Tandem Group plc Investor presentation September 2019 1 - - PowerPoint PPT Presentation

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Tandem Group plc Investor presentation September 2019 1 - - PowerPoint PPT Presentation

Tandem Group plc Investor presentation September 2019 1 DISCLAIMER This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares in the


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Tandem Group plc

Investor presentation September 2019

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DISCLAIMER

This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares in the Company, nor shall any part of it nor the fact of its distribution formpart of or be relied on in connection with any contract or investment decision relating thereto, nor does it constitute a recommendation regarding the securities of the Company. This document has not been verified, does not purport to contain all information that a prospective investor may require and is subject to updating, revision and

  • amending. The information and opinions contained in this document are provided as at the date of this presentation and are subject to change

without notice. In furnishing this document, the Company does not undertake or agree to any obligation to provide readers with access to any additional information or to update this document or to correct any inaccuracies in, or omissions from, this document that may become apparent. Recipients of this presentation should each make their own independent evaluation of the Company and should make such other investigations as they deem necessary. No reliance may be placed for any purposes whatsoever on the information or opinions contained in this document or on its

  • completeness. No representation or warranty, express or implied, is given by or on behalf of the Company its directors, officers or employees or

any other person as to the accuracy or completeness of the information or opinions contained in this document and no liability whatsoever is accepted by the Company or any of its members, directors, officers or employees nor any other person for any loss howsoever arising, directly or indirectly, from any use of such information or opinions or otherwise arising in connection therewith. This document contains forward-looking statements concerning the financial condition, results of operations and businesses of Tandem Group plc (“the Company”). All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. All forward-looking statements contained in this presentation are expressly qualified in their entirety by the cautionary statements contained or referred to in this

  • section. Readers should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of

this presentation. Neither the Company nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred fromthe forward-looking statements contained in this presentation.

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AGENDA

  • 1. GROUP STRUCTURE
  • 2. OPERATIONS AND PRODUCT RANGES
  • 3. GROUP STRATEGY
  • 4. FINANCIALS AND TRADING UPDATE

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  • 1. GROUP STRUCTURE

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GROUP STRUCTURE

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SLIDE 6
  • 2. OPERATIONS AND

PRODUCT RANGES

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OPERATION S AN D PRODUCT RAN GES MV Sports

7 MV Sports & Leisure is our UK based sports, leisure and toy business providing sales, product development and administrative functions The MV Sports Hong Kong office based in Kowloon provides quality assurance, quality control, factory inspections, sourcing and sales support 70,000 square foot warehouse and offices in Birmingham 40 employees based across two locations FOB sales generally managed by the Hong Kong office

Operat ations

  • ns

Products designed in the UK with manufacturing

  • utsourced to

the Far East

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SLIDE 8

OPERATION S AN D PRODUCT RAN GES MV Sports

Licenc nces: s: Avengers Infinity War 1*, Avengers*, Barbie*, Batman*, Ben 10*, Bored, Bumblebee*, Disney Pixar Cars*, Disney Pixar Finding Dory*, Disney Princess*, Electrick, E-Moto, Fireman Sam*, Frozen*, Grow & Go, Hatchimals*, Hot Wheels*, Incredibles 2*, Jo JoSiwa*, Jurassic World Fallen Kingdom*, Justice League*, The Lion King*, L.O.L Surprise!*, Marvels Avengers*, Minnie Mouse*, Miraculous*, My Little Pony*, Nella the Princess Knight*, Nerf*, Paw Patrol*, Peppa Pig*, Pikmi Pops*, PJ Masks*, Powerpuff Girls*, Rusty Rivets*, Shopkins*, Spiderman*, Star Wars*, Stunted, Superwings*, Teletubbies*, Teenage Mutant Ninja Turtles*, Toy Story*, Thomas & Friends*, Transformers*, Trolls*, Twista, U-Move, Wigwam, Wired, Zoomies

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* under licence

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SLIDE 9

OPERATION S AN D PRODUCT RAN GES MV Sports

Product ducts

  • UK’s leading wheeled toy supplier including bicycles, scooters, trikes, ride-ons, skates, go karts, glideboards, skateboards

and accessories

  • Other products include helmets, wigwams, scootin’ suitcases, dream dens, hoppers, mitts, knee & elbow pads

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www.mvsports.com

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OPERATION S AN D PRODUCT RAN GES MV Sports

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Own brand nd product ducts High specification pre-school scooters and ride-ons Widely acknowledged as being the oldest golf company in the world

www.bensayers.co.uk

Stunt scooters and accessories

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OPERATION S AN D PRODUCT RAN GES MV Sports

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Own brand nd product ducts (cont.) nt.) High specification pre-school scooters and ride-ons Leading UK supplier of outdoor play products Well renowned scooter, pool and multi-games table brand

www.hedstrom.co.uk

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OPERATION S AN D PRODUCT RAN GES MV Sports

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Own brand nd product ducts (cont.) nt.) Scooters, electric scooters, glideboards and glidekarts UK’s leading range of kids football training products High quality, fun skateboards

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OPERATION S AN D PRODUCT RAN GES MV Sports

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Custom

  • mers

rs include lude:

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OPERATION S AN D PRODUCT RAN GES MV Sports

Marketing ng

– Trade fairs (London, Nuremberg) – TV advertising to maintain position as market leader in licensed wheeled toys – Press advertising – Page contributions to major retailers – Customer specific marketing initiatives – Website marketing and own brand online retailing – Recognised market leader in wheeled toy innovation and product development

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OPERATION S AN D PRODUCT RAN GES Tandem Group Cycles

15 Tandem Group Cycles is still based in Birmingham, more than 90 years since Dawes Cycles began All products expertly designed and developed in the UK 3rd party warehousing used 11 employees based in the UK Manufacturing

  • utsourced globally

Operat ations

  • ns

Strong focus on heritage and well established brands

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OPERATION S AN D PRODUCT RAN GES Tandem Group Cycles: Squish

Brand ands and produ duct cts – Lightweight children’s bicycles – Independent bicycle dealers (RRP £230 - £500) – Launched 2017, rapid growth since – 14-26” wheel – Exciting designs

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www.squish.bike

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OPERATION S AN D PRODUCT RAN GES Tandem Group Cycles: Dawes

Brand ands and produ duct cts – Family cyclists and touring – Independent bicycle dealers (RRP £70 - £1,500) – Long established, respected heritage brand – Launching additional ebikes in 2020 – Quality and value

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www.dawescycles.com

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OPERATION S AN D PRODUCT RAN GES Tandem Group Cycles: Claud Butler

Brand nds and produ duct cts – MTB and ‘urban’ type bicycles – Independent bicycle dealers (RRP £250 - £1,800) – Competitive price points – Limited edition models with spot buying opportunities – ebike development in 2020

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www.claudbutler.co.uk

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OPERATION S AN D PRODUCT RAN GES Tandem Group Cycles: Falcon

Brand ands and produ duct cts – Family cycles – National Retailers (RRP £150 - £1,000) – Long established heritage brand – New ebikes introduced in 2019 – Strong consumer awareness

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www.falconcycles.co.uk

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OPERATION S AN D PRODUCT RAN GES Tandem Group Cycles: Boss

Brand ands and produ duct cts – Youth and adult cycles – National Retailers (RRP £180 - £500) – Focus on MTB – Lifestyle brand – Targeting a more “serious” national retailer customer

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www.bosscycles.co.uk

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OPERATION S AN D PRODUCT RAN GES Tandem Group Cycles: Townsend

Brand ands and produ duct cts – Children’s bicycles – National Retailers (RRP £50 - £130) – Long established, well known brand with 130 year history – Entry level but with focus on value – Strong brand recognition

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www.townsendcycles.co.uk

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OPERATION S AN D PRODUCT RAN GES Tandem Group Cycles: Elswick

Brand ands and produ duct cts – Heritage style bicycles for all ages – National Retailers (RRP £75 - £800) – Well renowned cycling brand – Traditional with a modern edge – Targeting leisure cyclists

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www.elswickbikes.co.uk

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OPERATION S AN D PRODUCT RAN GES Tandem Group Cycles: Zombie

Brand ands and produ duct cts – Children’s and youth BMX bikes – National Retailers (RRP £130 - £230) – Focus on BMX and dirt jump – Take advantage of current market trends – Built for strength and long life

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www.zombiebikeco.com

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OPERATION S AN D PRODUCT RAN GES Tandem Group Cycles

Sales s and d Marketing rketing – Team of UK sales representatives supported by telesales – Roadshows, events and trade fairs – Dealer support and POS – Promotional material – Customer specific marketing initiatives – Strong customer service – Website marketing Customer mers – 65% independent retailers/distributors – 35% national retailers

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OPERATION S AN D PRODUCT RAN GES Expressco Direct

25 Located in Northampton, Expressco is our online, direct to consumer business All products developed in the UK 33,000 square foot warehouse with additional 3rd party space utilised on an ad-hoc basis 24 employees based in the UK, supported by Hong Kong office for sourcing, QA and QC Manufacturing

  • utsourced globally

Operat ations

  • ns
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OPERATION S AN D PRODUCT RAN GES Expressco Direct: Garden Comforts

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Brand nds and produ duct cts – Focus on garden and outdoor products – Home of own brand ‘Airwave’ gazebos and party tents – Parasols and spas – Garden furniture and storage – Outdoor play

www.garde w.garden-camp camping. ng.com com

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OPERATION S AN D PRODUCT RAN GES Expressco Direct: H

  • me Comforts

www.j w.jac ackst stone

  • nehous

house.c .com

  • m www.at

w.athome homeco comf mforts.c s.co.uk

  • .uk

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Brand nds and produ duct cts – Indoor home, electrical and furnishings – Own brand ‘Jack Stonehouse’ radiator covers – Heating and cooling – Small electrical appliances – Furniture, lighting and mirrors

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OPERATION S AN D PRODUCT RAN GES Expressco Direct: Pro Rider Mobility

www.pro w.prori ride dermo mobili bility. y.co com

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Brand nds and produ duct cts – Mobility scooters and mobility accessories – Rise & Recline chairs – Own brand ‘Pro Rider’ – Distributor for Drive, Freerider, Kymco, Pride, Sunrise and TGA – Strong aftersales and service capabilities

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OPERATION S AN D PRODUCT RAN GES Expressco Direct: Pro Rider Leisure

www.pro w.prori ride derle leisur sure.c .com

  • m

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Brand nds and produ duct cts – Electric and manual golf trolleys – eBikes and manual own brand ‘British Eagle’ bikes – Ride-ons and fitness – Distributor for ‘Bioflow’ sports bands – New product development for 2020

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OPERATION S AN D PRODUCT RAN GES Summary

Core competencies

  • product design
  • product development
  • sourcing
  • importing
  • QC/QA systems
  • financial controls and cost

management

  • distribution
  • customer relations
  • experienced management

Group synergies

  • suppliers and terms
  • customers
  • shipping
  • distribution
  • warehousing
  • banking, finance and administration

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  • 3. GROUP STRATEGY

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GROUP STRATEGY Major objectives

To

  • enhanc

hance shareho arehold lder er value lue by:

  • generating cash
  • improving the profitability of the Group and increase net asset value
  • paying a regular dividend
  • improving communications with investors in order that the Group’s

performance is recognised

  • increasing market capitalisation

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GROUP STRATEGY Building brands and licences

Our ur ob

  • bjec

ectives tives are e to:

  • :
  • continue to invest in leading licences and remain the UK market leader in licensed

wheeled products

  • explore expansion into additional licensed categories
  • invest in the development of new innovative product ranges
  • grow own brands and build awareness
  • develop stronger relationships with key customers
  • develop new accounts and industry sectors
  • grow international business
  • continue to invest in and grow our online businesses

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GROUP STRATEGY Acquisitions and disposals

Whil ilst st our r focus us is for r org rgan anic ic growth rowth we conti tinue ue to have e an

  • pportu
  • rtunisti

istic c approa proach ch to M& M&A:

Acquisitions: uisitions:

  • Complements/enhances current product ranges
  • Uses common or existing supply base
  • UK designed and developed
  • Known brand/expertise
  • Major/National account retail potential/existing customer base
  • Potential for licensed derivatives
  • Offers potential for group economies of scale/cost savings

Dispo sposa sals: ls:

  • To explore disposal value of individual sectors when maximum

potential has been reached 34

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GROUP STRATEGY Infrastructure and resources

We will inve vest st as appropriat ropriate e to enable ble our object ectiv ives es to be achieved ieved by:

  • continuing to reviewour warehouse/distributionrequirements
  • investing in, rewarding and empowering key personnel
  • reviewing and supporting capex and infrastructure projects
  • ensuring our IT systems adequately support our businessoperations

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GROUP STRATEGY Conclusions

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To Torealise aliseour

  • ur strat

rategy egy we we:

  • recognise that we operate in a highly competitive and rapidly changing retail

environment

  • are aware of the need to harnessthe power of our brands to drive growth
  • are capable of driving revenue organically, accelerated by key acquisitions if
  • pportunitiesarise
  • will deliver profitability from additional revenue generated and continue to

carefully control our cost base

  • will aimto achieve the very best possible resultsfor all our stakeholders
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  • 4. FINANCIALS AND

TRADING UPDATE

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FIN AN CIALS AN D TRADIN G UPDATE Summary 6 months to 30 June 2019

38 Group Revenue

+ 27%

Gross Profit

+ 30%

Gross Profit %

+ 80 bps

Basic EPS

3.0p v (7.0)p

Net Profit

£155k v £(356)k

Dividend

+ 10%

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FIN AN CIALS AN D TRADIN G UPDATE Profit & Loss Account

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FIN AN CIALS AN D TRADIN G UPDATE Profit & Loss Account commentary

  • + 27% revenue growth (£16.0m v £12.7m) significantly driven by strong

licence performance

  • Improved gross profit percentage (30.6% v 29.8%) through better buying,

re-sourcing, new products and concentration on profitable product lines

  • Continued strong control of costs by efficient people and infrastructure

resource management

  • Increase in finance cost reflects swing in foreign currency derivative

contracts from credit to charge in the period

  • Tax expense due to increased FOB business from Hong Kong
  • Net profit £0.2m compared to prior year interim loss £(0.4)m

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FIN AN CIALS AN D TRADIN G UPDATE Balance sheet

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FIN AN CIALS AN D TRADIN G UPDATE Balance sheet commentary

  • Tight control of inventories (£5.7m v £6.2m), stocks are clean and

saleable

  • Increased trade debtors (£7.1m v £5.6m) reflecting revenue

growth, no material bad debts

  • Cash generation (£3.7m v £1.0m) and reduction in net debt

position (£(2.0)m v £(3.5)m)

  • Reduced pension liability (£2.7m v £2.8m) due to contribution

during the period, full valuation to be carried out at year end

  • + 17% net asset growth (£12.4m v £10.6m)

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FIN AN CIALS AN D TRADIN G UPDATE Outlook

  • Ongoing strong licence potential in 2020
  • Further development of MV own brand products and ranges
  • Squish expected to keep growing and take market share
  • Continuing challenges in the overall bicycle market
  • New product development in online businesses including outdoor,

indoor, sports and leisure

  • Macro economy and consumer spending a concern
  • Downside risk of weak GBP/USD depending on Brexit outcome

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FIN AN CIALS AN D TRADIN G UPDATE Dividend

  • First dividend paid 2010 following share capital restructure
  • Dividends paid to date £1.6 million
  • Cumulative dividend growth since inception +44%
  • We aim to continue with our progressive dividend policy
  • Dividend strategy and amount paid continually under review
  • Improving dividend cover and satisfaction of pension scheme
  • bligations will enable further dividend growth

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