Tandem fails to get on board with European red tape

CYCLING, toys and mobility scooter firm Tandem has seen a rise in first half revenue and profits – but the performance could have been much better had it not been for strict European red tape.

The Birmingham company said in its interim results statement that the performance of its mobility scooter business had been subdued due to a combination of HMRC demands and the European classification of its products.

It said: “Mobility sales and profitability were marginally behind and this was adversely impacted by an HMRC demand for retrospective import duty which we previously reported and which has meant retail prices have been increased to compensate.  

“Despite it being obvious that our mobility scooters are designed solely for the use by disabled persons, it is HMRC and the European Commission’s view that because a mobility scooter may be purchased by an able bodied person it is subject to a 10% rate of duty.   
 
“Whilst we believe that this is fundamentally wrong, after taking legal advice we are of the opinion that there is limited chance of a successful and cost effective appeal against the ruling.”  

It said the vendor of its Pro Rider business had now settled all liabilities up to the date of inspection in February 2016.

“We are aware that HMRC are actively targeting all competitors and we will continue to push to ensure that there is a level playing field in this sector,” it added.

Nevertheless, in the six months to June 30, 2016 group revenue increased by approximately 10% to £17,115,000 (H1 2015: £15,585,000). This incorporated a full period contribution from its ESC (Europe) acquisition.  

Gross profit was £5,106,000 (H1 2015: £5,052,000).

Performance could also have been better had it not been for tough comparisons in its cycling business.

Revenue from the bicycles, bicycle accessories and mobility businesses reduced to £6,078,000 (H1 2015: £8,397,000), which aside from the mobility scooter issues had been influenced by a national retailer not repeating its previous year’s bicycle promotion.

Operating profit for this section of the business was just £19,000, compared to £597,000 in the same period last year.

Tandem said group revenue for the 38-week period to September 23, 2016 was approximately £28.8m, compared to £25.1m in the comparative period last year.  In the 12-week period from June 30 to September 23, group revenue was approximately 21% ahead of the prior year period.  

It said it was also encouraged by its prospects for the Christmas trading period.