Stanley Gibbons Share Discussion Threads

[kael] 21/6/2004 03:09

Thank you for clearing that up Gengulphus, I was sure there needed to be a resolution passed to authorise any kind of action involving returns to shareholders, but if that isnt the case then so be it :) The information I received was obviously misguided ;)

[gengulphus] 21/6/2004 01:31

"(any dividend in fact requires a resolution)"

No - companies regularly pay out interim dividends without any sort of resolution. Final dividends do seem to require a resolution, normally at the AGM, but I've seen companies get around that by declaring a "second interim" dividend in place of a final dividend. See for a recent example of this.

Not certain what the situation is about special dividends needing resolutions.

Gengulphus

[ukhawk] 19/6/2004 09:53

xdavid, I don't think there's any doubt that the announcement before the end of this month will clearly state how the surplus funds will be returned to shareholders, as per the chairman's statement in the annual report. IMHO that'll be by way of a special dividend. I haven't seen any agreement for that though, so presume an EGM will follow. Can't see anybody voting against !!!

[xdavid] 18/6/2004 22:51

Sorry, Kael, I didn't mean to suggest that they would be 'paying' before interims. But I do think that in the next two weeks, as they themselves have stated, that they will announce what is going to happen. If necessary with the add-on that they will be seeking approval for the proposals at an egm.

They may not, however, need an egm if they were given a wide approval for any action at the AGM. Apart from the share buy back I can find no info on the other resolutions passed. I totally agree that there are many ways available for them to "return" the cash.

Mind you, I did notice that in their agm statement they say:
"We will be in a position by the end of June to review further returns to shareholders, dependent on the proceeds of our investment in Provide Commerce, Inc."
Note they say "review" and not 'announce' or some such word. Mmmmm....

[kael] 18/6/2004 19:56

Don't SGI need to have an EGM in order to authorise payment of a special dividend (any dividend in fact requires a resolution)? If that's true (which I believe it is) I would prolly expect the payment after interims together with the normal divi and the announcement of what they are planning to do with the extra cash.

Someone duly noted that there was a resolution passed allowing a 15% buyback. It is entirely possible the PRVD holding will be used on this 15% which I think is around 3 3/4 million shares.

PRVD holding at $20, is worth $4.4mil (although today it is sitting at $21.7). This is worth around £2.4mil which would allow the cancelllation of around 3.2mil (plus any other profit that can be used). In cash terms the holding is worth a shade over 9.5p per share.

So although encouraging figures, there is doubt over how this will be paid to shareholders, they did mention an announcement in June so lets hope they come out with something to clarify the position.

[nurdin] 15/6/2004 08:02

A great start...should go past previous highs in due course..and certainly if they put out a positive trading statement...:o)

[nurdin] 14/6/2004 15:59

Normally dividends paid out by a Jersey based company are liable for both Jersey tax and the UK tax if the holder is a UK citizen.However I understand that SGIs special dividends and future divis will be paid out from a Guernsey based off-shoot set up to overcome this double tax problem.Dividends paid from Guernsy are liable for UK tax only...so I understand.

[gengulphus] 14/6/2004 15:39

I don't think there should be any problem. The tax credit attached to UK dividends, which is equal to 1/9th of the dividend and which reduces the theoretical 10% and 32.5% dividend tax rates on basic- and higher-rate dividends to effectively 0% and 25% (*), is a notional tax credit. That is, it does not represent any tax paid by the company and is not linked to the payment of any tax by the company. It is entirely possible for a UK company to pay out a dividend with the tax credit attached despite not having paid enough corporation tax to cover the tax credits.

However, I am not quite certain about this, because, due to another tax jurisdiction being involved, I am not quite certain whether it will get normal UK tax treatment. I.e. I don't think there is any problem about the "hasn't paid corporation tax" angle, there might be about the "other tax jurisdiction" angle.

How to settle the question? I'd guess by aksing the company - though I think it might be best to wait until the dividend is declared (if a dividend is declared), see what the company says then, and then ask for clarification if needed.

(*) This is the net result of being taxed on the sum of the dividend and the tax credit, but being able to use the tax credit to pay the tax.

Gengulphus

[shanklin] 14/6/2004 07:04

A little while ago, Nurdin and I had a discussion on board (posts 1187-1188) re. the tax situation on the PRVD money.

Nurdin phoned SGI who confirmed that, due to their tax jurisdiction, SGI have no tax to pay on the proceeds of the PRS sale.

Thinking about this further... ...if SGI pay these funds out as a dividend, I do wonder whether, since SGI will have paid no tax on the associated profits... ...whether we will have to pay tax on the dividend at our full marginal tax rate, rather than:
- 0% for basic rate tax payers
- some higher number for 40% tax payers

Thoughts welcome as I thought the 0% assumed the company had paid UK corporate taxes.

Cheers, Martin

[ukhawk] 12/6/2004 11:02

Well, the PRVD lock-in period ends on monday and I'd be surprised if a home and price for SGI's 221k hadn't been agreed ages ago, subject to mkt conditions. As the chairman said in the end of year statement, referring to the return of surplus funds, "we hope to be in a position by june to confirm the exact amount". Based on thursdays closing price, this would be 10p a share.
An announcement with a trading statement leading up to the interims at the end of july should make for an interesting couple of months.

[kael] 10/6/2004 16:33

Indeed nurdin there are :)

What do you think about the creation of a new index and fund? MH has spoken about a fund a few times but was undecided (due to other matters) - now it appears with the new index they may be making that move.

[nurdin] 10/6/2004 16:21

Some lovely buys today ..:o)

[kael] 09/6/2004 14:28

Well isnt that what investing is about BP, you make educated assumptions and estimated figures. If you just invested everytime you see a companies results you wouldnt make much would you LOL. For some reason institutions obviously thought this was cheap at 67p, come on BP, you make your play on what you think will happen, not what already has happened.

[barnetpeter] 09/6/2004 14:22

Kael - your post above has four "if"s in it. Chill out!

I read the same stuff on every board on ADVFN i.e. "this is the one" and its undervalued. Well, unless the market is going to move up 2000 points in short order, a lot of folk will be wrong and disappointed. SGI was cheap in the 30p and 40p range. Now it is a little under valued but the market has all the info you and I have. The current price is 75p not 90p or 120p. Let us all wait and see the results.

[kael] 09/6/2004 14:02

Well BP they are pencilled in for 5.2p this year and 7.2p for 2005, I believe at least 5.5p is attainable which is 17% above expectations. SGI beat expectations by 16.5% for 2003. Given all the positive news indicated in trading statwments and the strength of the stamp market, it is certainly possible that this consisistency will be maintained.

I still dont understand how you can believe 120p as being an "outrageous" level and you havent provided any figures to substantiate this other than you believe a PE of 18 is sufficiently high enough. However if you look across the market where companies are consistently putting in great results, consistently impressing the market, they naturally receive a premium rating. If SGI beat expectations consistently, they too will receive the same premium as they did earlier this year, good growth companies dont come cheap!

Even if they do just meet targets, 90p would put them on a PE of nearer 17 not 18 ;) Dont be surprised if after beating expectations you see these sitting on above 20, froth accomodating. The long term in SGI is what investors want to see and this is where prosective PE is most important to enable a higher PE rating. At 7.5p (my estimate ;) ) for 2005, even your PE of 18 would put them on 135p.

[barnetpeter] 09/6/2004 13:23

Kael - this year. But unless they beat 5p substantially, (18 PE) that will be enough. The prvd holding is helpful but only as a "one-off".

I said before this is a good, solid stock. I am happy with that and do not need to believe it will hit outrageous levels.

[kael] 09/6/2004 12:33

Bit more info on SGI's new index:

Feature
Stanley Gibbons Introduce New GB Rarities Index
July 2004

To complement the established SG100 Stamp Price Index, Stanley Gibbons have compiled an index of rarer Great Britain stamps

The SG100 stamp price index was inaugurated in November 2002 to provide a definitive measure of market activity, allowing collectors and investors to objectively monitor prices and relate them to more traditional forms of investment such as the stock market and bank and building society deposit accounts.

At its launch the SG100 stood at 323.87, representing a growth over five years of 31.2 per cent. This month the index has risen to 371.37, a growth of 50.5 per cent since the end of 1997, compared with an increase in bank standard interest of 29.5 per cent.

The items which make up the SG100 are those 'most frequently traded' by Stanley Gibbons and the index therefore gives a very accurate picture of the state of the market for the most popular stamps. However, as auctions over the past couple of years have shown, rarities have been advancing in price at a much faster rate than popular stamps, but such material, because it could never be among 'the most frequently traded', does not feature in the original SG100 at all.

Stanley Gibbons have therefore compiled a second index, comprising only Great Britain rarities, to give a more accurate picture of the market for the scarcest items in the greatest demand. Whereas the stamps which make up the original SG100 have never been made public to ensure that the index could not be manipulated, most of the 30 items which make up the GB Rarities Index would be fairly obvious to collectors, so the details of the list are given here, together with price changes over the past five editions of the Great Britain Concise Catalogue.

Stamps included in the SG30 GB Rarities Index represent examples of the type of stamps recommended by the Stanley Gibbons Investment Department to its investment clients. Such stamps are considered to be the most likely to show consistent returns over the medium term through an ever-increasing scarcity.

Most notably, an unused example of the 1882 £1 brown-lilac, watermark anchor on blued paper (SG 132) has seen an increase in value from £32,000 in 1999 to £65,000 in 2004 reflecting its scarcity, whilst demand continues to increase worldwide from new collectors and investors entering the market. An investment of £447,000, representing one of each stamp comprising the GB Rarities Index in 1999, would have provided an average annual return of £65,900 (11.7 per cent per annum) which far outweighs bank deposit interest rates and the stock market performance during the period.

Stanley Gibbons is currently looking at the formation of a 'closed end' stamp investment fund which would comprise stamps such as those included in the SG30 GB Rarities Index. Investors would be able to purchase units in the fund with a view to liquidation in 5 years time. The creation of the fund will enable access to the type of returns demonstrated above to a wider audience of investors.

[kael] 09/6/2004 12:20

BP, just out of interest what is your time frame for 90p? by 2005? or interims?120p by 05 is a perfectly attainable target, maintaining current PE levels and SGI maintaining its expectation beating performance...tell me how is that figure starry eyed? :/

If you are looking for a quick buck then fair enough, but you have to realise there is more money to be had by *investing* in growth stocks. Over a period of 3 years assuming growth is maintained, you will be looking at over 10p EPS here.

[williemanjaro] 09/6/2004 09:16

Nurdin-"Id say look at the fundamentals again..
-the stamp market is worth over £5bn worldwide..SGI have barely scratched the surface......."

Ah fundementals always paint such a pretty picture-

Yes I`m just playing here-but nurdin- talking of "Scratching the surface";
Did you know, the Global Toy industry is worth $ 70 Billion. In North America alone-Annual scale-model railroad equipment sales have hit $500 million. Throw "train-related products" into the spreadsheet and that number approaches $1 billion. The opportunities there for Hornby to really get scratching - :-)

[barnetpeter] 09/6/2004 08:49

But I have not sold. I like SGI but do not get starry eyed and put up daft prices. 90p is fair value imo and that means a further 20% increase from todays price. You are not satisfied with that? I suggest you invest in risky techies if you want more.

[shanklin] 09/6/2004 07:09

Further to Nurdin's post, also worth noting that with stock undervalued on the balance sheet, TBV/Share is IMHO at least 63p, so in a market sector where brand value is important, as per Hornby in its market sector, with SGI, one gets:
- Similar or better growth than HRN
- Similar or better forward P/E to HRN
- Significantly more tangible assets/share price than HRN

HRN is a terrific company, but from where we are now I feel SGI is the better investment.

Cheers, Martin

[nurdin] 09/6/2004 06:36

barnetpeters..perhaps you sold your shares a bit too early? :o)

Id say look at the fundamentals again..
-the stamp market is worth over £5bn worldwide..SGI have barely scratched the surface
-earnings have grown from -0.6p in 2000 to over 3.3p in 03
-brokers forecast 5.3p in 04(52% over 03) rising to 7p in 05(32% lift)
-thats a forward pe of 11 and a peg of less than 0.3!
-their websites are now getting 10m hits per month!
-advertising revenues are coming in thick and fast
-sales were 20% ahead in Q1 compared to last year
-the stamp index is rising, partly due to the uncertain stock market conditions
-sales of autographs and other collectable items are picking up

My feeling is that they will surprise the market on the upside come the results time.I also expect 05 earnings to be revised up to perhaps 8p even after the interims..
15x 05 earnings is a modest rating for such a growth stock but even on that basis we are looking at a target price of 120p for the share price...and its a safer bet than most other highly valued stocks

[kael] 09/6/2004 01:25

BP...this is a growth share, as you obviously know, they tend to have *MUCH* higher PE's than normal...Historic of 20 is fine, prospective PE you havent bothered to consider in your calculations. On earnings of 7.5p 2005 and current share price, these now sit at around 10. It would be wise to concentrate on prospective earnings rather than historic when considering growth shares, just remember at this years results in Febuary they were sitting on a historic PE of 35...*cough*

There are plenty of growth stocks sitting on much higher PE's, have nigh on NIL institutional investment and promise "Jam tomorrow", I know which shares I'd rather be investing in. Here you have solid sustained growth in a niche market, coupled with an excellent management team determined to expand into other niche markets not to mention substantial institutional investmwnt. 90p fair value? You have got to be joking. Take into account the value of PRVD and its close to 90p already.

Assuming your estimate of 5p means that you think they will miss expectations, even in a rising stamp market AND the indications given in their recent trading statement! Ridiculous! I suggest you do a little more reading!