4th Mar 2005 07:00
Stanley Gibbons Group Limited04 March 2005 THE STANLEY GIBBONS GROUP LIMITED ("the Company" or "the Group") Audited Results for the year ended 31 December 2004 The Stanley Gibbons Group Limited, incorporating Stanley Gibbons, Fraser'sAutographs, Collector Cafe and other collectible-related Internet sites, todayannounced its audited results for the year ended 31 December 2004. Highlights • Record profit before tax (excluding profit on sale of holding in Provide Commerce, Inc.) of £1,743,000 (2003: £1,227,000), up 42% • Adjusted earnings per share (excluding profit on sale of Provide Commerce, Inc.) of 5.10p (2003: 3.61p) up 41% • Sales £10,051,000 (2003: £8,622,000), up 16.6% • Sale of investment in Provide Commerce, Inc. during year for 10 times book value, realising profit on sale of £1,985,000 • Bank and cash balances at 31 December 2004 of £1,930,000 (2003: £1,885,000) • Recommended final dividend of 1.5p net per share against 1p net per share forecast. Special dividend of 8p net per share and 0.5p net interim dividend already paid for the year • Repurchase of 1,322,394 shares for £1,060,000 on 15 March 2004 • Sales overseas represented 31% of total sales (2003: 29%) • Net assets per share retained in line with previous year at 30p despite a total return to shareholders for the year of £3,500,000 (14p per share) through dividends and buyback. • 20 million hits in December 2004 to Internet sites (2003: monthly average of 9 million). • Great Britain Rarities Stamp Price Index up 31% over past twelve months. Commenting on current trading, Paul Fraser, Chairman said: "We are very pleased with our progress made during 2004 and 2005 to date. Wehave continued to achieve exceptional profit growth, which is now being fuelledby a sustainable growth in sales from our investment department and Internetsites. We have cemented our position as the UK number one adviser in stampinvestment and I am very excited about the prospects in 2005 with the creationof a stamp investment fund. Progress in this area represents a key opportunityto substantially exceed expectations." For further information, contact: The Stanley Gibbons Group LimitedPaul Fraser, Chairman 020 7836 8444Michael Hall, Chief Executive 01425 472363 Seymour Pierce LimitedLouise Carpenter 020 7107 8000Jonathan Wright 020 7107 8000 Chairman's Statement Financials I am very pleased to report another record profit before tax of £3,728,000(2003: £1,227,000), representing an increase of 204%. Excluding the profit onthe sale of Provide Commerce, Inc., profit before tax was £1,743,000,representing an increase of 42%. Turnover increased by 17% to £10,051,000 (2003:£8,622,000). Earnings per Ordinary Share for the year ended 31 December 2004 were 13.23pcompared with 3.61p for the previous year. Excluding the profit on the sale ofProvide Commerce, Inc., earnings per Ordinary Share were 5.10p, representing anincrease of 41%. As at 31 December 2004, the Company had cash balances of £1,930,000 despite thepayment of a special 8p dividend, an ordinary dividend of 0.5p and buying back1,322,394 shares at a cost of £1,060,000; total spend of £3,134,000. Dividend Your Board is pleased to recommend an increased net final dividend of 1.5p pershare, giving a total net dividend for the year of 2p against 1.5p forecast. TheGroup is committed to maintaining dividend growth and believes that this is animportant part of the return to shareholders. Outlook Our Investment and Specialist Stamp Departments have performed exceptionallywell and the demand for the scarcest stamp material is still increasingstrongly. We are working hard to buy fresh material and larger collectionswhenever possible. This includes working closely with the top dealers andcollectors in the world to offer their material through various channels,including outright purchase, private treaty and auction. We are taking the next step to set up a stamp investment fund with the supportof a major international bank. There has been considerable interest frominvestors who would rather own units in a fund than have their own individualstamp portfolio. We believe there should be a very positive knock-on effect froma fund owning a large chunk of extremely scarce material both in the prices atthe top end of the market and as demand and prices then cascade down to thelower levels. The 'SG 100' Stamp Index is up a further 10% in 2004, (2003: 15% increase), withthe GB Rarities Index up 31% over the year, further demonstrating the continuinggrowth and liquidity in the market. Our Internet sites reached a new milestone in December with over 20 million hits(2003: 8 million), sales up 30% and a large increase in the content across allareas. Sales of our catalogues and philatelic literature have continued to grow and wenow produce most in full colour, with opportunities to produce a broader rangeof both philatelic and non-philatelic publications. We are currently developing the Publications department and recruiting thenecessary skills to realise this potential. We have seen as well, an increase inadvertising revenue, which should continue to rise in 2005 as we open up thesefurther avenues. We believe that the combination of our specialist stamp department, investmentportfolios and stamp fund, as well as our renewed efforts to develop thepublishing area, should give us significant benefits in terms of profits andadded value to shareholders which in turn, should drive the business forward in2005 and beyond. Directors I am pleased to have welcomed Peter John Wright to the Board, who joined us inMay 2004 as a Non-Executive Director. His wealth of experience gained during along career at Royal Mail has added a new dimension to the Board. Stephen Feigen resigned as a Non-Executive Director during the year and I takethis opportunity again to thank Steve for his valuable contribution in the earlystages of our Internet development projects. Employees We continue to aim for higher levels of performance and we can only thank allour staff for rising, once again, to the challenge and achieving another recordprofit. We aim to develop the strength and depth of management and specialised staff inline with growth and to ensure that our goals will continue to be attained. Paul FraserChairman3 March 2005 Operating Review Operating results for the year 2004 2004 2003 2003 2002 2002 Sales Profit Sales Profit Sales Profit £000 £000 £000 £000 £000 £000 Philatelic trading andretail operations 6,718 1,719 5,391 1,362 4,742 814Publishing andphilatelic accessories 2,660 846 2,481 659 2,605 679Dealing in autographs,records and 660 265 739 239 765 189related memorabilia------------------------------------------------------------------------------- 10,038 2,830 8,611 2,260 8,112 1,682Corporate overheads (925) (799) (847)New businessdevelopment 13 (214) 11 (254) 9 (293)Interest 52 20 (5)------------------------------------------------------------------------------- Before sale of fixedasset investment 10,051 1,743 8,622 1,227 8,121 537-------------------------------------------------------------------------------Profit on sale of fixedasset investment - 1,985 - -------------------------------------------------------------------------------- Group total sales andprofit before tax 10,051 3,728 8,622 1,227 8,121 537------------------------------------------------------------------------------- Sales Overall Group turnover increased by £1.4m (16.6%) compared to last year. Thegrowth has been assisted by prevailing strong philatelic market conditions, therealisation of the benefits of our website development and an increasedinvestment in our stockholding of key rarities and items of exceptional quality. We have continued to attract new customers through our website and visitors toour 399 Strand retail outlet and have experienced a 7% increase in new clientsrecruited compared to the previous year. New customers recruited during the yearcontributed £2.2m to turnover. Customer retention is a performance measure onwhich we will give added focus in 2005 and we intend to improve our analysis inthis area during the year to enable us to achieve our objective of increasingthe average lifetime spend of new customers. Philatelic trading and retail sales were 24.6% higher than last year, with salesgrowth achieved in all key areas of trading. The sale of stamps as analternative investment constituted a substantial element of the growth achievedand is proving a highly profitable new area of business. Our attendance at majorphilatelic and alternative investment shows worldwide this year has provedhighly lucrative, both directly through sales generated, and indirectly throughthe increased exposure of the services we offer to a global audience. Our focus on philatelic dealing has been towards achieving high value sales tokey customers through the acquisition of top quality philatelic items most indemand. Levels of demand are continuing to increase and consequently we arecurrently reviewing our resource in this area, with a view to recruiting furtherexperienced philatelic staff to enable us to acquire and process the increasedlevels of stock required to support demand. Revenue from auction activities has continued to enjoy strong growth. We heldtwo public auctions this year, compared to only one in the previous year. Thehigher prices currently being achieved at auction, due to the increase in demandin the philatelic market, have enabled us to improve margins in this area fromthe sale of our own material through auction, with sales values often exceedinglisted catalogue prices. Our return to public auctions has proved highlyprofitable and we believe there is further potential to develop sales throughthe auction route, which will be an area of increased focus during 2005. Publishing and philatelic accessory sales were 7.2% higher than last year.Advertising revenues were 22% ahead of last year and we are currently building astronger team in this area to ensure that we can improve focus on the sale ofinternet advertising and the development of non-philatelic advertisingrelationships. We have continued to enjoy strong growth in sales of ourcatalogue titles, which has been assisted by the ability to produce all titlesin full colour for the first time and the return of WH Smith as a distributor,which has started stocking our key titles again after a period of absence duringtheir internal reorganisations. Autographs and memorabilia sales were 10.7% below those in the previous year. Areduction in marketing activity has resulted in a fall of turnover, compensatedby increased gross margins from the implementation of better controls in stocksystems during the year and a reduction in overheads. We are currentlyundertaking a strategic review of the autograph division with the objective ofimproving focus on servicing the top end collectible and investment markets, atthe same time as improving sales and profitability on the sale of lower valueitems. Gross Margins The gross margin for the year ended 31 December 2004 was 57.7% (2003: 60.6%).The reduction in the gross margin percentage is attributable to reduced marginsfrom philatelic trading, particularly in specialist philatelic dealing. In orderto take advantage of the "real asset value" of philatelic stock at this time, weincreased our buying efforts to secure as much quality material as possible,often at the expense of short term margins due to our commitment to sell at ourcurrent listed catalogue prices. We are undertaking a pricing policy review toensure that our retail prices going forward reflect the true supply and demandequation in the marketplace. Profitability The profit before tax for the year of £3,728,000 compares to a profit last yearof £1,227,000, representing an increase of 204%. This year's profit includes acapital gain of £1,985,000 on the sale of our stake in Provide Commerce, Inc.Excluding the one-off capital gain, profit before tax was £1,743,000,representing an increase of 42%. The increase in profitability from the previousyear was achieved through growth in turnover, although at a lower gross marginpercentage, with overheads £95,000, (2.3%) higher than in the prior year. Salary overhead increased by £104,000, (5.2%). Increased salary costs areprimarily due to the payment of sales and profit related bonuses totalling£116,000, as a reward for the improved performance. Underlying fixed salaryoverhead is in line with the previous year, with a permanent staff headcount at31 December 2004 of 98 compared to 99 at 31 December 2003. Other overheads were materially consistent with the previous year, althoughmarketing costs were £84,000 lower as we benefit from the improved analysis ofreturns from marketing activities. This has enabled us to become more dynamic inour approach to product offerings and to deliver a better return at a lowercost. Total rental income in the year ended 31 December 2004 was £140,000,(2003: £69,000). New Business Development Direct sales generated through our websites increased by 30% and represented7.2% of total sales in 2004, (2003: 6.5%). The internet has enabled the exposureof the Stanley Gibbons brand name internationally and sales to customers outsideof the UK were 25% up on last year. The redesign and integration of our websites went live in September and waswelcomed with strong positive feedback from users, the success of which isevidenced from the resultant increase in visitors and online sales. All webdevelopment work was performed internally and all costs associated with thedevelopment have been written off to the profit and loss account as incurred. Website development in 2005 will include the re-launch of the Fraser's autographsite with design improvements similar to those already implemented in theStanley Gibbons site. We have recently developed an electronic link between ouronline catalogue data and the Stanley Gibbons online shop which allows users toview stock available for sale from both sources. The real benefit of this newfunctionality will be evidenced during 2005 as we upload to the site our fullstock range including lower value stamps which, at present, are only availablefor purchase at our 399 Strand retail outlet. Corporate Overheads Corporate overheads were £126,000 higher than last year mainly due to higherremuneration of Board Directors, together with the payment of performancerelated bonuses totalling £65,000. Consolidated Profit and Loss accountFor the year ended 31 December 2004 Year ended Year ended 31 December 2004 31 December 2003 Notes £'000 £'000 Turnover 10,051 8,622Cost of sales (4,248) (3,398) -------- -------- Gross profit 5,803 5,224Administration expenses (1,309) (1,183)Selling and distribution (2,803) (2,834)expenses ----- -------- Operating profit 1,691 1,207 Profit on sale of fixed assetinvestments 1,985 -Interest receivable and similarincome 56 27Interest payable and similarcharges (4) (7) ------- -------- Profit on ordinary activitiesbefore taxation 3,728 1,227Tax on profit on ordinaryactivities (499) (346) ------- -------- Profit for the financial year 3,229 881 Dividends paid and proposed 2 (2,440) - ------- -------- Retained profit for thefinancial 789 881year ------- -------- Earnings per Ordinary share 3 13.23p 3.61pAdjusted earnings per Ordinary Share 3 5.10p 3.61pDiluted earnings per Ordinary share 3 12.95p 3.49p Continuing operations: all items dealt with in arriving at the operating profitfor 2004 and 2003 relate to continuing operations. There is no material difference between the profit on ordinary activities beforetaxation and the retained profit for the year stated above and their historicalcost equivalents. Statement of total recognised gains and losses for the year ended 31 December2004 Year ended Year ended 31 December 2004 31 December 2003 £'000 £'000 Profit for the financial year 3,229 881 Surplus on revaluation of assets 37 - ----------- ----------- Total gains and losses recognised sincelast financial statements 3,266 881 ----------- ----------- Reconciliation of movements in equity shareholders' funds for the year ended 31December 2004 Year ended Year ended 31 December 2004 31 December 2003 £'000 £'000 Profit for the financial year 3,229 881Dividends (2,440) - ----------- ----------- Retained profit for the financial year 789 881Purchase of own shares (1,060) -Shares issued on exercise of shareoptions 224 -Other recognised gains 37 - ----------- ----------- Net (decrease)/increase in shareholders'funds (10) 881Opening equity shareholders' funds 7,299 6,418 ----------- ----------- Closing equity shareholders' funds 7,289 7,299 ----------- ----------- Balance sheetsat 31 December 2004 Group Group Company Company 31 31 31 31 December December December December 2004 2003 2004 2003 ------- ------- -------- --------- £'000 £'000 £'000 £'000 Fixed AssetsTangible assets 1,239 1,307 - -Investments - 223 5,811 5,811 ------- ------- -------- --------- 1,239 1,530 5,811 5,811 ------- ------- -------- --------- Current assetsStocks 5,588 4,878 - -Debtors: amountsfalling due after morethan one year 179 259 - -Debtors: amountsfalling due within oneyear 1,620 1,079 - 316Cash at bank and inhand 1,930 1,885 22 - ------- ------- -------- --------- 9,317 8,101 22 316 Creditors: amountsfalling due within oneyear (3,095) (2,097) (542) - ------- ------- -------- --------- Net currentassets/(liabilities) 6,222 6,004 (520) 316 ------- ------- -------- --------- Total assets lesscurrent liabilities 7,461 7,534 5,291 6,127 Creditors: amounts falling due aftermore thanone year - (47) - -Provision forliabilities andcharges (172) (188) - - ------- ------- -------- --------- Net assets 7,289 7,299 5,291 6,127 ------- ------- -------- --------- Capital and reservesCalled up sharecapital 244 244 244 244Share premium account 5,000 5,834 5,000 5,834Capital redemptionreserve 38 25 38 25Revaluation reserve 206 169 - -Profit and lossaccount 1,801 1,027 9 24 ------- ------- -------- --------- Equity shareholders'funds 7,289 7,299 5,291 6,127 ------- ------- -------- --------- Consolidated Cash Flow StatementFor the year ended 31 December 2004 Year ended Year ended 31 December 2004 31 December 2003 £'000 £'000 Net cash inflow from operatingactivities 1,024 1,373 ------- -------- Returns on investment and servicing offinanceInterest received 56 27Interest paid (4) (7) ------- -------- ------- -------- 52 20 TaxationUK corporation tax paid (134) (12)Jersey tax paid (10) - ------- -------- ------- -------- (144) (12) Capital expenditure and financialinvestmentsPayments to acquire tangible fixedassets (138) (134)Receipts from sales of fixed assetinvestment 2,208 - ------- -------- ------- -------- 2,070 (134) Equity dividends paid (2,074) - ------- -------- ------- --------Net cash inflow before financing 928 1,247 ------- -------- ------- -------- FinancingPurchase of own ordinary shares (1,060) -Shares issued 224 -Loan repayments - (55)Repayment of Loan notes (47) (16) ------- -------- ------- -------- Net cash outflow from financing (883) (71) ------- -------- ------- -------- Increase in cash 45 1,176 ------- -------- ------- -------- Reconciliation of operating profit to net cash inflow from operating activities Year ended Year ended 31 December 2004 31 December 2003 £'000 £'000 Operating profit 1,691 1,207Depreciation 243 282Increase in stocks (710) (331)Increase in debtors (461) (228)Increase in creditors 261 443 ----------- ----------- Net cash inflow from operatingactivities 1,024 1,373 ----------- ----------- Notes to Accounts 1. Basis of preparation The financial information set out in this announcement does not constitute theGroup's statutory financial statements for the years ended 31 December 2004 and31 December 2003. The financial information for the year ended 31 December 2003 has been extractedfrom the audited statutory financial statements for that year which include anunqualified audit report and have been filed with the Registrar of Companies inJersey. The financial information for the year ended 31 December 2004 has beenextracted from the audited financial statements of the Group for the year ended31 December 2004 which were approved by the Board of Directors on 3 March 2005. 2. Dividends The final dividend of 1.5p net per Ordinary Share will be paid on 19 April 2005to all shareholders on the register on 18 March 2005. 3. Earnings per ordinary share The calculation of basic earnings per ordinary share is based on the weightedaverage number of shares in issue during the year. Adjusted earnings per share has been calculated to exclude the effect of theprofit on the sale of the investment in Provide Commerce, Inc. The Directorsbelieve this gives a more meaningful measure of the underlying performance ofthe Group. For diluted earnings per share, the weighted average number of ordinary sharesin issue is adjusted to assume conversion of all dilutive potential ordinaryshares. The Group has only one category of dilutive ordinary shares: those shareoptions granted to employees where the exercise price is less than the averagemarket price of the Company's ordinary shares during the year. Year ended Year ended 31 December 2004 31 December 2003Weighted average number of ordinaryshares in issue (No.) 24,404,298 24,376,736Dilutive potential ordinary shares:Employee share options 523,776 865,251Profit after tax (£) 3,229,000 881,000Less: profit on sale of fixed assetinvestment (£) (1,985,000) - ----------- -----------Adjusted profit after tax (£) 1,244,000 881,000 ----------- ----------- Basic earnings per share - pence pershare (p) 13.23p 3.61pLess: profit on sale of fixed assetinvestment (8.13p) - ----------- -----------Adjusted earnings per share - pence pershare (p) 5.10p 3.61p ----------- ----------- Diluted earnings per share - pence pershare (p) 12.95p 3.49p ----------- ----------- 4. Annual report Copies of this announcement are available from the Company Secretary. Copies ofthe Annual Report for the year ended 31 December 2004 will be posted toshareholders in the week commencing 7 March 2005 and will be available at theregistered office of the Company, Pirouet House, Union Street, St Helier, JerseyJE1 3WF or alternatively on our website www.stanleygibbons.com. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
SGI.L