Times Business
Electric van maker’s future safe, says chief
1:43pm Friday 27th August 2010
THE future of electric van maker The Tanfield Group is not in jeopardy despite a sharp fall in its cash reserves, its chief executive said.
Interim results for the group, released to the Stock Exchange last week, showed its net cash had declined by £3.2m during the first six months of the year to £2.2m at June 30.
In addition, the Wearsidebased company, which has been loss making for the past year due to the recession’s effects on its key markets, said the cash levels had “subsequently reduced further,” and that, as a priority, it was reviewing ways to fund the continuing cash outflow.
However, the company is set to receive a significant injection of working capital when an expected merger of its Smith Electric Vehicles division with a US partner goes through, which could be as early as October.
Chief executive Darren Kell said: “The core message we need to get across is we have a very strong balance sheet and no debt in the business at all.
“We have a situation where the business has been using its cash reserves as it operates at a loss.
“We are aware of the fact there is a finite amount of cash available for the business, so we are investigating other means of generating cash.”
He added: “We have a deal that is progressing very well.
The business is not at any risk.”
Tanfield announced in March that Smith Electric Vehicles US (Sevus), in which it owns a 49 per cent stake, had offered to buy its Smith Electric Vehicles division for £37m.
But following a combination of the US electric vehicle market taking off more quickly than expected and Sevus winning the support of US President Barack Obama, Tanfield announced last week that the companies were to merge and it would retain a significant stake.
Although the company continued to make losses in the first six months, the losses had reduced to £9.8m, down from £11m for the same period of the previous year.
It has also continued to see growth in demand for its electric vans.
Last week’s results showed that turnover in its zero emission vehicles division rose to £8.4m in the first half of this year, up from £8.1m for the same period of 2009.
Tanfield said demand for its vehicles continued to rise during the six months, although new markets outside the UK accounted for a significant proportion of orders.
It added that after a severely depressed period there were also signs of the market recovering.
Its powered access division, providing aerial work platforms, saw a drop in turnover over the six months, down to £18.6m, compared to £21.2m in the same period of 2009.