant impact on
the Company’s financial position or results for the current or
prior years but may
impact the accounting for future
transactions or arrangements.
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 Company’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.
Investments
The status of the Company’s holding in Smith Electric Corp was
reviewed. Smith Electric Corp continues to demonstrate ability
to raise capital to fund its development, and as a result the
Company considers its receivables from Smith Electric Corp are
recoverable in full.
The status of the Company’s holding in Snorkel International
Holdings was reviewed. Since the injection of working capital
Snorkel International Holdings continues to progress well with
production increasing. The company has reviewed the financial
projections prepared by Snorkel and taking in to account
improving global market conditions, the injection of working
capital and applying its own sensitivity to the time taken to
achieve EBITDA growth to $25m, considers its investment in
Snorkel International Holdings to be at fair market value.
Accounting standards,
amendments to published accounts
interpretations and
The Company considered the implications, if any, of the
following amendments to IFRSs during the year ended 31
December 2014.
and
amended
New
and
interpretations effective from 1 January 2014
adopted by the Company
standards
During the year ended 31 December 2014, the Company has not
adopted any new IFRS, IAS or amendments issued by the IASB,
and interpretations by the IFRS Interpretations Committee,
impact on the Company’s
which have had a material
financial statements.
19
TANFIELD GROUP PLC FINANCIAL STATEMENTS
NOTES TO THE ACCOUNTS
1. Revenue
An analysis of the Company's revenue is as follows:
Management recharges
Total
2. Staff costs
Aggregate remuneration comprised
Wages and Salaries
Share scheme expense
Social Security Costs
Other Pension Costs
Total staff costs
Average monthly number of employees
Head Office and Administration
Total
2014
£000’s
-
-
2013
£000’s
2,223
2,223
2014
£000's
90
-
5
16
111
2014
No.
3
3
2013
£000's
2,155
155
143
153
2,606
2013
No.
17
17
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.
3. Finance expense and finance income
Finance expense
Interest on bank overdrafts, loans & financial instruments
Interest on director loans (note 16)
Total finance expense
Finance income
Interest on cash, cash equivalents & financial instruments a
Interest on deferred consideration (note 8)
Interest on Intercompany loans
Total finance income
a
Includes a one off £548k interest credit as part of the Smith debt conversion.
4. Other operating expenses
Other operating expenses
Property related expenses
Net loss on foreign exchange
Auditor's remuneration (see below)
Other operating expenses
Total operating expenses
20
2014
£000's
-
91
91
2014
£000's
604
20
-
624
2013
£000's
21
59
80
2013
£000's
3
14
31
48
2014
£000's
2013
£000's
1
-
22
273
296
153
112
54
360
679
TANFIELD GROUP PLC FINANCIAL STATEMENTS
4. Other operating expenses (continued)
Auditor's 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 accounts
Other services relating to taxation
compliance services
Comprising
Audit services
Non audit services
5. Taxation
Analysis of taxation charge for the year
United Kingdom
Corporation tax at 21.5% (2013: 23.25%)
Total current taxation charge
Deferred tax
Origination and reversal of temporary differences
Total deferred tax charge
Total taxation charge in the income statement
2014
£000's
2013
£000's
22
2
24
22
2
38
16
54
38
16
2014
£000's
2013
£000's
-
-
-
-
-
-
-
-
-
-
Factors affecting taxation charge
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:
Profit before taxation
Notional taxation charge at UK rate of 21.5% (2013: 23.25%)
Effects of:
Non (taxable) income/deductable expenses
Deferred tax asset not recognised in the period
Utilisation of tax losses brought forward
Total taxation charge
2014
£000's
144
31
-
-
(31)
-
2013
£000's
7,392
1,719
(2,082)
363
-
-
The Company has tax losses of approximately £2,134k (2013: £2,283k) available to carry forward against future profits of the
same trade. No deferred tax asset has been recognised due to the uncertainty of future profitability of the Company.
21
TANFIELD GROUP PLC FINANCIAL STATEMENTS
6. Earnings per share
Basic earnings 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 16.90p (2013: 20.25p).
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 operations
Earnings for the purposes of basic earnings 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
Earnings per share from operations
Basic (p)
Diluted (p)
7. Non current investments
A summary of the Non current investments is shown below:
Investment in Smith Electric Vehicles US Corp
Investment in Snorkel International Holdings LLC
Total Non current Investments
2014
No.
000’s
141,755
584
142,339
2014
£000's
144
-
144
2013
No.
000’s
136,879
2,883
139,762
2013
£000's
7,392
-
7,392
0.1
0.1
5.4
5.3
2014
£000’s
4,770
36,283
41,053
2013
£000’s
1,280
36,283
37,563
Smith Electric Vehicles US Corp
At 31 December 2014, the Company held a 5.76% (2013: 24%) share of the issued share capital of Smith Electric Vehicles US
Corp, a company registered in the US. This Shareholding is being held as a non current investment at the lower of cost and
realisable value (2014: £4,770k, 2013 £1,280k). On 4 October 2014, Smith restructured its debt by converting it in to common
stock equity which resulted in a change to the Company's holding (further details can be found at note 16).
Snorkel International Holdings LLC
At 31 December 2014, the Company held a 49% (2013: 49%) share of the issued share capital of Snorkel International Holdings
LLC, a company registered in the US. This share holding is being held as a non current investment at fair value (2014: £36,283k,
2013: £36,283k).
22
TANFIELD GROUP PLC FINANCIAL STATEMENTS
8. Deferred consideration
A summary of the deferred consideration receivable is shown below:
Due from Smith Electric Vehicles US Corp
Total Deferred consideration receivable
2014
£000’s
-
-
2013
£000’s
349
349
Smith Electric Vehicles US Corp
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 interest receivable on outstanding consideration
Effects of currency fluctuations
Converted to common stock equity
Deferred consideration receivable net of interest
2014
£000’s
349
20
10
(379)
-
2013
£000’s
341
14
(6)
-
349
9. Cash and cash equivalents
Cash and cash equivalents comprise cash and short-term deposits held by the Company treasury function. The carrying amount
of these assets approximates their fair value.
The Company primarily holds Sterling. Currency denominated balances are translated to sterling at the balance sheet date.
Cash and cash equivalents
10. Trade and other receivables
Payable within one year
Amounts due from Snorkel International Holdings LLC
Amounts due from Smith Electric Vehicles US Corp and its subsidiary
Other debtors and prepayments
2014
£000's
369
2014
£000's
15
-
116
131
The directors consider that the carrying amounts of Trade and other receivables approximates to their fair value.
11. Trade and other payables
The directors consider that the carrying amounts of trade and other payables approximates to their fair value.
2014
£000's
Payable within one year
Trade payables
Social security and other taxes
Accrued expenses
Loans
Average credit period taken on trade purchases (days)a
a
Creditor days have been calculated as trade payables over other operating expenses multiplied by 365 days.
56
38
41
-
135
67
2013
£000's
375
2013
£000's
223
2,511
168
2,902
2013
£000's
114
77
970
724
1,885
71
23
TANFIELD GROUP PLC FINANCIAL STATEMENTS
11. Trade and other payables (continued)
Payable after one year
Loans
Other creditors
12. Deferred taxation
Company
There is no movement in deferred taxation in the current or proceeding years.
13. Share capital and share premium
2014
£000's
805
760
1,565
2013
£000's
-
-
-
The Company has one class of ordinary shares which carry no right to fixed income. All shares are fully paid up.
Nominal share
value
5p
5p
5p
5p
5p
5p
5p
5p
At 31 December 2012
New share issue 25 March 2013a
New share issue 16 April 2013 a
At 31 December 2013
Share options exercised
New share issue 28 November 2014b
Share options exercised
At 31 December 2014
a
Number of shares
128,991,225
7,247,826
3,252,174
139,491,225
2,231,334
1,818,180
200,000
143,740,739
Share capital
£000’s
6,450
362
163
6,975
111
91
10
7,187
Share premium
£000’s
14,823
993
446
16,262
-
193
-
16,455
On 20 March 2013 the Company announced that it had conditionally raised gross proceeds of GBP2.1m. These funds were raised by way of a placing of 10,500,000 new Ordinary Shares of 5
pence ("Shares") with institutional investors at a price of 20 pence per Share. 7,247,826 shares were issued onto the AIM market on 25 March 2013 under existing authorities, a further
3,252,174 shares were issued on 16 April 2013 after the resolution allowing their issue was passed.
b On 25 November 2014 the Company announced that it had conditionally raised gross proceeds of GBP0.3m. These funds were raised by way of a placing of 1,818,180 new Ordinary Shares of
5 pence ("Shares") with institutional investors at a price of 16.5 pence per Share which were issued onto the AIM market on 28 November 2014 under existing authorities. Costs of £15,000
attributable to the share issue have been charged against the Share Premium account.
14. 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 2014 and 2013 are shown below.
Number of
share options
2014
Weighted average
exercise price
(pence)
2013
Number of
share options
Outstanding at the beginning of the year
Granted
Forfeited
Exercised
Expired
Outstanding at the end of the year
Exercisable
7,061,334
-
-
(2,431,334)
-
4,630,000
4,630,000
16
-
-
(5)
-
23
23
8,746,334
-
(1,685,000)
-
-
7,061,334
3,061,334
The outstanding options at 31 December 2014 had a weighted average remaining contractual life of 5.33 years (2013: 5.20
years)
24
Weighted
average
exercise price
(pence)
21
-
(41)
-
-
16
1
TANFIELD GROUP PLC FINANCIAL STATEMENTS
14. Share based payments (continued)
The following table relates to share options outstanding and exercisable at 31 December 2014
Exercise price (pence)
No of share options
No of exercisable options
Option exercise prices
5p
830,000
830,000
27p
3,800,000
3,800,000
Total
4,630,000
4,630,000
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 nil (2013: £155k) and a credit directly to equity of £1,059k (2013: £136k) 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.
15. Financial risk management
The Company’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 Company’s exposure to credit risk arises from its Trade and other receivables and cash deposits with financial institutions.
The Company’s maximum exposure to credit risk is summarised below:
Trade and other receivables
Cash and cash equivalents
2014
£’000
131
369
500
2013
£’000
2,902
375
3,277
2012
£’000
19,404
2,902
375
The Company 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 Company is exposed to liquidity risk arising from having insufficient funds to meet the Company’s future financing needs.
The Company’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.
Maturity analysis
The table below analyses the Company’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.
2014
Trade and other payables
2013
Trade and other payables
Total
£’000
1,700
1,700
1,885
1,885
Within 1 year
£’000
1 to 5 years
£’000
Over 5 years
£’000
1,565
1,565
-
-
-
-
-
-
135
135
1,885
1,885
25
TANFIELD GROUP PLC FINANCIAL STATEMENTS
15. Financial risk management (continued)
Foreign exchange risk management
The Company is exposed to movements in foreign exchange rates due to the net assets of its foreign investments being
denominated in foreign currencies. If appropriate the Company can use currency derivative financial instruments such as
foreign exchange contracts to reduce exposure. These were not used in the period.
Capital management
The Company’s main objective when managing capital is to protect returns to shareholders. The Company also aims to
maximise its capital structure of debt and equity so as to minimise its cost of capital. The Company 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
Company considers its capital to include share capital, share premium, special reserve, translation reserve and retained
earnings. No gearing is currently calculated as the Company currently has no borrowings.
16. Related party transactions
Company
The Company entered into transactions with its subsidiaries, until its disposal in the prior year, as disclosed below.
2014
£000’s
-
-
-
-
-
2013
£000’s
14,963
2,221
(17,141)
(43)
-
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 2013 the company formally forgave £17,141k of its intercompany receivables, of this balance £10,566k related to Snorkel Europe Limited (formerly Tanfield Powered Access Limited),
£3,810k to Snorkel International Inc, £1,283k to Tanfield Engineering System (US) Inc and £1,510k to Snorkel Australia PTY Ltd. In 2013 the company also wrote off a loan due to Tanfield Union
of £28k.
Transactions with its Smith Electric Vehicles US Corp and it’s subsidiary
During the year the group recharged nil (2013: £513k) 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 14
there was an outstanding balance due from Smith Electric of nil (2013: £682k) relating to these transactions. On 4 October 2014,
the Company converted its debt with Smith Electric totaling £3,490k in to common stock equity. This included £683k property
related costs, £2,329k loans, £379k deferred consideration and £99k interest.
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
2014
£000’s
98
16
114 2,147
2013
£000’s
1,995
152
Loans
During the year the loan provided to the Company by RRE Stanley continued. The agreed extension to the original loan was due
to expire in October 2014 and with this in mind, the board approached RRE Stanley in July 2014 and agreed to amend the terms
of the loan to a convertible loan with a further extension through to June 2016 as well as a reduction in the interest from 12% to
6% in return for payment of a £150k fee. Until the loan is either fully repaid or fully converted, the loan agreement is secured by
a Debenture. The Debenture is in a form which is relatively standard and constitute fixed and floating charges over the
Company's assets. As of 31 December 2014 the outstanding balance due was £623k (2013: £579k) which has been classified
under trade and other payables within the balance sheet.
26
TANFIELD GROUP PLC FINANCIAL STATEMENTS
17. Retirement benefits
The Company operates defined contribution retirement benefit plans for all qualifying employees. The assets of the schemes are
held separately from those of the Company 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 Company are reduced by the amount of
forfeited contributions.
The total cost charged to income of £16k (2013:£153k) represents contributions payable to these schemes by the Company at
rates specified in the rules of the schemes. As at 31 December 2014, contributions of nil (2013: £5k) due in respect of the current
reporting period had not been paid over to the schemes.
18. Financial instruments recognised in the balance sheet
Assets
Current financial assets
Trade and other receivables
Investments
Cash and cash equivalents
Total
Liabilities
Current liabilities
Trade and other payables
Total
a
Assets and liabilities at fair value through profit and loss.
2014
Assets
Available for
Salea
£000’s
Loans and
receivables
£000’s
-
41,053
-
41,053
Held for
tradinga
131
-
369
500
Other
financial
liabilities
£000’s
97
97
Total
£000’s
131
41,053
369
41,553
Total
2013
Assets
Available for
Salea
£000’s
-
37,563
-
37,563
Held for
tradinga
Total
£000’s
3,251
37,563
375
41,189
Total
£000’s
£000’s
-
-
1,808
1,808
Loans and
receivables
£000’s
3,251
-
375
3,626
Other
financial
liabilities
£000’s
1,808
1,808
£000’s
£000’s
-
-
97
97
19. Investments
The tables below give brief details of the Company’s investments at 31 December 2014. The Company had no operating
subsidiaries as of 31 December 2014.
Investments
Smith Electric Vehicles US Corp
Smith Electric Vehicles Europe Ltda
Snorkel International Holdings LLC
Tanfield Engineering Systems US (Inc)b
Snorkel Europe Ltd b
Snorkel International Inc b
Snorkel Australia Limited b
Snorkel New Zealand Limited b
a
Principal activity
Electric vehicle manufacture
Electric vehicle manufacture
Holding Company
Powered Access
Powered Access
Powered Access
Powered Access
Powered Access
Group Interest in
allotted capital &
voting rights
5.76%
5.76%
49.00%
49.00%
49.00%
49.00%
49.00%
49.00%
Country of
incorporation
US
UK
US
US
UK
US
AUS
NZ
Smith Electric Vehicle Europe Ltd is a 100% owned subsidiary of Smith Electric Vehicles US Corp . The Company’s interest in Smith Electric Vehicles Europe Ltd is held indirectly through its
investment in Smith Electric Vehicles US Corp.
b
The Company’s interest is held indirectly through its investment in Snorkel International Holdings LLC.
27