Tanfield Group PLC
Page 6


DIRECTORS' REPORT
The directors submit their report and the financial statements of Tanfield Group PLC for the year ended 31
December 2008.

PRINCIPAL ACTIVITIES

The company's principal activity is that of a holding company. Tanfield Group PLC is the parent company of a
group engaged mainly in the powered access, zero emission vehicle industries and engineering.

RESULTS AND DIVIDENDS

The financial result, for the twelve months to 31 December 2008 reflects the impact on the Tanfield Group plc of
the decline in its global markets and its response to that decline.

Turnover for the twelve month period grew to £146m which compares to £123m for the full year to December
2007. Although this is a growth of 18%, this reflects a strong first 5 months and then a decline month on month
since June 2008.

Profit from operations before impairments and restructuring costs and tax for the period of £1.7m shows a
significant reduction from the £12.8m profit in the year to December 2007. The 2007 figure included an amount
of £2m in relation to the recovery of a Snorkel customer debt.

A review was undertaken of the carrying value of assets in the Powered Access division given the significant
changes to market prospects. This review gave rise to impairments of those assets totaling £90m.

After restructuring and impairments, the loss before tax for the period of £88.7m reflects the impact of the
impairments.

The balance sheet remains very robust after impairments, with net assets at the end of December of £86m (£165m:
December 2007). Net Current Assets were £62m (2007: £110m) with cash balances in excess of £11m and no
borrowing. This demonstrates that the company has significant levels of working capital allowing it to work
through the current trading conditions.

No dividend has been paid or proposed for the year (2007: £nil). The loss of £89m (2007: Profit of £10.4m) has
been transferred to reserves.
REVIEW OF THE BUSINESS

The year was dominated by the deterioration in trading conditions in our main markets and the company's
response to that deterioration.

A detailed review of the business is included in the Business and Financial Review on pages 2 to 5.

FUTURE DEVELOPMENTS

The main focus in the short and medium term is one of managing through the difficult trading conditions, taking
all appropriate steps to minimise costs and preserve cash while retaining skills and resources to respond to any
market improvements when they arise.

Management policies will continue to be reviewed in the light of changing trading conditions.






AnnualReport2008 Page 9
Tanfield Group PLC
Page 7
DIRECTORS' REPORT (continued)

POLITICAL AND CHARITABLE CONTRIBUTIONS

During the year, the group has made no political or charitable donations (2007 - £nil).

FINANCIAL INSTRUMENTS
The Group's financial instruments comprise cash, finance leases, unsecured loan notes and short term debtors and
creditors arising from its operations. The principal financial instruments used by the Group are cash balances
raised from share issues by the company and are applied in financing the group's fixed assets. The Group has not
established a formal policy on the use of financial instruments but assesses the risks faced by the Group as
economic conditions and the Group's operations develop.
MARKET VALUE OF LAND AND BUILDINGS
The directors are of the opinion that the market value of properties at 31 December 2008 would exceed the net book
values included in the financial statements, but they are unable to quantify this excess in the absence of a professional
valuation, the costs of which are not considered justifiable in view of the group's intention to retain ownership of its
existing properties for use in its business for the foreseeable future.
RESEARCH AND DEVELOPMENT

The Group maintains a development programme as continuity of investment in this area is essential for the
maintenance of the Group's market position and for future growth.

EVENTS SINCE THE END OF THE YEAR

There have been no significant events since the end of the year.

DISABLED PERSONS
The group will employ disabled persons when they appear to be suitable for a particular vacancy and every effort is
made to ensure that they are given full and fair consideration when such vacancies arise. Where existing employees
become disabled, it is the Group's policy wherever practicable to provide continuing employment under normal terms
and conditions and to provide training and career development to disabled employees wherever appropriate.

EMPLOYEE INVOLVEMENT

The Group encourages the involvement of its employees through regular dissemination of information of
particular concerns to employees.

To facilitate this, the company undertakes a Communications Forum where all employees are represented by a
colleague within their department at regular meetings with senior managers.










AnnualReport2008 Page 10
Tanfield Group PLC
Page 8

DIRECTORS REPORT

DIRECTORS
The present membership of the board is set out on page 1. GE Allison was appointed to the board on 23
rd
Sept
2008.
Directors shareholding
Ordinary shares of
£ 0.01each
31/12/2008 31/12/2007
Beneficial
RRE Stanley
DS Kell
CD Brooks
BJ Campbell
M Groak
G Allison
JN Bridge
C Billiet
27,769,292
1,700,000
112,463
111,979
-
104,207
47,500
294,000
19,649,292
-
-
6,119
-
-
27,541
-
All directors have the right to acquire shares in the company via the exercise of options granted under the terms of
their service contracts, copies of which may be inspected by shareholders upon written application to the company
secretary. Details of the directors' options to acquire shares are set out in the Directors' Remuneration Report on
pages 13 to 16.
POLICY ON PAYMENT OF CREDITORS
It is group policy to agree and clearly communicate the terms of payment as part of the commercial arrangements
negotiated with suppliers and then to pay according to those terms based on the timely receipt of an accurate invoice.
The company supports and the UK based businesses follow the CBI Prompt Payers Code. A copy of the code can be
obtained from the CBI at Centre Point, 103 New Oxford Street, London WC1A 1DU.

Trade creditor days based on creditors at 31 December 2008 were 77 days. (2007 ­ 64 days)
SUBSTANTIAL SHAREHOLDINGS
On 31 December 2008 the following held substantial shares in the company. No other person has reported an interest
of more than 3% in the ordinary shares.
Nortrust Nominees
42,314,575
Barclayshare Nominees
32,799,010
TD Waterhouse Nominees (Europe)
28,063,410
HSDL Nominees
21,502,543
Productive Nominees
21,217,112
HSBC Global Custody Nominee (UK)
20,525,985
LR Nominees
19,406,957
Prudential Client HSBC GIS Nominee
14,644,718
Hargreaves Lansdown (Nominees)
11,751,518

As disclosed in the Directors report RRE Stanley holds shares of 7.5% which are held through nominee companies.
DIRECTORS' INTEREST IN CONTRACTS
No director had a material interest at any time during the year in any contract of significance, other than a service
contract, with the company or any of its subsidiary undertakings.
AUDITORS
A resolution to reappoint Baker Tilly UK Audit LLP as auditors will be put to the members at the annual general
meeting. Baker Tilly UK Audit LLP has indicated its willingness to continue in office.


AnnualReport2008 Page 11
Tanfield Group PLC
Page 9
DIRECTORS' REPORT (continued)

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

The directors in office on the date of approval of the financial statements have confirmed that, as far as they are
aware, there is no relevant audit information of which the auditors are unaware. Each of the directors have confirmed
that they have taken all the steps that they ought to have taken as directors in order to make themselves aware of any
relevant audit information and to establish that it has been communicated to the auditor.

DIRECTORS INDEMNITY

Every Director shall be indemnified by the company out of its own funds.


Approved by the Board of Directors
and signed on behalf of the Board


Director

16 April 2009