Tanfield Group PLC Snorkel Investment Update (8628G)
June 01 2017 - 6:18AM
UK Regulatory
TIDMTAN
RNS Number : 8628G
Tanfield Group PLC
01 June 2017
Tanfield Group Plc
('Tanfield' or 'the Company')
Snorkel Investment Update
The Board of Tanfield is pleased to update the market on its
investment in Snorkel International Holdings LLC ('Snorkel'), the
aerial work platform ('AWP') business.
Investment Background
-- Tanfield is a 49% shareholder in the equity of Snorkel,
following the disposal of 51% of the Snorkel business in 2013.
-- The carrying value, as set out in the Company's interim
accounts, is GBP36.3 million. This represents approximately 23.2p
per share.
-- The trigger event for the calculated realisation of the
preferred interest holding in Snorkel is dependent upon Snorkel
achieving an annualised trailing EBITDA of $25 million in any 12
month period by 30 September 2018.
-- After 30 September 2018, should the above event not be met,
the calculated realisation value (which is the basis of the GBP36.3
million balance sheet value) comes to an end, Tanfield remain a 49%
shareholder but the outcome then becomes uncertain and the return
could be more or could be less than the calculated realisation
value.
Business Update
Tanfield continues to own 49% of Snorkel, which it has held
since the disposal of the business in October 2013. Sales levels
have continued to grow during 2016 and sales for the year have
increased by 19% to $130.5m (2015: $109.9m / 2014: $85.3m). Despite
market conditions continuing to be challenging, Snorkel have been
able to achieve improved market share in targeted regions allowing
them to also create a broader and more diverse customer base. This
is expected to help to underpin further growth that is expected for
2017, including some large rental companies who have not purchased
Snorkel product for a number of years. This is testament to the
progress Snorkel have made in recent years and the improvements to
the product range, build quality and customer service.
The Snorkel 2016 year end accounts report an operating loss,
excluding depreciation, of $2.8m (2015: $10.6m / 2014: $14.9m) with
$1.9m of this loss being incurred in the first quarter of the year
and the business operationally breaking even during some of the
later periods. The significantly reduced operating loss is
partially linked to the increased sales levels but is mainly as a
result of the focused cost down activity that has taken place
during 2015 and 2016 coming to fruition, thereby reducing the bill
of material costs and lowering the break-even sales point.
Despite the challenging trading conditions, the Board
understands Snorkel are again targeting double digit growth in 2017
from their UK manufacturing facility which mainly provides product
to the European marketplace. Given the extent to which the US
manufacturing facility is dependent upon Ahern Rentals as its
principal customer, Tanfield are unsure at this point whether there
will be growth in that facility in 2017. That said, as a result of
the success of the cost down activity and the double digit European
growth expectation, the Board believe Snorkel could still achieve
combined growth, as evidenced in the March 2017 quarterly accounts,
and are expecting to be profitable for the 2017 year.
Should economic conditions materially change in the latter
stages of 2017, this may have an impact on the expected outcome but
the Tanfield Board is currently of the opinion that the investment
in Snorkel will result in a return to shareholders in the future
and it should be noted that, this may not materialise until after
30 September 2018 when the outcome then becomes uncertain and could
be more or could be less than the calculated realisation value.
For further information:
Tanfield Group Plc
Daryn Robinson 0700 349 7489
WH Ireland Limited - Nominated Advisor
James Joyce / Nick Prowting 020 7220 1666
Peterhouse Corporate Finance - Broker
Peter Greensmith / Duncan Vasey 020 7220 9797
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCSSLFSFFWSEFM
(END) Dow Jones Newswires
June 01, 2017 06:18 ET (10:18 GMT)
Tanfield (LSE:TAN)
Historical Stock Chart
From Apr 2024 to May 2024
Tanfield (LSE:TAN)
Historical Stock Chart
From May 2023 to May 2024