The Tanfield Group Plc

("Tanfield", "Group", or "the Company")

Interim Results for the six month period to 30 June 2011

29th September 2011

The Tanfield Group Plc, a leading manufacturer of aerial work platforms, announces its unaudited interim results for the six month period ended 30 June 2011.

·     Global aerial lift market recovering

·     Turnover increased to £24.6m (H1 2010: £19.6m / H2 2010: £23.8m)

·     Operating losses reduced to £7.0m (H1 2010: Operating loss: £7.7m / H2 2010 Operating loss: £8.1m)

·     Net cash at 30 June of £4.7m (31 December 2010: £3.6m)

·     Order book at 30 June of £20.9m (31 December 2010: £7.7m)

·     Supply chain capabilities limiting rate of growth

Darren Kell, CEO of Tanfield, said: "Global demand for aerial work platforms is returning, driven by major fleet operators replacing ageing equipment. However, this has created bottlenecks as the supply chain struggles to restore the capacity it lost during the protracted downturn.

"Our order book rose 170% over the first half of the year and has improved further since the half year end. We are working hard to resolve the supply chain issues so that we can bring orders through to sales at a faster rate and take the business back to profitability."

Further information:

Summary

Trading for the first half was in line with the Board's expectations, with turnover increasing 25% to £24.6 million, compared to £19.6 million in the same period last year. Net cash improved to £4.7m (31 December 2010: £3.6 million). The order book at 30 June 2011 stood at £20.9m, a 170% improvement since the last period (31 December 2010: £7.7m).

The increase in demand is largely driven by Snorkel customers replacing ageing equipment, plus the strength of the Snorkel brand's international distributor network. Given the capacity that has been removed from the market during the downturn, even this replacement is enough to absorb the available capacity.  As a result, pricing has improved and margins have increased.

Order intake has continued to exceed sales in spite of increased lead times for many products.  Lead times have increased owing to a combination of supply chain issues and careful management of our working capital. The global supply chain to the aerial lift industry is still rebuilding capacity that it lost during the downturn. Certain supply chain partners were able to accommodate our increasing demand in the first half, from their built up inventory and stock - however, once exhausted, it became clear that many were in turn facing their own supply chain issues and working capital constraints. The fragile condition of many suppliers, post market recovery, has resulted in shorter payment terms, putting increased pressure on the Company's working capital.  The Company is therefore controlling its growth rate to ensure that it has sufficient working capital to fund the growth.  This slower, controlled growth rate will extend the time taken for the Company to reach break even.  The Board expects this scenario to continue throughout the second half of 2011.

Snorkel - The Powered Access Market

The worldwide economic recession led to significantly reduced demand for aerial work platforms across the industry's main markets of North America and Western Europe. The extended moratorium on capital expenditure within our customer base meant that many companies did not purchase equipment for a number of years.  Clearly this situation was unsustainable as the equipment wears out and must be renewed in order to maintain an acceptable standard and competitive fleet age. Recovery in our markets is now therefore being driven by fleet replacement, rather than fleet expansion. True market growth is expected to return once increased demand within the non-residential construction and facilities maintenance markets increases the utilisation of equipment beyond acceptable parameters. The Company is preparing for that tipping point.

We are making gains in China, where we now produce several all-electric lifts for the local market. The construction boom in Brazil represents a significant opportunity to increase our presence in Latin America and we have recently appointed our first agent in this important market.

Following the completion of the re-brand and harmonisation of our UpRight Powered Access division, the Snorkel brand is now firmly established and has been fully embraced by our distributor network. Our engineers are engaged in a new product design programme that improves commonality of parts across our volume products and combines Snorkel's durability with enhanced machine performance.

Snorkel continues to attract high quality companies to act as its distributors. During the period, for example, we appointed the multi-billion euro Enka group as our distributor in Turkey.

Funding

Net cash improved by £1.1m during the six months to £4.7m at 30 June 2011 and we remain focused on the optimisation of our working capital.

Dividends

The Board has not declared a dividend for the period.

Outlook

Overall, the Board expects the trading performance in the second half of 2011 to be similar to the first half. Global demand for aerial work platforms is returning, driven by major fleet operators replacing ageing equipment. However, this has created bottlenecks as the supply chain struggles to restore the capacity it lost during the protracted downturn. Our order book rose 170% over the first half year and has improved further since the half year end.  We are working hard to resolve the supply chain issues so that we can bring orders through to sales at a faster rate and take the business back to profitability.