TANFIELD GROUP PLC
REPORT AND FINANCIAL
STATEMENTS 2016
Registered in England & Wales
Company number 04061965
TANFIELD GROUP PLC FINANCIAL STATEMENTS
REPORT AND FINANCIAL STATEMENTS 2016
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 Attributable to Equity Shareholders
Cash Flow Statement
Accounting Policies
Critical Accounting Estimates and Key Judgements
Notes to the Accounts
2
3
6
7
8
10
11
12
13
14
15
16
18
19
1
TANFIELD GROUP PLC FINANCIAL STATEMENTS
DIRECTORS AND ADVISERS
DIRECTORS
NON-EXECUTIVE
J Pither
M Groak
D Robinson
SECRETARY
D Robinson
REGISTERED OFFICE AND ADVISORS
REGISTERED OFFICE
Sandgate House
102 Quayside
Newcastle upon Tyne
NE1 3DX
AUDITOR
RSM 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 (resigned 31 May 2017)
Non executive Director
Non executive Director (appointed acting Chairman 31 May 2017)
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 we have continued to monitor closely the
progress of both of the Company’s investments. The Board once
again feels that some progress has been made towards a
realisation of value in the investment in Snorkel following
further growth in 2016. The calculation of the Snorkel valuation
was made in 2013 and is based on the formula detailed in the
circular that was distributed prior to the disposal of the
controlling interest in Snorkel, which expires on 30 September
2018. There is no guarantee that the financial targets required
to trigger the realisation of this value will be met before the
expiry date. The Board is of the opinion that should the financial
targets not be met before the deadline, the current valuation
could be a fair reflection of the investment value beyond the
end of the 5 year period.
With respect to Smith, however, the Board continue to hold the
view that the value of the investment should be nil.
NON-EXECUTIVES' REVIEW
Background
The Company is defined as an investment company with two
passive investments. This definition resulted from the disposal
of the controlling interest in Smith Electric Vehicles in 2009 and
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. Sales levels
(unaudited) have continued to grow during 2016, increasing by
19% to $130.5m (2015: $109.9m / 2014: $85.3m). Despite
market conditions continuing to be challenging, Snorkel has
been able to achieve improved market share in targeted regions
allowing it to also create a broader and more diverse customer
base. This is expected to help underpin further growth
expected for 2017, including from large rental companies that
have not purchased Snorkel product for a number of years. This
is testament to the progress Snorkel has made in recent years
and the improvements to the product range, build quality and
customer service.
The Snorkel 2016 accounts report an operating loss (unaudited),
excluding depreciation, of $2.8m (2015: $10.6m / 2014:
$14.9m) with $1.9m of this loss being incurred in the first
quarter of the year and the business operationally breaking
even during some of the later periods. The significantly reduced
operating loss is partially linked to the increased sales levels but
is mainly the result of the focused cost-down activity that has
taken place during 2015 and 2016 coming to fruition, thereby
reducing the bill of material costs and lowering the break-even
sales point.
the challenging
trading conditions,
Despite
the Board
understand Snorkel is again targeting double-digit growth in
2017 from their UK manufacturing facility which mainly provides
product to the European marketplace. Tanfield are, however,
unsure how much growth will come from the US manufacturing
facility in 2017, given its dependency upon Ahern Rentals as its
principal customer. Nevertheless, as a result of the success of
the cost down activity and the double digit European growth
expectation, the Board believes Snorkel could still achieve
combined growth, as evidenced in the March 2017 quarterly
accounts, and move into profit for the full 2017 year, in line with
their forecast.
Should economic conditions materially change in the latter
stages of 2017, this may have an impact on the expected
outcome, but the Tanfield Board is currently of the opinion that
the investment in Snorkel will result in a return to shareholders
in the future, although it should be noted that this may not
materialise until after 30 September 2018 when the outcome
then becomes uncertain and could be more or could be less
than the calculated realisation value.
Valuation of Snorkel holding: unchanged at
£36.3 million
The Board of Tanfield has taken a view of the carrying value of
its 49% holding and its preferred interest position that takes
account of risks in the industrial global markets and the normal
cycles that operate within these markets. The range of potential
valuations can be broad, with the added complexity of a time-
driven element whereby the agreement for the current
valuation formula could only be triggered during a five year
period ending in September 2018. The transaction is described
below, largely extracted from page 7 of the Circular distributed
to Shareholders in 2013 and available from the Company
website at http://www.tanfieldgroup.com with current values*
inserted where appropriate.
Xtreme, by way of its holding in SKL Holdings, entered in to a
staged acquisition of the Snorkel Division, via the creation of
Snorkel International Holdings, in which Tanfield retains a
holding until the consideration terms are fully met. Xtreme has
made significant working capital facilities available to Snorkel
International Holdings to deliver its growth forecast (currently
believed to be approximately $70m* of working capital) and has
delivered certain other strategic benefits and synergies to
Snorkel International Holdings. Tanfield retains an initial interest
in 49% of Snorkel International Holdings and an adjusted
preferred interest position of $22.4m*, in exchange for Xtreme’s
controlling interest in Snorkel International Holdings. Subject to
the Snorkel Division reaching an EBITDA of at least $25m for any
prior 12 month period prior to 30 September 2018, Tanfield can
demand payment of this preferred interest which would be paid
when Snorkel International Holdings is able to fund such
payment and its net debt/EBITDA ratio is less than 2, ultimately
reducing Tanfield’s interest to 30% and Xtreme will hold 70% of
Snorkel International Holdings.
3
TANFIELD GROUP PLC FINANCIAL STATEMENTS
STRATEGIC REPORT (Continued)
Subject to the payment of the preferred interest, and before 30
September 2018, Tanfield has a ‘‘put’’ option on this remaining
holding, whereby SKL Holdings will be obliged to purchase the
remaining interest held by Tanfield at an agreed multiple of 5.5
times EBITDA earnings, as at the date of the put, again subject
to Snorkel International Holdings being able to fund such a
payment. SKL Holdings has a call option on the same
commercial terms.
At the end of 2016 there were just under two years left to run
on the fixed terms of the agreement. If the formula is not
triggered within the 5 year time frame Tanfield will retain a 49%
interest in Snorkel but the $25m EBITDA trigger compelling
payment of the $22.4m adjusted preferred interest position and
the Company's put option compelling the purchase of Tanfield's
remaining interest in Snorkel will expire.
The Board continues to have discussions with Snorkel and
remain of the view that Don Ahern, the owner of Xtreme, would
wish to one day own 100% of Snorkel and will therefore seek to
buy Tanfield’s holding in Snorkel at some point in the future.
The Board has considered a number of scenarios and, based on
the range of possible outcomes, feel the valuation of £36.3m
should be maintained. This valuation has been assessed against
including past performance, production
various criteria,
capacity, market conditions, the capability of the business to
increase output and exchange rate fluctuations.
The original valuation was based on the assumption that the
$25m EBITDA target would be reached within the 5 year period.
Whilst that target now seems increasingly unlikely to be
achieved, if the assumption is made that both the progress
within Snorkel and the wider global market conditions will
continue to improve, then the current £36.3m valuation could
still be a fair reflection of the investment value beyond the 5
year period; with the caveat that a number of factors could
influence the valuation and performance of Snorkel between
now and a potential realisation date beyond September 2018,
including Xtreme’s negotiating stance. Therefore, the actual
value that might be realised could be more or less than the
current valuation.
The Board would like to draw your attention to the Auditors’
report on page 11 in which they have also highlighted this
uncertainty.
The Board will continue to monitor the investment and is
reviewing the original agreements with its advisers to ensure it
has an accurate understanding of the position post September
2018 should the EBITDA target not be achieved beforehand.
Smith
In October 2014 Smith completed a restructuring exercise that
saw it convert debt to equity. As a result of this, they informed
the Company that its equity shareholding had reduced from
24% to 5.76% (excluding warrants).
Since then, Smith has sought to raise funds which would allow it
to implement its strategic plan. To date, no significant fundraise
has been completed and the Board of Tanfield does not foresee
this happening in the immediate future.
In May 2015 Smith executed a conditional agreement to form an
exclusive joint venture with strategic partner and investor FDG
Electric Vehicles Limited ("FDG"). In May 2016, the Board of
Tanfield was informed that Smith had filed a complaint against
FDG and the New Joint Venture. The Board of Tanfield
understands that counter-claims have been made against Smith
and that legal procedures are ongoing.
Valuation of Smith holding
In 2015, the Board of Directors 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
funding uncertainties as well as the legal proceedings between
Smith and FDG.
We understand that legal proceedings are ongoing and that
Smith have not been able to raise any meaningful funds since
that time and so the Board maintain its opinion that the
investment value should be held at nil.
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 it
will result in a return of value to shareholders over time. In
contrast, at this stage it does not look likely that its investment
in Smith will result in a return of value to shareholders.
in
The Directors will update shareholders should this view change.
The strategy of the Company in relation to these investments is
to return as much as possible of any realised value to
shareholders as 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 further
progress made by Snorkel, there is still a risk of failure, although
based on progress to date and commitments from Don Ahern /
Xtreme, this seems unlikely. The Board will continue to fulfill its
obligation to its shareholders in seeking to optimise the value of
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 expense and income
The interest cost in the period of £13k (2015: £54k) was incurred
from loan interest charged during the period and interest
income of £1k (2015: £1k) received on bank balances.
4
TANFIELD GROUP PLC FINANCIAL STATEMENTS
STRATEGIC REPORT (Continued)
Loss from operations
Loss from operations after impairment was £0.2m, (2015:
£4.4m), the most significant difference being the £4.8m
impairment of the investment in Smith in 2015.
Loss per share
Loss per share from continuing operations was 0.2 pence (2015:
3.1 pence). No dividend has been declared. (2015: nil)
Cash
At 31 December 2016, the Company had cash of £0.3m (2015:
£0.1m).
Risks and uncertainties
The business believes it has sufficient cash funds to continue in
business beyond June 2018. There is no guarantee that a
realisation of value from one of its investments will happen
before then and the Board will closely monitor progress. It
recognises that its investments have a level of risk associated
with them and is reliant on the continued performance within
their respective markets.
KPI's
The Board do not use any KPI's to monitor the performance of
the business.
Approved by the Board of Directors and signed on behalf of the
Board
Daryn Robinson
Non-Executive Director
29 June 2017
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 2016.
Trade creditor days based on creditors at 31 December 2016
were 48 days (2015: 58 days).
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 2016 reflects
the principal activity of the company being that of an
investment company.
Turnover for the year was nil (2015: nil). The operating loss
before impairments in the year of £0.2m (2015: £0.4m profit)
arose from operating costs. The prior year profit resulted from
the reversal of a provision that was no longer required.
The balance sheet remains consistent with total assets at the
end of the year of £36.6m (2015: £36.5m). Net Current Assets
were £0.2m (2015: £0.1m) with cash balances of £0.3m (2015:
£0.1m). The directors believe the Company has sufficient
working capital to allow it to continue beyond June 2018.
No dividend has been paid or proposed for the year (2015: £nil).
The loss of £0.2m (2015: £4.4m) has been transferred to
reserves.
SUBSTANTIAL SHAREHOLDINGS
On 31 December 2016 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
46,337,197
29.64%
CHASE NOMINEES LIMITED
21,166,792
13.54%
AURORA NOMINEES LIMITED
14,566,045
9.32%
VIDACOS NOMINEES LIMITED
12,234,421
7.83%
THE BANK OF NEW YORK (NOMINEES)
10,621,200
6.79%
RATHBONE NOMINEES LIMITED
7,087,279
4.53%
FOREST NOMINEES LIMITED
6,174,063
3.95%
LYNCHWOOD NOMINEES LIMITED
5,561,841
3.56%
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 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.
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.
STATEMENT AS TO DISCLOSURE OF INFORMATION TO THE
AUDITOR
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.
DIRECTORS
The present membership of the board is set out on page 2.
DIRECTORS INDEMNITY
Every Director shall be indemnified by the company out of its
own funds.
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.
Approved by the Board of Directors and signed on behalf of the
Board
Daryn Robinson
Non-Executive Director
29 June 2017
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.
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 of Jon
Pither and Daryn Robinson. 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
reports from RSM 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 is 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 the 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
29 June 2017
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 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.
Remuneration levels have been held at the reduced values
agreed in December 2015.
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.
Directors interests
The interests of directors holding office at the year end in the
company’s ordinary 5p shares at 31 December 2016 and 1
January 2016 are shown below:
M Groak
J Pither
D Robinson
Total
Number of shares
2016
-
1,542,553
942,785
2,485,338
2015
-
1,403,248
546,740
1,949,988
The directors, as a group, beneficially own 1.59% 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 Robinson
Total
a
RRE Stanley resigned on 17 November 2015
Salary
2016
£000's
-
20
24
41
85
Pension
2016
£000's
-
-
-
-
-
Total
2016
£000's
-
20
24
41
85
Salary
2015
£000's
43
35
39
4
121
Pension
2015
£000's
16
-
-
-
16
Total
2015
£000's
59
35
39
4
137
Directors share options held at 31 December 2016 were as follows:
31 December
2015
Granted/
(Lapsed)
Exercised
31 December
2016
M Groak b
M Groak
M Groak
J Pither
D Robinson
Total
200,000
30,000
100,000
100,000
100,000
530,000
-
(30,000)
-
-
-
(30,000)
-
-
-
-
-
-
200,000
-
100,000
100,000
100,000
500,000
Option
price per
sharea
Date from
which normally
exercisable
5p
5p
27p
27p
27p
02/01/2010
01/03/2009
02/02/2015
02/02/2015
02/02/2015
Expiry Date
02/01/2017
01/03/2016
02/02/2020
02/02/2020
02/02/2020
a
On 31 December 2016 the market price of the ordinary shares was 15.25p. The range during 2015 was 9.31p to 16.25p
b
On 2 January 2017 the option lapsed
Approval
This report was approved by the board of directors and authorised for issue on 29 June 2017 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, Directors’ Report, Corporate Governance Report and
Directors' Remuneration 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
International Financial
Reporting Standards ("IFRS") as adopted by the European Union
(“EU”).
in accordance with
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
that
the
statements
Companies Act 2006. They are also responsible for safeguarding
the assets of the company and hence for taking reasonable steps
fraud and other
for the prevention and detection of
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
Opinion on the financial statements
We have audited the financial statements on pages 12 to 24.
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.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the
company and its environment obtained in the course of the
audit, we have not identified any material misstatements in
the Strategic Report or the Directors’ report.
In our opinion the financial statements:
give a true and fair view of the state of the company’s
affairs as at 31 December 2016 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.
Emphasis of matter - Carrying value of non-current investment
In forming our opinion on the financial statements, which is not
modified, we have considered the adequacy of the disclosures
made in the Accounting Policies and note 6 to the financial
statements concerning the carrying value of the company’s
£36m investment in Snorkel International Holdings LLC. The
Accounting Policies set out the basis whereby the Directors
have considered the fair value of the investment and the
assumptions made therein. The timing of when the company
will be able to realise its interest in Snorkel and the sum to be
realised are both dependent on the underlying trading
performance of Snorkel over the period to September 2018
over which the Directors have no control and the sum realised
may be more or less than the current carrying value. The
Directors continue to discuss the realisation process with the
majority shareholders of Snorkel and take appropriate
professional advice on this matter. These conditions indicate
the existence of a material uncertainty that could impact the
carrying value of Non Current Asset Investments. The ultimate
outcome of this material uncertainty cannot presently be
determined and as a result the financial statements do not
include any adjustments that would result if any of the
assumptions made by the Board were incorrect.
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 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 and, based on the work undertaken in the
course of our audit, the Strategic report and the Directors’
Report have been prepared in accordance with applicable legal
requirements.
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.
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.
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.
ANDREW ALLCHIN (Senior Statutory Auditor)
For and on behalf of RSM UK AUDIT LLP, Statutory Auditor
Chartered Accountants
1 St James’ Gate
Newcastle upon Tyne
NE1 4AD
29 June 2017
11
2015
£000's
-
618
27
(268)
377
(4,770)
(4,393)
(54)
1
(53)
(4,446)
-
(4,446)
-
(85)
30
(182)
(237)
-
(237)
(13)
1
(12)
(249)
-
(249)
(0.2)
(0.2)
(3.1)
(3.1)
TANFIELD GROUP PLC FINANCIAL STATEMENTS
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2016
Notes
2016
£000's
Revenue
Staff costs
Other operating income
Other operating expenses
(Loss)/Profit from operations before impairments
Impairment of Investments
Loss from operations after impairments
Finance expense
Finance income
Net finance expense
Loss from operations before tax
Taxation
Loss & total comprehensive income for the year attributable to equity
shareholders
Earnings per share
Loss per share from operations
Basic (p)
Diluted (p)
1
3
2
2
4
5
5
12
TANFIELD GROUP PLC FINANCIAL STATEMENTS
BALANCE SHEET (Company registration number 04061965)
AS AT 31 DECEMBER 2016
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
Total liabilities
Equity
Share capital
Share premium
Share option reserve
Special reserve
Merger reserve
Retained earnings
Total equity attributable to equity shareholders
Notes
6
8
7
9
9
10
10
2016
£000's
36,283
36,283
61
269
330
2015
£000's
36,283
36,283
98
94
192
36,613
36,475
91
91
-
-
91
7,816
17,190
459
66,837
1,534
(57,314)
36,522
110
110
254
254
364
7,546
16,800
461
66,837
1,534
(57,067)
36,111
Total equity and liabilities
36,613
36,475
The financial statements on pages 12 to 24 were approved by the board of directors and authorised for issue on 29 June 2017 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 2016
At 1 January 2015
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 10)
Share based payments (note 11)
At 31 December 2015
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 10)
Share based payments (note 11)
At 31 December 2016
Share
capital
Share
premium
£000's
7,187
£000's
16,455
Share
option
reserve
£000's
845
Merger
reserve
Special
reservea
Retained
earnings
Total
£000's
1,534
£000's
66,837
£000's
(53,005)
£000's
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)
-
-
-
-
-
-
-
-
-
-
(249)
(249)
270
-
7,816
390
-
17,190
-
(2)
459
-
-
1,534
-
-
66,837
-
2
(57,314)
704
-
36,111
(249)
(249)
660
-
36,522
a
The company’s special reserve relates to a previous reclassification of the share premium account.
14
TANFIELD GROUP PLC FINANCIAL STATEMENTS
CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2016
Loss before interest and taxation
Loss on impairment of investments
Operating cash flows before movements in working capital
Decrease/(increase) in receivables
Decrease in payables
Net cash from/(used in) operations
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
2016
£000's
(237)
-
(237)
25
(273)
(485)
660
660
175
94
269
2015
£000's
(4,393)
4,770
377
(25)
(1,331)
(979)
704
704
(275)
369
94
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 financial
in “Critical accounting
statements, are disclosed below
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 2016 the Company had
cash balances of £0.3m and is debt free.
The Directors are confident that the cash balances will be
sufficient to see the Company continue for a minimum of 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 to operate within
its cash balances. Having taken the uncertainties into account
the Board believes that it is appropriate to prepare the financial
statements on the going concern basis. The financial statements
do not include any adjustment to the value of the balance sheet
assets or provisions for further liabilities, which would result
should the going concern assumption not be valid.
in
currencies other
(iii) 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.
sterling,
than
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.
(iv) 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.
(v) Borrowing costs
All borrowing costs are expensed in the income statement in the
period in which they are incurred.
(vi) 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 impairment.
Trade receivables do not carry any interest and are stated at
their nominal value as reduced by appropriate allowances for
estimated irrecoverable amounts.
Provisions for impairment 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 and equity
Financial
instruments are classified
according to the substance of the contractual arrangements
entered into. An equity instrument is any contract that
evidences a residual interest in the assets of the 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
TANFIELD GROUP PLC FINANCIAL STATEMENTS
ACCOUNTING POLICIES (continued)
(vii) 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 it only has one segment and that the role of chief operating
decision-maker is performed by the Tanfield Group Plc's board
of directors.
(viii) Termination benefits
Termination benefits
(leaver costs) are payable when
employment is terminated before the normal retirement date,
in
or when an employee accepts voluntary redundancy
exchange for these benefits.
The Company recognises
termination benefits when it is demonstrably committed to the
affected employees leaving the Company.
(ix) 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.
(x) Functional and presentational currencies
The consolidated financial statements are presented in sterling
which is also the functional currency of the company.
17
TANFIELD GROUP PLC FINANCIAL STATEMENTS
CRITICAL ACCOUNTING ESTIMATES AND KEY JUDGEMENTS
and
amended
New
and
interpretations effective from 1 January 2017
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 2017
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.
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 understand that the company has ceased
to trade and 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 2016.
and
amended
New
and
interpretations effective from 1 January 2016
adopted by the Company
standards
During the year ended 31 December 2016, 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. Staff costs
Aggregate remuneration comprised
Wages and salaries
Social security costs
Other pension costs
Total staff costs
Average monthly number of employees
Directors'
Total
2016
£000's
85
-
-
85
2016
No.
3
3
2015
£000's
(638)
4
16
(618)
2015
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 previous
year a provision of £760k of remuneration costs was reversed.
2. Finance expense and finance income
Finance expense
Interest on director loans
Total finance expense
Finance income
Interest on cash, cash equivalents & financial instruments
Total finance income
3. Other operating expenses
Other operating expenses
Property related expenses
Auditor's remuneration (see below)
Other operating expenses
Total operating expenses
2016
£000's
13
13
2016
£000's
1
1
2015
£000's
54
54
2015
£000's
1
1
2016
£000's
2015
£000's
43
24
115
182
39
24
205
268
Auditor's remuneration
Amounts payable to RSM 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
2016
£000's
2015
£000's
22
2
24
22
2
22
2
24
22
2
19
TANFIELD GROUP PLC FINANCIAL STATEMENTS
4. Taxation
Analysis of and 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 before taxation
Notional taxation charge at UK rate of 20% (2015: 20.25%)
Effects of:
Non (taxable) income/deductable expenses
Deferred tax asset not recognised in the period
Utilisation of tax losses brought forward
Total taxation charge in the income statement
2016
£000's
(249)
(50)
-
50
-
-
2015
£000's
(4,446)
(900)
966
-
(66)
-
No deferred tax asset has been recognised due to the uncertainty of future profitability of the Company.
5. Loss per share
Basic loss per share is calculated by dividing the loss attributable to equity shareholders by the weighted average number of
shares in issue during the period. In calculating the dilution per share, share options outstanding and other potential ordinary
shares have been taken into account where the impact of these is dilutive. As the potential dilutive ordinary shares from
share options reduce the loss per share these shares are omitted from the dilutive loss per share calculation. The average
share price during the year was 12.88p (2015: 19.58p).
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
From operations
Loss 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 for the purposes of diluted earnings per share
Loss per share from operations
Basic (p)
Diluted (p)
6. 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
2016
No.
000’s
153,677
122
153,799
2016
£000's
(249)
-
(249)
2015
No.
000’s
144,823
171
144,994
2015
£000's
(4,446)
-
(4,446)
(0.2)
(0.2)
(3.1)
(3.1)
2016
£000’s
-
36,283
36,283
2015
£000’s
-
36,283
36,283
Smith Electric Vehicles US Corp
At 31 December 2016, the Company held a 5.76% (2015: 5.76%) share of the issued share capital of Smith Electric Vehicles US
Corp, a company registered in the US. In 2015 the Board decided to impair the investment in Smith to nil and they maintain
continue to maintain this position. 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.
20
TANFIELD GROUP PLC FINANCIAL STATEMENTS
6. Non current investments (continued)
Snorkel International Holdings LLC
At 31 December 2016, the Company held a 49% (2015: 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 (2016: £36,283k,
2015: £36,283k). See Strategic Report for impairment considerations.
7. Cash and cash equivalents
Cash and cash equivalents comprise cash and short-term deposits held by the Company. 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
8. Trade and other receivables
Receivable within one year
Amounts due from Snorkel International Holdings LLC
Other debtors and prepayments
2016
£000's
269
2016
£000's
-
61
61
2015
£000's
94
2015
£000's
15
83
98
The directors consider that the carrying amounts of trade and other receivables approximates to their fair value. A provision has
been made against the amounts due from Snorkel International Holdings LLC due to the age and nonpayment of the debt.
9. Trade and other payables
The directors consider that the carrying amounts of trade and other payables approximates to their fair value.
2016
£000's
Payable within one year
Trade payables
Social security and other taxes
Accrued expenses
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
23
37
31
91
48
2016
£000's
-
-
2015
£000's
43
37
30
110
58
2015
£000's
254
254
21
TANFIELD GROUP PLC FINANCIAL STATEMENTS
10. 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 2014
Share options exercised
New share issue 6 November 2015a
At 31 December 2015
Share options exercised
New share issue 22 March 2016b
New share issue 10 October 2016c
At 31 December 2016
a
Number of shares
143,740,739
600,000
6,583,334
150,924,073
30,000
2,758,620
2,610,824
156,323,517
Share capital
£000’s
7,187
30
329
7,546
1
138
131
7,816
Share premium
£000’s
16,455
-
345
16,800
-
254
136
17,190
On 3 November 2015 the Company announced that Directors and the Company Secretary were converting £675k of convertible loan and accrued interest 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.
b
On 16 March 2016 the Company announced that it had conditionally raised gross proceeds of £400k. These funds were raised by way of a placing of 2,758,620 new Ordinary Shares of 5
pence ("Shares") with institutional investors at a price of 14.5 pence per Share which were issued onto the AIM market on 22 March 2016. Costs of £8k attributable to the share issue have
been charged against the Share Premium account.
c
On 5 October 2016 the Company announced that Directors and former Directors of the Company were converting £267k of convertible loan and accrued interest in to equity which resulted
in 2,610,814 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 10 October 2016.
11. Share based payments
IFRS2 requires share based payments to be recognised at fair value. The company measures the fair value of its share based
payments to employees, “share options”, using the Black-Scholes valuation method at the date of grant and recognised in profit
or loss over the vesting period.
All share based payments are equity settled and details of the share option activity during 2016 and 2015 are shown below.
Outstanding at the beginning of the
year
Granted
Exercised
Outstanding at the end of the year
Exercisable
Number of
share options
4,330,000
-
(30,000)
4,300,000
4,300,000
2016
Weighted average
exercise price
(pence)
24
-
(5)
26
26
Number of
share options
4,630,000
300,000
(600,000)
4,330,000
4,330,000
2015
Weighted average
exercise price
(pence)
23
27
(5)
24
24
The outstanding options at 31 December 2016 had a weighted average remaining contractual life of 3.8 years (2015: 4.5 years)
The following table relates to share options outstanding and exercisable at 31 December 2016
Exercise price (pence)
No of share options
No of exercisable options
Option exercise prices
5p
200,000
200,000
27p
4,100,000
4,100,000
Total
4,300,000
4,300,000
Income statement charge
In accordance with IFRS2 the company determined the fair value of its options at ‘grant date’. The company 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 (2015: nil) and a credit directly to equity of £2k (2015: £384k) have been made during
the year in accordance with IFRS2 ‘Share-based payments’.
The company uses the Black-Scholes model to value its share options.
22
TANFIELD GROUP PLC FINANCIAL STATEMENTS
12. 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
2016
£000's
61
269
330
2015
£000's
98
94
192
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.
2016
Trade and other payables
2015
Trade and other payables
Within 1 year
£000's
1 to 5 years
£000's
Over 5 years
£000's
Total
£000's
91
91
110
110
-
-
254
254
-
-
-
-
91
91
364
364
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.
13. 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
23
2016
£000’s
85
-
2015
£000’s
125
16
85 141
TANFIELD GROUP PLC FINANCIAL STATEMENTS
13. Related party transactions (continued)
Transactions with directors
Loans
On 5 October 2016, it was announced that the Directors were converting £267k of loans and accrued interest at 10.25p resulting
in 2,610,814 new ordinary shares of 5p each being issued. As of 31 December 2016 the outstanding loan balances due were nil
(2015: £254k) which has been classified under trade and other payables within the balance sheet.
14. Retirement benefits
The Company operates a defined contribution retirement benefit plan for all qualifying employees. The total cost charged to
income of nil (2015: £16k) represents contributions payable to that scheme by the Company at rates specified in the rules of the
scheme. As at 31 December 2016, contributions of nil (2015: nil) due in respect of the current reporting period had not been
paid over to the scheme.
15. 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
2016
Assets
Available for
Salea
£000’s
-
36,283
-
36,283
Held for
tradinga
Total
£000’s
61
36,283
269
36,613
Total
£000’s
£000’s
-
-
54
54
Loans and
receivables
£000’s
61
-
269
330
Other
financial
liabilities
£000’s
54
54
2015
Assets
Available
for Salea
£000’s
-
36,283
-
36,283
Held for
tradinga
Total
£000’s
98
36,283
94
36,475
Total
£000’s
£000’s
-
-
73
73
Loans and
receivables
£000’s
98
-
94
192
Other
financial
liabilities
£000’s
73
73
a
Assets and liabilities at fair value through profit and loss.
16. Investments
The tables below give brief details of the Company’s investments at 31 December 2016. The Company had no operating
subsidiaries as of 31 December 2016.
Investments
Smith Electric Vehicles US Corp
Snorkel International Holdings LLC
Tanfield Engineering Systems US (Inc)a
Snorkel Europe Ltd a
Snorkel International Inc a
Snorkel Australia Limited a
Snorkel New Zealand Limited a
a
Principal activity
Electric vehicle manufacture
Holding Company
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Group Interest in
allotted capital &
voting rights
5.76%
49.00%
49.00%
49.00%
49.00%
49.00%
49.00%
Country of
incorporation
US
US
US
UK
US
AUS
NZ
The Company’s interest is held indirectly through its investment in Snorkel International Holdings LLC.
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