Impairment losses impact on Tanfield's profit
By Maria Hadlow14 April 2009
Impairment losses have had a serious impact on Tanfield's end of year figures: figures which would otherwise show that the company had come through a difficult year in relatively good financial shape.
Turnover for the whole Group which includes the UpRight and Snorkel businesses and the Zero Emission Vehicle Division was £146 million -18% up on 2007 although profit was down from £12.3 to £1.7 million before impairments and restructuring costs.
Roy Stanley, chairman of the Tanfield Group said, "This has been a challenging year for the Group. However, we are a business that is lean, nimble and focused, with a highly experienced management team, which reacted promptly and decisively to the adverse market conditions. Tanfield is well placed to trade through the downturn and to move rapidly when its end markets improve."
The first half of the year was profitable for Tanfield, but it experienced a downturn in its end markets in the second half of 2008 particularly in the Powered Access Division.
In his statement Mr Stanley said "Despite these challenges we succeeded in growing sales during 2008. Turnover in the period was £145.7 million, an increase of 18% on 2007 particularly reflecting a full year of Snorkel."
The Board's review of Tanfield's goodwill and other assets particularly those arising from the acquisition of Snorkel in 2007 resulted in a series of impairments valued at £89.7 million. This results in losses before tax of £88.8 million.
In his report Charles Brooks Tanfield's finance director said that significant cost base reductions had been implemented both by reducing headcount and minimising other areas of spend in property costs by terminating leases. This has reduced the break even point in response to lower revenues. "The speed of response to the market changes has allowed the company to report a profit from operations of £1.7 million before non-recurring items."