25.09.2006

Tanfield sales up 60%

Tanfield, the owner of UpRight powered access has reported first half revenues of £16.5 million, a 60 percent increase on the same period in 2005.

Profits showed a more significant increase, with net after tax profits rising by over 900 percent from £192,000 in the first half of 2005 to £1.73 million this year.

With net profits for the full year 2005 of £2 million, Tanfield looks set to more than double its profits for the full year 2006.

The impact of the UpRight acquisition on the first half numbers was negligible, given that it was only completed in the last few weeks of the period.

However the access segment revenues were £3.1 million, well up on 2005, when the full year revenues were only £4.4 million. The vast majority of this represented organic growth in sales of Aerial products, the producer of trailer and vehicle mounted lifts.

Details of the UpRight acquisition were also released; it appears that Tanfield effectively paid nothing for the intellectual rights or goodwill. Inventories totalled £5.5 million, the debtor’s book just over £1million and the order book £322,000.

Tanfield paid £6.8 million in cash.

Roy Stanley, Tanfield chairman said: “The financial results for the six months to June 2006 demonstrate how the Group is building strongly on its improved performance in 2005, with an exceptional level of growth and maintained profitability”.

“Turnover for the six months grew by almost 60 percent, almost entirely made up of organic growth from continuing operations. The acquisition during this period was completed on June 9th 2006 and had limited impact on sales figures”.

“The increase in turnover has been achieved while maintaining gross profit at 54 percent, (55% in the first 6 months of 2005). Profit before tax was £1.94m before restructuring costs, after goodwill write-off and depreciation, compared with £0.19m in the first half of 2005 and £1.69m for the full year ending December 31st 2005”.

Vertikal Comment

The Tanfield results, while in a different league to the larger companies than we usually report on, are none the less very impressive.

The company has demonstrated its ability to grow, what were considered to be, fairly weak businesses organically. At the same time it has clearly recognised the need for a strong brand image and product range if it is to grow at a faster pace.

It is now putting all of its efforts behind the UpRight name and the Smiths name for its Electric Vehicles, or Zero Emission Vehicles as it is now calling this product segment.

The UpRight acquisition looks like a bargain and provides a huge potential for the company to become a major player in the world wide access business, something that would have not been feasible with the Aerial brand and product line-up.

At the same time the company has financed this with equity, keeping its gearing exceptionally low, possibly for later ramping up? Its borrowings are minimal with over 16 times interest cover.

Make no mistake though, Tanfield has some major challenges on its plate in the access business, as it revamps the UpRight products and moves production to the UK.

The first time we will be able to gauge how things are going will be when the full year numbers are published in March.

However the true test will, of course, be the full year 2007, when Tanfield will either have pulled it off and be well on its way to gaining a significant slice of the aerial lift market or will have been sidelined as a regional or niche player.

Watch this space.