Tandem Share Discussion Threads

[bobthetrader] 16/4/2012 12:42

Does anyone understand the workings of the pension scheme?

I notice that they had a surplus at the end of the f/y 2008 and now they have a deficit of 2.7 mil. It seems to be slowly rising year on year. They also stated a few years ago that they would try to find ways of reducing the deficit or eliminate it altogether.

If someone could explain how this works in simple terms, it would be appreciated, and how important is this in investing terms ie. what is the chances of this deficit increasing in the next year or two.

Non share holder, but considering an investment!

Thanks in advance!

[wapper] 16/4/2012 11:38

A dismal performance once again. Only winners are the Management. Every company involved in bike selling is booming, producing record figures. But TND are "pleased" to report significantly lower sales/margins/forecasts & a dramatically reduced NAV ue to an out of control Pensions deficit. More dilution to come ?

[graham1ty] 16/4/2012 10:50

To counter my ( bored) but happy post above: thoughts for the day:

Market cap: £3.7m
Total director's emoluments over the last 8 years: £3.8m
Highest paid Director's total over last 8 years: £1.5m
Total shareholdings built up by the Directors: er.....worth just £240,000
Dividends paid to shareholders over 8 years: c£198,000
Increase in revenue over last 8 years.............er, a drop of 17%
Increase in eps over 8 years............er a drop of 30%

It is debt free ( almost); still profitable in a rubbish market; BUT, the Director's do NOT have a meaningful stake in the business and their reward is through salary, not equity exposure. I want them to sweat, want them to be rewarded WITH EVERYONE ELSE, related to profitability and total returns to shareholders. We do not have the annual report yet: i am not confidant that we will have a drop in total pay of 32% in line with profitability.......but I might be wrong.

Reading this non-execs ?

[whoppy] 16/4/2012 10:38

Their salaries are way out of scale for the size of business and it's turnover/profitability. In fact salaries add up to more than the profit..
The pension deficit is shocking aswell increased to £2m..what the..##. Probably linked to the companies share price
The only positive is trading is ahead of expectation for the first quarter, but then they say they don't expect 2012 to be great. The year of the Olympics.!!

[amt] 16/4/2012 10:35

Whoppy - Very difficult to run a manufacturing operation. That requires a lot of skill. Historically UK PLC has been focused on making easy money through the Finance sector. Now that has fallen appart maybe people will begin to see where proper money can be made. True skills are required and its not all about a quick buck. Their salaries are a fraction of what the Bankers take and these sort of businesses need to be encouraged and nurtured through difficult times. Such times ironically caused because it was seen as so easy to make a quick return in the past.
Its the investment community who need a shake up and to start backing companies like Tandem. Its up to them to start looking for value rather than being lazy and expect everything to be delivered on a plate as it was in the past.

[whoppy] 16/4/2012 10:24

amt,

I think low ambition for shareholders, but rather high ambition for management to keep their cushy salaries. They are quite a desperate bunch and are not really for the commercial world hence there are no forecasts, presentations, etc. The only idea they could manage to come up with is spending loads of shareholders money on buying back shares in a desperate attempt at boost the eps. They have no idea on how to improve eps by actually growing the business. Just very lacking.
Maybe they should sell the business, but that would mean giving up their massive salaries so we are stuck, imo. They are obviously not even doing something to promote the brand seeing as the Olympics are about to start. team GB are going to win medals and cycling will be at the forefront. Where is the promotion of the brands. it's as if they don't exist.

[graham1ty] 16/4/2012 10:23

Amt, agree with you. Hope there is not an acquisition for acquisitions sake. It has taken five years to bed down all they have got, cut the debt ( pre the buyback), change senior management, focus on some key brands etc etc. The last thing they need is another acquisition that adds yet more brands and takes ages to bed in. It would be either expensive ( back to big net debt) or very very dilutive, at these levels.

These results are swings/roundabouts: revenue down.....but margins steady; cash tied up in stock levels dramatically up......but used at 140p on the buyback; the pension issue "tail" again wagging the dog; caution on the economy.....but revenue's well up this year in both divisions; a divi, good......the increase so dull ( it should go up, but let us be cautious and increase the smallest amount we can").

For my halfpennyworth: in this market, these are fine, if not good. Tandem remains profitable and might even grow this year. However, there is nothing to excite anyone and these will be dead in the water ( even at these depressed levels)until the AGM. Only a positive statement then would get these moving again.

[davidosh] 16/4/2012 10:16

amt...investors always have a choice of where to invest but it is the directors who have to provide the information and reasons to choose Tandem as a long term hold or encourage new investment.

There are no forecasts in the market.
There are no broker notes
Directors do not offer presentations to investors.
There are no institutions investing.
There is no PR for the company.

I accept that this is not a high tech or growth story but...

In the last three years eps has been 17.67p, 19.6p and now 13.37p whilst dividends received by shareholders have been zero, 3p and today 3.15p announced. My view is that if the company had been paying 5p, 5.5p and 6p which is approximately one third of its earnings out to shareholders then the shares would have been attractive to income seekers and also worthy of holding long term to await developments in the business.

The shares would have been trading at about £1 throughout the last three years with a 6% yield on offer rather than at 60p then inflated to £1.60 and then all the way back down to 70p !! Instead management focussed on paying very handsome rewards to directors but not shareholders. When a shareholder stood up to that the rest of us have suffered the result ! That is clearly not maximising shareholder value for ALL shareholders

What happens if Mr Burgess or a student of his comes back to do the same again in 2012 especially if the shares slip another 15% ?

[amt] 16/4/2012 10:14

whoppy - I dont think its low ambition. With the dreaadfull state of the economy its a question of ensuring the company remains robust and stable.

[envirovision] 16/4/2012 10:11

I think management have shown that they cant be trusted, quite why people here don't move on is beyond me. If they have done it once then you can be certain they will do it again at some stage, why take the risk ?

[amt] 16/4/2012 10:10

18BT - Well might not be prudent to hike the didvidend. Probably arent any value enhancing acquisitions around at the moment, prefer organic growth myself. Most acquisitions diminish returns and only the Corporate finance people gain in the end. I really hope they dont spend valuable cash on Corporate Finance advice.

[whoppy] 16/4/2012 09:57

they seem to have low ambition aswell..hence the results...blaming it on the economy is all too easy. It's up to them to manage the situation and grow by focusing on what they do best and finding new customers.

[18bt] 16/4/2012 09:54

amt, disagree with you there. The management can do something about the shareprice from increasing dividends, finding a value enhancing acquisition, possibly squeezing out small shareholders again via a tender offer to just communicating better. It's a decent manufacturing company, with a management which seems to know nothing about corporate finance and doesn't seem to take advice.

[amt] 16/4/2012 09:47

Not at all but I dont see how those events helped the Company and therefore shareholders. I think most fair people would reckon the Company is well run and producing good results against a tough background and if the share price is undervalued then that is not the responsibilty of the Management. Thats just an issue with British investors historically not being interested in manufacturing.

[davidosh] 16/4/2012 08:41

amt...Are you suggesting that the seller held a gun to the head of the directors and forced them to buy at £1.40 ? If the company had been paying a dividend at say one third of profits to give shareholders a good reason to buy the stock at £1 for a 6% yield then a predator would not be able to build a stake quite so easily in the first place !

That said is it right to offer just one shareholder an exit at a price that is 100% above the average price it has been over the previous three years without there being a substantial improvement in trading to match it ? All shareholders should have been offered the same terms or the company should be run in a way that benefits shareholders without someone with a gun being able to take advantage would be my reasonable assessment of the situation but do tell me if I have it wrong ?

[amt] 16/4/2012 08:22

oops forgot about,thought that was ages ago. pity about that. Lets hope that situation doesnt happen again and the management are allowed to get on running the business without distraction.

[davidosh] 16/4/2012 08:15

amt....the directors spent £1.24m on shares by buying them back at £1.40. I think you will find that is where the cash went !

I would have liked the figures for January just so that we have a fair comparison going forwards rather than backwards for the full 12 months but at least it looks like January 2012 was actually better than last year.

[amt] 16/4/2012 07:58

Good results especially given dire state if the economy. Very tight control over costs. They have done very well especially when you compare against other companies closely related to leisure sector. Only dissapointment was drop in cash balance, dont understand that bit.

[18bt] 16/4/2012 07:45

OK results, but they seem to have gone backward on disclosure again. No restatement of prior years to give a comparable 12 months, so strategy other than more of the same. Not surprising this languishes on a PE of under 6 and a yield of over 4% despite being at a 42% discount to net assets.

[mrshaungcm] 16/4/2012 07:24

they have no hope of greatly increasing profitability through organic growth in the cycle market

[18bt] 03/4/2012 10:25

Why such a ridiculous spread? I was quoted 85p to buy

[graham1ty] 27/3/2012 12:19

David, can u go and sort out this seller at 72p ??

[davidosh] 20/3/2012 12:16

whoppy....You say your holding is very small now so that means you probably took advantage by selling in the spike created by AB. Why not start buying back at these lower prices and build your stake to the levels where it makes a difference to the share price and your portfolio !? With a meaningful stake you can then have a serious voice that management will listen to if aligned with the rest of us! Five investors here already have nearly 15%

[whoppy] 20/3/2012 08:35

davidosh,

I'm afraid I have written off my investment here so do not participate in shareholder disquiet as nothing will change. I was hopeful when AB got involved but even he became disillusioned and wanted out. If I remember, the management bemoaned his involvement as the share price went up so much, which messed up further share buy backs. To get rid of him they paid 143p a share with our money. That's 100% premium to today's share price Shows you what they will do to keep it cosy.

My holding is very small now. I was just curious what other big holders think as you guy's must really be hurting.

Castleford,

If you could light a fuse under management. We need something done. Hopefully it won't be a damp sqiub but there doesn't seem to be a lot of spark here.