Sdic Power Discussion Threads

[scburbs] 27/4/2010 14:00

Rightnice, It is a tricky question. On the fundamentals I attribute a lot of value to the assets. If they are even considering doing a discounted equity issue without taking the hard decisions then I would attribute a major negative value to management. However, the net value of these two is difficult to assess.

Goal was worth around €2m in June 2008. A purchase of Goal at a similar value (which would be generous given the problems faced by Goals major client!) in exchange for shares issued at a NAV would be a good deal in my view.

[envirovision] 27/4/2010 13:35

I dont believe it ! Has it not occured to you Rightnice that we like sickly depressing shares with little to no future.

[rightnice] 27/4/2010 13:30

Most people on this board have no confidence in the ability of SDIC's management to turn things around. Why then are you even bothering to keep posting, surely you should just sell up and move into other stocks.

What are posters thoughts on SDIC buying GOAL from SYG????

Surely this could be achieved by using existing cash reserves and or a small capital raising.

[lagosboy] 27/4/2010 13:12

shrubs

I don't need to tell you investing in a company is about a credible business plan and a management capable of delivering that plan.

I am amazed that there have not been any senior management changes. That gives the impression that the model is fundamentally flawed and that's why investors have lost confidence.

I think many investors invested in the man (JM) and now they have been forced to re-think.

It will certainly be interesting to see how JM puts capital to work in SDIC as Davidoh suggests he will.

[scburbs] 27/4/2010 12:58

Afternoon Lagosboy, If I had 70% of my wealth tied up in German resi then it would definitely be the last thing I would want to do! This is why it was rather surprising to hear that he was planning on piling in further. However, from the research I have done into competitors the market conditions seem pretty good at the moment for slow and steady growth with falling vacancies. Sadly SDIC seems to be an exception and rather too much of my investment was made on the expectation that SDIC would perform broadly in line with the market!

[lagosboy] 27/4/2010 12:48

Good Atfetnoon Shrubs, I trust you are well.

JM is not the largest shareholder in SDIC, I think has circa 12% but seems to have influence well beyond this due to the management structure. I think it would be the last thing JM would want to do with his cash, but waht do I know.


The view that the company should take hard decisions to get the share price up (leaving aside the managers fee arrangements which I think we all agree on), is one that no one would disagree with. It does however rely on one huge assumption, and that is that the current management team are up to the task.

[scburbs] 27/4/2010 11:58

Thanks for the feedback Davidosh. If JM was looking to increase his exposure to German property then he could underwrite a rights issue. This could avoid the massive expensive that currently makes a rights issue impossible.

PSPI did something similar recently with its largest shareholder underwriting the offer. This enabled the offer to get away at pretty close to the then share price.

Having said that I do not think they should be doing an equity raise until they have taken the hard decisions to get the share price up (just in case anyone had forgotten my view!!).

[lagosboy] 27/4/2010 11:21

davidosh


Rights Issue is out of the question, amount raised would be uncertain, could not be underwritten and far too expensive as would an Open Offer to all shareholders.

Directors Loans would seem to just add to debt pile.

It is looking more like an institutional placing to me conditional upon items such as new fee arrangements, a new CEO. etc.

I can not see how the current management can strenthen the price, all they have achieved is the opposite and they are miles away from meeting the financial objectives of the original prospectus.

Your last point is interesting & the language is not clear as to which part of his German property portfolio that JM is planning to put substantial money,... is it into SDIC or his personal portfolio of German property?

Perhaps he is considering taking SDIC private as given his confidence in the market now would be a perfect opportunity from all sides.

[davidosh] 27/4/2010 11:00

I prefer to see neither a placing nor rights issue and would certainly want a few other things achieved to strengthen the price before one is done. All those at the MI show heard JMs view on german property and he more or less spelt out that he would be putting additional substantial money into his investment there in coming months.

[lagosboy] 27/4/2010 10:37

davidosh

I am sure he is, maybe my expectations were too high for such a venue and event.

Do you expect a Placing or Open Offer ?

Thank you.

[davidosh] 27/4/2010 09:47

Incidentally I go to the Show every year and had a number of companies and speakers to see and speak to so JM was not my reason for attending but just a bonus to catch up with him. We only spoke very briefly at the MI show alongside a couple of other guys from here. You cannot ask the questions you really want to and gain the answers you need in a big public hall with tens of people massing around trying to get their book signed or seeking JMs views on the direction of the Euro !! I am rarely outflanked in any context I can assure you and JM is equally aware of my property knowledge and background

[lagosboy] 27/4/2010 09:14

Davidosh

Shrubs is most unhappy about the conflict of interest but that relates to the ongoing SYG/SDIC fee arrangements in light of SDIC's performance, as I understand it, and has nothing to do with how JM personal wealth is invested. The fact that you have confirmed that neither SYG or Goal manage any of his personal assets is already public information by default as it would need to be disclosed. JM has simply confirmed what is already known.

Any past/future sales or purchases would also all have to be disclosed as related party transactions.

By outflanked, I had assumed that with your sector knowledge and experience that you would have asked some very demanding questions of JM about the woeful performance of SDIC and the share price collapse. I thought you and others were going to take hinm to task. You make no mention of having addressed the vacancy problem with him.

Instead it appeared from your comments that your main topic of conversation was the realtive performance of his personal assets and confirmation of info already known.

It seemed to me likely that JM had steered the conversation into calmer waters, avoided the big issues, and thereby outflanked you.

I am not being critical, please don't view it that way & I am sure I would probably gleaned even less.

[davidosh] 26/4/2010 22:25

lagosboy....I think it is very appropriate how the two portfolios are performing and certainly wanted to know whether any of JMs property had been sold into the SDIC portfolio which seemed a common fallacy.

What do you mean by outflanked !?

For the record I feel the information given is important for all shareholders to understand. I did not have to share it and nor for that matter did JM but as many see the possible conflicts of interest here I do think we need clarity on certain matters.

[lagosboy] 26/4/2010 21:43

davidosh

Your conversation with JM is great in that it confirms his personal portfolio is performimg well., or at least better than SDIC.

My interest and many others is however SDIC and the performance of JM personal portfolio provides little comfort.

Rather than discuss his personal portfolio surely it would have been more appropriate to discuss SDIC, or were you simply well and truly outflanked by him.

[lagosboy] 26/4/2010 11:08

davidosh

As you know shrubs and I have debated at length, the best course of action for SDIC to take. I think we all understand what the problems are.

I would be interested to hear your views.

[davidosh] 26/4/2010 09:59

Just to add some clarity to JM and his position re german property and SDIC as there are commonly held views often posted here that have been misleading at best. I spoke to JM personally and confirmed the following....

1. He has never sold or had any of his own portfolio passed to SDIC for management or any other purpose.

2. His portfolio of property which I understand to be 40000 units is less leveraged and performing well.

3. His portfolio is not managed by GOAL nor any company linked to SYG.

4. JM does not use SYG for any services on his own portfolio to the best of my knowledge and understanding.

I have major concerns about vacancy rates as I was a property manager on a large scale in London until a few years ago. I do not know how JMs portfolio is performing in that respect but I bet it is performing far better than the SDIC folio. I would put my house on it....lol

[kibes] 26/4/2010 09:41

davidosh - I am uncertain whether JM's 40,000 properties are entirely separate from SDIC's, after all he put a large number of his own properties into SDIC which perhaps he still regards as 'his'. He still has other German property in his own name probably not very highly geared. I would imagine he uses SYG as manager for all his properties why would he do otherwise as chairman of SYG?

In talking about his 'net worth' there is of course a huge difference between balance sheet value and market capitalisation in the case of SDIC holdings. As you say £250 million on the balance sheet has a market value of only £40 million. Is his wealth estimate based on balance sheet or market value I wonder? If 70% of his wealth is in German property he is massively over-exposed in my opinion. Eggs in baskets etc!

[davidosh] 25/4/2010 18:46

I do not think the Sunday Times Rich list is online yet for 2010 but it was released today in hard copy and Jim Mellon is at number 121. The feature of his wealth is the claim that 70% is derived from German property and the list states that JM has 40,000 properties.

Assuming that is correct we must presume that JM has equity of just short of £400m in his German portfolio as the net worth claimed is £530m. If we say £370m that allows for £9,250 equity on avg per apartment.

At SDIC we have 26,654 properties (at 31/12/09) but our net worth has fallen dramatically so that we only have about £250m of equity after deducting our debt and a market cap of barely £40m. So per property we have about £9,375 equity and unless there is a significantly better vacancy figure and the property held by JM has a much lower value then there is something amiss here.

JM must be leveraged and across such a huge portfolio he must have a few that perform better than others but can we be sure that his portfolio is in a significantly better shape for some reason. Who manages his portfolio ? Why do we not use that management team as they are giving Jim a far better rating for the same amount of equity per property ??

[lagosboy] 25/4/2010 17:23

I was, the old trigger finger at 13.25 kicked in.

I should have learnt my lesson by now I bought a few just under 30 cents, dumped those pretty quickly.

I first bought SDIC just over a year ago at from memory around 15 cents, I watched it go to 44 cents and sold at 35 cents. I doubled my money so all in all SDIc has been fairly kind to me. I hold just 20,000 share now, probably a mistrake but if they get a Placing away with good conditions and the new management can achive all the things it needs to do over the next couple of years it might still turn out to a good long term investment.

I think you need to get your head around some short term pain to get the long term gain.

I have never suggested liquidation, although the company could face technical insolvency if it remains cash negative and does not address all the issues.

I would still like to see it put up for sale, I wonder what JM average price per share is, although it seems from Strolling that he is hoping to turn it around.

What are you in at ?

[scburbs] 25/4/2010 15:07

Lagosboy, I thought you were waiting for 10c?

As usual we are talking at cross purposes. I am talking from the perspective of the existing shareholder. You are talking from the perspective of the business.

A pre-pack liquidation might be viewed as a rescue from the perspective of the business, but it is not viewed as a rescue from the perspective of the existing shareholder.

Raising equity at the worst possible moment is only 1 step removed from this (i.e. passing nearly all of the value to someone else as opposed to all of the value). If the only other alternative is liquidation/insolvency then it is a rescue (and with only one silo in potential breach I don't think we are at this stage). Otherwise it is a lazy way of saving the business. After all the equity itself will do little for the operational cash flow (unless it is very large). It is vacancy reductions, rental increases and cost cutting which will sort out the operational cashflow. They do not need equity for this, so why raise it at the worst possible moment.

[lagosboy] 25/4/2010 14:53

I am a shareholder.

I would expect the Placing to be conditional on certain changes demanded by the Institutional Shareholders.

If you don't consider it a rescue, that is your prerogative but the facts are against you.

SDIC is in breach, it has never generated positive cash from operations, it is leveraged to the gunnels, it share price has collapsed......I call that a rescue.

How much worse does it need to get ?

[scburbs] 25/4/2010 13:23

A placing is a rescue! LOL! That's a good one! Unless you mean a placing for SDIC without taking hard action is a rescue for SYG?

Not too much more to debate if you really believe that. I suspect your views would be very different if you were a shareholder.

If they think potential equity is the same excess liquidity mug equity that they raised in 2006/7 then they should think again. Potential equity will want to crawl over their business model and I seriously doubt they have any way of raising equity and keeping the cosy SYG/SDIC relationship in place at the same fee level (unless the source of the equity is JM). After all you can't raise equity without a viable business model and the fees paid to SYG/Goal make the business unviable, particularly at the current high level of vacancy.

Both banks and potential equity will be insisting that they cut costs. It is a sorry state of affairs when these guys start having to do the boards job for them!

[lagosboy] 25/4/2010 12:35

Forgot to ask did Manx Financial Group Ticker LON:MFX get any metion at the seminar. does anyone know about Manx?

Up 20% on Friday and small mention in the bible (Daily Mail).

Been alot of interesting corporate re-org and hiring over last 4 months and it owns Conistor Bank which of course has a banking licence.