Stanley Gibbons Share Discussion Threads

[superiorshares] 28/2/2018 02:41

pugugly.. The train was built by Hornby not E- bay. Anyone who thinks everything can be done by Auction alone is implying nobody buys anything new in Trains or Philately anymore and it is not the case. If Retail was Game over you wouldn't have any shops but you do . Modern Talkers think the world revolves around the internet . Wrong !

[ltcm1] 27/2/2018 15:42

But the difference between these guys and Hornby is they don't have to manufacture the bloody things! It's just buy/sell and auction, plus the catalogues. This is like having your own brokerage. How they don't make 3mil a year net from stamps and coins is beyond me.

They need a 10m stamp stock and a 2m annual profit off that. 5m in coins and 1m off that. Auctions should bring in 1-2 million and catalogues whatever they bring.

Gross profit of 6m and 2m to run it say. How hard can it be ffs???!!!

We are talking the buying and selling of stamps and coins here, not running Marks and Spencer.

My point is if those numbers don't work you change the mix till you get something that does. Start on the bottom line and work up. They are running a company not a museum!!! If they can't afford the premises then move to an empty bank in Oxford say. Cut your cloth according to what is realistic to make over a year. If they can't make money dealing close it down and become an auctioneer only.

It is hardly rocket science but reading about the problems Phoenix have created at Hornby makes you wonder if they really are capable of running a business.

[pugugly] 26/2/2018 21:35

Superior shares - You have answered one of my earlier points - The trade has moved from retail to gneric online platforms - So Stanley Gibbons/Hornby on line -v-ebay is no contest -ebay has volume momentum - SGH will (imo) get squashed. Game over for retail - Still stand by marketing appeal change - Children have moved on so a market is moving to the crematorium. A bit like mens hair grease .

[pugugly] 25/2/2018 20:28

ALS: Is it possible that those responsible for the corporate actions at Pheonix used to collect stamps and play with Hornby products as children and have not yet realised that the world has moved on ??

[arthur_lame_stocks] 25/2/2018 19:16

I'd be a bit surprised if Pheonix were planning on pushing HRN and SGI together as apart from the fact they are famous old brands they have little in common.

Personally I don't like either of them as an investment much but maybe Pheonix know the potential of both brands better than me.

[topvest] 25/2/2018 18:58

I think this is a good deal for Stanley Gibbons. It’s probably this or administration. Phoenix are a good shareholder to have. I don’t hold Stanley Gibbons but have followed. Do have shares in Aurora Investment Trust managed by Phoenix. I do wonder whether the medium term game might be to push Hornby and Stanley Gibbons together, given they will have a big holding in both. You could sort of see this as a collector of iconic brands of yester year. Little in the way of synergies, but would save on central costs and a chance to start afresh.

[sikhthetech] 25/2/2018 14:10

The Phoenix deal is the best for the company to continue trading... If the deal gets approval then SG should be in a good position to continue to turn the company around...

The deal is not good for lth, given deal price is still around 1/2 current share price A RI would have given lth an opportunity to drastically reduce their average..

But then SG did have a resolution at their recent agm asking shareholders to give up their preemp rights and it was passed.
Maybe shareholders didn't understand what the resolution meant.

As to LO, they took over the holding just over a year ago, after they bought Hendersons subsidiary, so it's possible they hadn't looked at individual holdings of the fund...

[jasdan] 25/2/2018 13:34

Itcm1, I do wonder about this. In particular, is this the best deal on the table? We are not exactly being told what the real alternatives are. We learnt in the December RNS that RBS was willing to now improve the banking facility terms, what were they willing to offer?

At the end of the day, this is so some degree about debt, and how SG were going to deal with their £17m debt. I contend that if RBS were willing to offer good enough improved banking terms that allowed SG to make inroads into the debt, then whilst this might be a slower route to recovery than Phoenix's proposition, on the other hand it would not involve any dilution. It seems at least some of the impetus for the current Phoenix deal is SG's irritation at the constant reporting to RBS that they had no choice over. Is it in shareholders best interest then that management should not be so closely scrutinised under Phoenix?

The simple point really is that we do not know what terms are available as an alternative from RBS. Yet we should be told, we are shareholders after all, so how else can we compare? Equally, I contend that it was hardly stretching the boundaries of possibility that the current main shareholders could have provided the £5m funding on soft terms to allow SG to carry on and I do not know why this was not considered.

According to the as if figures in the December RNS, SG would be moving into the black as a profitable entity once the Guernsey and other liabilities were no longer an issue. That then raises the prospect that perhaps SG is much closer than is publicly being portrayed, to move into the black? Only current management will know, but I wonder as I state above, if shareholders best interests are being fully taken into account with this proposed deal?

[ltcm1] 24/2/2018 14:49

Good summaries dsct and microscope.

I think what people have to accept is that another RI was never going to be possible.

The thing is if SG can run normally for a couple of years and make profits confidence will return.

It would be a big help if they stated clearly what assets they do have. I mean what is the current level of stock now? Last time I tried to read the accounts a couple of years ago they were a farce, they were clearly done to confuse. Hopefully Phoenix will keep this business simple, cut costs and accept a profit of £3-5 million is the limit of what SG can realistically achieve. If they do that they could end up with a nice little business with a strong balance sheet.

[ltcm1] 24/2/2018 13:50

Jasdan well done for admitting your errors at least. As to your ideas about a large share price jump, clearly the big holders who will be far better informed would be adding if it was such a great opportunity. In other words the move would have happened by now.

They do still own Baldwin's don't they? Baldwin's was a good business and ought to have a decent value.

Then there is the SG stock to consider.

Surely there are enough assets to mean the debt is not a problem in that there are actual assets.

I have always thought the real issue is not the brand or a decline in stamps but their absurd cost base. SG has been out of control for years on all the business costs.

[jasdan] 24/2/2018 09:15

Pugugly, can you explain to everyone why you hate this stock so much? Have you lost a fortune on it? Are you a disgruntled ex-employee?

[jasdan] 24/2/2018 09:13

The third thing one realises is that this is Phoenix's valuation of SG at this point in the cycle, but I am sure that everyone agrees that valuing SG now when it is on its knees is hardly going to make for great accuracy. Equally, the deal is messy in that it is over complex and involves getting rid of the RBS loan facility and replacing it with what exactly? As I read through the RNS, it is clear that the alternative is very soft for SG but there remains a technical £10m debt plus interest somewhere within the group. How does one value this?
In the same way, currently, the share price of 5.35p values SG as being worth £10m by the market, but we know that also includes the RBS 17m loan, the £6.5m owed by Guernsey etc, yet the value is still £10m
When this deal goes through, the company's debt will be much lower, in fact it could be cancelled by Phoenix since it is now their choice, and no doubt if they want to sell it, they will cancel it, especially if it so increases the share price at that time. Is it worth one day £10m and the next £33.48m? If so, current shareholders should be looking at a good rise in their share price especially in such an illiquidly traded stock.

Clearly one to buy at the moment based on the above.

[pugugly] 24/2/2018 09:07

Itcm1: More toxic than before - This was shorthand for gut feel that at the current share price of 5.2/5.5 and some 426,920,000 shares issued and to be issued produce a market cap at 5.35p of £23 million and an EV of say £35 ,illion subject to debt calculation:


In addition while Pheonix assert that the Market/Brand has the following attributes
"-- brand integrity and leadership;
-- loyal collector customer base; and
-- invaluable industry expertise which is revered worldwide. "

I strongly suspect that brand integrity has been over 75% destroyed by the buyback guarantee failure as much of the business and HNW stamp purchasers and hence turnover was supported by this product - which had similarities in principle to the American CDO disaster.

Loyal customer base now partially destroyed as above

Uncertain as to how much of the expertise remains in the group after staff departures - It may be there but without access to employment records significant lack of clarity

Brand extension - As brand has (imo) lost significant stature - credibility - will have to be rebuilt - rebuilding is often far more costly than initial build

Also significant changes in marketplace both trade and consumer. The entry level consumer base is falling fast as children are not nearly as interested in collecting stamps as were earlier generations and Stanley Gibbons have not shown flair and competence so far (imo) in their offerings in the digital field.

[jasdan] 24/2/2018 09:05

Have had time now to really go through the proposed deal, and I must admit I made an error.

I was right in that if Phoenix are spending £19.45m to buy 58.09% of the shares, this equates to 100% = £33.48m as an assumed value for the whole group. Where I was wrong was firstly the share price this assumes. I had previously said this was equal to 18.75p because when the company's share price was 5.6p, the market cap was £10m. The error? My apologies but I 'overlooked' the dilution created by 248m new shares, so making 427m in total. Therefore, since there are currently 179m shares, the 18.75p converts to: 18.75 x 179/427 = 7.86p

Therefore, that is why the price is rising, because actually at 5.35p there is still an immediate 50% upside.
I mentioned 'firstly' above. There is a second issue that I realised when looking at this more closely. We all of course assume there is going to be a dilution, but that in turn assumes Phoenix wishes to sell. I don't think they operate like that. If we then assume they take up their 58.09% stake and don't sell, the only thing that happens for everyone else is their stakes get theoretically diluted as above, so our current two main shareholders who own 38% end up with 15.93% of the whole shares, [or 38% of the remaining shares], depending on how you look at it. I cannot see any gain for Phoenix in swamping the market with these shares, logically, after spending £19.45m they are not going to sell out before they have made a nice profit. In turn, I cannot see Lombard Odier selling out at a loss when such a major new shareholder has entered the ring. So, 58.09% + 15.93% = 74.02% meaning there will be few shares around afterwards so this will be a very illiquidly traded stock and there could now be some sharp rises.

[augustusgloop] 24/2/2018 08:23

superior shares,

they have less debt.

They still owe £17m - but £7m of that is to SGF, which they own.
So they owe £7m to themselves.

[microscope] 23/2/2018 22:59

The debate here is fascinating, and good points on both sides. Have followed ever since it was brought to my attention elsewhere by one of your number, some months ago.

The results were kitchen sink, and the agreement today the final piece (for now) of the equation.

On the one hand it reminds me of someone deep in debt who is bailed out by a loan shark, and can only lose from then on - yet this is no Wonga. Phoenix are well named and have given SGI a vital lifeline to 'raise from the ashes'.

For sure they are taking their pound of flesh (no more cliches i promise!) here, but it is not in their interests that SGI fail from here on.

The headroom it gives SGI is undoubted and they probably have approx 18 months to sort out their issues.

It might be near worthless, but the market won't see it that way in my view and for the brave there now could be a sufficient 'space' to take a punt. Not going to make a fortune investing, but probably not for the moment going to lose everything either.

Not holding but fascinated!

[dsct] 23/2/2018 22:41

I've still to go through this, but initial impression is that it's a saving deal for shareholders. Not ideal, but could have been liquidation, or a higher dilution rescue. Phoenix having a seat on the board should help too.

I mentioned last month that I thought there was more chance of raising £5m by 400m shares at 1.25p than jasdan's suggestion of 40m at 12.5p, and also knew the AGM 'legally binding' limit of them being able to only issue 25% (44.5m shares) would be irrelevant in a fundraising.

To confirm (as many have said on here already), the £19.45m IS NOT for Phoenix buying a 58% stake. They paid £6.2m (2.5p x 248m) for their 58% of the enlarged issued share capital (427m shares).

SGI were owed £6.5m from SG Guernsey, but have received £2.75m now, from Phoenix for this debt, which is better than the £0 which I suggested they would have received.

The company should benefit from much reduced financial costs for the next 5 years, but have to plan to pay back the £10m Phoenix loan PLUS the compound interest at the end of that period.

How this suddenly turns a £10m mkt cap company into an £80m (427m x 18.75p) company at the 18.75p jasdan mentioned is unbelievable ! lol

I wonder if we'll get a pre Y/E trading update or more likely, one in May. Should be interesting, although I'll be amazed if it's not a large loss, as none of these 'benefits' will show until the next interims and finals.

Disc: I bought a small 'punt' in SGI last July at 10p. Having been down 75% (?), I'm now only 50% down lol. I never seriously considered averaging down, and will await the YE results to decide if I should continue to hold or sell (at a loss most probably).

[superiorshares] 23/2/2018 21:33

augustusgloop.. I don't see them as having less debt ?. its just been Re-jigged. The plus is the fear of administration has gone . The deal you would assume has made the company more valuable ?.. but I still see it coming down to the 2 to 3p area when the new shares are issued .

[augustusgloop] 23/2/2018 20:29

ltcm1 23 Feb '18 - 19:52 - 3440 of 3441
0 0 0
SS or anyone! Doesn't the current price get divided by .42 from now on giving 2.31 as the current new price once the new shares are issued?

--------------

Only if you assume that the deal doesn't change the company's market capitalisation.

Less debt should make it more valuable.

If they had issued the same amount of shares - at 5p -- raising £12.5m -- they could have repaid the RBS debt (at 40% like this deal) -- had the same working capital, but no £10m loan weighing them down.

[ltcm1] 23/2/2018 20:20

Augustus, PUGUGLY, thanks for your work on this. Aug yes it is accounting flannel but RBS have written off debt too. I don't have all the figures at hand but SG was worth very little with the debt, the share price was only ever the hope value of the brand imo.

PUGUGLY I am interested in why you think it is not a good deal. Personally I think the brand is interesting and could be developed beyond collecting.

[ltcm1] 23/2/2018 19:52

SS or anyone! Doesn't the current price get divided by .42 from now on giving 2.31 as the current new price once the new shares are issued? Less debt but more shares.

I am quite capable of getting these things completely wrong though!!!

Jasdan this is a lifesaving injection not a share premium takeover like ARM. You are not thinking straight!

[ltcm1] 23/2/2018 19:36

I too think it is a positive development. What more did people expect??? It is like a rights issue , debt is reduced and five years breathing space is provided in return for the equity dilution. Phoenix are risking losing £10m after all.

It doesn't matter about the starting price, it's where we finish is what matters. However Phoenix having such a big stake is a concern, but you can see that two ways.

[arthur_lame_stocks] 23/2/2018 18:48

Personally I think this is quite a good deal for SGI shareholders because I expected them to face a total wipeout so the fact that they still have some of the equity has to be a plus surely?

[pugugly] 23/2/2018 17:37

augusus - Just checked how to do the capitalisation interest caculation and (provided maths correct) total interest due on the £10 million (nominal loan) is £2,762,816 - nice money PROVIDED repayment of capital.

Forget J - I have come to the conclusion that he is not an investor but just a wind up merchant who gets morbid pleasure from trying to provoke knowledgeable investors into wasting their time to try and help him - Best filtered and ignored (the worst punishment he will ever endure !! Shades of Tom Leher ) -

I cannot do better at this stage than agree with SS's post above.