TIDMTND
RNS Number : 6255H
Tandem Group PLC
26 March 2020
TANDEM GROUP PLC
PRELIMINARY RESULTS FOR THE YEARED 31 DECEMBER 2019
Chairman's statement
______________________________________________________________
Introduction
I am pleased to present the results for the year ended 31
December 2019.
Results
It was a strong year for the Group. Group revenue for the year
ended 31 December 2019 increased by nearly 20% to GBP38,837,000
compared to GBP32,511,000 in the year ended 31 December 2018.
Revenue in the first half of the year increased by approximately
27% as a result of solid performances from both licensed and own
brand properties. Growth in the second half of 2019 was close to
15% ahead of the same period in the prior year despite the
sustained periods of wet weather across many parts of the country
in the late Autumn period and macro uncertainties which hindered
the excellent progress made earlier in the year.
We were pleased with the performance from our Disney licence
which included new properties including Frozen II, Lion King,
Spider-Man and Toy Story. Coupled with our existing Disney Princess
licence, Disney made a significant contribution to revenue.
The stand out performing licence however continued to be LOL
Surprise! which delivered further growth over the prior year with
the folding inline scooter the Group's best selling product.
Our Batman, Paw Patrol and Peppa Pig licensed ranges and own
brands Ben Sayers, Hedstrom, Kickmaster, Stunted, U-Move and Wired
continued to perform strongly.
Bicycles remained more challenging overall. Notwithstanding the
significant growth from Squish, other brands were similar or behind
the prior year reflecting the ongoing competitive environment for
bicycles.
In our direct to consumer business it was a year of mixed
success. Certain product categories including our Pro Rider
mobility and Jack Stonehouse cooling and small domestic appliances
ranges performed strongly. Margin in other categories was under
greater pressure. We are mindful that online selling can be a "race
to the bottom" and therefore we believe that it is crucial to keep
identifying differentiated products.
Operating profit before exceptionals, finance costs and taxation
was GBP3,033,000 for the year ended 31 December 2019 compared to
GBP2,247,000 for the year ended 31 December 2018, an increase of
35%.
During the year exceptional costs of GBP29,000 were incurred in
relation to redundancy costs as we streamlined our bicycle
business.
Total finance costs increased to GBP497,000 compared to
GBP157,000 in the prior year principally as a result of the fair
value adjustment on foreign exchange contracts which was a charge
of GBP160,000 compared to a credit of GBP109,000 in 2018. This
adjustment will vary year on year based on the foreign exchange
contracts in place at the year end and their maturity date. Pension
finance costs increased to GBP155,000 compared to GBP100,000 in the
prior year. Interest payable on bank loans, overdrafts and invoice
finance facilities reduced from GBP157,000 in 2018 to GBP149,000 in
2019.
Our cash position improved again with cash and cash equivalents
increasing to GBP5,037,000 at 31 December 2019 compared to
GBP4,847,000 at 31 December 2018. Most notable however was the
overall net cash position which improved from GBP107,000 at the end
of 2018 to GBP1,846,000 at the end of 2019.
Net assets increased during the year from GBP12,408,000 at 31
December 2018 to GBP14,311,000 at 31 December 2019.
Further details of operational activities can be found in the
Strategic Report.
Dividend
As the Group moves into an ongoing net cash position and after a
strong year in 2019, the Board believes that there is additional
capacity to increase the dividend.
In accordance with our ongoing progressive policy, we are
proposing to pay a final dividend of 3.04 pence per share (year
ended 31 December 2018 - 2.89 pence per share).
In addition, we are proposing a special dividend of 2.00 pence
per share (year ended 31 December 2018 - nil).
When combined with the interim dividend of 1.56 pence per share
(year ended 31 December 2018 - 1.42 pence per share), this is a
total dividend of 6.60 pence for the year (year ended 31 December
2018 - 4.31 pence per share) which represents an increase of over
53%.
Our dividend policy remains progressive, paying an increasing
dividend as trading results and funds permit. Moreover, we will
review the capacity each year to pay a special dividend where
profits are materially ahead of the prior year.
Subject to shareholder approval at the Annual General Meeting to
be held on 25 June 2020, the final and special dividends will be
paid on or around 2 July 2020 to shareholders on the share register
as at 15 May 2020. The ex-dividend date will be 14 May 2020.
Pension schemes
The Group operates two defined benefit pension schemes with both
schemes closed to new members. There are no active members in
either scheme.
The deficit of the schemes at 31 December 2019 reduced to
GBP2,480,000 compared to GBP2,827,000 at 31 December 2018.
The pension schemes continue to significantly utilise the
Group's cash resources with payments in respect of the schemes
totalling GBP506,000 (year ended 31 December 2018 - GBP487,000).
The total comprised deficit contributions of GBP336,000 and
GBP101,000 in respect of Tandem and Casket schemes respectively
(year ended 31 December 2018 - GBP423,000) and government levies
and administration costs of GBP69,000 (year ended 31 December 2018
- GBP64,000).
We have previously reported on the current views of the Pensions
Regulator (tPR). In their Annual Funding Statement tPR stated "As
the pension scheme is a key financial stakeholder, we expect to see
it treated equitably with other stakeholders. In last year's annual
funding statement we highlighted our concerns about inequitable
treatment of schemes relative to that of shareholders. We remain
concerned about the disparity between dividend growth and stable
deficit repair contributions (DRCs). Recent corporate failures have
highlighted the risk of long recovery plans while payments to
shareholders are excessive relative to DRCs."
The 2019 triennial valuations for both schemes have been
undertaken with negotiations between Company and Trustees ongoing
to agree a suitable recovery plan and deficit repair
contributions.
The Board are mindful that the recovery plans for both schemes
exceed tPR's reported median length of 7 years. However, this is
justifiable on the basis that the employer covenant is stronger and
that there is in place an agreed provision that in any calendar
year dividend payments will not exceed deficit contributions paid
to the Tandem scheme.
Without these factors it is likely that both Trustees and tPR
would demand significantly greater contributions from the
Company.
Employees
On behalf of the Board of Directors, once again I would like to
take this opportunity to thank our teams of loyal, highly dedicated
and hard working employees who are committed to the ongoing success
of the Group. The Board thanks them all for their efforts and
continuing contribution to the profitability of the businesses
during the year.
Board changes
We previously reported that I have notified the Board of my
intention to retire as Non-Executive Chairman and step down as a
Director with effect from 31 July 2020.
After 30 years with the business, Steve Grant also informed the
Board of his intention to step down from his role as CEO. Steve has
indicated his desire to remain with the Group and accordingly will
take up the position of Non-Executive Chairman from 1 August
2020.
Jim Shears, currently Group Finance Director, will take up the
position of Chief Executive Officer at the same time. We have
recruited a Group Financial Controller to whom Jim will hand over
his day to day financial responsibilities.
Jim and Phil Ratcliffe, Group Commercial Director, will become
Joint Managing Directors of the Company's trading subsidiary MV
Sports & Leisure Limited. Phil will also retain his sales and
marketing responsibilities for the business.
I believe that these changes will maintain both continuity and
retain the wealth of industry specific knowledge and experience
within the Group.
Outlook
As we reported in February, this year has started more slowly
for the Group.
COVID-19 has, as anticipated, had a material impact with none of
our scheduled shipments leaving the Far East in the whole of
February and into early March. Fortunately, as a result of Chinese
New Year and the usual factory closures, it is normally a quieter
time for the Group and there is still time to recover some of the
lost production.
Unfortunately, the situation in the UK and Europe is worsening
by the day and on 23 March the Prime Minister announced an
effective lockdown in the UK. There will undoubtedly be
implications for the whole economy with an inevitable impact on our
business and we currently cannot predict the extent of this or when
it will end.
In addition, although we sold to national retailers strongly in
2019, we are aware that some of our major customers have carried
stock forward into this year which will impact on their ability to
re-buy.
We remain confident that we have secured all of the major
wheeled toy licences for 2020 and have also identified a number of
new product opportunities with own brands which we continue to
develop.
We are also more actively exploring new geographical
markets.
In our online business we continue to focus on existing ranges
whilst not losing the ability to be opportunistic and take
advantage of new products that we identify. We remain very aware of
the ongoing channel shift to online sales but remain focussed on
profitable, differentiated product.
In conclusion, we have an excellent portfolio of both licensed
and own brands. We offer different routes to market and benefit
from highly skilled and experienced teams to continue to deliver
future profitability. Our balance sheet is well capitalised. In
2019 we delivered a strong result and we believe that this can be
the case again in 2021. We are prepared, however, for the fact that
2020 could be seriously impacted by COVID-19.
M P J Keene
Chairman
26 March 2020
Strategic report
______________________________________________________________
Operating and Financial Review
Revenue
Group revenue for the year ended 31 December 2019 was
GBP38,837,000 compared to GBP32,511,000 in the prior year, an
increase of almost 20%.
Despite a third year in a row of decline in the toy industry as
a whole with reported outdoor toy sales declining by almost 10%,
revenue from the toys business was considerably ahead of the prior
year. In licensed wheeled toy categories, L.O.L Surprise! delivered
another excellent result.
The impact of the new Disney contract was significant with
Frozen II, Spider-Man, Disney Princess and Toy Story all making
important contributions. In other licences, Peppa Pig, Paw Patrol
and Batman remained strong.
In own brand portfolios, we continued to develop our U-Move
scooter range which delivered revenue growth of 85%. Ben Sayers
finished the year over 20% ahead of the prior year which was
encouraging. Most other brands including Hedstrom, Wired,
Kickmaster and Stunted were in line or slightly ahead of the prior
year.
Feedback from this year's London Toy Fair to the new MV Sports
& Leisure ranges, where we showcased all of our products for
2020 and a new range of lithium electric scooters under the Li-Fe
brand, was excellent.
Overall total revenue from the bicycle businesses was down in
2019 compared to 2018. However, revenue from our Squish bicycle
range sold to independent bicycle dealers grew by 33% in the
year.
Claud Butler revenue was similar to the prior year although
Dawes was behind. There was partly a substitution effect of
consumers switching from traditional Dawes kids' bikes to
lightweight Squish but this was at a higher average selling
price.
It was a more challenging year for our corporate bicycles range
which, although positively contributing to profitability, was
behind the prior year.
Despite a strong first quarter, revenue in our direct to
consumer business, Expressco Direct, was slightly behind the
previous year. A combination of garden and outdoor leisure products
performing behind expectation and the increasingly competitive
online retail environment impacted on margins and slowed down the
previous progress that had been made.
Notwithstanding these items, there was significant growth in
mobility and home electrical products and the successful
introduction of a Christmas range.
Gross profit
Gross profit increased to GBP11,788,000 for the year ended 31
December 2019 compared to GBP10,249,000 in the previous year.
The gross profit percentage, which reduced from 31.5% to 30.4%,
was under greater pressure during the year partly due to an
appreciating dollar which was approximately 4% stronger than in the
previous year and partly due to ongoing pricing pressures in our
online business.
We have a continuing focus on maintaining and improving our
gross margin by improving supplier buying prices, re-sourcing
product where this is not possible, discontinuing low margin
product and introducing new, more profitable products.
Operating expenses
Group operating expenses increased to GBP8,755,000 in the year
(year ended 31 December 2018 - GBP8,002,000) as a result of the
growth in revenue and increased marketing costs in relation to new
licences.
Operating profit
Operating profit before exceptional costs was GBP3,033,000 for
the year ended 31 December 2019 compared to GBP2,247,000 in the
prior year.
Exceptional costs and Non-underlying items
Exceptional costs and non-underlying items are material items
which have arisen from unusual non-recurring or non-trading
events.
Exceptional costs of GBP29,000 were incurred in the year to 31
December 2019 (year ended 31 December 2018 - GBP218,000) in respect
of redundancy costs.
Other non-underlying items comprised:
-- a fair value charge adjustment for foreign currency
derivative contracts under IFRS9 of GBP160,000 (year ended 31
December 2018 - GBP109,000 credit);
-- pension finance costs under IAS19 of GBP155,000 (year ended
31 December 2018 - GBP100,000); and
-- a deferred tax charge of GBP48,000 (year ended 31 December
2018 - GBP55,000) in respect of pension schemes.
Finance costs
Total net finance costs increased to GBP497,000 in the year
ended 31 December 2019 compared to GBP157,000 in the year ended 31
December 2018.
Interest payable on bank loans, overdrafts, hire purchase and
invoice finance facilities was GBP149,000 compared to GBP157,000 in
the prior year.
Finance costs in respect of the pension schemes provided in line
with IAS19 were GBP155,000 compared to GBP100,000 for the year
ended 31 December 2018.
In accordance with IFRS9, there was a fair value charge of
GBP160,000 in respect of derivative foreign exchange contracts
which compared to a credit of GBP109,000 in the prior year.
The net of pension schemes' financing and foreign currency
derivatives, which totalled a charge of GBP315,000 (year ended 31
December 2018 - GBP9,000 credit), is included in non-underlying
items.
Taxation
The tax expense for the year ended 31 December 2019 was
GBP473,000 compared to GBP250,000 in the prior year.
The current tax charge, which comprised corporation tax from the
overseas Hong Kong operation, was GBP604,000 (year ended 31
December 2018 - GBP189,000).
There was a deferred tax credit of GBP131,000 compared to a
charge of GBP61,000 in the prior year.
Net profit
Net profit for the year ended 31 December 2019 after
non-underlying items, finance costs and taxation was GBP2,034,000
compared to GBP1,622,000 for the year ended 31 December 2018.
Capital expenditure
Total capital expenditure incurred during the year was GBP63,000
excluding the required adjustment of GBP250,000 with respect to
IFRS16 (year ended 31 December 2018 - GBP70,000).
Property
A valuation of the Castle Bromwich property was carried out by
CBRE Ltd in January 2018 in accordance with the RICS Valuation -
Professional Standards January 2014, published by The Royal
Institution of Chartered Surveyors. This valuation was used to
revalue the property as at 31 December 2017. The Directors are of
the opinion that there has been no material change since this date
and the valuation remains valid as at 31 December 2019.
Cash flows, working capital and net cash
Net cash inflow from operating activities before movements in
working capital for the year ended 31 December 2019 was
GBP2,843,000 compared to GBP1,792,000 in the year ended 31 December
2018.
Cash generated from operations was GBP2,329,000 compared to
GBP1,638,000 last year.
Net cash outflows from investing activities were GBP70,000 in
the year ended 31 December 2019 against GBP88,000 in the previous
year.
There was a net cash outflow from financing activities of
GBP1,773,000 in the year ended 31 December 2019 which compared to
GBP342,000 in the year ended 31 December 2018. This was principally
as a result of the part repayment of the invoice finance
facilities.
As a result of these movements the closing cash position at 31
December 2019 was GBP5,037,000 compared to GBP4,847,000 at 31
December 2018.
Net cash, comprising cash and cash equivalents less invoice
financing liabilities and borrowings, was GBP1,846,000 at 31
December 2019 compared to GBP107,000 at the end of the previous
year.
Dividends
We have increased total dividends paid and proposed for the year
ended 31 December 2019 by over 53% by proposing an additional
special dividend of 2.00 pence per share in addition to the final
dividend.
A total dividend of 6.60 pence per share will be paid, subject
to shareholder approval, compared to 4.31 pence per share for the
year ended 31 December 2018.
The dividend cover ratio was 6.1 (year ended 31 December 2018 -
7.5).
As we have previously stated, it continues to be the Group's
policy to progressively increase the dividend payment to
shareholders where trading performance permits.
Earnings per share
Basic earnings per share was 40.5 pence per share for the year
ended 31 December 2019 compared to 32.3 pence per share in the year
ended 31 December 2018. Diluted earnings per share was 39.6 pence
per share compared to 32.1 pence per share in the prior year.
Steve Grant Jim Shears
Chief Executive Officer Group Finance Director
26 March 2020
Consolidated income statement
______________________________________________________________
31 December 2019 31 December 2018
Before After Before After
non-underlying Non-underlying non-underlying non-underlying Non-underlying non-underlying
Note items items items items items items
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 38,837 __ 38,837 32,511 __ 32,511
Cost of sales (27,049) __ (27,049) (22,262) __ (22,262)
--------------- --------------- --------------- --------------- --------------- ---------------
Gross profit 11,788 __ 11,788 10,249 __ 10,249
Operating expenses (8,755) __ (8,755) (8,002) __ (8,002)
--------------- --------------- --------------- --------------- --------------- ---------------
Operating profit
before exceptional
costs 3,033 __ 3,033 2,247 __ 2,247
Exceptional costs __ (29) (29) __ (218) (218)
--------------- --------------- --------------- --------------- --------------- ---------------
Operating profit
after exceptional
costs 3,033 (29) 3,004 2,247 (218) 2,029
Finance costs (182) (315) (497) (166) 9 (157)
--------------- --------------- --------------- --------------- --------------- ---------------
Profit before
taxation 2,851 (344) 2,507 2,081 (209) 1,872
Tax expense (425) (48) (473) (195) (55) (250)
Net profit for
the year 2,426 (392) 2,034 1,886 (264) 1,622
=============== =============== =============== =============== =============== ===============
Earnings per
share 3 Pence Pence
Basic 40.5 32.3
=============== ===============
Diluted 39.6 32.1
=============== ===============
Consolidated statement of
comprehensive income
______________________________________________________________
31 December 31 December
2019 2018
GBP'000 GBP'000
Net profit for the year 2,034 1,622
Other comprehensive income:
Items that will be reclassified subsequently
to profit and loss:
Foreign exchange differences on translation
of foreign operations (24) 102
Items that will not be reclassified subsequently
to profit or loss:
Actuarial gain/(loss) on pension schemes 65 (222)
Movement in pension schemes' deferred tax
provision 24 37
Other comprehensive income for the year,
net of tax 65 (83)
Total comprehensive income for the year
attributable to equity shareholders 2,099 1,539
============== ==============
All figures relate to continuing operations.
Consolidated balance sheet
______________________________________________________________
At 31 December 2019 At 31 December 2018
GBP'000 GBP'000
Non current assets
Intangible fixed assets 5,542 5,580
Property, plant and equipment 3,590 3,480
Deferred taxation 1,931 1,776
------------------- -------------------
11,063 10,836
------------------- -------------------
Current assets
Inventories 4,709 4,250
Trade and other receivables 5,443 4,397
Derivative financial asset held at fair value __ 54
Cash and cash equivalents 5,037 4,847
------------------- -------------------
15,189 13,548
Total assets 26,252 24,384
=================== ===================
Current liabilities
Trade and other payables (5,507) (4,266)
Borrowings (2,394) (3,542)
Derivative financial liability held at fair value (106) __
Current tax liabilities (657) (143)
------------------- -------------------
(8,664) (7,951)
Non current liabilities
Borrowings (797) (1,198)
Pension schemes' deficits (2,480) (2,827)
------------------- -------------------
(3,277) (4,025)
Total liabilities (11,941) (11,976)
=================== ===================
Net assets 14,311 12,408
=================== ===================
Equity
Share capital 1,503 1,503
Shares held in treasury (247) (247)
Share premium 286 286
Other reserves 3,620 3,644
Profit and loss account 9,149 7,222
------------------- -------------------
Total equity 14,311 12,408
=================== ===================
Consolidated statement of changes in equity
______________________________________________________________
Profit
Shares Capital and
Share held in Share Merger redemption Revaluation Translation loss
capital treasury premium reserve reserve reserve reserve account Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2018 1,503 (247) 286 1,036 1,427 530 549 5,984 11,068
Net profit for
the year - - - - - - - 1,622 1,622
Re-translation
of overseas
subsidiaries - - - - - - 102 - 102
Net actuarial
loss on
pension
schemes - - - - - - - (185) (185)
--------- ---------- --------- --------- ------------ ------------- ------------- --------- ---------
Total
comprehensive
income for the
year
attributable
to equity
shareholders - - - - - - 102 1,437 1,539
Share based
payments - - - - - - - 11 11
Dividends paid - - - - - - - (210) (210)
--------- ---------- --------- --------- ------------ ------------- ------------- --------- ---------
Total
transactions
with owners - - - - - - - (199) (199)
At 1 January
2019 1,503 (247) 286 1,036 1,427 530 651 7,222 12,408
Net profit for
the year - - - - - - - 2,034 2,034
Re-translation
of overseas
subsidiaries - - - - - - (24) - (24)
Net actuarial
gain on
pension
schemes - - - - - - - 89 89
--------- ---------- --------- --------- ------------ ------------- ------------- --------- ---------
Total
comprehensive
income for the
year
attributable
to equity
shareholders - - - - - - (24) 2,123 2,099
Share based
payments - - - - - - - 28 28
Dividends paid - - - - - - - (224) (224)
--------- ---------- --------- --------- ------------ ------------- ------------- --------- ---------
Total
transactions
with owners - - - - - - - (196) (196)
At 31 December
2019 1,503 (247) 286 1,036 1,427 530 627 9,149 14,311
========= ========== ========= ========= ============ ============= ============= ========= =========
Consolidated cash flow statement
______________________________________________________________
31 December 2019 31 December 2018
GBP'000 GBP'000
Cash flows from operating activities
Net profit for the year 2,034 1,622
Adjustments:
Depreciation of property, plant and equipment 203 139
Amortisation of intangible fixed assets 45 41
Profit on sale of property, plant and equipment - (5)
Contribution to defined pension benefit plans (437) (423)
Finance costs 497 157
Tax expense 473 250
Share based payments 28 11
------------------ ------------------
Net cash flow from operating activities before movements in working
capital 2,843 1,792
Change in inventories (459) (407)
Change in trade and other receivables (1,046) 142
Change in trade and other payables 991 111
------------------ ------------------
Cash generated from operations 2,329 1,638
Interest paid (182) (166)
Tax paid (90) (153)
Net cash flows from operating activities 2,057 1,319
================== ==================
Cash flows from investing activities
Purchases of intangible fixed assets (7) (24)
Purchases of property, plant and equipment (63) (70)
Sale of property, plant and equipment - 6
Net cash flows from investing activities (70) (88)
================== ==================
Cash flows from financing activities
Loan repayments (407) (408)
Finance lease repayments 115 (27)
Movement in invoice financing 1,257 303
Dividends paid (224) (210)
Net cash flows from financing activities (1,773) (342)
================== ==================
Net change in cash and cash equivalents 214 889
Cash and cash equivalents at beginning of year 4,847 3,856
Effect of foreign exchange rate changes (24) 102
------------------ ------------------
Cash and cash equivalents at end of year 5,037 4,847
================== ==================
Notes to the preliminary results
_____________________________________________________________
1. General information
The financial information set out in this preliminary
announcement does not constitute statutory accounts as defined in
section 434 of the Companies Act 2006. The Consolidated income
statement, the Consolidated statement of comprehensive income, the
Consolidated balance sheet at 31 December 2019, the Consolidated
statement of changes in equity, the Consolidated cash flow
statement and the associated notes for the period then ended have
been extracted from the Group's financial statements upon which the
auditor's opinion is unqualified and does not include any statement
under section 498 of the Companies Act 2006. The statutory accounts
for the year ended 31 December 2019 will be delivered to the
Registrar of Companies following the Group's Annual General
Meeting.
2. Basis of preparation
The consolidated financial statements of the Group have been
prepared under the historical cost convention and in accordance
with the International Financial Reporting Standards ( IFRS) as
adopted by the EU. The principal accounting policies adopted by the
Group, which remain unchanged, are set out in the statutory
financial statements for the year ended 31 December 2019 .
Non-underlying items
Non-underlying items are material items which arise from unusual
non-recurring or non-trading events. They are disclosed in
aggregate on the Consolidated income statement where in the opinion
of the Directors such disclosure is necessary in order to fairly
present the results for the period. Non-underlying items comprise
exceptional costs of Group restructuring, the finance cost and
deferred tax related to the Group's pension schemes calculated in
accordance with IAS19 and the impact of the movement in respect of
derivative foreign exchange contracts held at fair value through
the profit and loss in accordance with IFRS9.
Key areas of estimation uncertainty
Impairment of goodwill
The annual impairment assessment in respect of goodwill requires
estimates of the value in use of cash generating units to which
goodwill has been allocated to be calculated. As a result,
estimates of future cash flows are required, together with an
appropriate discount factor for the purpose of determining the
present value of those cash flows.
Financial instruments valuation
Forward contracts and options are used to minimise the impact of
foreign exchange fluctuations on the group. An asset or liability
is recognised representing the fair value of the instruments in
place at the year end. The fair value is calculated using certain
estimates and valuation models by reference to significant inputs
including; implied volatilities in foreign currency and historical
movements in foreign currency exchange rates. Changes in the fair
value of the instruments are recognised in profit or loss in the
income statement.
Pension scheme valuation
The liabilities in respect of defined benefit pension schemes
are calculated by qualified actuaries and reviewed by the Group,
but are necessarily based on subjective assumptions. The principal
uncertainties relate to the estimation of the discount rate, life
expectancies of scheme members, future investment yields and
general market conditions for factors such as inflation and
interest rates. Profits and losses in relation to changes in
actuarial assumptions are taken directly to reserves and therefore
do not impact on the profitability of the business, but the changes
do impact on net assets.
Inventory provisioning
The Group reviews the net realisable value of and demand for its
inventory on an ongoing basis to ensure recorded inventory is
stated at the lower of cost or net realisable value. Factors that
could impact estimated demand and selling prices are the timing and
success of future technological innovations, competitor actions,
suppliers' prices and economic trends. If total inventory losses
differ, the Group's consolidated net income in the year would have
improved or declined, depending upon whether the actual results
were better or worse than expected.
Bad debt provision
At each reporting period, the Directors review outstanding debts
and determine appropriate provision levels. The recovery of certain
debts is dependent on the individual circumstances of customers. At
the year end there are a number of debts which remain outstanding
past their due date, which the Directors believe to be
recoverable.
Intangible asset valuation
In attributing value to intangible assets arising on
acquisition, management has made certain assumptions in terms of
cash flows attributable to intellectual property and customer
relationships. The key assumptions relate to the trading
performance of the acquired business, royalty rates applied in the
royalty relief calculation and discount rates applied to calculate
the present value of future cash flows. The Directors consider the
resulting valuation to be a reasonable approximation as to the
value of the intangibles acquired.
Going Concern
The accounts are prepared on the going concern basis unless it
is inappropriate to presume that the Company and the Group will
continue in business. The financial uncertainty created within the
economy as a result of COVID-19 is clearly difficult to forecast
and predict but the Directors have produced a range of forecasts
based on their best estimates of likely outcomes, and these
indicate that for the 12 month period from the date of signing
these financial statements the Group will be able to operate within
the financial facilities available to it, with significant headroom
to allow for further lost revenues.
The Group has significant cash reserves and the Board
continually monitor a rolling cashflow forecast for the business as
a whole. Given the Group's low fixed cost base (wage costs equate
to 10% of revenues in the current year, 2018 - 11%) and the
facilities available to it the Board therefore considers the Group
will continue to be able to meet its liabilities as they fall
due.
Furthermore, the Directors are comforted by clear sentiment from
the UK Government that they will support business during this
difficult time, with a range of measures already outlined to
protect jobs and business, with more to come. In addition, the
recovery of trade in the Far East gives further comfort, as the
Group has now begun to receive shipments from suppliers in the
regions previously affected by COVID-19 earlier in 2020.
On that basis, the Directors are confident that they will be
able to manage the business in such a way that it will continue to
operate and trade for at least 12 months from the date of the
signing of the accounts and have therefore prepared these financial
statements on a going concern basis.
Key judgements
Deferred tax assets
In determining the deferred tax asset to be recognised the
Directors carefully review the recoverability of these assets on a
prudent basis and reach a judgement based on the best available
information. Estimates and judgements used in the financial
statements are based on historical experience and other assumptions
that the Directors and management consider reasonable and are
consistent with the Group's latest budgeted forecasts where
applicable. Judgements are based on the information available at
each balance sheet date. Although these estimates are based on the
best information available to the Directors, actual results may
ultimately differ from those estimates.
Pension deficit
In accordance with the winding up provisions of the Trust deeds
the Directors have concluded that the Group may not have a
discretionary right to receive returns of contributions if the
schemes were to be in surplus. Accordingly, and where material, any
excess funding has not been recognised on the balance sheet.
3. Earnings per share
The calculation of earnings per share is based on the net profit
and ordinary shares in issue during the year as follows:
31 December 31 December
2019 2018
GBP'000 GBP'000
Net profit for the year 2,034 1,622
======================= =======================
Weighted average shares in issue (excluding
shares held in treasury) used for basic earnings
per share 5,026,091 5,026,091
Weighted average dilutive shares under option 112,889 25,005
Average number of shares used for diluted earnings
per share 5,138,980 5,051,096
======================= =======================
Pence Pence
Basic earnings per share 40.5 32.3
======================= =======================
Diluted earnings per share 39.6 32.1
======================= =======================
4. Dividend
The Directors are proposing a final dividend of 3.04 pence per
ordinary share (year ended 31 December 2018 - 2.89 pence) and a
special dividend of 2.00 pence per ordinary share (year ended 31
December 2018 - nil) payable to shareholders on the register on 15
May 2020 and will be paid on or around 2 July 2020.
5. Annual report and accounts
The annual report and accounts will be posted to shareholders
shortly and will be available on the Company's website,
www.tandemgroup.co.uk .
6. Annual General Meeting
The Annual General Meeting will be held at 11:00 a.m. on 25 June
2020 at 35 Tameside Drive, Castle Bromwich, Birmingham, B35
7AG.
For further information contact:
Tandem Group plc
Steve Grant, Chief Executive
Jim Shears, Group Finance Director and Company Secretary
Telephone 0121 748 8075
Nominated Adviser
Cairn Financial Advisers LLP
James Caithie
Tony Rawlinson
Telephone 020 7213 0880
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
Forward-Looking Statements
Certain statements made in this announcement are forward-looking
statements. These forward-looking statements are not historical
facts but rather are based on the Company's current expectations,
estimates, and projections about its industry; its beliefs; and
assumptions. Words such as 'anticipates,' 'expects,' 'intends,'
'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions
are intended to identify forward-looking statements. These
statements are not guarantees of future performance and are subject
to known and unknown risks, uncertainties, and other factors, some
of which are beyond the Company's control, are difficult to
predict, and could cause actual results to differ materially from
those expressed or forecasted in the forward-looking statements.
The Company cautions security holders and prospective security
holders not to place undue reliance on these forward-looking
statements, which reflect the view of the Company only as of the
date of this announcement. The forward-looking statements made in
this announcement relate only to events as of the date on which the
statements are made. The Company will not undertake any obligation
to release publicly any revisions or updates to these
forward-looking statements to reflect events, circumstances, or
unanticipated events occurring after the date of this announcement
except as required by law or by any appropriate regulatory
authority.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR GZGZFNKNGGZM
(END) Dow Jones Newswires
March 26, 2020 03:00 ET (07:00 GMT)
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