TIDMTAN
RNS Number : 5584J
Tanfield Group PLC
17 August 2023
The information contained within this announcement is deemed by
the Company to constitute inside information under the Market Abuse
Regulation (EU) No. 596/2014. Upon the publication of this
announcement via a Regulatory Information Service ("RIS"), this
inside information is now considered to be in the public domain
Tanfield Group Plc
("Tanfield" or the "Company")
Snorkel Investment Update
The Board of Tanfield (the "Board") is pleased to update the
market on its investment in Snorkel International Holdings LLC
("Snorkel"), the aerial work platform business.
Investment Background
-- Tanfield is a 49% shareholder in the equity of Snorkel
following the joint venture between the Company and Xtreme
Manufacturing LLC ("Xtreme") (the "Contemplated Transaction"), a
company owned by Don Ahern of Ahern Rentals Inc, relating to
Snorkel, in October 2013.
-- T he Snorkel investment is valued at GBP19.1m. The outcome of
the US Proceedings referenced below could have an impact on this
valuation.
-- On 22 October 2019, the Company announced that it had
received a Summons and Complaint, filed in Nevada (the "US
Proceedings") by subsidiaries of Xtreme, relating to the
Contemplated Transaction .
Highlights
-- In the second quarter of 2023, Snorkel's sales increased by
7.7% to US$50.5m (Q2 2022: US$46.8m). Whilst the increase in sales
was US$3.6m in value, the EBITDA in the second quarter of 2023
improved to a US$1.6m profit (Q2 2022: US$4.3m loss), an
improvement of some US$5.9m.
-- Year to date sales for the first 6 months of 2023 saw an
increase of 6.2% to US$94.0m (YTD 2022: US$88.6m). Whilst the
increase in sales was US$5.4m in value, the EBITDA for the first 6
months of 2023 improved to a US$1.8m profit (YTD 2022: US$7.7m
loss), an improvement of some US$9.6m.
Business Update
Tanfield is a 49% shareholder in the equity of Snorkel following
the joint venture between the Company and Xtreme, a company owned
by Don Ahern of Ahern Rentals Inc, relating to Snorkel, in October
2013 .
In the second quarter of 2023, Snorkel's sales increased by 7.7%
to US$50.5m, compared to US$46.8m for the second quarter of 2022.
Whilst the increase in sales was US$3.6m in value, the EBITDA for
the second quarter of 2023 was a profit of US$1.6m, compared to a
loss of US$4.3m in the second quarter of 2022, an improvement of
some US$5.9m. This resulted primarily from a marked improvement in
the gross profit margin, which in the second quarter of 2023
increased to 13.0%, up from 2.8% in the second quarter of 2022, and
up from 4.2% for the full year 2022.
This resulted in year-to-date sales for the first 6 months of
2023 to increase to US$94.0mm, compared to US$88.6m for the same
period in 2022, an increase of 6.2%. Whilst the year-to-date
increase in sales was US$5.4m in value, the EBITDA for the first
six months of 2023 was a profit of US$1.8m, compared to a loss of
US$7.7m for the same period in 2022, an improvement of some
US$9.6m. This resulted primarily from a marked improvement in the
gross profit margin, which in the first 6 months of 2023 increased
to 12.9%, up from 3.4% for the same period in 2022, and up from
4.2% for the full year 2022.
The Board continues to be unaware of the reason behind the gross
profit margin improvement from 2022 to 2023 but hopes that its
ongoing work to try and investigate the current and historic gross
profit margins may provide some further clarification.
As reported in the media towards the end of 2022, Don Ahern, the
owner of the Company's 51% joint venture partner, sold the trade
and assets of Ahern Rentals to United Rentals for around US$2bn.
While the trade and assets of Ahern Rentals were sold, the Board
understand that Don Ahern retained ownership of the company Ahern
Rentals Inc. Since the Contemplated Transaction in 2013, Ahern
Rentals has been Snorkel's largest customer by far and the Board
are therefore pleased to see that despite the change of ownership,
sales have again continued to increase in the second quarter of
2023 and that sales now appear to be achieving improved gross
profit margins.
Below is a summary of the consolidated financial statement for
the second quarters of 2023 and 2022, along with the respective
year to date totals.
US$000's Q2 2023 YTD 2023 Q2 2022 YTD 2022
Net sales 50,459 94,001 46,848 88,554
Cost of goods sold 43,920 81,910 45,521 85,514
Gross profit 6,540 12,091 1,327 3,040
-------- --------- -------- ---------
13.0% 12.9% 2.8% 3.4%
Selling, general & administrative
costs 5,430 10,839 4,957 9,869
Foreign currency exchange
(gain)/loss 491 583 (635) (915)
EBITDA profit/(loss) 1,600 1,835 (4,265) (7,744)
Depreciation & non-operating
costs 419 768 638 1,181
Net profit/(loss) 1,180 1,068 (4,903) (8,925)
-------- --------- -------- ---------
The Board views the increase in sales and gross profit margin in
2023 to be a continued positive development and is not aware of any
reason why this improving trend should not continue.
The Company is now focussed on the US Proceedings which are
continuing, with a jury trial currently scheduled to take place in
early 2024. However, as reported on 24 July 2023, the Board expect
the trial date will be rescheduled to around the summer of 2024.
The Board continue to believe that a positive outcome to those
proceedings is possible. So far as it is necessary, the Company
will continue to vigorously defend its position whilst continuing
to seek advice.
Further updates will be provided to Shareholders as and when
appropriate.
For further information:
Tanfield Group Plc 020 7220 1666
Daryn Robinson
WH Ireland Limited - Nominated Advisor / Broker
James Joyce / Andrew de Andrade / Enzo Aliaj 020 7220 1666
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END
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August 17, 2023 02:00 ET (06:00 GMT)
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