14th Mar 2008 07:00
Stanley Gibbons Group Limited14 March 2008 THE STANLEY GIBBONS GROUP LIMITED THE STANLEY GIBBONS GROUP LIMITED ("the Company" or "the Group") Audited Results for the year ended 31 December 2007 The Stanley Gibbons Group Limited, incorporating Stanley Gibbons, Fraser'sAutographs and Collector Cafe today announced its audited results for the yearended 31 December 2007. Highlights • Adjusted profit before tax, excluding exceptional operating costs, was £4.62m, up 23%. Profit before tax up 20% to £4.51m (2006: £3.75m). • Adjusted earnings per share, excluding exceptional operating costs, were 13.83p, up 25%. • Earnings per share of 13.46p (2006: 11.07p) up 22%. • Sales up 21% to £20.2m (2006: £16.7m) • Bank and cash balances at 31 December 2007 of circa £3.0m (2006: same) • Recommended final dividend of 2.75p net per share, giving a total net dividend for the year of 4.5p (2006: 4p net per share) up 13% • Sales of £3.6m (18%) made to customers recruited from our websites compared to £1.65m (10%) of sales in the prior year. • Approaching 4 million website visits in 2007, up over 40% on the prior year • Autograph and memorabilia sales increased by almost 40% following the successful development of rare historical signatures as an alternative investment • Increased investment in stockholding of high value rarities facilitating an increase in trading at the top end of the market which supports future growth Mike Hall, Chief Executive commented: "2007 was another excellent year's trading with profits up by over 20%. Wecontinued to grow organically whilst maintaining our financial resources andwithout any acquisitions. Stanley Gibbons has a clear comparative advantage in our markets - we are thebiggest brand in our field yet still command only a small market share. Our aimremains to bring the fragmented world of collectibles to one location onlinethrough use of our popular websites. Collectibles as an asset class are growingand tighter economic conditions are resulting in an increasing number ofinvestors turning to our products as a means of protecting their wealth bydiversifying their asset holdings. Increasing demand for our investment products, coupled with a better qualitystockholding, place us in a strong position as we start 2008 with an increasedmomentum." For further information, contact: The Stanley Gibbons Group LimitedMichael Hall, Chief Executive Tel: +44 (0) 20 7836 8444www.stanleygibbons.com Seymour Pierce Ltd, NOMAD/ Broker Tel: +44 (0) 20 7107 8000Jonathan Wright Bishopsgate Communications Ltd, Financial PR Tel: +44 (0) 20 7562 3350Jenni Herbert/Nick [email protected] Chairman's Statement After just four months as your Board's Chairman it is a great pleasure topresent to Shareholders yet another year of exceedingly good results,maintaining the growth momentum in the Group's businesses. The Senior executiveteam has fulfilled the expectations of the Board for 2007. These resultsillustrate both the Group's sound strategy and also its well managed execution.The outcome is 2007 achieving record results. Financial PerformanceTurnover increased to £20.2 million, an increase of more than one-fifth over thepreceding year, and profit before tax grew in line with turnover, and beforeexceptional charges, rose by almost one-quarter to £4.6 million. Earnings per share at 13.46 pence were 22% up on the preceding year, once againin line with the other measures of profit. Your Board is conscious of the need to retain adequate liquid resources, withcash balances held steady at just over £3 million, underpinning the Group'sability to fund further growth in its business without being constrained by lackof liquidity. DividendAs a consequence of all the above, your Board is pleased to recommend toShareholders, for approval at the forthcoming AGM, a final dividend of 2.75pence per share (net of Jersey tax) which would produce a total dividend out of2007 earnings of 4.5 pence (net of Jersey tax), an increase of 13% over 2006. The Board's progressive dividend policy is maintained, with dividend more thanthree times covered by earnings in 2007 compared with 2.75 times in 2006, havinghad regard to projected cash flow requirements in 2008 and beyond. OutlookCollectibles as a potential Savings and Wealth Management asset class aregrowing. As they continue to be more fully recognised as an "alternative"investment, your Company is well positioned to participate in this growth invalue and volume terms. Even now, our stamp and autograph indices are availableon Bloomberg information terminals for institutional investors. A small increasein acceptance by institutional investors would make a significant positiveimpact on the growth potential of our businesses. We have continued to increase our inventories of high-end quality stamps andautographs. Such investment will support the future growth we anticipate. We arealso particularly pleased that we have significantly reduced our low value andslow moving inventory items which has been achieved through the development of anumber of successful trading relationships during the year, facilitating anincrease in trade sales at acceptable margins. This combination, coupled with afaster inventory turnover, gives us a very strong potential to fuel theincreased momentum to earn profits more consistently across the entire year. The more rapid turnover of major items gives confidence to all our customers,collectors and investors, and the market as a whole. We still have a potentialbusiness clients' "wants list" of over £12 million of rare items they areseeking. Stock holding is clearly an important part of our strategy to allocate resourcesto areas of our business experiencing faster growth and where we believe we canadd value. This is in parallel with investment in the structure and recruitingthe key personnel which will enable this strategy to be fully implemented. We have successfully added to our network of agents and Independent FinancialAdvisers around the world, which has increased both our sales and brandawareness on an international basis. Sales to overseas customers were nearly 10%on last year and represented two in five sales by value. Our internet sites are still seeing exponential growth in visitor numbers and weare developing our sites to include landing pages in various key languages,especially those of strong emerging markets of the "BRIC" countries. The new Guernsey office had an exceptional year and confirmed the wisdom of ourdecision to open it in August 2006. We are looking at other opportunities torepeat this, possibly in Jersey and other places. There is great trust and awareness of our brand and we are always looking atways to improve our products and services to fully capitalise on this and I amdelighted to confirm continuation of our Royal Warrant until 2013. In summary, we are attracting more customers in a very cost effective way,increasing total sales, average order values and frequency of purchase - fourprerequisites for success in our businesses. BoardThe year since our previous Annual Report saw a number of changes to your Board.First, I must record the Board's appreciation of the leadership of Paul Fraserduring his longstanding association with the business up to him stepping down inAugust 2007. Secondly, our thanks to Bob Henkhuzens in succeeding Paul Fraser as InterimChairman and continuing the seamless progress of the business during 2007, alongwith the other Board members, as well as chairing the Audit Committee. Since joining the Board, and as Chairman of its Nominations Committee, Iproposed that the Board's corporate governance would be strengthened by theaddition of a further Independent Director and Sir Michael Wilkes was appointedin early 2008. Following this the composition of the various Board Committeeswas reviewed, with Sir Michael taking the chair of the Remuneration Committee. Your Board is now well balanced and capable of fulfilling its role in thedevelopment of the Company and its businesses and I am grateful for theirsupport. StakeholdersI would also like to thank all our colleagues in the Group for their hard workand contribution. They have a combination of skills, knowledge and experiencethat are key drivers behind the success shown consistently in recent years. Ialso extend my gratitude to other stakeholders associated with our activitieswho have supported our continued growth and look forward to meeting Shareholdersat the forthcoming AGM on 23 April 2008. Operating Review Operating results for the year 2007 2007 2006 2006 2005 2005 Sales Profit Sales Profit Sales Profit £000 £000 £000 £000 £000 £000Philatelic trading andretail operations 14,945 3,868 12,194 3,231 10,076 2,789Publishing andphilatelic accessories 2,919 868 2,787 814 2,818 871Dealing in autographs,records and 2,284 1,076 1,664 793 748 205related memorabilia-------------------- ------ ------- ------- ------- ------- ------- 20,148 5,812 16,645 4,838 13,642 3,865Internet development 43 (65) 39 (40) 33 (2)Corporate overheads (1,269) (1,228) (1,045)Interest and similarincome 147 176 95-------------------- ------ ------- ------- ------- ------- ------- Before exceptional items 20,191 4,625 16,684 3,746 13,675 2,913-------------------- ------ ------- ------- ------- ------- ------- Exceptional operatingcosts (117) - (94)-------------------- ------ ------- ------- ------- ------- ------- Group total sales andprofit before tax 20,191 4,508 16,684 3,746 13,675 2,819-------------------- ------ ------- ------- ------- ------- ------- Overview Overall group turnover increased by £3,507,000 (21%) compared to last year. Theprofit before tax for the year of £4,508,000 compared to a profit last year of£3,746,000 representing an increase of 20%. Excluding exceptional operatingcosts incurred in the year of £117,000, profit before tax was £4,625,000representing an increase of 23%. Growth was achieved organically through thecontinued successful implementation of our strategy which, based on the power ofour brand, yet small global market share, still has a long way to run. The keyareas of growth achieved during the year included: • Increased investment in our stockholding of high value rarities enabling us to increase trading at the top end of the market • Increased acceptance of collectibles as an "alternative" investment with strong growth in the sale of our investment products • Successful development of e-mail marketing strategy based on "newsletter" sales approach • Successful development of the sale of rare historical signatures as an alternative investment • Building of successful trading partnerships resulting in an increased level of sales with members of the trade We have recruited an increasing number of new high net worth clients resultingin the spend from new clients added in the year increasing by 26% compared tothe prior year. Our marketing spend increased by 27% to £552,000 as our averageresponse rates improved providing confidence to increase the frequency of ourmagazine advertising, mailings and overseas exhibitions. An increasingproportion of our marketing spend is being used to grow and develop the size ofour e-mail database which is an area we believe will provide the platform tosecure future sustainable and consistent growth. Philatelic trading and retail operations Philatelic trading and retail sales were 23% higher than last year with profitcontribution up by 20%. Our confidence to invest in our stockholdingparticularly in higher value philatelic pieces has paid dividends and driven anincrease in philatelic sales to collectors. This, together with strong marketconditions prevailing, led to an increase in sales to collectors of stamps fromGreat Britain of 48%. Sales to investment clients increased by 36% benefiting from improved responsesfrom our marketing activities. Our stamp and autograph price indices are nowavailable on Bloomberg terminals for institutional investors adding credence tocollectibles as an alternative asset class. During 2007 we have developed coresales copywriting skills in-house. The resultant improvements to the quality ofsales copy in our e-mail marketing has improved response rates dramatically andthis will form an integral part of our future growth. The development of stronger relationships with members of the philatelic tradehas provided an outlet for the sale of lower value material. Such deals ensurethat our stockholding remains fresh and that cash does not become tied up inslow moving stock. At the same time, we have increased our investment in highvalue rarities leading to a significant improvement in the profile and qualityof our stockholding. Publishing and philatelic accessories Publishing and philatelic accessory sales were 5% higher than last year withprofit contribution up 7%. Modest growth was supported by a 12% increase inonline sales benefiting from improved presentation of our stock range online andthe expansion of our range of third party stamp albums and accessories. Some progress was made in developing our world-renowned range of printed priceguide catalogues. In December, we published our first ever edition of "CollectAutographs" which has been received well in the market. We also enhanced ourmost respected publication this year with the extension of the "Commonwealth &British Empire" catalogue to cover the period from 1840 to 1970, (previously1840 to 1952). This change received strong recognition from collectors andmembers of the trade. Autographs, records and related memorabilia Autographs, records and related memorabilia sales were 37% higher than last yearwith profit contribution up 36%. We have continued to make significant progressin the marketing and sales of rare historical signatures as an "alternative"investment. Sales to investors were highest in December following the successfulacquisition of a collection of Royalty signatures of exceptional quality andrarity. As with stamps, our strategy of investing in our stockholding of high valuerarities has been a success. Retail sales in our London Gallery at 399 Strandwere 33% up on the prior year despite a lower footfall with higher averagetransaction values. Our e-mail marketing has been particularly effective ingenerating sales of high value autographs. Internet development Sales reported within this department relate to online subscription revenueonly. In the year ended 31 December 2007 £3,582,000 (18%) of sales were made tocustomers recruited from our websites compared to £1,652,000 (10%) of sales inthe prior year. Our websites received 3,800,000 visitors during 2007 compared to2,700,000 in the prior year representing an increase of 41%. The website remains a core part of our strategy in achieving global recognitionof our brand together with growing our sales penetration overseas. We haverecently increased our investment in IT and web development staff in order toaccelerate some of the planned changes to our websites and IT systems. Corporate overheads Corporate overheads were £41,000 (3%) higher than last year. We havestrengthened the Board during the year to support our ambitious growthaspirations and to provide improved corporate governance to shareholders.Following the resignation of Paul Fraser as executive Chairman, we havestrengthened the executive team. Mark Henley was appointed as Finance Directorin August and Steve Sjuggerud was appointed as executive director in May. Wehave also strengthened our Board of non-executive directors with the appointmentof Martin Bralsford as non-executive Chairman in November and General SirMichael Wilkes as non-executive director and Chairman of the remunerationcommittee in January 2008. As a result, we now have an equal split on the Boardbetween executives and non-executives. Exceptional operating costs Exceptional operating costs of £117,000 relate to remuneration paid to PaulFraser under the terms of his Service Agreement. Strategic focus and opportunities Even though Stanley Gibbons is the most recognised name in the world of stamps,we still command less than 1% of the market. We believe our strategy willprovide the solution to this conundrum. Our continued focus on developing ourwebsite and communicating with an increasing number of customers at a low costmore regularly through our e-mail marketing should drive continued organicgrowth. Further investment, most notably in human resource, will be required to providethe scalability to our growth plans particularly in the sourcing of anincreasing level of rare stamps and autographs to meet the rising demand we arecreating. We are proud of what we have achieved over the past eight years and believe thatwe still have significant opportunities in front of us. We therefore remain veryconfident about our prospects and consider that continued growth is sustainable. Accounting Policies The Group adopted International Financial Reporting Standards (IFRS) for thefirst time in the presentation of its interim results for the six months ended30 June 2007. This is our first full set of financial statements prepared underIFRS. The adoption of IFRS has had no material impact on the financial resultsreported. Consolidated Income Statementfor the year ended 31 December 2007 Year ended Year ended 31 December 2007 31 December 2006 Notes £'000 £'000 ------------- ------------- Revenue 20,191 16,684Cost of sales (10,815) (8,448)------------------- ----- ------- -------- --- ------- -------- Gross Profit 9,376 8,236 Administrative expenses (1,610) (1,569)Distribution costs (3,288) (3,097)Exceptional operating costs (117) -------------------- ----- ------- -------- --- ------- -------- Operating Profit 4,361 3,570Finance income 149 176Finance costs (2) -------------------- ----- ------- -------- --- ------- -------- Profit before tax 4,508 3,746Taxation (1,125) (972)------------------- ----- ------- -------- --- ------- -------- Profit for the financial year 3,383 2,774------------------- ----- ------- -------- --- ------- -------- Basic Earnings per Ordinary share 3 13.46p 11.07pDiluted earnings per Ordinary share 3 13.41p 11.06p------------------- ----- ------- Statements of Recognised Income & Expense Group Group Company Company 31 December 31 December 31 December 31 December 2007 2006 2007 2006 £'000 £'000 £'000 £'000 Profit / (loss) forthe financial year 3,383 2,774 (1) (1)Surplus on revaluationof assets - 47 - -Deferred taxattributable torevaluation of assets 5 (14) - -Actuarial(losses)/gainsrecognised in thepension scheme (115) 348 - -Deferred taxattributable toactuarial gains 31 (105) - - ----------------------- ------- -------- -------- --------- Total recognisedincome/(expense) forthe year 3,304 3,050 (1) (1)----------------------- ------- -------- -------- --------- All activities have arisen from continuing operations. Balance Sheetsat 31 December 2007 Group Group Company Company 31 31 31 31 December December December December 2007 2006 2007 2006 Notes £'000 £'000 £'000 £'000 ----- ------- ------- -------- ---------Non-current assetsIntangible assets 37 83 - -Property, plant andequipment 978 1,034 - -Deferred tax asset 71 25 - -Trade and otherreceivables 2,846 610 - -Investment inSubsidiary - - 5,855 5,811-------------------- ----- ------- ------- -------- --------- 3,932 1,752 5,855 5,811 -------------------- ----- ------- ------- -------- --------- Current AssetsInventories 7,109 6,035 - -Trade and otherreceivables 4,248 3,254 - -Cash and cashequivalents 3,013 3,083 27 32-------------------- ----- ------- ------- -------- --------- 14,370 12,372 27 32 -------------------- ----- ------- ------- -------- --------- Total assets 18,302 14,124 5,882 5,843-------------------- ----- ------- ------- -------- --------- Current liabilitiesTrade and otherpayables 3,118 1,894 394 398Current tax payable 908 513 - --------------------- ----- ------- ------- -------- --------- 4,026 2,407 394 398 -------------------- ----- ------- ------- -------- --------- Non-currentliabilitiesRetirement benefitobligations 252 84 - -Deferred taxliabilities 150 179 - -Other financialliabilities 300 171 - -Other provisionsfor liabilities 62 50 - --------------------- ----- ------- ------- -------- --------- 764 484 - - -------------------- ----- ------- ------- -------- --------- Total liabilities 4,790 2,891 394 398-------------------- ----- ------- ------- -------- --------- Net assets 13,512 11,233 5,488 5,445-------------------- ----- ------- ------- -------- --------- EquityCalled up sharecapital 251 251 251 251Share premiumaccount 5,148 5,148 5,148 5,148Shares to be issued 44 - 44 -Capital redemptionreserve 38 38 38 38Revaluation reserve 182 177 - -Retained earnings 7,849 5,619 7 8-------------------- ----- ------- ------- -------- --------- Equityshareholders' funds 13,512 11,233 5,488 5,445-------------------- ----- ------- ------- -------- --------- Consolidated Cash Flow Statementsfor the year ended 31 December 2007 Group Group Company Company 31 31 31 31 December December December December 2007 2006 2007 2006 Notes £'000 £'000 £'000 £'000 ----- ------- -------- ------- -------- Cash generatedfrom/(used in)operations 1,782 2,293 (6) 22Interest paid (2) - - -Taxes paid (770) (978) - --------------------- ----- ------- -------- ------- -------- Net cash generatedfrom/(used in)operatingactivities 1,010 1,315 (6) 22-------------------- ----- ------- -------- ------- -------- Investing activitiesPurchase ofproperty, plant andequipment (88) (120) - -Purchase ofintangible assets (7) (25) - -Interest received 83 110 1 -Dividends received - - 1,068 877-------------------- ----- ------- -------- ------- -------- Net cash used ininvestingactivities (12) (35) 1,069 877-------------------- ----- ------- -------- ------- -------- Financing activitiesDividends paid tocompanyshareholders (1,068) (877) (1,068) (877)Net proceeds fromissue of ordinaryshare capital - 95 - --------------------- ----- ------- -------- ------- -------- Net cash used infinancingactivities (1,068) (782) (1,068) (877)-------------------- ----- ------- -------- ------- -------- Net (decrease) /increase in cashand cashequivalents (70) 498 (5) 22-------------------- ----- ------- -------- ------- -------- Cash and cashequivalents atstart of year 3,083 2,585 32 10-------------------- ----- ------- -------- ------- -------- Cash and cashequivalents at endof year 3,013 3,083 27 32-------------------- ----- ------- -------- ------- -------- Cash generated from / (used in) operations 31 December (Group) 31 December (Company) 2007 2006 2007 2006 £'000 £'000 £'000 £'000 Operating profit/(loss) 4,361 3,570 (2) (1)Depreciation 144 127 - -Amortisation 53 65 - -Increase in provisions 260 324 - -Cost of share options 44 18 - -Increase in inventories (1,074) (86) - -Increase in trade and otherreceivables (3,230) (915) - -Increase/(decrease) in tradeand other payables 1,224 (810) (4) 23------------------------ ------- -------- -------- -------- Cash generated from/(usedin) operations 1,782 2,293 (6) 22------------------------ ------- -------- -------- -------- 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 2007 and31 December 2006. The financial information for the year ended 31 December 2006 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 2007 has beenextracted from the audited financial statements of the Group for the year ended31 December 2007 which were approved by the Board of Directors on 13 March 2008. 2. Dividends The final dividend of 2.75p net per Ordinary Share will be paid on 28 April 2008to all shareholders on the register on 28 March 2008. 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 sharehas been calculated to exclude the effect of exceptional operating costs. TheDirectors believe this gives a more meaningful measure of the underlyingperformance of the 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. Also in existencewere 265,492 options issued under the Company's 2007 Long-Term Incentive Plan(LTIP). These options were not dilutive at 31 December 2007. Year ended Year ended 31 December 2007 31 December 2006Weighted average number of ordinaryshares in issue (No.) 25,137,443 25,051,638Dilutive potential ordinary shares:Employee share options (No.) 81,113 21,257Profit after tax (£) 3,383,000 2,774,000Exceptional operating cost (net of tax) 94,000 ------------------------------ ----------- ----------- Adjusted profit after tax (£) 3,477,000 2,774,000----------------------------- ----------- ----------- Basic earnings per share - pence pershare (p) 13.46p 11.07p----------------------------- ----------- ----------- Diluted earnings per share - pence pershare (p) 13.41p 11.06p----------------------------- ----------- ----------- Adjusted earnings per share - pence pershare (p) 13.83p 11.07p----------------------------- ----------- ----------- 4. Annual report and accounts The Annual Report and Accounts for the year ended 31 December 2007 will beposted to shareholders shortly. Further copies can be obtained from the CompanySecretary at 399 Strand, London WC2R 0LX or the Company's Broker, Seymour PierceLimited at 20 Old Bailey, London EC4M 7EN or can be viewed on the Company'swebsite at www.stanleygibbons.com. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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