TIDMTAN
RNS Number : 8107Z
Tanfield Group PLC
18 May 2023
18 May 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 .
-- On 24 October 2019, the Company announced it had become
necessary to issue and serve a claim in the English High Court (the
"UK Proceedings") against its former solicitors acting for the
Company at the time of the Contemplated Transaction. On 18 October
2022, the Company announced that it had settled its claims in
relation to the UK Proceedings on a no-fault basis.
Highlights
-- In the 2022 financial year, Snorkel's sales increased by 8.9%
to US$168.8m (2021: US$155.0m). Despite the increase in sales, the
EBITDA loss for the 2022 year increased to US$13.8m (2021:
US$9.6m).
-- In the first quarter of 2023, Snorkel's sales increased by
4.4% to US$43.5m (Q1 2022: US$41.7m). Whilst the increase in sales
was a fairly modest US$1.8m in value, the EBITDA for the first
quarter of 2023 improved to a US$0.2m profit (Q1 2022: US$3.5m
loss), an improvement of some US$3.7m.
-- 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, who has been Snorkel's largest
customer since the Contemplated Transaction in 2013, 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.
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 2022 financial year, Snorkel's sales increased by 8.9% to
US$168.8m, compared to US$155.0m in 2021. Despite the increase in
sales, the EBITDA loss for the 2022 year increased to US$13.8m,
compared to US$9.6m in 2021. This was largely down to the gross
profit margins becoming even lower in 2022 (4.2%) when compared to
the already low gross profit margin in 2021 (5.4%). As previously
reported, the Board has believed for some time that the gross
profit margins are not in line with the industry averages and
continue to try and investigate this.
In the first quarter of 2023, Snorkel's sales increased by 4.4%
to US$43.5m, compared to US$41.7m for the first quarter of 2022.
Whilst the increase in sales was a modest US$1.8m in value, the
EBITDA for the first quarter of 2023 was a profit of US$0.2m,
compared to a loss of US$3.5m in the first quarter of 2022, an
improvement of some US$3.7m. This resulted primarily from a marked
improvement in the gross profit margin, which in the first quarter
of 2023 increased to 12.7%, up from 4.2% for the full year 2022 and
up from 2.9% in the fourth quarter of 2022. The Board is unaware of
the reason behind this sudden improvement from one quarter to the
next 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.
Since the Contemplated Transaction in 2013, Ahern Rentals has been
Snorkel's largest customer by a long way and the Board are
therefore pleased to see that despite the change of ownership,
sales have not only continued to increase in the first quarter of
2023 but it would appear that sales are now at improved gross
profit margins.
As shown in the summary below, Snorkel's 2022 consolidated
financial statement reported a US$31.8m related party forgiveness
which resulted in the company reporting a US$15.3m net profit for
the year. Without this entry, Snorkel would have achieved a net
loss of US$16.5m for 2022 (2021: US$12.0m).
Below is a summary of the consolidated financial statement for
the full year of 2022 and 2021, along with the first quarters of
2023 and 2022.
US$000's 2022 2021 Q1 2023 Q1 2022
Net sales 168,752 154,951 43,541 41,706
Cost of goods sold 161,677 146,651 37,990 39,993
Gross profit 7,075 8,301 5,551 1,713
--------- --------- -------- --------
4.2 5.4 12.7 4.1
Selling, general & administrative
costs 19,393 17,443 5,408 4,912
Foreign currency exchange
(gain)/loss 1,505 418 (92) 281
EBITDA profit/(loss) (13,822) (9,560) 235 (3,479)
Depreciation & non-operating
costs 2,725 2,448 349 543
Related Party Forgiveness 31,809 - - -
Net profit/(loss) 15,261 (12,008) (113) (4,022)
--------- --------- -------- --------
The Board views the increase in sales in both periods, and the
increased gross profit margin in the first quarter of 2023, to be a
positive development and is not aware of any reason why this
improving trend should not continue.
As reported on 18 October 2022, the Company is now focussed on
the US Proceedings which are continuing, with a jury trial
currently expected to take place in early 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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May 18, 2023 02:00 ET (06:00 GMT)
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