Preliminary results from Tanfield, the manufacturer of zero emission (i.e. 'electric' in old language) vehicles and aerial work platforms, showed significant growth in sales and profit.

Sales rose from £22.4 to £41m, just slightly below the broker’s estimates and after re-structuring costs of £1.9m, profit before tax rose from £2.1m to £3.6m. Earnings per share were slightly below even the broker’s expectations at an adjusted 1.6p (estimates. 2.6p).

I am aware that business is buoyant for Tanfield, however, the valuation relative to these numbers and the projections looks a bit excessive. It’s definitely the green premium that is pulling things up.

Even the normally bullish house broker has reduced their forecasts from BUY to HOLD against a target price which is now 21x expectations for the current year.

I like one of the comments in the results announcement in respect of the move to new premises:

'......the Chairman and founder of Tanfield, Roy Stanley, successfully negotiated a 15-month rent-free period at Vigo Centre. The Chairman also secured a £1.95m grant for Tanfield, from Regional Development Agency, One NorthEast.'

Clearly the Chairman needs plenty of praise heaped on him. I thought it was in his job description to act in the best interests of the company!

The first of the group’s Smith vehicles have entered service with business-to-business parcel delivery company TNT Express; and contract logistics company CEVA Logistics (formerly TNT Logistics), on behalf of Starbucks.

TNT Express has indicated that there is the potential for it to replace up to 10% of its UK fleet with zero-emission vehicles such as the Smith Newton.

At this stage it appears to be politically correct for big groups to show interest in green initiatives. I just wonder how long it will take for them to really commit to material orders and thereby help to justify Tanfield’s stratospheric share price.