TIDMTND
RNS Number : 3835O
Tandem Group PLC
09 February 2021
Tandem Group plc
(the "Company" or "Group")
TRADING UPDATE AND NOTICE OF RESULTS
Tandem Group plc (AIM: TND), designers, developers, distributors
and retailers of sports, leisure and mobility equipment, announces
a trading update ahead of its annual results for the year ended 31
December 2020 which are due to be announced in March 2021.
Trading and operations
As we announced in our interim results on 22 September 2020
revenue in the first half of the year increased by approximately 6%
to GBP16,927,000 (2019 - GBP16,029,000) due to the strong growth in
cycling and sales of outdoor products, partially offset by cautious
national retailer FOB (w here product is purchased in full
containers and shipped direct from the country of origin ) wheeled
toy buying.
In the second half of the year, as we previously reported,
revenue in the Summer period and to the end of Quarter 3 was behind
the prior year due to the ongoing cautious national retailer FOB
buying. However, Quarter 4 revenue was approximately 6% ahead of
the prior year which recovered some of the reduction in Quarter 3.
As a result, unaudited Group revenue for the full year was
approximately GBP37.1 million.
Gross profit mar gins continued to be stronger due to the
increased proportion of domestic sales in our wheeled toy business
where margin is traditionally higher than from FOB, coupled with
higher bicycle, golf and B2C revenues.
Group operating expenses reduced by approximately 11% in the
year principally as a result of the COVID-19 impact, with reduced
exhibition costs and travel for much of the year.
Group profit before tax is therefore expected to be materially
ahead of the prior year. The strong trading performance also
enabled cash generation which helped to strengthen the balance
sheet position further.
Revenue from domestic toy business was more than 40% ahead of
the prior year although this was more than offset by the reduction
in FOB revenue. Revenue from most licensed products was behind the
prior year, although in many cases domestic revenue was ahead and
in the cases of Frozen 2, Peppa Pig, Spiderman and Batman,
significantly so.
Despite lower FOB business, domestic sales of Kickmaster
football training and Hedstrom outdoor play products continued to
perform strongly and were also well ahead of the prior year. Other
own brands including Stunted and uMoVe were also up.
It was a fantastic year for our Ben Sayers golf brand. Revenue
more than doubled as consumers took advantage of golf courses
reopening in May and our quality and value product proposition.
As we reported before, the impact of COVID-19 changed the
landscape for cycling. From the second quarter onwards, revenues
were at exceptional levels with significant growth at both
independent bicycle dealers and also national retailer
customers.
Stock availability, although slower than we would have hoped
for, improved towards the end of the year to enable a strong finish
to 2020 for the cycling businesses.
We have been very excited by the continued growth in our
lightweight Squish junior bikes range which has continued to
increase market share and was well ahead of the same period in the
prior year. In addition, the demand for our flagship Dawes and
Claud Butler ranges showed no sign of abatement, supported by
Falcon, Boss, Elswick, Townsend and Zombie.
Our ranges of ebikes and escooters continued to grow
significantly in Quarter 3 and Quarter 4, utilising our own bicycle
brands Dawes and Falcon on ebikes and Li-Fe and Wired for
escooters.
Our Expressco Direct group of online businesses significantly
increased profitability, with growth from many of our outdoor
product ranges including outdoor living, garden storage and outdoor
play ahead of the prior year. From Autumn onwards, our ranges of
small domestic appliances and household products performed well. As
we have stated before, the combination of lockdown and particularly
good weather during the spring months had a very positive impact on
sales and gross margin.
We are now in the position whereby the investment into and the
development of our B2C business is now generating profitability and
cash.
Pension scheme and dividend payments
The 2019 Tandem Group Pension Plan triennial valuation has been
finalised with the Trustees. This has resulted in a 5% ongoing
increase in contributions agreed.
There is a provision that in any calendar year should dividend
payments exceed pension deficit contributions, an additional
contribution, equal to the excess, will be paid into the scheme.
However, the Board's objective to operate a progressive dividend
policy and to increase the dividend as trading results and funds
permit remains in place.
Appointment of Company Secretary
The Company announces that David Rock has been appointed as
Company Secretary from 1 January 2021. David was appointed Group
Financial Controller in June 2020 to take over day to day financial
responsibilities from Jim Shears, following his appointment as
Chief Executive Officer . David is a qualified ACCA accountant with
over ten years post qualification experience.
Outlook
We are pleased with the encouraging start to 2021 despite a
number of pressures facing the Group. COVID-19 continues to have an
impact on the supply chain and on our ability to travel overseas.
This affects our capacity to identify and source new products as
efficiently. It is also impacting on the exhibition of our products
at the various fairs and shows that we would normally attend with
both the Hong Kong and London toy fairs cancelled and the Nuremburg
fair deferred until Summer.
Lead times, particularly on bicycles, are longer due to global
demand for components and we are therefore committing to purchases
much further into the future.
The US dollar is currently weaker than previously which is a
positive although Far East costs are under great pressure due to
material price increases, global demand and the adverse
relationship between United States dollar and Chinese renminbi.
One of the most pressing current issues is with respect to
freight where, despite having part of our freight requirement at
fixed prices, there has not been enough capacity in the system to
fulfil demand, coupled with port congestion and COVID-19 related
delays. To ensure supply we are currently being quoted many times
the rates we were paying in the Autumn of 2020. Whilst we have
continued to import products, in some cases we have chosen not to
at this time, although it is unclear when freight rates will begin
to reduce to allow this to become commercially viable again.
Notwithstanding these issues, revenue to the end of January 2021
was approximately 75% ahead of the same period last year with back
orders fulfilled as stock was received. Our forward order book
across all parts of the Group is also substantially ahead of last
year which is encouraging.
We are in the process of signing a number of additional wheeled
toy licences for the second half of 2021 and beyond and we will
update shareholders further in due course.
We have expanded our Ben Sayers golf range to cater for a wider
range of golfers, including ladies and juniors, and we believe that
this strategy will be successful in light of the increased
popularity in golf over the last year.
We expect the strong demand for bicycles to continue in the
immediate future. There is still growth potential, particularly
from Squish, and we remain of the belief that there will be further
growth in ebikes and from increasingly fashionable escooters. As a
result, we have committed more heavily to stock purchases in these
areas for 2021.
In our online businesses, as ever, we continue to focus on
existing ranges whilst not losing the ability to be opportunistic
and take advantage of new products that we identify.
We have undertaken a full redesign of all our websites with
Garden Comforts by Garden & Camping ( www.garden-camping.com )
and At Home Comforts by Jack Stonehouse ( www.jackstonehouse.com )
going live before Christmas and the remainder recently or about to
go live. Both website visitors and revenues subsequent to re-launch
have increased. Our B2C businesses are now in a great position for
the next stage of growth.
Notice of results
The Group expects to publish its final results for the year
ended 31 December on 25 March 2021.
A final results presentation will be available on the website on
25 March 2021 at www.tandemgroupplc.co.uk/investor-presentations .
Investors with questions are asked to email the Company at
investorrelations@tandemgroupplc.co.uk.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014 (MAR) and the Directors of
the Company take responsibility for this announcement.
Enquiries:
Tandem Group plc
Jim Shears, Chief Executive Officer
David Rock, Company Secretary
Telephone 0121 748 8075
Nominated Adviser
Cairn Financial Advisers LLP
James Caithie
Sandy Jamieson
Telephone 020 7213 0880
9 February 2021
Forward-Looking Statements
Certain statements made in this announcement are forward-looking
statements. These forward-looking statements are not historical
facts but rather are based on the Company's current expectations,
estimates, and projections about its industry; its beliefs; and
assumptions. Words such as 'anticipates,' 'expects,' 'intends,'
'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions
are intended to identify forward-looking statements. These
statements are not guarantees of future performance and are subject
to known and unknown risks, uncertainties, and other factors, some
of which are beyond the Company's control, are difficult to
predict, and could cause actual results to differ materially from
those expressed or forecasted in the forward-looking statements.
The Company cautions security holders and prospective security
holders not to place undue reliance on these forward-looking
statements, which reflect the view of the Company only as of the
date of this announcement. The forward-looking statements made in
this announcement relate only to events as of the date on which the
statements are made. The Company will not undertake any obligation
to release publicly any revisions or updates to these
forward-looking statements to reflect events, circumstances, or
unanticipated events occurring after the date of this announcement
except as required by law or by any appropriate regulatory
authority.
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END
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February 09, 2021 02:00 ET (07:00 GMT)
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