TANFIELD GROUP PLC FINANCIAL STATEMENTS
TANFIELD GROUP PLC
REPORT AND FINANCIAL
STATEMENTS 2023
Registered in England & Wales
Company number 04061965
TANFIELD GROUP PLC FINANCIAL STATEMENTS
REPORT AND FINANCIAL STATEMENTS 2023
SUMMARY OF CONTENTS
Directors and Advisors
Strategic Report
Directors’ Report
Corporate Governance
Directors’ Remuneration Report
Statement of Directors’ Responsibilities
Report of the Independent Auditor
Statement of Comprehensive Income
Statement of Financial Position
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
9
10
11
14
15
16
17
18
20
22
1
TANFIELD GROUP PLC FINANCIAL STATEMENTS
DIRECTORS AND ADVISORS
Chairman
Non-Executive Director
NOMINATED ADVISOR
WH Ireland
24 Martin Lane
London
London
EC4R 0DR
NOMINATED BROKER
WH Ireland
24 Martin Lane
London
London
EC4R 0DR
DIRECTORS
NON-EXECUTIVE
D Robinson
M Groak
SECRETARY
D Robinson
REGISTERED OFFICE AND ADVISORS
REGISTERED OFFICE
c/o Weightmans LLP
1 St James’ Gate
Newcastle upon Tyne
Tyne and Wear
NE99 1YQ
AUDITOR
RSM UK Audit LLP
Third Floor, Centenary House
69 Wellington Street
Glasgow
G2 6HG
SOLICITOR
Weightmans LLP
1 St James’ Gate
Newcastle upon Tyne
Tyne and Wear
NE99 1YQ
REGISTRAR
Link Group
Central Square
29 Wellington Street
Leeds
LS1 4DL
2
TANFIELD GROUP PLC FINANCIAL STATEMENTS
STRATEGIC REPORT
CHAIRMAN’S STATEMENT
The Company’s main investment, Snorkel International Holdings
LLC ("Snorkel International"), continued to see an increase in sales
impact of Covid-19.
following the decline caused by the
Furthermore, a sizeable improvement to the gross profit margin
has been noted in 2023. The Board continues to closely monitor
performance and is hopeful that 2024 will continue to see an
increase in sales.
Following Tanfield’s 51%
joint venture partner Xtreme
Manufacturing LLC (“Xtreme”), via its subsidiary SKL Holdings LLC
(“SKL”) and Snorkel International, filing a Summons and Complaint
(the “US Proceedings”) against the Company and its subsidiary
HBWP Inc (“HBWP”), the Board remains disappointed that an
amicable resolution has not been possible. The US Proceedings are
therefore ongoing and the Board continues to seek advice and
vigorously defend its position.
As a result of the issues arising from the US Proceedings, it became
necessary for Tanfield to issue and serve a claim against the
Company’s former solicitors acting for the Company at the time of
the Snorkel transaction in 2013 in the English High Court (the “UK
Proceedings”). In October 2022, the Board announced that the UK
Proceedings had been settled on a no-fault basis which saw the
Company receive £6.9m.
The investment in Smith Electric Vehicles Corp. ("Smith") continues
to be held at 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
the controlling interest in Smith in 2009 and the formation of a
joint venture between Tanfield and Xtreme relating to the Snorkel
division in October 2013 (the “Joint Venture”). Tanfield currently
owns 5.76% of Smith and 49% of Snorkel International.
OVERVIEW
Snorkel International
Tanfield continues to retain an investment in Snorkel International
(currently valued at £19.1m, 2022: £19.1m) consisting of a 49%
interest and a preferred interest position, incorporating a Priority
Amount and a Preferred Return (collectively the “Preferred
Interest”), which
it has held since the Joint Venture was
established in October 2013.
Since the injection of working capital following the Joint Venture,
Snorkel achieved increased year on year sales levels however,
during 2020 the impact of the Covid-19 pandemic saw the first
reduction of sales. A summary of sales (unaudited) and the
is
operating profit/(loss) (unaudited), excluding depreciation
shown below:
Year
2022
2021
2020
2019
2018
2017
2016
2015
2014
Sales
$168.8m
$155.0m
$110.8m
$220.8m
$200.5m
$165.8m
$130.5m
$109.9m
$85.3m
Increase/
(decrease)
9%
40%
(50%)
10%
21%
27%
19%
29%
-
Operating profit/
(loss) excluding
depreciation
($12.3m)
($9.1m)
($12.3m)
$0.3m
$2.9m
$1.6m
($2.8m)
($10.6m)
($14.9m)
In the first 9 months of 2023, Snorkel has seen its sales increase by
11% to $145m compared to the same period in 2022 (first 9 months
of 2022: $131m), with an operating profit, excluding depreciation of
$2.38m (first 9 months of 2022: loss of $8.8m). This largely resulted
from the sizeable improvement in gross profit margin to 12.9%, up
from only 4.6% at the end of the first 9 months of 2022.
The Board is not aware of any market factors and have not been made
aware of any specific reason why sales growth and gross profit margin
improvements for the full 2023 year should not be achieved. The
Board is also not aware of any reason why the current trend should
not continue in 2024.
In October 2019, the Board received the US Proceedings, in which
Xtreme, via its subsidiary SKL and Snorkel International, allege that
Tanfield has refused to comply with its contractual obligations by not
agreeing to sign over its interest in Snorkel International for £nil
consideration. It is the Board’s belief that the intent of Tanfield, its
non-conflicted directors at the time and its shareholders, as well as
the contractual terms, require that the Preferred Interest is paid to
the Company before its 49% holding in Snorkel International can be
acquired. Notwithstanding that, in the Board’s opinion, payment of
the Preferred Interest is a clear requirement described in the Circular
that was distributed to shareholders in advance of shareholders
approving the transaction, Xtreme allege that this was not their intent
or understanding of the transaction despite both they, and their
advisers, reviewing and commenting on the Circular prior to its
distribution. They also allege that they do not believe payment of the
Preferred Interest is a requirement of the contractual agreements.
The position of Xtreme, which is the premise of the US Proceedings, is
that while they accept that Tanfield received a 49% interest in Snorkel
International and an adjusted priority amount of $22.5m (adjusted
from the headline $50m value detailed in the Circular, and with
interest accruing) in exchange for contributing the entire Snorkel
division, including all its assets and intellectual property, to the Joint
Venture, and gave Xtreme a 51% controlling interest, they allege that
because Snorkel International, under Xtreme’s control, failed to
achieve a 12 month EBITDA of $25m prior to 30 September 2018, that
Tanfield’s $22.5m adjusted Priority Amount, plus accrued interest,
simply disappeared; allowing Xtreme to acquire Tanfield’s 49%
interest for £nil consideration.
3
TANFIELD GROUP PLC FINANCIAL STATEMENTS
STRATEGIC REPORT (Continued)
In summary, it is alleged by Xtreme that the terms of the
transaction were such that after (a) Tanfield contributed all of the
assets and intellectual property of its Snorkel division to the Joint
Venture, which Snorkel’s own tax returns declare as having a net
fair market value of $45.5m, (b) Tanfield conceded management
control of the Snorkel division to Xtreme, (c) Xtreme ran the
business as it saw fit for approximately 5 years and Snorkel
International failed to achieve an annualized $25m EBITDA, (d)
Tanfield’s value disappears completely and Xtreme can take 100%
ownership of Snorkel
International without paying any
consideration to Tanfield.
As the US Proceedings have been brought against Tanfield, it is
evident that Don Ahern, the owner of Xtreme, wishes to own 100% of
Snorkel International. However, based on statements within the US
Proceedings, it is evident that Don Ahern does not believe he should
have to pay anything in order to acquire Tanfield’s 49% of Snorkel
International. One possible outcome is that Tanfield continues to hold
its 49% interest for the foreseeable future however, the Board does
not believe such a scenario would be in the best interest of
shareholders given the action taken by Don Ahern against the
Company and, should it become necessary, would consider options
that may assist in moving from this position.
The Board vigorously deny that this was the intent of the parties,
or the meaning of the contractual agreements. It would have
made no commercial sense to contribute the considerable value,
trade and assets of the Snorkel division, which both parties agreed
from the outset was fundamentally a viable company, while also
relinquishing control of the division, to then receive no
consideration for the considerable value contributed to the Joint
Venture, because the controlling party failed to achieve the target.
The Board therefore continues to seek advice and vigorously
defend its position.
Despite the allegations, which the Board believe are without merit,
the Board is currently of the opinion that the investment in Snorkel
International will result in a return to shareholders in the future
but would like to draw your attention to the “Valuation of Snorkel
International holding” below and the critical accounting estimates
and key judgments on pages 20 and 21 which further explain the
potential risks.
The US Proceedings have continued to progress during 2023 and a
jury trial is currently expected to commence in early 2025.
Further updates in relation to progress and timing will be provided
as and when appropriate.
Valuation of Snorkel International holding: £19.1
million (2022: £19.1 million)
On 30 September 2018 the fixed terms of the agreement came to
an end. In summary, if the trailing 12 month EBITDA had reached
$25m by 30 September 2018, this would have triggered payment
of the Preferred Interest, valued at £19.1m, which once paid,
would have allowed the Company to exercise its put option,
compelling the purchase / sale of Tanfield's remaining holding in
Snorkel International. As a $25m trailing 12 month EBITDA was not
reached by the deadline, the put option expired. Tanfield retains a
49% interest in Snorkel International and, in the Board’s opinion,
the Preferred Interest, but it can no longer compel Xtreme to pay
the Preferred Interest and acquire its 49% interest. The Board
therefore remains of the opinion that the Preferred Interest is the
minimum payment required under the terms of the contractual
agreements for Xtreme to acquire Tanfield’s interest and that this
is therefore an appropriate basis for determining the value the
investment is to be carried at.
Due to the risks involved with the ongoing different opinions
regarding the contractual agreements, it is possible the actual
realisation of value could be less, or more, than the current valuation.
A number of factors could influence the valuation of Snorkel
International between now and a potential realisation date, including
the outcome of all relevant legal proceedings, Xtreme’s negotiating
stance and the exchange rate at the time of any realisation.
Due to these inherent uncertainties, the Board is unable to determine
whether the actual outcome will be less than the current valuation of
£19.1m, which it believes is underpinned by the value of the Preferred
Interest, so feel the valuation of £19.1m should be maintained. This
valuation has been assessed against various criteria, including
exchange rate fluctuations. The Board would like to draw the reader’s
attention to the critical accounting estimates and key judgments on
pages 20 and 21 which further explain the uncertainty.
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.
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 understand that Smith has not been trading in recent years
and as Smith are unable to provide any certainty on its future, the
Board maintains its opinion that the investment value should be held
at £nil.
Strategy of Tanfield Board of Directors in relation to its
Investments
The Board believes its investment in Snorkel International will result
in a return of value to shareholders but cannot predict the timeframe
for such a return. With regard to Smith, due to the ongoing
uncertainty, the Board is unable to say, at this time, whether it will
result in a return of value to shareholders. The Directors will update
shareholders should this view change.
4
TANFIELD GROUP PLC FINANCIAL STATEMENTS
STRATEGIC REPORT (Continued)
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 will continue to fulfil 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 as Tanfield does not hold Board seats in either
Snorkel International or Smith. There is no limit on the amount of
time the existing investments may be held by the Company.
Finance expense and income
Interest and borrowing costs of £nil was incurred in the period
(2022: £565k) and interest income of £123k (2022: £16k) was
received on bank balances.
Profit/loss from operations
The loss from operations was £454k (2022: profit £5,495k). The
main difference being the £6.9m no-fault settlement received, net
of associated legal costs, in 2022 which related to the UK
Proceedings.
Profit/loss per share
Loss per share from continuing operations was 0.20 pence (2022:
profit 3.04 pence). No dividend has been declared (2022: £nil).
Cash
At 31 December 2023, the Company had cash of £3.5m (2022:
£3.8m) and approximately £3.4m as at the date of this report.
Risks and uncertainties
There is no guarantee if and when a realisation of value from one
of the investments will happen, or of the costs associated in
securing a realisation, and the Board will closely monitor progress.
It recognises that its investments have a level of risk associated
with them and
is somewhat reliant on their continued
performance within their markets. However, the Board believes
that the Company has sufficient cash reserves to fully defend its
position in the US Proceedings.
Section 172: Companies Act Statement
The Board takes seriously its duties towards a wide range of
stakeholders and acts in a way to ensure that its decision making
promotes the success of the Company for the benefit of these
stakeholders in accordance with Section 172. The Board’s ability to
do this is as a result of the Company status – as an investment
Company it has no employees or customers and its activities have
no impact on the wider community and environment. The
statements below provide further information as to how the
directors have had regard to the relevant matters.
The likely consequences of decisions in the long term. As discussed
earlier in this report, the sole aim of the Board is to maximise the
return to shareholders through its investment holdings. This is of
necessity a short-term focus, and the financial outcome will
determine the future position and strategy of the Company.
The need to foster the Company’s business relationships with suppliers
and the desirability of the Company to maintain a reputation for high
standards of business conduct. Engagement with suppliers is a key
part of the business as the Board looks to bring a resolution to its
investment position. Therefore, we are selective in the suppliers we
choose to work with, demonstrating the Board’s commitment to
maintaining high standards of business conduct and professionalism.
The Annual General Meeting is the principal forum for shareholders,
and we encourage all shareholders to attend and participate. The
notice of the meeting is sent at least 21 days before the meeting. The
Chairman of the Board and other directors, where possible, are
present and are available to answer questions raised by shareholders.
The Board ensure regular communications are made to all
shareholders via periodic RNS announcements.
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
Chairman
24 April 2024
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 2023. 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.
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.
INVESTING POLICY
The holdings in Snorkel International Holdings LLC and Smith
Electric Vehicles Corp. are passive investments. It is the intention
that where distributions or realisations of such holdings are made
(or there is a receipt of marketable securities) that these are
distributed to shareholders, subject to compliance with any legal
requirements associated with such distributions. There is presently
no anticipated limit on the amount of time the holdings are to be
held by the Company. The Company does not have and will not
make any cross holdings and does not have a policy on gearing.
RESULTS AND DIVIDENDS
The financial result for the year to 31 December 2023 reflects the
principal activity of the company being that of an investment
company.
Turnover for the year was £nil (2022: £nil). The loss from
operations in the year of £454k (2022: profit £5,495k) arose from
operating costs.
The statement of financial position shows total assets at the end
of the year of £22.6m (2022: £23.0m). Net Current Assets were
£3.5m (2022: £3.8m) with cash balances of £3.5m (2022: £3.8m).
The directors believe that the Company has sufficient cash to allow
it to continue for a period of more than 12 months from the date
of this report.
No dividend has been paid or proposed for the year (2022: £nil).
The loss of £331k (2022: profit £4,946k) has been transferred to
reserves.
FINANCIAL INSTRUMENTS
The Company’s financial instruments comprise cash, non-current
investments, current receivables and current payables arising from
its operations. The principal financial instruments used by the
Company during the year are cash balances. 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.
DIRECTORS
The present membership of the Board is set out on page 2.
The directors’ do not currently have a right to acquire shares in the
company via the exercise of options as all past options have either
been exercised or lapsed. Details of the directors’ remuneration
and incentives are set out in the Directors’ Remuneration Report
on page 9.
Trade creditor days based on trade payables at 31 December 2023
were 12 days (2022: 3 days).
SUBSTANTIAL SHAREHOLDINGS
On 31 December 2023 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)
56,050,684
34.4%
CHASE NOMINEES LIMITED
28,938,171
17.8%
AURORA NOMINEES LIMITED
19,445,744
11.9%
INTERACTIVE BROKERS LLC
THE BANK OF NEW YORK (NOMINEES)
SECURITIES SERVICES NOMINEES
LYNCHWOOD NOMINEES LIMITED
HARGREAVES LANSDOWN (NOMINEES)
10,928,964
10,854,975
7,526,785
4,983,595
4,890,246
6.7%
6.7%
4.6%
3.1%
3.0%
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.
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 has confirmed that they have taken all the steps that
they ought to have taken as directors in order to make themselves
aware of any relevant audit information and to establish that it has
been communicated to the auditor.
DIRECTORS INDEMNITY
Every Director shall be indemnified by the Company out of its own
funds.
Approved by the Board of Directors and signed on behalf of the Board
Daryn Robinson
Chairman
24 April 2024
6
TANFIELD GROUP PLC FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
All members of the board believe strongly in the value and
in our
importance of good corporate governance and
accountability
including
to all of Tanfield’s stakeholders,
shareholders and suppliers.
The corporate governance framework which the company
operates, including board leadership and effectiveness, board
remuneration, and internal control is based upon practices which
the board believes are proportional to the size, risks, complexity
and operations of the business and is reflective of the company’s
values. Of the two widely recognised formal codes, we have
adopted the Quoted Companies Alliance’s (QCA) Corporate
Governance Code for small and mid-size quoted companies
(revised in April 2018 to meet the new requirements of AIM Rule
26).
The QCA Code is constructed around ten broad principles and a set
of disclosures. The QCA has stated what it considers to be
appropriate arrangements and asks companies to provide an
explanation about how they are meeting the principles through
the prescribed disclosures. We have considered how we apply
each principle to the extent that the board judges these to be
appropriate in the circumstances.
Principle 1
Business Model and Strategy
Tanfield Group is a passive investment Company with investments
in Snorkel International and Smith, as described in the Investing
Policy on page 6. As a passive investment Company, we do not
have operational control or input into these investments. It is the
intention that where distributions or realisations are made that
these are distributed to shareholders, subject to compliance with
any legal requirements associated with such distributions.
Principle 2
Understanding Shareholder Needs and Expectations
The Board is committed to maintaining good communication with
its shareholders and the Company endeavours to keep
shareholders informed via its public announcements. The Board
believes that it has successfully engaged with shareholders to date,
keeping them abreast of the Company's strategy and progress.
Principle 3
Stakeholder and Social Responsibilities
As a passive investment Company, the Board recognises that its
stakeholders are limited to external stakeholders (which includes
its investments), with the exception of the Directors, and are
therefore not as extensive as many operational businesses. The
Company maintains a dialogue with its external stakeholders as
appropriate and as the need arises. Whilst we are a passive
investment Company, we still consider it important that our
behaviour is socially responsible and we will endeavour to be
accountable for our actions, be transparent about our activities,
operate in an ethical, professional and responsible manner, be
mindful of our stakeholder interests, respect the rule of law and
respect human rights in whatever we do.
Principle 4
Risk Management
The Board is mindful of and monitors its corporate risks. The main
risks the business faces are that the investments may not achieve their
operational goals, resulting in no realisation event and the potential
for disputes with the controlling shareholders as to the terms of a
realisation event should one occur. As a passive investment company,
the Board is not able to influence the decision making or strategy of
the investment companies and so its ability to mitigate some risks Is
limited.
Principle 5
Board Structure
The Company operates as a passive investment company and has put
in place a board structure that can best provide the strategic advice,
leadership and continuity required. The board structure consists of
two non-executive directors, Daryn Robinson and Martin Groak, both
sitting on the PLC Board. During the year there were four board
meetings, all fully attended, that took place.
Principle 6
Board Composition, Experience and Dynamics
The Board considers the Board composition in terms of skills,
experience and balance. Its committees seek external expertise and
advice where required. With only two Board members, due to the
limited activities of the Company, Board cohesion is paramount and
this is regularly reviewed. The Board members have held roles and
directorships in other publicly listed companies where they have
gained a wealth of financial and public market experience which
collectively has provided them with the balance of skills and expertise
to deliver the business strategy.
Principle 7
Board Evaluation
The Board considers evaluation of its committees and individual
directors to be an integral part of corporate governance to ensure it
has the necessary skills, experience and abilities to fulfil
its
responsibilities. To ensure the skills and knowledge of the Board are
kept up to date, it works with its Nominated Advisor & Broker, Auditor
and Solicitor to ensure that any relevant new or amended accounting
standards and interpretations, AIM rules or Companies Act legislation
are fully understood and implemented.
Principle 8
Corporate Culture
The Board recognises that a corporate culture based on sound ethical
values and behaviours is an asset. In accordance with the Company’s
stated social responsibilities it endeavours to conduct its business in
an ethical, professional and responsible manner. As the Company has
no control over operational matters relating to its investments, it is
unable to influence the values and behaviours directly but it supports
a culture of dealings with both shareholders and investee companies
with integrity and respect.
7
TANFIELD GROUP PLC FINANCIAL STATEMENTS
CORPORATE GOVERNANCE (continued)
Principle 9
Governance Structure
The PLC Board, which as a passive investment Company consists of
two non-executive directors, have the responsibility of monitoring
the Company investments to ensure that, where distributions or
realisations are made, these can be distributed to shareholders,
subject to compliance and any legal requirements associated with
such distributions. Due to the nature of the business, executive
directors and an operational Board are not deemed necessary and
therefore the non-executive directors are deemed not to be
independent.
Principle 10
Stakeholder Communication
The Board is committed to maintaining good communication and
having constructive dialogue with all of its stakeholders, including
shareholders, providing them with access to information to enable
them to come to informed decisions about the Company. The
Company’s website provides all required regulatory information as
well as additional information shareholders may find helpful.
An explanation of the approach taken in relation to each of the
QCA Code principles can also be found on the Company’s website
www.tanfieldgroup.com/about#governance.
The board considers that it does not depart from any of the
principles of the QCA Code.
Going Concern
The directors are satisfied that the Company has sufficient cash
to continue for a period of 12 months from the date of this
report. For this reason, they continue to adopt the going concern
basis in preparing the financial statements.
Daryn Robinson
Chairman
24 April 2024
8
TANFIELD GROUP PLC FINANCIAL STATEMENTS
DIRECTORS’ REMUNERATION REPORT
Remuneration committee
The company has established a Remuneration Committee which is
constituted in accordance with the recommendations of the QCA
Code. The members of the committee during the year were D
Robinson and M Groak and the committee was chaired by D
Robinson.
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.
•
•
•
Share options
The directors had options granted to them under the terms of the
Share Option Scheme which, as at the date of this report, have
expired. No new share options have been granted as at the date of
this report.
Pension arrangements
One director was a member 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 2023 and 31 December
2022 are shown below:
Number of shares
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.
D Robinson
M Groak
Total
2023
942,785
40,000
982,785
2022
942,785
40,000
982,785
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.
Remuneration review
Directors emoluments for the financial year were as follows:
The directors, as a group, beneficially own 0.6% of the company’s
shares.
As at the date of this report, no director has any remaining 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.
M Groak
D Robinson
Total
Salary
£000's
30
145
175
Bonus
£000's
-
-
-
Total
2023
£000's
30
145
175
Total
2022
£000's
35
195
230
Pension
2023
£000’s
-
13
13
Pension
2022
£000's
-
3
3
The directors held no share options at 31 December 2023 (2022: nil).
Approval
This report was approved by the board of directors and authorised for issue on 24 April 2024 and signed on its behalf by:
Daryn Robinson
Chairman
9
TANFIELD GROUP PLC FINANCIAL STATEMENTS
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the company’s transactions and
disclose with reasonable accuracy at any time the financial position of
the company and enable them to ensure that the financial statements
comply with the 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.
The directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Tanfield Group Plc
website.
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other
jurisdictions.
The directors are responsible for preparing the Strategic Report,
the Directors’ Report and the
in
accordance with applicable law and regulations.
financial statements
Company law requires the directors to prepare financial
statements for each financial year. Under that law and the AIM
Rules of the London Stock Exchange the directors have elected
to prepare the financial statements of the company
in
accordance with applicable law and UK-adopted International
Accounting Standards.
The financial statements are required by law and UK-adopted
International Accounting Standards 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 UK-adopted International Accounting Standards;
prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
company will continue in business.
10
TANFIELD GROUP PLC FINANCIAL STATEMENTS
REPORT OF THE INDEPENDENT AUDITOR
Independent auditor's report to the members of Tanfield Group Plc
Opinion
We have audited the financial statements of Tanfield Group (the
‘company’) for the year ended 31/12/2023 which comprise the
statement of comprehensive income, statement of financial
position, statement of changes in equity attributable to equity
shareholders, cash flow statement and notes to the financial
including significant accounting policies. The
statements,
financial reporting framework that has been applied in their
preparation is applicable law and United Kingdom Accounting
Standards.
Carrying value of non-current investment
Key audit matter description
Included in the Statement of Financial Position are non-current asset
investments with a carrying value of £19.1m (2022: £19.1m). This
represents the Company’s 49% holding in Snorkel International Holdings
LLC (‘Snorkel’). Note 6 and the Accounting Policies of the financial
statements describe the judgements made by the Board with regards to
the need for an impairment to be recognised in respect of each of the
investments and, in particular, the significant uncertainty concerning the
£19.1m carrying value of the investment in Snorkel.
In our opinion the financial statements:
•
give a true and fair view of the state of the company’s
affairs as at 31 December 2023 and of its loss for the year
then ended;
have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements
of the Companies Act 2006.
•
•
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in
the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the
company in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK,
including the FRC’s Ethical Standard as applied to listed entities
and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Summary of our audit approach
•
Key audit matters - Carrying value of non-current
investments
• Materiality
- Overall materiality: £468,000
(2022:
£466,000), Performance materiality: £351,000 (2022:
£349,000)
Scope - Our audit procedures covered 100% of total assets
and 100% of profit before tax.
•
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most
significant assessed risks of material misstatement (whether or
not due to fraud) we identified, including those which had the
greatest effect on the overall audit strategy, the allocation of
resources
in the audit and directing the efforts of the
engagement team. These matters were addressed in the
context of our audit of the financial statements as a whole, and
in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
The investment in Snorkel represents the sole significant non-cash asset
held within the Statement of Financial Position of the company. As
described on pages 20 and 21 there are significant uncertainties over the
timing of any realisation, and the amount that might ultimately be
realised on this investment, that could have a material effect on the
recoverable amount. The realisation of this investment for either more
or less than it’s carrying value could have a material impact on the
financial statements.
The Board has limited financial and non-financial information upon
which to calculate/base its estimate of the realisation value and timing
thereof. The Critical Accounting Estimates and Key Judgements
disclosures on pages 20 and 21 set out the basis of the Directors
consideration of the fair value of the investment, based on its expected
recoverable amount, and the assumptions made therein. The
assessments and conclusion of the directors are based on the
Investment Circular setting out the Proposed Transaction issued to
Shareholders in September 2013, the legal advice obtained at the time
and subsequent to that date along with the information received in
respect of the financial performance and position of Snorkel. The
assessment made by the Directors as to the sums falling due under the
Investment Circular differs to the assessment made by Xtreme, which
has led to legal proceedings by Xtreme against the company to obtain
control of the remaining 49% of Snorkel. The directors have concluded
that the most appropriate basis for determining the carrying amount
continues to be the amount represented by the Preferred Interest
element, which was established at the time of the Transaction, and was
the value the investment in Snorkel was impaired to following the expiry
of the put option in 2018.
As explained in the Critical Accounting Estimates and Key Judgements
section on pages 20 and 21, the timing of realisation and the sum to be
realised are dependent on definitive clarification as to the legal position
of the call option still held by Xtreme. The eventual amount realised is
also dependent on the applicable rate of exchange at the time that any
US$ proceeds are converted into GBP. As a result, there remains
significant doubt over the timing and value at which this asset will be
realised.
How the matter was addressed in the audit
Our audit work has considered the nature of the financial and other
information held by management described above, the assumptions
used by management to assess the estimated timing and realisable value
of the investment, and such other audit evidence as was available, to
form a view on the reasonableness of these assumptions, estimates and
calculations.
11
TANFIELD GROUP PLC FINANCIAL STATEMENTS
REPORT OF THE INDEPENDENT AUDITOR (CONTINUED)
In carrying out our audit work we have considered and
challenged the range of outcomes considered by the directors,
the conclusion the directors have reached about the reliability
of any alternative valuation and the disclosures made,
specifically
in the Critical Accounting Estimates and Key
Judgements disclosures and in Note 6. We also circularised the
Company’s legal advisors in both the UK and United States.
Our application of materiality
When establishing our overall audit strategy, we set certain
thresholds which help us to determine the nature, timing and
extent of our audit procedures. When evaluating whether the
effects of misstatements, both individually and on the financial
statements as a whole, could reasonably
influence the
economic decisions of the users we take into account the
qualitative nature and the size of the misstatements. Based on
our professional judgement, we determined materiality as
follows:
• Overall materiality - £468,000 (2022: £466,000).
•
Basis for determining overall materiality – 2.0% of total
assets.
Rationale for benchmark applied - Consistent with the
prior year, the company’s principal activity continues to be
that of an investment company. As such, we deemed total
assets to be the key benchmark for users of the financial
statements.
Performance materiality - £351,000 (2022: £349,000).
Basis for determining performance materiality - 75% of
overall materiality.
•
•
•
• Materiality levels for those classes of transaction where
materiality levels are lower than overall materiality - The
statement of comprehensive income was tested to the
lower Performance Materiality figure of £12,700 (2022:
£185,000) to ensure adequate coverage of these values.
This has been calculated as 3.9% (2022: 3.7%) of profit
before tax.
Reporting of misstatements to the Audit Committee -
Misstatements in excess of £5,000 (2022: £5,000) and
misstatements below that threshold that, in our view,
warranted reporting on qualitative grounds.
•
An overview of the scope of our audit
The company has been subject to a full scope audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the directors’ assessment of the company’s ability
to continue to adopt the going concern basis of accounting
included:
•
checking the integrity and accuracy of the cashflow
forecasts prepared by management;
reasonableness of assumptions and
assessing
explanations provided by management to supporting
information, where available;
reviewing the forecast funding requirements and assessing
the directors’ opinion of the entity’s ability to obtain future
funding; and
•
•
the
•
auditing the accuracy and consistency of disclosures made in the
financial statements in respect of principal risks and going concern.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the company’s ability to
continue as a going concern for a period of at least twelve months from
when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect
to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual
report, other than the financial statements and our auditor’s report
thereon. The directors are responsible for the other information
contained within the annual report. Our opinion on the financial
statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any
form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the course of the
audit or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material misstatement
in the financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
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
the Strategic Report and the Directors’ Report have been prepared
in accordance with applicable legal requirements.
•
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
material misstatements in the Strategic Report or the Directors’ Report.
We have nothing to report in respect of the following matters in relation
to which 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.
12
TANFIELD GROUP PLC FINANCIAL STATEMENTS
REPORT OF THE INDEPENDENT AUDITOR (CONTINUED)
Responsibilities of directors
As explained more fully
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, and for such internal
control as the directors determine is necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the company’s ability to continue as a
going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the company or
to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on
the basis of these financial statements.
The extent to which the audit was considered capable of
detecting irregularities, including fraud
Irregularities are instances of non-compliance with laws and
regulations. The objectives of our audit are to obtain sufficient
appropriate audit evidence regarding compliance with laws and
regulations that have a direct effect on the determination of
material amounts and disclosures in the financial statements, to
perform audit procedures to help identify instances of non-
compliance with other laws and regulations that may have a
material effect on the financial statements, and to respond
appropriately to identified or suspected non-compliance with
laws and regulations identified during the audit.
In relation to fraud, the objectives of our audit are to identify
and assess the risk of material misstatement of the financial
statements due to fraud, to obtain sufficient appropriate audit
evidence regarding the assessed risks of material misstatement
due to fraud through designing and implementing appropriate
responses and to respond appropriately to fraud or suspected
fraud identified during the audit.
However, it is the primary responsibility of management, with
the oversight of those charged with governance, to ensure that
the entity's operations are conducted in accordance with the
provisions of laws and regulations and for the prevention and
detection of fraud.
In identifying and assessing risks of material misstatement in respect of
irregularities, including fraud, the audit engagement team:
•
obtained an understanding of the nature of the industry and sector,
including the legal and regulatory framework that the company
operates in and how the company is complying with the legal and
regulatory framework;
inquired of management, and those charged with governance,
about their own identification and assessment of the risks of
irregularities, including any known actual, suspected or alleged
instances of fraud;
discussed matters about non-compliance with laws and regulations
and how fraud might occur including assessment of how and where
the financial statements may be susceptible to fraud.
•
•
The most significant laws and regulations were determined as: UK-
adopted IAS; Companies Act 2006 and AIM listing rules. Additional audit
procedures performed by the audit engagement team included:
•
Review of the financial statement disclosures and testing these to
supporting documentation; and
Completion of disclosure checklists to identify areas of non-
compliance.
•
The area that we
identified as being susceptible to material
misstatement due to fraud were: the risk of management override of
controls. The audit procedures performed by the audit engagement
team included:
•
Testing the appropriateness of
adjustments;
Assessing whether the judgements made in making accounting
estimates are indicative of a potential bias; and
Evaluating the business rationale of any significant transactions that
are unusual or outside the normal course of business.
journal entries and other
•
•
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council’s website at:
http://www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
Use of our report
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.
ALAN AITCHISON (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
Third Floor, 69 Wellington Street, Glasgow, G2 6HG
24 April 2024
13
TANFIELD GROUP PLC FINANCIAL STATEMENTS
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
Revenue
Staff costs
Other operating income
Other operating expenses
(Loss)/profit from operations
Finance expense
Finance income
(Loss)/profit before tax
Taxation
(Loss)/profit & total comprehensive income for the year attributable
to equity shareholders
(Loss)/profit per share
(Loss)/profit per share
Basic and diluted (p)
Notes
1
3
2
2
4
2023
£000's
-
(190)
23
(287)
(454)
-
123
(331)
-
(331)
2022
£000's
-
(242)
6,900
(1,163)
5,495
(565)
16
4,946
-
4,946
5
0.20
3.04
14
TANFIELD GROUP PLC FINANCIAL STATEMENTS
STATEMENT OF FINANCIAL POSITION (Company registration number 04061965)
AS AT 31 DECEMBER 2023
Non-current assets
Non-current Investments
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Total liabilities
Equity
Share capital
Share premium
Special reserve
Merger reserve
Retained earnings
Total equity attributable to equity shareholders
Notes
6
8
7
9
10
10
2023
£000's
19,100
19,100
58
3,473
3,531
2022
£000's
19,100
19,100
30
3,824
3,854
22,631
22,954
72
72
72
8,145
17,336
66,837
1,534
(71,293)
22,559
64
64
64
8,145
17,336
66,837
1,534
(70,962)
22,890
Total equity and liabilities
22,631
22,954
The financial statements on pages 14 to 26 were approved by the board of directors and authorised for issue on 24 April 2024 and
are signed on its behalf by:
Daryn Robinson
Chairman
15
TANFIELD GROUP PLC FINANCIAL STATEMENTS
STATEMENT OF CHANGES IN EQUITY ATTRIBUTABLE TO EQUITY
SHAREHOLDERS
FOR THE YEAR ENDED 31 DECEMBER 2023
At 1 January 2022
Comprehensive income
Profit for the year
Total comprehensive income for
the year
At 31 December 2022
Comprehensive income
Loss for the year
Total comprehensive income for
the year
At 31 December 2023
Share
capital
£000's
8,145
Share
premiuma
£000's
17,336
Merger
reserveb
£000's
1,534
Special
reservec
£000's
66,837
Retained
earningsd
£000's
(75,908)
Total
£000's
17,944
-
-
-
-
4,946
4,946
-
8,145
-
17,336
-
1,534
-
66,837
4,946
(70,962)
4,946
22,890
-
-
-
-
(331)
(331)
-
8,145
-
17,336
-
1,534
-
66,837
(331)
(71,293)
(331)
22,559
a The share premium account represents amounts subscribed for share capital in excess of nominal value, net of directly attributable share issue costs.
b The merger reserve has arisen on the legal acquisition of subsidiary companies.
c The special reserve relates to a previous reclassification of the share premium account.
d The retained earnings represents the accumulated retained profits and losses less dividend payments.
16
TANFIELD GROUP PLC FINANCIAL STATEMENTS
CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(Loss)/profit before tax
Adjustment for:
Finance expense
Finance income
Changes in operating assets and liabilities / working capital:
Increase in receivables
Increase/(decrease) in payables
Cash (used in)/generated by operations
Interest paid
Net cash (used in)/generated by operating activities
Cash flow from Investing Activities
Interest received
Net cash from investing activities
Cash flow from financing activities
Proceeds from borrowings
Repayment of borrowings
Net cash used in financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the start of year
Cash and cash equivalents at the end of the year
2023
£000's
(331)
-
(123)
(28)
8
(474)
-
(474)
123
123
-
-
-
(351)
3,824
3,473
2022
£000's
4,946
565
(16)
(7)
(8)
5,480
(810)
4,670
16
16
1,375
(2,825)
(1,450)
3,236
588
3,824
17
TANFIELD GROUP PLC FINANCIAL STATEMENTS
ACCOUNTING POLICIES
(i) Basis of preparation of the financial statements
Tanfield Group Plc is a public company incorporated in England and
quoted on AIM. These financial statements have been prepared on
the going concern basis in accordance with applicable law and UK-
adopted
financial
International Accounting Standards. The
statements have been prepared under the historical cost
convention, except for the revaluation of certain financial assets
and liabilities measured at fair value.
The financial statements present the company accounts only and
have not been consolidated as the company is deemed to be an
investment entity under IFRS 10. The financial statements are
prepared in sterling, which is the functional currency of the
company. Monetary amounts in these financial statements are
rounded to the nearest thousand.
The preparation of the financial statements 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 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 2023 the Company had cash balances of £3.5m (2022:
£3.8m) and approximately £3.4m as at the date of this report.
The Board believes that it has sufficient cash funds to continue for
more than 12 months from the date of this report. While there is
no guarantee if and when a realisation of value from one of the
investments will happen, the Board believes it has sufficient cash
funds to see the US Proceedings reach a conclusion at some point
in the future. Having taken the uncertainties into account the
Board believes it is appropriate to prepare the financial statements
on the going concern basis.
(iii) Foreign currencies
Transactions in currencies other than sterling, the functional
currency of the company, are recorded at the rates of exchange
prevailing on the dates of the transactions. At each statement of
financial position date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing on the statement of financial position 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
retained earnings.
(iv) Retirement benefit cost
The company operates a defined contribution pension scheme
and pays contributions to an externally administered pension
plan. The company has no further payment obligations once the
contributions have been paid. The contributions are recognised
as an employee benefit expense in the period in which they fall
due.
(v) Financial instruments
Recognition of financial assets and financial liabilities
Financial assets and financial liabilities are recognised on the
Company’s statement of financial position when the Company
has become a party to the contractual provisions of the
instrument.
Financial assets
Investments
Investments in equity instruments are included at fair value
with fair value gains and losses recognised in profit or loss.
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 amortised cost 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.
An impairment loss is recognised for the expected credit losses
on receivables when there is an increased probability that the
counterparty will be unable to settle an
instrument’s
contractual cash flows on the contractual due dates, a
reduction in the amounts expected to be recovered, or both.
Impairment losses and any subsequent reversals of impairment
losses are adjusted against the carrying amount of the
receivable and are recognised in profit or loss.
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.
18
TANFIELD GROUP PLC FINANCIAL STATEMENTS
ACCOUNTING POLICIES (continued)
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 amortised cost.
(vi) Segmental reporting
In accordance with IFRS 8 operating segments are determined 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.
Amendments to IFRS 16 Leases: Lease Liability in a Sale and
Leaseback (issued 22 September 2022). Adds subsequent
measurement requirements for sale and leaseback transactions
that satisfy the requirements in IFRS 15 to be accounted for as
a sale, so the seller-lessee does not recognise any gain or loss
that relates to the right of use it retains but is not prevented
from recognising in profit or loss any gain or loss relating to the
partial or full termination of a lease.
The Directors anticipate that the adoption of these Standards
and Interpretations in future periods will have no material
impact on the financial statements of the Company.
Accounting
amendments to published accounts
standards,
interpretations
and
During the year ended 31 December 2023, 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.
New and amended standards and interpretations
effective from 1 January 2024 not yet adopted by the
Company.
Instruments:
Amendments to IAS 7 Statement of Cash Flows and IFRS 7
Financial
Finance
Arrangements. The amendments add disclosures requirements to
enhance the transparency of supplier finance arrangements and
their effects on a company’s liabilities, cash flows and exposure to
liquidity risk.
Disclosures,
Supplier
Amendments to IAS 1 Presentation of Financial Statements:
Classification of Liabilities as Current or Non-Current (issued on 23
January 2020), including Deferral of Effective Date Amendment
(issued on 15 July 2020). Clarifies existing requirements on the
classification of debt and other liabilities as current or non-current
for debt and other liabilities with an uncertain settlement date and
for debt a company might settle by converting it into equity.
Classification is based on the right, at the end of the reporting
period, to defer settlement of the liability for at least twelve months
and is unaffected by the likelihood that the entity will exercise its
right.
Non-current Liabilities with Covenants (issued on 31 October
2022). Specifies that covenants to be complied with after the
reporting date do not affect the classification of debt as current or
non-current at the reporting date. Requires disclosures about these
covenants to enable users to understand the risk that liabilities
could become repayable within twelve months after the reporting
period.
19
TANFIELD GROUP PLC FINANCIAL STATEMENTS
CRITICAL ACCOUNTING ESTIMATES AND KEY JUDGEMENTS
In the first 9 months of 2023, Snorkel has seen its sales increase
by 11% to $145m compared to the same period in 2022 (first 9
months of 2022: $131m), with an operating profit, excluding
depreciation of $2.38m (first 9 months of 2022: loss of $8.8m).
This largely resulted from the sizeable improvement in gross
profit margin to 12.9%, up from only 4.6% at the end of the first
9 months of 2022.
The Board is not aware of any market factors and have not been
made aware of any specific reason why sales growth for the full
2023 year should not be achieved. The Board is also not aware
of any reason why the sales growth should not continue in
2024.
Under the terms of the Joint Venture, the level of financial
information available to the Board to assess the fair value of the
investment in Snorkel International is limited to quarterly
historical financial information, incorporating a consolidated
operating statement, balance sheet and cashflow.
In 2018, the Board impaired Tanfield’s investment value in
Snorkel International down to £19.1m, from the previous
valuation of £36.3m. The valuation of £19.1m is based on the
value of the Preferred Interest which is made up of the priority
amount, set in 2013 based upon the assets of the Snorkel
division contributed to the Joint Venture, plus the preferred
return, being interest accruing on the priority amount. This is
the basis of valuation that was set out in the Circular issued to
Shareholders at the time of the Joint Venture. The Board have
not included the effect of discounting for the timing of a future
realisation as they do not believe this materially impacts on the
valuation.
The previous valuation of £36.3m was originally calculated in
2013 and assumed the $25m EBITDA trigger, compelling the
payment of the Preferred Interest and the purchase of
Tanfield's interest in Snorkel International by Xtreme, would be
reached within the predefined period ending 30 September
2018. As Snorkel International, under Xtreme’s control, failed
to achieve the EBITDA trigger, Tanfield retains a 49% interest in
Snorkel International and the Preferred Interest, but it can no
longer compel Xtreme to pay the Preferred Interest and acquire
its 49% interest.
In November 2018, the Board received a call option notice in
which Xtreme, via its subsidiary SKL, requested to exercise a call
option to acquire Tanfield's interest in Snorkel International. In
the request, SKL stated that the option price to acquire
Tanfield’s holding was $0 (nil) and that payment of the
Preferred Interest was not required.
The preparation of financial statements in conformity with UK-
adopted IAS 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
Smith
The status of the Company’s holding in Smith Electric Vehicles US
Corp was reviewed during the year. The Board previously advised
that the company had ceased operations and did not feel that Smith
had made sufficient progress towards achieving its plan of
obtaining a public listing to maintain the previous valuation and had
therefore decided to impair the investment in Smith to £nil.
Subsequently, no progress has since been made that gives rise to
an expectation of a realisation in value. As such, the Board is
maintaining its view that the investment currently has £nil value.
Nevertheless, the Board acknowledges that there is a chance the
investment could 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.
Snorkel International
The status of the Company’s holding in Snorkel International
Holdings LLC was reviewed during the year. The Board has
concluded that, while Tanfield continues to retain an investment in
Snorkel International (currently carried at £19.1m), consisting of a
49% interest and the Preferred Interest, under the terms of the
Joint Venture, they are unable to exercise significant influence over
the activities and strategic direction of Snorkel International and
therefore holding the investment as a trade investment, as
opposed to applying equity accounting, continues to be the correct
treatment.
Since the injection of working capital following the Joint Venture,
Snorkel achieved increased year on year sales levels however,
during 2020 the impact of the Covid-19 pandemic saw the first
reduction of sales. A summary of sales (unaudited) and the
operating profit/(loss) (unaudited), excluding depreciation is shown
below:
Year
Sales
2022
2021
2020
2019
2018
2017
2016
2015
2014
$168.8m
$155.0m
$110.8m
$220.8m
$200.5m
$165.8m
$130.5m
$109.9m
$85.3m
Increase/
(decrease)
9%
40%
(50%)
10%
21%
27%
19%
29%
-
Operating profit/
(loss) excluding
depreciation
($12.3m)
($9.1m)
($12.3m)
$0.3m
$2.9m
$1.6m
($2.8m)
($10.6m)
($14.9m)
20
TANFIELD GROUP PLC FINANCIAL STATEMENTS
CRITICAL ACCOUNTING ESTIMATES AND KEY JUDGEMENTS (continued)
If the assumption is made that both the progress within Snorkel
International and the wider global market conditions will
continue to improve, then the Board note that the valuation
is
could potentially
underpinned by the Preferred Interest element. However, the
Board has considered various Snorkel International trading
scenarios, based around historic sales growth trends and does
not believe the valuation is likely to materially increase from
£19.1m in the near future.
increase beyond the £19.1m which
The Board, however, caveat that a number of factors could
influence
the valuation and performance of Snorkel
International between now and a potential realisation date,
including Xtreme’s opinion of the contractual agreements
which has resulted in the US Proceedings (see Strategic Report
on pages 3 to 5 for further information). Due to the risks
involved with the ongoing different opinions regarding the
contractual agreements, it is possible the actual realisation of
value could be less than the current valuation, potentially as
low as £nil as alleged by Xtreme and depending on the outcome
of ongoing US Proceedings.
Given the risks, the Board has considered whether a further
impairment loss should be recognised but have concluded that
based on their understanding of the contractual agreements in
place, no further impairment is required at this time.
Whilst the timing and quantum of realisation of the investment
remains unclear, the Board is currently of the opinion that the
investment in Snorkel International will result in a return to
shareholders in the future, that the current value of the
investment of £19.1m remains appropriate and there is not an
alternative, more reliable valuation of the investment than the
current estimate.
The Board did not agree with this statement and does not believe
that the contractual agreements, or the Circular distributed to
shareholders to fully explain the terms of the transaction - and
thereby seek their authority to enter into the transaction - allow for
a call option whereby Xtreme can acquire Tanfield’s interest in
Snorkel International for a nil value. The Board therefore rejected
the call option notice and sought to amicably resolve the dispute
with Tanfield’s 51% joint venture partner, Xtreme. As announced
on 22 October 2019, Xtreme (via its subsidiary SKL and Snorkel
International) filed the US Proceeding against Tanfield and its
subsidiary HBWP.
As the US Proceedings have been brought against Tanfield, it is
evident that Don Ahern, the owner of Xtreme, wishes to own 100%
of Snorkel International. However, based on statements within the
US Proceedings, it is evident that Don Ahern does not believe he
should have to pay anything in order to acquire Tanfield’s 49%
interest in Snorkel International. One possible outcome is that
Tanfield continues to hold its 49% interest for the foreseeable
future however, the Board do not believe such a scenario would be
in the best interest of shareholders and, should it become
necessary, would consider options that may assist in moving from
this position.
The Board has reviewed the historic financial information, along
with the global industrial and aerial work platform market
conditions and has concluded it is appropriate to value Tanfield’s
investment in Snorkel International based on what the Board
understands are the contractual arrangements and so at an amount
based on the Preferred Interest amount of £19.1m.
This valuation has been assessed against various criteria, including
past performance (including but not limited to a growth in sales, bill
of material costs and improved operating profitability), production
capacity, market conditions, the capability of the business to
increase output and exchange rate fluctuations. In coming to this
opinion, the Board has considered the trends within the business
and their consistency; in particular:
•
the rate of sales growth being more or less than that recently
achieved by Snorkel International.
the level of operating profitability improvement being more or
less than that recently achieved by Snorkel International.
The impact of exchange rate movements given that any
proceeds will be received in USD, considering current, historic
and average exchange rates.
•
•
Between 1 January 2023 to 31 December 2023, the range of the
GBP to USD exchange rate has a low of 1.1840 and a high of 1.3098,
the average being 1.2438. If £19.1m is assumed to represent the
average exchange rate, then based on the low of 1.1840 the
valuation increases by approximately 5% to £20.1m and based on
the high of 1.3098 the valuation reduces by approximately 5% to
£18.1m giving a potential movement of 10% in the valuation. Whilst
the Board is not in a position to mitigate any potential exchange
rate variation, until such time as the realisation of the Snorkel
International investment is known, it will continue to consider such
means as may be possible to maximise the GBP return to
shareholders.
21
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
2023
£000's
175
2
13
190
2023
No.
2
2
2022
£000's
230
9
3
242
2022
No.
2
2
All staff costs relate to Directors’ remuneration. 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 page 9.
2. Finance expense and finance income
Finance expense
Interest and borrowing cost
Total finance expense
Finance income
Interest on cash, cash equivalents & financial instruments
Total finance income
3. Other operating expenses
Property related expenses
Auditor's remuneration (see below)
Legal and professional fees
Other operating expenses
Total operating expenses
2023
£000's
-
-
2023
£000's
123
123
2023
£000's
30
28
204
25
287
2022
£000's
565
565
2022
£000's
16
16
2022
£000's
26
24
1,088
25
1,163
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
2023
£000's
2022
£000's
25
25
22
TANFIELD GROUP PLC FINANCIAL STATEMENTS
4. Taxation
Analysis of and factors affecting taxation charge
The taxation charge on the (loss)/profit for the year differs from the amount computed by applying the corporation tax rate to
the (loss)/profit before taxation as a result of the following factors:
(Loss)/profit before taxation
Notional taxation charge at UK rate of 19% (2022: 19%)
Effects of:
Non-taxable income
Non-deductible expenses
Deferred tax asset not recognised in the period
Total taxation charge in the income statement
2023
£000's
(331)
(63)
-
30
33
-
2022
£000's
4,946
940
(1,307)
197
170
-
The Company has tax losses of approximately £5.7m (2022: £5.5m) 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.
5. (Loss)/profit per share
Basic (loss)/profit per share is calculated by dividing the (loss)/profit attributable to equity shareholders by the weighted average
number of shares in issue during the period. The average share price during the year was 3.49p (2022: 2.30p).
Number of shares
Weighted average number of ordinary shares for the purposes of earnings per share
(Loss)/profit
From operations
(Loss)/profit for the purposes of earnings per share being net profit attributable to owners of the
parent
(Loss)/profit per share
Basic and diluted earnings per share (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
2023
No.
000’s
162,907
2022
No.
000’s
162,907
2023
£000's
(331)
2022
£000's
4,946
(0.20)
3.04
2023
£000’s
-
19,100
19,100
2022
£000’s
-
19,100
19,100
Smith Electric Vehicles US Corp
At 31 December 2023, the Company held a 5.76% (2022: 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 continue to maintain
this position. However, the Board will continue to monitor the investment.
Snorkel International Holdings LLC
At 31 December 2023, the Company held a 49% (2022: 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 (2023: £19.1m, 2022:
£19.1m). The cumulative impairment provision against this investment is £17.2m (2022: £17.2m). See Strategic Report on pages
3 to 4 and critical accounting estimates and judgements on pages 20 to 21 for further considerations.
23
TANFIELD GROUP PLC FINANCIAL STATEMENTS
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 cash and cash equivalents in Sterling bank accounts.
Cash and cash equivalents
8. Trade and other receivables
Receivable within one year
Other debtors and prepayments
2023
£000's
3,473
2023
£000's
58
58
2022
£000's
3,824
2022
£000's
30
30
The directors consider that the carrying amounts of trade and other receivables, recognised at amortised cost, approximates to
their fair value.
9. Trade and other payables
The directors consider that the carrying amounts of trade and other payables approximates to their fair value.
2023
£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.
10
3
59
72
12
2022
£000's
11
2
51
64
3
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.
At 1 January 2022
At 31 December 2022
At 31 December 2023
Nominal share
value
5p
Number of shares
162,906,850
Share capital
£000’s
8,145
5p
5p
162,906,850
162,906,850
8,145
8,145
Share premium
£000’s
17,336
-
17,336
17,336
11. 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
2023
£000's
2
3,473
3,475
2022
£000's
2
3,824
3,826
24
TANFIELD GROUP PLC FINANCIAL STATEMENTS
11. 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 statement of financial position 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 statement of financial position date up to the contractual maturity date.
2023
Trade and other payables
2022
Trade and other payables
Within 1 year
£000's
1 to 5 years
£000's
Over 5 years
£000's
Total
£000's
72
72
64
64
-
-
-
-
-
-
-
-
72
72
64
64
Foreign exchange risk management
The Company is exposed to movements in foreign exchange rates due to any realisation of its investment in Snorkel International
being denominated in foreign currencies. The carrying amount of the company’s investment in Snorkel International at 31
December 2023, which is denominated in USD, is £19.1m (2022: £19.1m). During 2023, the GBP to USD exchange rate averaged
1.2438 with a low of 1.1840 and a high of 1.3098. See critical accounting estimates and key judgements on page 21 for further
details of the impact of changes in the exchange rates. The company has no other material assets or liabilities 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, merger reserve and retained
earnings. No gearing is currently calculated as the Company had no borrowings during the year.
12. Contingencies
Authorised Guarantee Agreement
At the time of the Joint Venture between Tanfield Group Plc and Xtreme Manufacturing LLC relating to Snorkel International in
October 2013, Tanfield Group Plc was the tenant of the Vigo Centre manufacturing facility from which the Snorkel division carried
out its UK manufacturing operations. In order to gain permission to assign the lease to Snorkel Europe Limited, Tanfield Group Plc
entered into an authorised guarantee agreement on the 25-year lease which commenced 27 June 2006.
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 page 9.
Salaries and short term benefits including NI
Post employment benefits
2023
£000’s
177
13
190
2022
£000’s
239
3
242
25
TANFIELD GROUP PLC FINANCIAL STATEMENTS
14. Retirement benefits
The Company operates a defined contribution retirement benefit plan for all qualifying employees. The total cost charged to income
of £13k (2022: £3k) represents contributions payable to that scheme by the Company at rates specified in the rules of the scheme.
As at 31 December 2023, contributions of £nil (2022: £nil) due in respect of the current reporting period had not been paid over to
the scheme.
15. Financial instruments recognised in the statement of financial position
Assets
Current financial assets
Trade and other receivables
Investments
Cash and cash equivalents
Total
Liabilities
Current liabilities
Trade and other payables
Total
Amortised
cost
£000’s
2
-
3,473
3,475
2023
Fair value
through profit
and loss
£000’s
Total
Amortised
cost
£000’s
£000’s
2022
Fair value
through profit
and loss
£000’s
-
19,100
-
19,100
2
19,100
3,473
22,575
2
-
3,824
3,826
-
19,100
-
19,100
Amortised
cost
£000’s
2023
Fair value
through profit
and loss
£000’s
Total
Amortised
cost
£000’s
£000’s
2022
Fair value
through profit
and loss
£000’s
69
69
-
-
69
69
62
62
-
-
Total
£000’s
2
19,100
3,824
22,926
Total
£000’s
62
62
Financial assets and liabilities measured at fair value are measured using a fair value hierarchy that reflects the significance of the
inputs used in making the fair value measurements, as follows:-
•
•
•
Level 1 – Unadjusted quoted prices in active markets for identical asset or liabilities (‘quoted prices’);
Level 2 – Inputs (other than quoted prices in active markets for identical assets or liabilities) that are directly or indirectly
observable for the asset or liability (‘observable inputs’); or
Level 3 – Inputs that are not based on observable market data (‘unobservable inputs’).
All of the company’s financial assets and liabilities measured at fair value are measured using level 3 valuations in both the year
ended 31 December 2023 and the year ended 31 December 2022.
The fair value investment is measured against the contractual terms of the Joint Venture with Xtreme, as detailed in the circular
distributed to shareholders to fully explain the terms of the transaction – and thereby seek their authority to enter into the
transaction. Further details are provided in the strategic report on pages 3 to 5 and in the critical accounting estimates and key
judgements on pages 20 and 21.
16. Investments
The tables below give brief details of the Company’s investments at 31 December 2023. The Company had no operating subsidiaries
as of 31 December 2023.
Investments
Smith Electric Vehicles US Corp
HBWP Inc
Snorkel International Holdings LLC
Tanfield Engineering Systems US (Inc) a
Snorkel Europe Ltd a
Snorkel International Inc a
Snorkel New Zealand Limited a
a The Company’s interest is held indirectly through HBWP Inc, a wholly owned subsidiary, and its investment in Snorkel International Holdings LLC
Principal activity
Electric vehicle manufacture
Holding Company
Holding Company
Powered Access
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Group Interest in allotted
capital & voting rights
5.76%
100.00%
49.00%
49.00%
49.00%
49.00%
49.00%
Country of
incorporation
US
US
US
US
UK
US
NZ
26