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So far in this series of Newsletters I’ve described Tandem Group (LSE:TND) and that its shares are priced low relative to earnings achieved over the last ten years. Also, financial distress risk is low, it holds plenty of cash and has a history of positive cash flow. Today I’ll outline what I know about the directors. This is not very much – I have yet to meet them – so if anyone reading this can help please add your thoughts to the comment section at the end of the newsletter. I’ll also discuss the main risks as I see them – again, please add your insights, as I’m still feeling my way here.
The directors
Between them the directors have decades of experience in Tandem’s main sectors and they have decades of working with the team at Tandem or its subsidiary MV. This should count for much in terms of knowing the industry inside out and where profits are to be found.
But they have made many mistakes along the way, including persisting with an emphasis on selling bicycles at a loss.
In recent years they recognised the need for a strategic pivot toward both selling items with some pricing power (even if quite small) and for direct selling to consumers rather than relying solely on retail customers.
They have also bought into some interesting niches such as importing mobility scooters and wheelchairs, thus owning a respected name and in a sector with growth potential as the UK population ages.
If they can maintain discipline and show ability to differentiate between commoditised business areas (low or zero profits) and differentiated industries (high rates of return on capital due to pricing power) then they might redeem themselves, justify their relative high salaries (for a £8m company), and put Tandem on an earnings growth trajectory.
Steve Grant, CEO, aged 58
Formerly an accountant he joined MV Sport and Leisure in 1990 as FD. Made MD of MV in 1996 and CEO of Tandem in 2010, seven years after the merger of MV and Tandem. He holds 5% of Tandem’s shares, plus 2.5% under options. “He continues to be a regular visitor to the Far East and has considerable knowledge of selling to both national and independent customers.” (Tandem website)
Jim Shears, FD, aged 44
Joined Tandem as Financial Controller in 2002 and Secretary 2008. Became Group FD in 2010. Holds 3.4% of Tandem’s shares plus 1.5% under options.
Mervyn Keene, non-executive Chairman, aged 68
Joined Tandem in 1989 becoming MD of the former Garden Leisure Division. FD of Group in 1993. Chairman 2010 (non-executive). Accounting qualification. Holds 5% of Tandem’s shares.
Phil Ratcliffe, Commercial Director, aged 56
Joined MV Sports in 1999. Commercial Director of Tandem 2013. Member of Chartered Institute of Marketing. Holds 1.8% of Tandem’s shares plus 1.8% under options. “His experience encompasses marketing, licensing, p
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