Tandem Share Discussion Threads

[davidosh] 24/8/2010 17:33

amt....Agreed I really like BLNX and bought my holding straight after the results three months ago as they looked to be heading into profit with a positive H2. It was the very first time I had looked at them and thankfully excellent timing. You are correct in that momentum gets right behind stocks like that.

As for the situation at Tandem....shareholders with around 10% were the ones who started the action and greengiant now has nearly 17%. Together that is more than the number of votes registered at any shareholder meeting for Tandem this Century. I doubt anyone else is building a stake although Jupiter have added a small amount recently. In that situation the owners have a great platform to share their thoughts and build a good relationship with management.

It also means that if any third party wanted to take control of Tandem then there are literally only two people they actually need to consult with but that is not suggesting anything of the sort is likely.

[amt] 24/8/2010 16:54

I tend to invest in tech shares mainly. I reckon they are more exciting and once in a sweet spot tend to follow an upward trend for years . Examples - IMG, Autonomy & BLINKX. There are loads more which I beleive are much earlier in the cycle than these. I also mentioned Ultrasis where the jury is a bit out at the moment but if management get it right the potential is very large. As you might have gathered from my earlier comments I think Tandem have good proven management but are in a tough market. I am honestly not convinced that shareholder action here will help much and if pushed too hard could do the reverse. Hence I sold out recently. Shareholder action at Ultrasis by the way a year or so back resulted in a costly EGM and failure. The management got their own way and now we seem to get less information than before. Anyway thats my personal view only , every situation is different and the people writing on this board seem very reasonable and constructive so I might get back again when the economy looks more optimistic.

[davidosh] 24/8/2010 14:14

amt....What other companies are you interested in ? Why did you sell your TND holding ? I think we are on the cusp of something with great potential here... Shareholders are now taking a huge interest as part owners and the sound base already created and new incentivised management could pay dividends !! (pardon the pun ....lol)

[amt] 24/8/2010 13:24

Hi greengiant. I shall watch with interest, although I have a other holdings where I have significant investments to keep track of. Yes its amazing how much one buyer can have on the share price The same happened with Ultrasis that I mentioned yesterday. Some time ago someone accumulated shares and pushed the price up. In that case the share price fell back afterwards. It should settle down over time though to what the market as a whole places as a value I would have thought. The existing holders after all would sell if they didn't believe the valuation was fair. In the case of Tandem it looks though that when you buy there is now a short term spike and then it drifts down again. It seems that the market is putting a value on the Company of about £1.0 or so. A p/e of about 10 then based on forecast which seems ok to me. I agree that it needed significant investors to take an interest at the start to get the share price moving but there are numerous undervalued companies on the AIM market at the moment. I dont hold the management to account for that except where in a few cases the price is deliberately held down to take a company private. Certainly not the case here. I agree that having the golf business doesnt make sense. However they would need to pick a good time to divest it.

[greengiant] 24/8/2010 11:40

davidosh,

Unless the company examines in great detail the potential disposal of non core assets then I for one will not be happy - it is time this company refocused on what it does well.

With regards to the others who have helped to drive the change, well done but the work is not yet complete

gg

[davidosh] 24/8/2010 11:32

Thank you for the kind words Andrew but in all honesty I am just in the forefront and there a large number who have been doing their bit and not least the other guys who stook in there and attended the AGM and Alun who set up the website to attract fellow shareholders.

I have spoken this morning to a large shareholder who knew nothing about the meeting on the 7th and I will contact a few more to ensure it gets the widest possible coverage. I think we may have about 35% of the shareholder base in the room which would be terrific for the first one and a great platform for the new chief exec to give us his strategy plan.

Incidentally I did hear about a company wanting to buy the Ben Sayers golf business only a few months ago !

[greengiant] 24/8/2010 11:11

AMT - quite enjoying our chat, don't go away. Just out of interest, you stated that you did not think the rise could be all down to my buying - well I have bought some more today and look at the effect. The share is that illiquid that a small amount of buys lifts the shareprice.

The actions at Tandem are due mostly to davidosh who has worked tirelessly and has really been the driving force behind the increases in Corp Gov, which could only be a good thing.

Also interested in your views regarding why anyone would think that a Golf Business is a good fit within this business?

gg

[greengiant] 23/8/2010 14:05

amt -

Hornby EPS
2009 - 11.16
2010 - 9.6
2011 forecast - 12.6

Character EPS

2008 - 12.03
2009 - LOSS
2010 forecast - 16.99

Tandem - Add Back exceptional amortisation in 2009 to get LFL

2009 - 17.5
2010 - 17.7
2011 forecast - 10.4

Good? Thought not

gg

[amt] 23/8/2010 13:51

greengiant - amt - what is the EPS growth of Halfords, Hornby and Character and what is the growth of TND?

Well actually I make it that Hornby is 30% lower than 2007, Character only back into profit in the last reporting. Halfords are doing well but to be fair they are a much bigger company and its not realistic to compare except in general terms ie bikes sales are doing well, but so they are for Tnd.

Anyway thats probably my last word for the moment.
I will dip in and out of the bb from time to time and maybe reinvest when I see the outcome of the present shareholder action.

I wish you good luck with your investment.

Perhaps you could help us out over on the Ultrasis BB (ULT) where posters are absolutely fed up. Although share price has crept up a bit today.

[davidosh] 23/8/2010 13:11

Clearly quite a few are getting interested in the debate and just received a couple of calls. I will post shortly on TMF to encourage a few potential investors too.

I am keeping a running list for the investor presentation at the offices of Grant Thornton, 30 Finsbury Square, London EC2P 2YU at 10.00am on Tuesday 7 September 2010. Those wishing to attend are asked to also email our Nominated Adviser ([e-mail]) or telephone [phone] to confirm attendance.

greengiant
marben100
davidosh
skegbyhouse
supreme mo
devymaster (TMF)
grahamty
DaveBrickles (Stockopedia)
Cornelia (TMF)
Elwyn (TMF)
asagi
ecrip (TMF)
taylormade (TMF)
Blackjack (TMF)

Any more interested from here ?

[greengiant] 23/8/2010 12:54

IP addresses are wonderful things

;-)

gg

[amt] 23/8/2010 12:50

Thats ok I didnt join with you to appoint new non execs but had a long standing interest as a shareholder. I sold out recently because I was concerned about what was happening. I would rather that things were left to progress as before. I take a look at the bulletin board from time to time.

[davidosh] 23/8/2010 12:38

amt....Forgive me for asking but I do not have you listed as a shareholder/poster on this thread who joined with us in taking action to secure two new non executive directors. Did you attend the AGM or have you only recently taken an interest in the company ? Will you be coming to the investor presentation ?

[greengiant] 23/8/2010 12:19

amt - what is the EPS growth of Halfords, Hornby and Character and what is the growth of TND?

Let us just say that we have a difference of opinion, one which is shared by a lot of people. This board have failed to convince me that it is delivering shareholder value, if they can convince you, then please buy.

£2m directors pay in 4 years (£1.8m to 2 directors) - limited share purchases, Stagnant growth, stagnant profits (in fact a 50% reduction of profits if you look at this years forecast). Simply NOT GOOD ENOUGH in my opinion.

gg

[davidosh] 23/8/2010 11:52

Over the last four and five years Tandem have not changed their overall value significantly and even MK admitted at the AGM that the only value added was due to gg. buying in the market. That is not totally true as a number of investors linked to our shareholder activism website had already grouped together and had got the ball rolling.

The fact remains that the directors over the last five years have done absolutely nothing to attract investment into the company so the share price drifted to well below what most long term investors believed was fair value. The directors were happy to buy as many shares as they could a year ago when the share price was at lows pre consolidation but did not want to do investor presentations or any broker research.

Here is a comparable chart for the other companies mentioned and three of the four are up between 50% and 140%. It should also be noted that CCT, HFD and in particular CDY pay very significant dividends so total shareholder return especially if reinvested at lows would be very rewarding indeed.

ADVFN competitor.com/action/charts/basic

CCT - blue
CDY - red
HFD - black
HRN - green

Tandem even with the recent increase in share price has only stayed level after all those years and just five months ago was underperforming by a huge margin. There are no dividends at Tandem and with the large shareholder base still I am not certain it will be efficient to pay one even now but we do need fair reward for ALL.

[amt] 23/8/2010 11:29

Out of interest I had a look at share price performance of Hornby, Character and Halfords over the last 4 years. What stands out for me is that Tandem have done ok except when compared against Halfords. Even if you take out the impact of your buying (not sure that is an entirely valid to do that by the way) they will have beaten Hornby by a long way. I am sure you will have spent a lot longer than me researching TND than me but actually the more time I look into it the better the impression of performance I am getting.

[amt] 23/8/2010 10:28

greengiant. I dont understand your comment about taking a 4 year period and "benefited from strong £" Actually the £ is down by about 20% over tha last 4 years. There have been a few short lived bounces over the last year to two but if you iron these out the £ weakness is the main reason why despite increase turover the net profits have not increased.
Regarding adding shareholder value. I do understand that but the Directors cannot control the share price. The fact is though that balance sheet is much stronger than it was 4 years ago. I remember a former US company I worked for appointed a new CEO and he commented that his job was to run the business as effectively as possible and not control the share price The market would over time take care of the share price My fear here is that mistakes might be made under pressure to create short term shareholder value rather than following a longer term plan.

[greengiant] 23/8/2010 10:02

AMT - I don't disagree with the $ argument, which is why I have taken a 4 year period - this way you see a balanced picture where the company has benefited from the strong £. But the same argument HAS to be made for the company's peers. Hornby, increasing EPS this year. Character, Increasing EPS this year, Halfords - Increasing EPS this year. Flair plc, had a meeting with them last week (well Giochi anyway) they are upbeat - Raleigh are upbeat.

You could say they are misguided, I say most are listed companies who know the effect of a profits warning, so will not misguide their shareholders.

As for share options - I agree this would be a step in the right direction, however, again, this HAS to be done to reward management for performance in excess of the norm. I would not accept share options for anything less than growing profits.

You misunderstand - a listed company's sole reflection on its worth (and thereby how much value it has added) is its market cap. The company could have a NAV of £2, but if the market still thinks it is only worth £1 - that is what value the shareholders of the company can realise - £1. Unless, someone comes along and sells off the parts to realise the £2. Also the market cap has been inflated due to my purchasing - period (for which I have my own agenda). Not due to the company overperforming.

Also, don't confuse HARD WORK for PERFORMANCE. I would have thought management would have been adequately rewarded for their performance in the past - my issue is there should be no reward going forward without enhancing shareholder value.

gg

[amt] 23/8/2010 09:43

greengiant. My understanding was that the plunging value of sterling in the period more than offset any benefits from lower input costs. Although bikes is a growing market they are up against tough opposition from the likes of Halfords. In summary I think management have done well to hold things together during a tough period. I am not sure I agree that no shareholder value has been created over 4 years. What about cash generated. Over £3.0m cash on the balance sheet vs £ 0.5M in 2007. Reduced pension fund deficit. Also if you track the share price vs the market in general it has outperformed.
I agree that it wouldnt do any harm to put a bit of pressure on remuneration and perhaps push this more towards share options. However I would be very concerned if too much pressure results in distraction from running the business. The Directors must have had to work very hard to hold things together and they like other employees need motivating. If they get distracted and demotivated that would not be good for the company.

[greengiant] 23/8/2010 09:21

AMT - There is no doubt that the company did well to hold profitability during the period 2009/10.

However, you cannot have it both ways, you cannot praise management for holding profitability in that year when freight costs plummeted, raw material prices plummeted and labour costs plummeted. Then use the fact that raw material prices, freight costs and labour costs have increased to justify their 41% reduction in earnings this year. The simple fact is that over the past 4 years management have not increased the profitability of the company, yet have taken over £2m out in salaries in those 4 years. I have never been against high salaries, but they have to be justified against increasing SHAREHOLDER VALUE.

The simple truth is that in 4 years NO shareholder value has been created. Irrelevant as to whether they have improved the balance sheet - the company's guide as to whether it has created value is its MARKET CAP. It has failed and the management has failed.

As far as salaries go, I would accept nothing paid this year with the exception of Base salary, no increase in pension nor any bonuses paid. You should only be paid a bonus for performance in excess of the norm. Is this salary level acceptable? I have no issue with the salary level, for high performing management - the question is whether this company has the management to justify the salary?

gg

[amt] 23/8/2010 08:49

You guys seem to forget that during the period from 2007 the UK went through the worst recession for 50 years and still increased turover and managed to hold profitabilty. The overall salary bill is not high for a company with sales over £36m.

[greengiant] 22/8/2010 18:56

Davidosh,

Our views do not differ significantly, the only difference that I can see is that because I am a new investor, I prefer to allow management 12 months to show their worth. Based on what I have seen thus far, they have failed, but they still have 6 months to deliver - and the Investor Presentation.

To me, Performance = Reward. That is the missing link here which management HAS to address. Time is not in their favour - some here would argue that they have had 5 years and failed to deliver it, in which case I would say that another 6 months wont make much more difference.

In the meantime, I will add on weakness. It is interesting to see that 3 of my 4 biggest shareholdings are undergoing some sort of corporate action (some in the background without shareholders being aware).

Andrew

[davidosh] 22/8/2010 16:22

'I do not plan to make the Investor presentation easy for management as I believe that the way forward is to push them out of their period of complacency into one which delivers TANGIBLE shareholder value. I will also want full disclosure on Bonus performance for this year, as I believe no bonus should be paid for a drop in Operating Profit.' (gg)

Operating Profit adding back Amortisation & Exceptionals
2007, £1,191k
2008, £1,368k
2009, £1,126k
2010, £1,217k


gg,

As you know Skegbyhouse and I have always shown our concern about the levels of bonus payments without any returns to shareholders. Bonuses should only be paid out for returns significantly ahead of what should be reasonably expected to be delivered and directors should receive a fair return before any bonus is suggested or expected !! You have been very relaxed about the past and only looking to the future. As you are now showing concern about those levels of remuneration compared to their peers and just as importantly in comparison to profitability then we need to know how these bonuses are earned ??

What are the terms of the contracts ?

Why were substantial bonuses paid in 2009 when the profits actually fell ?

Why were bonuses and salaries so inflated from 2007 without introduction of any return for shareholders and still no dividend in sight ?

If the directors are to achieve such huge bonuses compared to base salaries then why are they not paid in shares rather than cash ?

If they received shares then they may be far more aligned with shareholders and be incentivised to drive long term shareholder return and introduce a dividend ?

The non stop cost cutting and reduction in workforce does not fit well with large increases in director remuneration and may disincentivise the remaining staff. Is there proof that the next level of management and key design, sales and marketing guys are happy with their position in such an environment.

What are the thoughts of the new non execs with regards to remuneration policy ? As the old chairman who was a one man committee has gone it is they who you need to give your thoughts on the subject. I have already made it clear of my concerns in communication and at the AGM but your contact will carry more weight.

We need Fair reward for everyone at Tandem.