Access write offs wipe out Tanfield's profit
By Maria Hadlow30 September 2008
Tanfield Group, owner of UpRight, Snorkel and electric vehicle maker Smith Electric Vehicles, has written off £75 million (€96 million) from its books, comprising £48 million (€61 million) to reduce goodwill and intangible assets associated mainly with Snorkel, £11.5 million (€15 million) for bad debt provision and a £15.3 million (€19.6 million) charge on the value of inventories of “slow moving and obsolete” machines.
Tanfield said the write off was prudent given current market conditions. The company said its balance sheet remained strong, that it had sufficient cash to operate without the need to raise additional funds, and that it had a “solid platform for steady growth once market conditions normalise.”
The one-off impairment charge turned the company’s operating profit of £10.3 million (€13 million) into a £68.1 million (€87 million) loss for the period. Before the charge, Tanfield’s profits almost doubled on a turnover up from £36.8 million (€47 million) to £92.8 million (€119 million), with sales up 36% on a proforma basis taking into account the Snorkel acquisition.
Tanfield said trading in the first five months of the year had been strong for the powered access business, but that June saw the market significantly reduce, prompting the restructuring announcement on 1 July. That restructuring has so far seen 30% of the group’s workforce made redundant, a reduction on production and a withdrawal from its Norquip airport equipment business.
“It has been a very difficult time but we have managed through it”, said Tanfield chairman, Roy Stanley, “The business has been restructured and is operating normally, albeit in line with a reduced growth plan in the face of unpredictable market conditions. It is now time to hunker down with slower growth and run the business for sustainable profit and cash generation.”
Tanfield said its balance sheet remained strong – net assets of £98 million (€125 million) and current assets £82 million (€105 million) in excess of current liabilities - and with £12 million (€15 million) in cash at the end of September. It said the company would not need to raise any more funds and had sufficient working capital for the medium term, with cash balances forecast to increase in the final quarter of the year.