TANFIELD GROUP PLC
REPORT AND FINANCIAL
STATEMENTS 2015
Registered in England & Wales
Company number 04061965
TANFIELD GROUP PLC FINANCIAL STATEMENTS
REPORT AND FINANCIAL STATEMENTS 2015
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
5
7
8
10
11
12
13
14
15
16
19
1
TANFIELD GROUP PLC FINANCIAL STATEMENTS
DIRECTORS AND ADVISERS
DIRECTORS
NON-EXECUTIVE
J Pither
RRE Stanley
M Groak
D Robinson
SECRETARY
D Robinson
Chairman
Non executive Director (resigned 17 November 2015)
Non executive Director
Non executive Director (appointed 13 November 2015)
REGISTERED OFFICE AND ADVISORS
REGISTERED OFFICE
Sandgate House
102 Quayside
Newcastle upon Tyne
NE1 3DX
NOMINATED ADVISOR
WH Ireland
24 Martin Lane
Londno
London
EC4R 0DR
AUDITOR
RSM UK Audit LLP (formerly Baker Tilly UK Audit LLP)
1 St James’ Gate
Newcastle upon Tyne
NE1 4AD
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
SOLICITOR
Ward Hadaway
Sandgate House
102 Quayside
Newcastle upon Tyne
NE1 3DX
REGISTRAR
Capita IRG Plc
Bourne House
34 Beckenham
Beckenham
Kent
BR3 4TH
2
TANFIELD GROUP PLC FINANCIAL STATEMENTS
STRATEGIC REPORT
CHAIRMAN’S STATEMENT
During the year we have continued to monitor the progress of
both investments closely. The Board feels that some progress
has been made towards a realisation in value of the investment
in Snorkel following further growth in 2015. The Board do not
feel that sufficient progress was made by Smith and, following a
review of the investment in Smith, decided to impair the
investment to a nil value.
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. Progress in
production continued to be made during 2015 which resulted in
sales increasing by approximately 30% compared with 2014.
Investment in Snorkel by the current owner since the disposal
stands at over $70m. This has allowed the business to make the
progress to date and will assist in the continued progress that is
targeted for the future.
The Board understands that it is the intention of Snorkel to
focus on improving profit margins of its products during 2016
through further procurement synergies and standardisation
across the product range as well as efficiency improvements. In
March 2016 Ahern Deutschland, the German distributor for
Snorkel, opened a new €1.1 million headquarters along with
new regional sales appointments in to the European markets
which underpins the ambition and drive to increase European
market penetration.
Snorkel continues to operate in an aggressive market where
competitors are also targeting increased market share but there
is no reason why the progress made to date should not
continue to be made in to the future. Mr Don Ahern, the owner
of Extreme and Ahern Rentals, remains fully committed to
Snorkel and has a strong desire to continue to grow and
improve the business.
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
2015 there were just under three 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, being $43.1m equity holding and $17.0m preferred
interest holding). 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
2015, the $60.1m valuation would convert to £40.7m and based
on the exchange rate at 1 June 2016, it would convert to
£41.6m. This represents approximately 27p per share.
Smith
In October 2013 Smith completed a restructuring exercise that
saw it convert debt to equity. As a result of this, they informed
the Company that the equity shareholding went from 24% to
5.76% (excluding warrants).
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 were to invest the
Smith brand, licence for Newton™ EV design and IP while FDG
were to invest $15M in cash and $30m in assets, licence for
commercial EV design and IP. The New Joint Venture entity was
to be responsible for US product development, sales and
marketing and Smith were to be responsible for manufacturing
and maintain its right to territories outside of the USA.
3
TANFIELD GROUP PLC FINANCIAL STATEMENTS
STRATEGIC REPORT (Continued)
In May 2016, the Board of Tanfield was informed by the Board
of Smith that it had filed a complaint against FDG and the New
Joint Venture based on fraudulent misstatements that were
given that induced Smith to enter into the joint venture. Smith
have asked the court to declare the joint venture terminated or
rescinded, thereby returning the right to sell its vehicles in the
United States along with damages for the financial injury
inflicted on Smith.
Following the complaint against FDG, the Smith Board are now
focused on the sale and production of its existing vehicles and
technology in to the United States and European markets. It will
continue to pursue opportunities
license/JV/partner
opportunities throughout the Rest Of The World whilst
continuing to invest in the development of the next generation
vehicle.
for
In order to implement its plan, the Smith Board are seeking to
raise $15m in new funding through a series 'F' financing round.
It is unknown at this stage whether this financing will be
successful or not.
Valuation of Smith holding
In 2014, the investment in Smith was valued at £4.8m ($7.4m).
The Board of Directors have carried out a review of the
investment in Smith resulting in a decision to impair the
investment value to nil. The Board came to this decision due to
the uncertainty around the level of funding required before
Smith is able to achieve profitability and become self financing
as well as the disruption, costs and delays as a result of the
relationship with FDG which the Board acknowledge Smith are
now trying to remedy via legal proceedings.
The Board will continue to monitor any progress made by Smith
in relation to the investment in Smith and will review the
position should significant progress be made in achieving its
plans.
in
Strategy of Tanfield Board of Directors
relation to its Investments
Although the Board cannot predict the timeframe for a return
of value in its investment in Snorkel, the Directors believe that
its investment will result in a return of value to shareholders
over time. At this stage it is uncertain whether its investment in
Smith will result in a return of value to shareholders but the
Directors will continue to monitor the situation.
The strategy of the Company in relation to these investments is
to return as much as possible of any 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 Snorkel, there is still a risk of failure. The Board will
continue to fulfill 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 £54k (2014: £91k) was incurred
from loan interest charged during the period and interest
income of £1k (2014: £624k) received on deferred consideration
and loans with Smith and bank balances.
Taxation
There is no tax charge for the period under review. There is no
brought forward deferred tax asset recognised, and none was
recognised in the period resulting in no adjustment to deferred
tax, consistent with 2014.
Loss from operations
Loss from operations after impairment was £4.4m, (2014:
£0.4m), the most significant difference being the £4.8m
impairment of the investment in Smith.
Loss per share
Loss per share from continuing operations was 3.1 pence (2014:
profit 0.1 pence). No dividend has been declared. (2014: nil)
Cash
At 31 December 2015, the Company had cash of £0.1m (2014:
£0.4m).
Approved by the Board of Directors and signed on behalf of the
Board
Daryn Robinson
Non-Executive Director
24 June 2016
4
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 2015.
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 2015 reflects
the changes to the principal activity of the company to that of
an investment company.
Turnover for the year was nil (2014: nil). The operating profit
before impairments in the year of £0.4m (2014: £0.4m loss)
arose from operating costs.
The balance sheet has slightly reduced compared to the prior
year with total assets at the end of the year of £36.5m (2014:
£41.6m) caused largely by the write off of the Investment value
in Smith Electric. Net Current Assets were £0.1m (2014: £0.4m)
with cash balances of £0.1m (2014: £0.4m). Following the
£0.4m fundraising completed in March 2016, the directors
believe the Company has sufficient working capital to allow it to
continue through to the Autumn of 2017 or beyond.
No dividend has been paid or proposed for the year (2014: £nil).
The loss of £4.4m (2014: £0.1m profit) 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 8 to 9.
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 2015
were 58 days (2014: 67 days).
SUBSTANTIAL SHAREHOLDINGS
On 31 December 2015 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)
50,575,085
33.51%
CHASE NOMINEES LIMITED
14,772,506
9.79%
RATHBONE NOMINEES LIMITED
12,235,452
8.11%
THE BANK OF NEW YORK (NOMINEES)
12,011,045
7.96%
VIDACOS NOMINEES LIMITED
10,214,172
6.77%
FOREST NOMINEES LIMITED
7,233,086
4.79%
HARGREAVES LANSDOWN (NOMINEES)
6,263,757
4.15%
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 RSM UK Audit LLP (formerly Baker Tilly
UK Audit LLP) as auditor will be put to the members at the
annual general meeting. RSM 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.
5
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
Daryn Robinson
Non-Executive Director
24 June 2016
6
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 of the Non-Executive
Chairman and two independent Non-Executive Directors. D
Robinson was appointed to the Board on 13 November 2015
and RRE Stanley resigned from the board on 17 November
2015.
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 Jon
Pither and Daryn Robinson who took over from Roy Stanley
following his resignation.
The Remuneration Committee
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 8 to 9.
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 RSM UK Audit LLP (formerly
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.
Daryn Robinson
Non-Executive Director
24 June 2016
7
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 J Pither and D Robinson who took over from R
Stanley following his resignation 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.
Following a review in December 2015 it was felt that a
reduction in the overall remuneration levels was appropriate
and with immediate effect terms were amended reducing the
overall remuneration costs.
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 9.
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 2015 and 1
January 2015 are shown below:
M Groak
J Pither
D Robinson
Total
Number of shares
2015
-
1,403,248
546,740
1,949,998
2014
-
1,015,084
-
1,015,084
The directors, as a group, beneficially own 1.29% 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.
8
TANFIELD GROUP PLC FINANCIAL STATEMENTS
DIRECTORS’ REMUNERATION REPORT (continued)
Remuneration review
Directors emoluments for the financial year were as follows:
RRE Stanleya
M Groak
J Pither
D Robinsonb
Total
Salary
43
35
39
4
121
Benefits
in kind
-
-
-
-
-
Total
2015
43
35
39
4
121
a
b
RRE Stanley resigned on 17 November 2015
D Robinson was appointed on 13 November 2015
Pension Total
Total
2014
30
25
38
-
93
2015
16
-
-
-
16
Pension
Total
2014
16
-
-
-
16
Directors share options held at 31 December 2015 were as follows:
31
December
2014
Granted/
(Lapsed)
Transferred
Exercised
31
December
2015
Option
price
per
sharea
Date from
which
normally
exercisable
RRE Stanley
M Groak
J Pither
D Robinson
M Groak
M Groak
J Pither
D Robinson
Total
800,000
-
-
-
30,000
-
-
-
830,000
-
-
-
-
100,000
100,000
100,000
300,000
(800,000)
200,000
200,000
400,000
-
-
-
-
-
-
-
(200,000)
(400,000)
-
-
-
-
(600,000)
-
200,000
-
-
30,000
100,000
100,000
100,000
530,000
5p
5p
5p
5p
5p
27p
27p
27p
02/01/2010
02/01/2010
02/01/2010
02/01/2010
01/03/2009
02/02/2015
02/02/2015
02/02/2015
a
On 31 December 2015 the market price of the ordinary shares was 14.25p. The range during 2015 was 14.25p to 25.00p
Expiry Date
02/01/2017
02/01/2017
02/01/2017
02/01/2017
01/03/2016
02/02/2020
02/02/2020
02/02/2020
Approval
This report was approved by the board of directors and authorised for issue on 24 June 2015 and signed on its behalf by:
Daryn Robinson
Non-Executive Director
9
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.
10
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 12 to 26.
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
As more fully explained in the Directors’ Responsibilities
Statement set out on page 10, 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 2015 and of its loss 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 RSM UK AUDIT LLP (formerly Baker Tilly UK
Audit LLP), Statutory Auditor
Chartered Accountants
1 St James’ Gate
Newcastle upon Tyne
NE1 4AD
24 June 2015
11
TANFIELD GROUP PLC FINANCIAL STATEMENTS
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2015
Revenue
Staff costs
Other operating income
Other operating expenses
Profit/(Loss) from operations before impairments
Impairment of Investments
Loss from operations after impairments
Finance expense
Finance income
Net finance (expense)/ income
(Loss)/Profit from operations before tax
Taxation
(Loss)/Profit & total comprehensive income for the year attributable to
equity shareholders
Earnings per share
(Loss)/earnings per share from operations
Basic (p)
Diluted (p)
Notes
1
2
4
3
3
5
6
6
2015
£000's
-
618
27
(268)
377
(4,770)
(4,393)
(54)
1
(53)
(4,446)
-
(4,446)
2014
£000's
-
(111)
18
(296)
(389)
-
(389)
(91)
624
533
144
-
144
(3.1)
(3.1)
0.1
0.1
12
TANFIELD GROUP PLC FINANCIAL STATEMENTS
BALANCE SHEET (Company registration number 04061965)
AS AT 31 DECEMBER 2015
Non current assets
Non current Investments
Current assets
Trade and other receivables
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
9
8
10
10
11
12
12
2015
£000's
36,283
36,283
98
94
192
2014
£000's
41,053
41,053
131
369
500
36,475
41,553
110
110
254
-
254
364
7,546
16,800
461
66,837
1,534
(57,067)
36,111
135
135
1,565
-
1,565
1,700
7,187
16,455
845
66,837
1,534
(53,005)
39,853
Total equity and total liabilities
36,475
41,553
The financial statements on pages 12 to 26 were approved by the board of directors and authorised for issue on 24 June 2016 and
are signed on its behalf by:
Daryn Robinson
Non-Executive Director
13
TANFIELD GROUP PLC FINANCIAL STATEMENTS
STATEMENT OF CHANGES IN EQUITY ATTRIBUTABLE TO EQUITY
SHAREHOLDERS
FOR THE YEAR ENDED 31 DECEMBER 2015
At 1 January 2014
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 12)
Share based payments (note 13)
At 31 December 2014
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 12)
Share based payments (note 13)
At 31 December 2015
Share
capital
Share
premium
£000's
6,975
£000's
16,262
Share
option
reserve
£000's
1,904
Merger
reserve
Special
reservea
Retained
earnings
Total
£000's
1,534
£000's
66,837
£000's
(54,208)
£000's
39,304
-
-
-
-
-
-
-
-
-
-
144
144
144
144
212
-
7,187
193
-
16,455
-
(1,059)
845
-
-
1,534
-
-
66,837
-
1,059
(53,005)
405
-
39,853
-
-
-
-
-
-
-
-
-
-
(4,446)
(4,446)
(4,446)
(4,446)
359
-
7,546
345
-
16,800
-
(384)
461
-
-
1,534
-
-
66,837
-
384
(57,067)
704
-
36,111
a
The company’s special reserve relates to the reclassification of the share premium account.
14
TANFIELD GROUP PLC FINANCIAL STATEMENTS
CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2015
Loss before interest and taxation
Loss on deferred consideration currency fluctuations
Loss on impairment of investments
Operating cash flows before movements in working capital
(Increase)/decrease 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
2015
£000's
(4,393)
-
4,770
377
(25)
(1,331)
(979)
-
(979)
-
-
704
704
(275)
369
94
2014
£000's
(389)
55
-
(334)
109
(186)
(411)
-
(411)
-
-
405
405
(6)
375
369
15
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 2015 the Company had
cash balances of £0.1m and, apart from director loans, is debt
free.
The Directors are confident that the cash balances will be
sufficient to see the Company continue for the foreseeable
future, well beyond 12 months, or 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
Transactions
the
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.
16
(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.
17
and
amended
New
and
interpretations effective from 1 January 2016
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 2016
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. The Board do not feel that Smith have made
sufficient progress towards achieving its plan of obtaining a
public listing to maintain the previous valuation and have
therefore decided to impair the investment in Smith to nil.
However, the board acknowledge that there is a chance the
investment will result in a return to Shareholders and will
continue to monitor the investment. Should progress be made
in the future the valuation of the investment will be revisited.
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. The
Board takes the view that while there has been progress made
by Snorkel, there is still a risk of failure. The valuation has not
been adjusted for foreign currency fluctuations due to the
uncertain nature of foreign currency markets.
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 2015.
and
amended
and
New
interpretations effective from 1 January 2015
adopted by the Company
standards
During the year ended 31 December 2015, 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 financial
statements.
18
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
Social Security Costs
Other Pension Costs
Total staff costs
Average monthly number of employees
Head Office and Administration
Total
2015
£000’s
-
-
2014
£000’s
-
-
2015
£000's
(638)
4
16
(618)
2015
No.
3
3
2014
£000's
90
5
16
111
2014
No.
3
3
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 8 to 9. During the year a
provision for £760k of remuneration costs was reversed.
2015
£000's
54
54
2015
£000's
1
-
1
2014
£000's
91
91
2014
£000's
604
20
624
2015
£000's
2014
£000's
39
-
22
207
268
1
-
22
273
296
3. Finance expense and finance income
Finance expense
Interest on director loans
Total finance expense
Finance income
Interest on cash, cash equivalents & financial instruments
Interest on deferred consideration
Total finance income
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
19
TANFIELD GROUP PLC FINANCIAL STATEMENTS
4. Other operating expenses (continued)
Auditor's remuneration
Amounts payable to RSM UK Audit LLP (formerly 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 20.25% (2014: 21.5%)
Total current taxation charge
Deferred tax
Origination and reversal of temporary differences
Total deferred tax charge
Total taxation charge in the income statement
2015
£000's
2014
£000's
22
2
24
22
2
22
2
24
22
2
2015
£000's
2014
£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:
(Loss)/Profit before taxation
Notional taxation charge at UK rate of 20.25% (2014: 21.5%)
Effects of:
Non (taxable) income/deductable expenses
Utilisation of tax losses brought forward
Total taxation charge
2015
£000's
(4,446)
(900)
966
(66)
-
2014
£000's
144
31
-
(31)
-
The Company has tax losses of approximately £2,307k (2014: £2,373k) 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.
20
TANFIELD GROUP PLC FINANCIAL STATEMENTS
6. (Loss)/earnings per share
Basic (loss)/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 19.58p (2014: 16.90p).
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
(Loss)/earnings
From operations
(Loss)/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
(Loss)/earnings for the purposes of diluted earnings per share
(Loss)/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
2015
No.
000’s
144,823
171
144,994
2015
£000's
(4,446)
-
(4,446)
2014
No.
000’s
141,755
584
142,339
2014
£000's
144
-
144
(3.1)
(3.1)
0.1
0.1
2015
£000’s
-
36,283
36,283
2014
£000’s
4,770
36,283
41,053
Smith Electric Vehicles US Corp
At 31 December 2015, the Company held a 5.76% (2014: 5.76%) share of the issued share capital of Smith Electric Vehicles US
Corp, a company registered in the US. The Board do not feel that Smith have made sufficient progress towards achieving its plan
of obtaining a public listing to maintain the previous valuation and have therefore decided to impair the investment in Smith to
nil. However, the board acknowledge that there is a chance the investment will result in a return to Shareholders and will
continue to monitor the investment. Should progress be made in the future the valuation of the investment will be revisited. In
2014 the Shareholding was held as a non current investment at the lower of cost and realisable value of £4,770k.
Snorkel International Holdings LLC
At 31 December 2015, the Company held a 49% (2014: 49%) share of the issued share capital of Snorkel International Holdings
LLC, a company registered in the US. This shareholding is being held as a non current investment at fair value (2015: £36,283k,
2014: £36,283k).
8. 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
2015
£000's
94
2014
£000's
369
21
TANFIELD GROUP PLC FINANCIAL STATEMENTS
9. Trade and other receivables
Payable within one year
Amounts due from Snorkel International Holdings LLC
Other debtors and prepayments
2015
£000's
15
83
98
The directors consider that the carrying amounts of trade and other receivables approximates to their fair value.
10. Trade and other payables
The directors consider that the carrying amounts of trade and other payables approximates to their fair value.
2015
£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.
Payable after one year
Loans
Other creditors
43
37
30
-
110
58
2015
£000's
254
-
254
11. Deferred taxation
Company
There is no movement in deferred taxation recognised in the current or proceeding years.
12. 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.
Nominal share
value
5p
5p
5p
5p
5p
5p
5p
5p
At 31 December 2013
Share options exercised
New share issue 28 November 2014a
Share options exercised
At 31 December 2014
Share options exercised
New share issue 6 November 2015b
At 31 December 2015
a
Number of shares
139,491,225
2,231,334
1,818,180
200,000
143,740,739
600,000
6,583,334
150,924,073
Share capital
£000’s
6,975
111
91
10
7,187
30
329
7,546
2014
£000's
15
116
131
2014
£000's
56
38
41
-
135
67
2014
£000's
805
760
1,565
Share premium
£000’s
16,262
-
193
-
16,455
-
345
16,800
On 25 November 2014 the Company announced that it had conditionally raised gross proceeds of £300k. 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. Costs of £15k attributable to the share issue have
been charged against the Share Premium account.
b
On 3 November 2015 the Company announced that Directors and the Company Secretary were converting £675k of convertible loan in to equity which resulted in 6,583,334 new Ordinary
Shares of 5 pence ("Shares") being issued. Under the terms of the convertible loan agreements, the shares were issued at a price of 10.25 pence per Share and were admitted onto the AIM
market on 6 November 2015.
22
TANFIELD GROUP PLC FINANCIAL STATEMENTS
13. 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 2015 and 2014 are shown below.
Number of
share options
2015
Weighted average
exercise price
(pence)
Outstanding at the beginning of the year
Granted
Forfeited
Exercised
Expired
Outstanding at the end of the year
Exercisable
4,630,000
300,000
-
(600,000)
-
4,330,000
4,330,000
23
27
-
(5)
-
24
24
2014
Number of
share options
7,061,334
-
-
(2,431,334)
-
4,630,000
4,630,000
Weighted
average
exercise price
(pence)
16
-
-
(5)
-
23
23
The outstanding options at 31 December 2015 had a weighted average remaining contractual life of 4.47 years (2014: 5.33
years)
The following table relates to share options outstanding and exercisable at 31 December 2015
Exercise price (pence)
No of share options
No of exercisable options
Option exercise prices
5p
230,000
230,000
27p
4,100,000
4,100,000
Total
4,330,000
4,330,000
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 (2014: nil) and a credit directly to equity of £384k (2014: £1,059k) 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.
14. 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
2015
£’000
98
94
192
2014
£’000
131
369
500
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.
23
TANFIELD GROUP PLC FINANCIAL STATEMENTS
14. Financial risk management (continued)
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.
2015
Trade and other payables
2014
Trade and other payables
Within 1 year
£’000
1 to 5 years
£’000
Over 5 years
£’000
110
110
135
135
254
254
1,565
1,565
-
-
-
-
Total
£’000
364
364
1,700
1,700
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, share option reserve and retained
earnings. No gearing is currently calculated as the Company currently has no borrowings.
15. Related party 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 8 to 9.
Directors emoluments are shown in the table
below:
Salaries and short term benefits including NI
Post employment benefits
2015
£000’s
125
16
141 114
2014
£000’s
98
16
24
TANFIELD GROUP PLC FINANCIAL STATEMENTS
15. Related party transactions (continued)
Transactions with directors
Loans
During the year the convertible loans provided to the Company by some of the Directors were amended. The terms of the
previous convertible loan agreements were due to expire in June 2016 with interest of 6% and an average conversion price of
6p. It was felt by the Board that whilst the average conversion price was proportionate to the risk at the time the loans were
taken out in 2013, as there was no certainty of the Snorkel division being sold, a higher conversion price would now be more
appropriate. In return for a combined fee of £68k being accrued, it was agreed that the loans were extended through to June
2017, with interest of 6% and an increase in the conversion price to 10.25p. Until the loans are either fully repaid or fully
converted, the loan agreements are secured by a Debenture. The Debenture is in a form which is relatively standard and
constitutes fixed and floating charges over the Company's assets.
On 3 November 2015, it was announced that the Directors were converting £675k of their loans at 10.25p resulting in 6,583,334
new ordinary shares of 5p each being issued. As of 31 December 2015 the outstanding loan balances due were £254k (2014:
£805k) which has been classified under trade and other payables within the balance sheet.
16. 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 (2014:£ 16k) represents contributions payable to these schemes by the Company at
rates specified in the rules of the schemes. As at 31 December 2015, contributions of nil (2014: nil) due in respect of the current
reporting period had not been paid over to the schemes.
17. 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.
2015
Assets
Available for
Salea
£000’s
Loans and
receivables
£000’s
-
36,283
-
36,283
Held for
tradinga
98
-
94
192
Other
financial
liabilities
£000’s
73
73
Total
£000’s
98
36,283
94
36,475
Total
2014
Assets
Available for
Salea
£000’s
Loans and
receivables
£000’s
131
-
369
500
-
41,053
-
41,053
Total
£000’s
131
41,053
369
41,553
Other
financial
liabilities
£000’s
97
97
Held for
tradinga
Total
£000’s
£000’s
-
-
97
97
£000’s
£000’s
-
-
73
73
25
TANFIELD GROUP PLC FINANCIAL STATEMENTS
18. Investments
The tables below give brief details of the Company’s investments at 31 December 2015. The Company had no operating
subsidiaries as of 31 December 2015.
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
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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.
19. Post balance sheet events
The Company raised a total of £400,000 through the placing of 2,758,620 ordinary shares at a price of 14.5 pence per share. The
shares were admitted to trading on AIM, a market operated by the London Stock Exchange plc, on 22 March 2016.
26