11.11.2008

Tanfield update

Tanfield the owner of Snorkel and UpRight has announced the appointment of Arbuthnot Securities as its nominated advisor and joint broker.

At the same time the company has released a further trading update. It also says that chairman Roy Stanley has relinquished his day to day involvement with the business and returned to his previous non-executive role.

Essentially the company says that trading has stabilised at lower levels caused by lower demand and the overall economic downturn caused by lack of credit. It claims to have cut costs to the point where it is breaking even and does not expect trading conditions to change much during 2009. Further cost reductions n order to reduce its break even level are also being prepared.

It also says that it has a strong balance sheet and liquidity with no borrowings and feels well placed to come through the downturn.

In the company’s own words: “As stated on 30th September, Tanfield Group is operating in challenging global markets. The lack of availability of credit to end customers and a general reduction in demand, resulting from the economic downturn, is creating significant market uncertainty. Excess industry inventory continues to affect market pricing and this pricing pressure, combined with higher input costs, is significantly impacting margins and profitability.”

“Despite these challenges we continue to trade at a lower level and have reduced capacity and costs which has allowed us to return to break even at these levels. While market uncertainty makes future forecasting difficult, our 2009 plans broadly assume a continuation of current trading conditions with no sign yet of any upturn. We continue to review the scope for additional cost cuts with a view to further reducing our breakeven level in the event of any further deterioration in trading.”

“We continue to focus on our financial position which remains comfortable with cash of £13.3m at 31st October 2008, and no borrowings. Cash balances are expected to rise further as working capital unwinds and the Directors continue to believe that the business is very well placed to weather the downturn and take advantage of market improvements when they arise.”