Stanley Gibbons Share Discussion Threads

[superiorshares] 28/3/2018 01:17

Jasdan ...I have seen the large purchases too ...Try this one , Not the former large shareholders buying, but Phoenix , preparing to take SGI private for pennies .

[jasdan] 27/3/2018 17:29

Superior, you would be better off factoring in a range of large purchases that seem to be now happening on a daily basis on this stock.

As I pointed out before, there is only a limited amount of free floating stock around for anyone to pick up.

I would not be surprised at all if the former major shareholders now beef up their shareholdings as they are currently well below the 30% level following the recent rights issue.

[superiorshares] 23/3/2018 20:17

Has anyone factored a stock market crash into the equation ?

[dsct] 21/3/2018 12:06

Looking back at the last year finals, the total revenue of £42.464m was overshadowed by the 68% cost of sales (£29.060m) and 42% selling and distribution costs (£17.852m).

If these two costs were reduced by 25% to £21.795m and £13.389m respectively, and also excluding the £19.017m exceptional charge, the operating profit would have been £1.044m.

To achieve my break even 10p purchase price, SGI would need EPS of 0.667p assuming a PE ratio of 15. So, a profit of £2.84m with the now 427m shares in issue.

If they can even reduce the two costs mentioned above from 68% and 42% to 55% and 35%, and assuming no further increases in costs or exceptional costs, they'd need a £91m revenue to reach an operating profit of £2.864m.

Revenue £91.000m
COS £50.050m (55% of revenue)
Admin/pension £6.236
Selling costs £31.850m (35% of revenue)
operating profit £2.864m

Quite a lot of IFs and assumptions, but still quite a challenge to do all of those - reduce two main variable costs by approx. 25% and more than double revenue.

Using the above figures, they'd need revenue to be £62.360m to achieve breakeven.

Hopefully these figures are correct ! lol

[ltcm1] 21/3/2018 07:38

Jasdan you really are totally mixed up when it comes to business and shares. I suggest you buy a book on business studies and investing.

The share price is not determined by the number in free float but by the future profits of the company. The price can only go to 30p if net profits grow enormously.

The point is that the SG cost base is huge which has been destroying profits for years and is the reason RBS sold out so cheaply. I think people need to understand that Phoenix might well lose this £10m, clearly there is a lot of risk with this loan. I take it they can't simply sell Baldwin's and sell off the SG stock and liquidate. Surely that would be too favourable to Phoenix???

I take it Phoenix are making a five year investment with quite a high chance they won't see all their £10m back.

But the interest payable to Phoenix will be a massive drag on profits and how will SG repay this loan???

Now Phoenix control the company what happens if SG can't repay them at the end of five years???

[superiorshares] 20/3/2018 19:17

Jasdan .. if Phoenix paid more than 30 per cent,of the value of the debt, owed to RBS . I will eat my hat !.... The profit make no mistake is in the recovery of the total debt. Any share price increases will be the icing on the cake . Imo that will be a few years down the line . unless there is an incredible turn around in stamp sales. Also I think Phoenix will consider selling off the coin bit sometime in the future and leave the stamps to sink or swim ?.. Regards Brother

[jasdan] 20/3/2018 09:41

Superior, think what you are saying! Are you honestly saying that Phoenix have taken on the £10m debt from RBS at no charge to SGI for five years on the hope of then charging them 5% compound interest on that debt at the end of the five years? Bear in mind SGI do not have to repay a penny until five years time - that is a very long time for Phoenix to wait for a return. There would be a £2.76m technical profit in five years time, but there is an opportunity cost to that £10m and there is also a substantial risk of non payment, plus of course there is a cost to Phoenix of providing such funding.

Phoenix are financiers, but there is no way the main profit for them is going to be made out of the £10m loan. And 5% rate for such a borrower is a soft loan, especially since they are also willing to offer them a further £5m on other soft terms.

No, Phoenix's profit on this deal is through a serious increase in the stock price, plus perhaps dividend payments in due course, although I think SG would find it hard to evidence that dividend payment was the best use of their money whilst the £10m debt remained.

I remain convinced that the stock price is going to recover sharply over the next couple of years as a profit emerges again. Why anyone is selling now when the company's fate is safe at last is a mystery to me as they should only now be buying.

[superiorshares] 19/3/2018 17:33

Jasdan perhaps you should go to school :-).. Of course phoenix are in it to make a profit out of the debt !.. They are financiers.. The discount off RBS and the interest off the debt from Stanley make a tidy Profit, as someone said on here the shares are a freebie a bit extra should it survive ?. Look at my comments I. have never wanted sgi to fail . Im a philatelist. Look at your comments they are moronic !... I have predicted everything correct from £3.50 down and you since you have been on here , predicted everything wrong ! . The number of shares in issue creates the Dilution.... The percentage on the open market the liquidity. Two different things .

[augustusgloop] 19/3/2018 10:11

jasdan,

correct that phoenix will make a profit from the SGI shares.

The deal with SGU (excluding the Guernsey bit) will cost Pheonix NOTHING if the loan is repaid with interest in 5 years. They will then have picked up all their shares for free!

This is exactly how the deal was structured - it would be too much of a coincidence that the numbers just balanced to make Pheonix's net payment zero (after 5 years).

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Pheonix probably approached SGI with the offer -- we will lend you £10m, but want 60%+ of your business in return, what can you offer?

[jasdan] 19/3/2018 10:01

Superior, I really feel sorry for you on this one. Talk about having a chip on your shoulder. You really wanted SG to fail, now it will not only survive, but prosper. I think Phoenix will be a good fit for SGI, this will become obvious as the share price rises.

We are ex-rights this morning but there is no difference in the share price, as some of us correctly guessed.

The new shares only create dilution if they are available to buy. None are since Phoenix will not be selling any. So, there is a dilution the other way round only - i.e. when dividends are payable.

Superior, go back to school. Phoenix are not doing this deal to earn a profit out of loaning SG £10m!!! You make me laugh with these moronic comments. They are in it for the growth in the share price, just like us.

[superiorshares] 17/3/2018 19:55

Bloody hell Jasdan get a grip with your Delusions !. Its irrelevant wether the shares are readily traded or not . The new shares will create dilution ie, mkt cap earnings per share etc . Phoenix doesnt need the share price to rise to make its money , they need Stanley to pay back the money it owes . It could also pay special dividends from any future profits, as they are the majority shareholder , they gain. This pay back debt on soft terms is another one of your delusions as was the main shareholders subscribing for shares at a massive premium to the share price . you will not be getting a profit any time soon . please stop fantasizing !

[jasdan] 16/3/2018 21:29

The dilution debate does interest me. I do not think the price will fall on Monday at all. We have 248m new shares plus 179m existing shares = 427m shares from Monday. But of that 427m, 248m will be immediately owned by Phoenix, leaving 179m left over, of which 40% approximately remain owned by a couple of larger shareholders. So the free shares remain a maximum of 60% of 179m = 107m

Of that 107m I would say a good proportion are owned by institutions owning 1% - 3% amounts so in reality there is probably only 50m shares floating loose in the market. That is why this share can move sharply if some momentum builds up behind it.

The share price should recover sharply as SG moves back into the profit and as debt drops. I do not know what immediate effect cutting £7m off the debt will have but surely it must be positive?

[jasdan] 16/3/2018 21:22

So, I reckon Phoenix paid £12.75m for the £17m debt, £2.75m of which is kept on Phoenix's books as the SGF shares are assigned to Phoenix.

What is pretty obvious as well is that Phoenix only gains from this if the shares rise. Given the debt they are taking on and the financial support they are giving SG, combined with their confirmation in the prospectus that they intend to support SG longterm, I would guess that they are in SG for the long haul, so I guess they see SG recovering to at least 30p - 50p range before considering selling out.

Now that SG's future is safeguarded again, I also reckon other investors will come back in.

[jasdan] 16/3/2018 21:16

Apologies if I am a bit obtuse everyone, but The deal is too complex for us ordinary mortals.
For example, on Monday, SGI's debt drops from £17m to £10m whilst number of shares in issue goes up by 248m. And the share price must reflect the level of improved debt and the soft credit facilities now being offered by Phoenix. Still, I cannot see, as I wrote earlier, that it is going to drop by 42% on Monday??? On that, I agree with you Augustus.
Augustus, the write down of debt is actually pretty obvious by RBS - it is £4.25m write down on the £7m part of the debt, leaving £2.75m left over which is changed into special shares held by Phoenix. So you have £10m swapped over from RBS to Phoenix, plus the other £7m of RBS debt becoming £2.75m of shares in SGF. So RBS have lost £4.25m by walking away. SG's balance sheet should therefore show an improvement in debt immediately of at least £4.25m and possibly the full £7m depending on how the £7m is accounted for.
As far as the construction of the £19.45m, that is constituted as being: £10m for the debt plus £6.2m for new shares plus £3.25m for the Guernsey stock.

[ltcm1] 16/3/2018 20:16

I appreciate you explaining all this Augustus. I am sure jasdan is not alone in being confused by the situation.

What I don't understand is what is the level of SG stock now?

Baldwin's is presumably still a good business and worth a tidy sum. After all SG paid a lot for it a few years back and coins are a very popular medium.

My point is much is known about the debt but the asset side seems very opaque.

[augustusgloop] 16/3/2018 19:36

The price should stay about the same.

Jasdan,

the reason that the deal is so complicated is so that you can't tell how much Pheonix paid for the RBS debt.

Why don't they just simplify: Loan £10m to SGI, who then pays RBS to clear the debt.

The only reasons I can see for not doing it this simple (and more usual) way -- is (1) that in the next set of accounts the payment to RBS would be clear for everyone to see.
(2) Pheonix would have to actually stump up £10m


But the way that they do it, the payment to RBS will be in the Pheonix accounts - which you will not see!
And Pheonix get the benefit of any discount (probably £6m), which you will never find out.
Pheonix look like they are paying £6m more -- thus making it less likely that shareholders will cry foul at the sale of shares at 2.5p

[jasdan] 16/3/2018 18:50

Why should the price fall on Monday- all the new shares are being bought and held by Phoenix so cannot see the rest of the shares should be discounted? It would I agree be as you say if the rights shares were not allocated but this is not that situation.

[orange1] 16/3/2018 18:18

Oh, Jasdan. What a novice you are. You will still have your 10000 shares on Monday. The price will go down though to reflect the dilution.

[jasdan] 16/3/2018 17:03

Does anyone know if our shares now get diluted by 42% on Monday? If I own 10,000 shares currently, will I only 4,200 on Monday?

Why was there so little trading or interest in the EGM?

[augustusgloop] 15/3/2018 16:43

jasdan

show me anywhere it says that the loan has been bought at face value!

So, Pheonix arrange the deal -- and get a big discount for SGF, but no discount for themselves????
Wake up!

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"The share price does not reflect any of this, and currently values SGI at just over £7m which seems incredible given the write off of £7m of debt, and the issuance of £6.2m new shares. Surely the market is not saying that the rest of the group is only worth £0.8m?"

NO!

it means that the market believes that without the write-off of debt --- SG was worth less than nothing.

Basically, SGI were going out of business - if a saviour hadn't come to the rescue, then you would have lost everything.

If the company could have been liquidised raising £17m then RBS would have enforced this - and not had to write-off a big chunk of their money.


For some reason, you seem to believe that the banks and Pheonix are willing to take a bad deal -- just to ensure that you get a good one.
This is naïve beyond belief.

You are more than a glass half-full type of guy -- you believe that your half full glass is going to be filled by fairies.

[jasdan] 15/3/2018 11:33

Augustus, you are not right on this as Phoenix is buying the debt off of RBS.

Under the deal, as you may recall, SGI had a fixed loan and a revolving facility. Both were with RBS. The £10m loan has been bought by Phoenix at face value. That does not mean then that this £10m loan is only costing Phoenix £4m. Like anyone, they have a cost to their capital, and whilst SGI now has to repay Phoenix in place of RBS, Phoenix on the other hand has a £10m debt on its books as it has paid £10m for the loan, but is only receiving any sort of return in five years. I know the debt is priced at 5% but these are not the worst terms for SGI.

As regards the other £7m RBS loan, here it is not clear how much RBS received for the £7m, but it is clear that Phoenix have taken a haircut and agreed to accept only £2.75m for it, by way of assigned £1 shares. For SGI this part of their debt has been a win win position as they have effectively had the £7m debt written off without a debt replacement as part of the deal.

The point is that what it has cost RBS to do this is one thing, and what it has cost Phoenix, is another. The haircut seems to have been on Phoenix's shoulders.

The share price does not reflect any of this, and currently values SGI at just over £7m which seems incredible given the write off of £7m of debt, and the issuance of £6.2m new shares. Surely the market is not saying that the rest of the group is only worth £0.8m?

[augustusgloop] 14/3/2018 19:48

The concept that Pheonix are putting in £19.45m is just accounting trickery.

If you owed the bank £10m and I bought the debt off the bank for £4m then agreed with you to extend the £10m loan over another 5 years -- you would not consider that I stand to lose £10m on the deal. the most that I can lose is £4m.

But there is a £10m asset in my accounts - so if you go bust 6 months later -- I will write off the loan - with a £10m accounting LOSS.

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When you see a deal that should be simple made as murky as this one - you have to suspect that there is a reason why they are doing so.
That reason is to dupe shareholders into thinking that they are paying a lot more than they actually are -- so you don't feel shafted.

Who represents shareholders in the arrangement of this deal?
The Pheonix guys are out for the best deal for themselves.
The Directors want to keep themselves in well paid jobs -- with no doubt a good incentive package.

The interests of shareholders are well down the list.

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If your logic was correct and the shares were worth 8p -- the hedge funds would be hovering them up -- ready to cash in in less than a month.

Either you are wrong, or every well funded financial institution in the City is wrong.

[augustusgloop] 14/3/2018 19:40

jasdan,

that is pure rubbish.

The deal costs Pheonix almost nothing.

If SGI is still around in 5 years - SGI get £12.75m back on the loan.

Thus getting all the shares for FREE!

And the loan gets paid first if SGI are no longer a viable concern.

Basically, as long as SGI don't go bust in 5 years -- phoenix are covered.

[This is not counting the £2.75m that they pay for the Guernsey 'rights' - which may make them a load, or they may lose it all -- we will never know.]

[jasdan] 14/3/2018 17:52

There must be a lot of uncertainty out there over the vote on Friday as the ex-rights price is just under 8p. That is after taking into account the cost to Phoenix of the proposed deal.

Perhaps it will jump tomorrow, but if not, then it all hangs on Fridays vote.

[penny black1] 14/3/2018 12:04

I still have a feeling that if they sort things out in a year or two they will take the group private at 2.5p per share.