Ten Alps - is there anything of value left?

Is this company still alive? Its share price has been stuck in the 2-3p range for the last year – a far cry from the 66p of five years ago – and the 2011/12 annual report appears to hold out little hope of early salvation.

Ten Alps (TAL), founded by TV entrepreneur Alex Connock and ‘Band Aid’ creator Sir Bob Geldof, has three core businesses – TV (makes well regarded documentaries for BBC, ITV etc), a B2B publishing operation(nearly three quarters of revenues) and a once admired but loss-making Corporate Social Responsibility (CSR) division.

TAL lost £21.8m in 2010/11 and £4.0m in 2011/12. At an Ebitda level it did no better than break even on revenues of £43.5m in 2011/12.

The highly paid Connock has resigned, most of the top management has been changed, and a new chairman has been hired. Overheads have been cut, and the company has just about stayed afloat by raising £7.7m in two highly dilutive share placings at 8p and 2.5p over the last 18 months, and writing off part of its bank debt.

TAL, with a market cap of £6.9m, starts 2012/13 with net assets of £9.15m, borrowings of £6.12m. and a big question mark over its future.

The B2B business holds the key to its recovery. But the combination of a weak UK economy and the difficulty of adapting to the rapid changes in the publishing sector, makes a rapid turnaround here seem unlikely.

The TV operation continues to win awards. But award winning ‘one-off’ documentaries are rarely very profitable, and are worth next to nothing in terms of repeat value. TAL does produce Benidorm ER, a TV soap based in a Spanish hospital which chronicles the stag and hen party alcohol-induced injuries and poolside tumbles of UK holidaymakers in Spain. But hard to believe that this is going to turn out to be a money spinner like Endemol’s Big Brother or Phil Redmond’s Brookside.

The smallest operation is the CSR division which has failed to translate its impressive client list (Siemens, Thames Water etc) into a profitable business model.

Last month TAL sold its Asian publishing businesses for a rock-bottom price of £600,000, and seems to have abandoned any hope of generating any money from SchoolsWorldTV, which it had re-launched from the ashes of Teachers TV. The latter, which had revenues of £10m plus, was closed after the Government axed its funding. Newton.TV, another promising initiative focusing on science programmes, also seems to have dropped off the TAL radar screen. Pity.

One small comfort from the latest disappointing performance (the board’s description not mine) is that underlying revenues of the two biggest businesses grew last year. (5.5% in case of B2B and 25.6% in TV).

A glance at the shareholder list at the back of the latest annual report suggests that most of TAL’s better known shareholders – UBS, BlackRock, and Capital Research Global Investors – have either sold out, or been diluted down to such an extent that their shareholdings are no longer notifiable.

Herald Investment Trust, which owns 34.55%, is TAL’s biggest shareholder, followed by something called Heritage Bank with 18.56%. If it is the Swiss private bank, of the same name, based in Lausannne, one can only wonder what its managers see in TAL that has escaped the rest of the UK investment community.

The other big investors are Artemis (7.8%) and John Booth, a non-executive director of Herald Investment Management, who has spent his career in the equity markets and made his fortune selling his Link investment management operation to ICAP in 2008. Along with his charitable foundation, Booth controls another 11% of TAL.

It is far from clear whether TAL is a misunderstood hidden gem, or just another AIM stock with minimal liquidity (four biggest shareholders own 72%) , which deserves to be put out of its misery.

Unfortunately, I can’t make Ten Alps AGM next Thursday (venue: RPC, Tower Bridge House, St Katherine's Way, London E1W 1AA at 9.30a.m.on the 23rd August) but would love to hear the feedback of anyone else who might attend.

If nothing else I would like to know why the board insists on paying the saintly Sir Bob Geldof £75,000 a year for being a non-executive director. This is the same as TAL chairman Peter Bertram is paid, and three times as much as TAL’s other non-exec (Brian Walden).

It is also in stark contrast with Timothy Hoare, an investment banker who came on board as part of the refinancing. He owns nearly as many TAL shares(4.2m) as Geldof, but has had the sense to forego his non-executive directors fees.