3rd Mar 2006 07:00
Stanley Gibbons Group Limited03 March 2006 THE STANLEY GIBBONS GROUP LIMITED THE STANLEY GIBBONS GROUP LIMITED ("the Company" or "the Group") Audited Results for the year ended 31 December 2005 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 2005. Highlights • Profit before tax up 65.4% to £2,819,000 (2004: £1,704,000*, excluding profit on the sale of Provide Commerce, Inc.)• Adjusted earnings per share of 9.30p (2004: 4.96p) up 87.5%. Adjusted earnings exclude the profit on sale of Provide Commerce, Inc. in 2004 and exceptional operating costs in 2005• Sales up 36.1% to £13,675,000 (2004: £10,051,000)• Bank and cash balances at 31 December 2005 of £2,585,000 (2004: £1,930,000)• Recommended final dividend of 2p net per share, giving a total net dividend for the year of 3p (2004: 2p net per share) up 50% • Sales overseas represented 41% of total sales (2004: 31%)• Internet sales increased by 23% compared to the previous year• Expansion plans to include the opening of an office in Guernsey, Channel Islands to progress investment activities• Great Britain Rarities Stamp Price Index up a further 20% over past twelve months• Stanley Gibbons celebrates its 150th Anniversary in 2006 * Figures for the year ended 31 December 2004 have been restated for FRS 17 (Retirement Benefits), FRS 20 (Share-based Payment) and FRS 21 (Events after the Balance Sheet Date) Commenting on current trading, Paul Fraser, Chairman said: "I am both delighted and excited to be involved with Stanley Gibbons at thistime. Never before has the brand name been positioned better to benefit fromboth the strong market in collectibles and the growing alternative investmentmarket. Our Internet sites are now increasing our visibility within overseasmarkets, as per our original strategic plans, enabling consistently stronglevels of customer recruitment year on year. We have maintained high levels ofdemand for our financial-based investment products since the year end as westart 2006 with an ever increasing momentum." For further information, contact: The Stanley Gibbons Group LimitedPaul Fraser, Chairman - 020 7836 8444Michael Hall, Chief Executive - 01425 472363 Seymour Pierce LimitedJonathan Wright - 020 7107 8000 Chairman's Statement Financials I am very happy to report yet another record-breaking year, with profit beforetax of £2,819,000 (2004: £1,704,000, excluding profit on the sale of ProvideCommerce, Inc) representing an increase of 65.4%. Turnover increased by 36.1% to£13,675,000 (2004: £10,051,000). Earnings per Ordinary Share for the year ended 31 December 2005 were 9.03pcompared with 13.10p for the previous year. Adjusted earnings per share were9.30p (2004: 4.96p) representing an increase of 87.5%. Adjusted earnings excludethe profit on the sale of Provide Commerce, Inc. in 2004 and exceptionaloperating costs in 2005. These results include the changes in accounting for pensions, share options anddividends in both the prior and current years as a result of the introduction ofnew Accounting Standards as detailed in the Operating Review and note 1 to thefinancial statements. In summary, though, they are not material to our overallreported results. As at 31 December 2005, the Company had cash balances of £2,585,000, despite theincreased dividends paid and increases in stock purchasing necessary to supporta higher level of demand. Dividend Your Board is pleased to recommend an increased net final dividend of 2p pershare, giving a total net dividend for the year of 3p (2004: 2p) representing anincrease of 50%. We remain committed to maintaining dividend growth in both theshort and medium term. Outlook All areas of the Group have performed well. However, special mention once againmust go to our Investment and Specialist Stamp Departments. Stamps as analternative investment are receiving very favourable press comment and we havenow developed a number of financial-based products to suit the various needs ofcollectors and investors. Supply and demand pressures are increasing prices ofthe very best material across the board and beginning to reflect the true valueof how rare some material is. Our Auction Department is stronger, with good performances in public, postal andonline auctions. Retail has performed well, within the general backdrop of theretail malaise, and is a strong new customer recruitment route. We havestrengthened our buying team and increased advertising and roadshows across thecountry to be more aggressive in this competitive environment. We continue to develop new profitable titles in our Publishing Division andadvertising sales have benefited from this and our strong market position incatalogues, magazines and expansion of our Internet content and services. The Internet has increased our brand exposure worldwide, provided cost-effectivecommunication, recruited thousands of new customers and has shown an ability togrow sales year-on-year by over 30%, which should produce increasing sales inthe years to come. The Internet, as a route to market, reminds us that we haveless than 1% of the global stamp market which presents a huge potential forStanley Gibbons. In 2006, Stanley Gibbons is celebrating the 150th anniversary of Edward StanleyGibbons starting the business in his father's chemist shop in Plymouth. We havea number of events planned and we will keep all shareholders aware of what weare doing. The Stanley Gibbons Group is a Jersey-based company, as a legacy of ourinvolvement with Flying Brands, and we intend, this year, to open an office inGuernsey, which will support our further international expansion and satisfymany of our clients who would welcome the benefits of a Channel Islands base. Employees Our strategy continues to pay dividends for all stakeholders and the commitmentof all of my colleagues at Stanley Gibbons has provided the growing momentumwhich is reflected in the current profitability and will serve us well inattaining similar growth and results in 2006 and beyond. Operating Review Operating results for the year 2005 2005 2004 2004 2003 2003* Sales Profit Sales Profit Sales Profit As restated £000 £000 £000 £000 £000 £000 Philatelic trading and 10,076 2,789 6,718 1,719 5,391 1,362retail operationsPublishing and philatelic 2,818 871 2,660 846 2,481 659accessoriesDealing in autographs, 748 205 660 265 739 239records andrelated memorabilia 13,642 3,865 10,038 2,830 8,611 2,260Corporate overheads (1,045) (1,017) (799)New business development 33 (2) 13 (214) 11 (254)Interest and similar 95 105 20income/charges Before exceptional items 13,675 2,913 10,051 1,704 8,622 1,227Profit on sale of fixed - 1,985 -asset investmentExceptional operating (94) - -costs Group total sales and 13,675 2,819 10,051 3,689 8,622 1,227profit before tax *2003 results have not been restated for FRS 17 "Retirement Benefits" or FRS 20"Share-based Payment" Sales Overall group turnover increased by £3,624,000 (36.1%) compared to last year.Sales growth has been driven primarily by the development of the investmentdepartment. New financial-based products launched towards the end of the yearreceived exceptional levels of demand, particularly our fixed term investmentcontracts. The launch of these new financial products has enabled the Group tosell stamps and autographs as alternative investments to a much wider class ofinvestor worldwide. The continuing enhancement of our website, widely recognised as the bestphilatelic website in the world, together with the prominence of our 399 Strandretail outlet represent the flagship of the Group, which both protect and enablethe development of our brand name. We have experienced a 30% rise in new clientsrecruited compared to the previous year. Philatelic and retail sales were 50% higher than last year, with the majority ofgrowth achieved in the sale of stamps to investors, the trading of high valuestamps to collectors and auction activities. Demand experienced during the yearfor top grade material exceeded our ability to acquire philatelic material ofthe right quality with sufficient margin despite the implementation of moreaggressive buying activities. It is clear that our infrastructure now needs togrow to meet these new levels of demand. The opening of an office in Guernseythis year dedicated to the development of our investment activities will havethe key aims of increasing our supply chain worldwide to become the biggestinternational buyer of rare stamps and to provide a team committed to thepromotion of our investment services and management of investment clients. Sales from our auction department were 17.7% above last year. Sales growth wasachieved from an increased focus on the breadth of stock being offered throughauction together with increased investment in the quality of our presentation.Roadshows held throughout the country proved to be a successful means ofsourcing new material. The further strategic development of auction activitiescontinues to form part of our overall plan. Publishing and philatelic accessory sales were 5.9% higher than last year.Publication sales benefited from an increase in the number of new titlespublished during the year compared to the prior year, including the publicationof the 150th Anniversary Special Edition of Gibbons Stamp Monthly in October.Growth in this area of our business is being driven by increased direct salesfrom our website and improved responses from direct mailings. Direct sales toretail customers accounted for 50% of total sales compared to 46% last yeardemonstrating our success in recruiting new retail customers hence reducing ourdependence on wholesalers and other distributors of our products. Autographs and memorabilia sales were 13.3% higher than last year. Decliningretail and auction sales as a result of increased competition are being morethan compensated by the growth being achieved in the sale of autographs as analternative investment. We have improved the quality of our stockholding withinvestment directed towards high quality pieces and key rarities where ourreturn on capital is highest. Gross Margins The gross margin for the year ended 31 December 2005 was 51.2% (2004: 57.7%).The reduction in the gross margin percentage was in line with expectations basedon the shift in emphasis towards higher value sales to the investment market. Instriving to achieve scalability and growth, we have acquired top-end specialistmaterial at lower margins in order to transact an increasing amount of sales ofhigher value items. Our gross margins have increased or remained consistent inall other areas of our business. Profitability The profit before tax for the year of £2,819,000 compares to a profit last year(as restated) of £3,689,000. Last year's profit included a capital gain of£1,985,000 on the sale of our stake in Provide Commerce, Inc. Excluding theone-off capital gain, profit before tax was £1,115,000 (65.4%) higher than lastyear. Increased profitability has been achieved through growth in turnoverwhilst maintaining overheads broadly in line with the previous year. Overheads were 1.6% higher than last year, although this includes exceptionaloperating costs of £94,000 in respect of the closure and relocation ofactivities from our premises in Nailsea to Ringwood, Hampshire. Overheads were0.6% lower than last year when excluding exceptional operating costs with profitbefore tax up £1,209,000 (71%). Our investment in new staff during the year has resulted in an increase insalary overhead of 4.8%. Graduate recruits made over the past few years areprogressing well within their roles and are becoming increasing contributors toGroup performance. Overall headcount remained broadly unchanged from theprevious year. Other overheads were, in total, materially consistent with the previous year.Total rental income in the year ended 31 December 2005 was £160,000 (2004:£140,000). New Business Development Direct sales generated through our websites increased by 23%. We launched a newonline service in October "My Collection" signing up over 1,000 new subscribersin the first three months. "My Collection" is a new tool which has beendeveloped by our in-house team enabling collectors to manage, view and valuetheir collections online. Feedback from users of the new service has been veryencouraging. New business development costs have been integrated into operating businessactivities located in Ringwood, Hampshire, which have resulted in overall costsavings to the Group, although increased overheads within the publishing andphilatelic accessories division compared to the prior year. Corporate Overheads Corporate overheads were £28,000 (2.8%) higher than last year due mainly to thereclassification of salary costs in respect of the web development team from newbusiness development costs to the IT and internet department reported withincorporate overheads. Accounting Policies Accounting policies are detailed in note 1 to the financial statements. Thesepolicies are in accordance with UK generally accepted accounting practice. Wehave reported the results and restated the prior year results in order to complywith the provisions of FRS 17 (Retirement Benefits), FRS 20 (Share-basedPayment) and FRS 21 (Events after the Balance Sheet Date). As a result of theimplementation of new accounting standards, the profit before tax for the yearended 31 December 2005 was reduced by £17,000 and net assets at 31 December 2005were increased by £158,000. Details of the restatement of prior year results isgiven in note 1. Consolidated Profit and Loss AccountFor the year ended 31 December 2005 Year ended Year ended 31 December 2005 31 December 2004 As restated Notes £'000 £'000 Turnover 13,675 10,051Cost of sales (6,679) (4,248) Gross profit 6,996 5,803Administration expenses (1,393) (1,401)Selling and distribution (2,785) (2,803)expensesExceptional operating (94) -costs Operating profit 2,724 1,599 Profit on sale of fixed - 1,985asset investmentsInterest receivable and 95 109similar incomeInterest payable and - (4)similar charges Profit on ordinary 2,819 3,689activities before taxationTax on profit on ordinary (590) (493)activities Profit for the financial 2,229 3,196year Earnings per Ordinary share 3 9.03p 13.10pDiluted earnings per 3 8.95p 12.82pOrdinary share Continuing operations: all items dealt with in arriving at the operating profitfor 2005 and 2004 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 December2005 Year ended Year ended 31 December 31 December 2005 2004 As restated £'000 £'000 Profit for the financial year 2,229 3,196 Surplus on revaluation of assets - 37Actuarial gains/(losses) recognised in the 1 (186)pension schemeDeferred tax attributable to actuarial - 55gains/(losses)Prior year adjustment (note 1) 27 - Total gains and losses recognised since 2,257 3,102last financial statements Reconciliation of movements in equity shareholders' funds for the year ended 31December 2005 Year ended Year ended 31 December 31 December 2005 2004 As restated £'000 £'000 Profit for the financial year 2,229 3,196Dividends (614) (2,074) Retained profit for the financial year 1,615 1,122Purchase of own shares - (1,060)Shares issued on exercise of share options 60 224Surplus on revaluation of assets - 37Actuarial gains/(losses) in pension scheme 1 (131)net of taxAdjustment for cost of share options 17 23 Net increase in shareholders' funds 1,693 215Opening equity shareholders' funds as 7,289 7,299previously statedPrior year adjustment (note 1) 27 (198) Opening equity shareholders' funds as 7,316 7,101restated Closing equity shareholders' funds 9,009 7,316 Balance Sheetsat 31 December 2005 Group Group Company Company 31 31 31 31 December December December December 2005 2004 2005 2004 As As restated restated £'000 £'000 £'000 £'000 NotesFixed AssetsTangible assets 1,117 1,239 - -Investments - - 5,811 5,811 1,117 1,239 5,811 5,811 Current assetsStocks 5,949 5,588 - -Debtors: amounts falling due 2,949 1,620 - -within one yearCash at bank and in hand 2,585 1,930 10 22 11,483 9,138 10 22 Creditors: amounts falling (3,200) (2,729) (470) (542)due within one year Net current assets/ 8,283 6,409 (460) (520)(liabilities) Total assets less current 9,400 7,648 5,351 5,291liabilities Provision for liabilities (133) (119) - -and charges Net assets excluding pension 9,267 7,529 5,351 5,291liabilitiesPension liabilities (net of (258) (213) - -deferred taxation) Net assets including pension 9,009 7,316 5,351 5,291liabilities Capital and reservesCalled up share capital 248 244 248 244Share premium account 5,056 5,000 5,056 5,000Capital redemption reserve 38 38 38 38Revaluation reserve 206 206 - -Profit and loss account 3,461 1,828 9 9 Equity shareholders' funds 9,009 7,316 5,351 5,291 Consolidated Cash Flow StatementFor the year ended 31 December 2005 Year ended Year ended 31 December 2005 31 December 2004 Notes £'000 £'000 Net cash inflow from 1,897 1,024operating activities Returns on investment andservicing of financeInterest received 49 56Interest paid - (4) 49 52 TaxationUK corporation tax paid (636) (134)Jersey tax paid (4) (10) (640) (144) Capital expenditure andfinancial investmentsPayments to acquire (97) (138)tangible fixed assetsReceipts from sales of - 2,208fixed asset investment (97) 2,070 Equity dividends paid (614) (2,074) Net cash inflow before 595 928financing FinancingPurchase of own ordinary - (1,060)sharesShares issued 60 224Repayment of Loan notes - (47) Net cash inflow/(outflow) 60 (883)from financing Increase in cash 655 45 Reconciliation of operating profit to net cash inflow from operating activities Year ended Year ended 31 December 31 December 2005 2004 As restated £'000 £'000 Operating profit 2,724 1,599Depreciation 219 243Increase in provisions 137 105Cost of share options 17 23Increase in stocks (361) (710)Increase in debtors (1,329) (497)Increase in creditors 490 261 Net cash inflow from operating activities 1,897 1,024Notes to Accounts 1. Changes in accounting policies and presentation The financial information set out in this announcement does not constitute theGroup's statutory financial statements for the years ended 31 December 2005 and31 December 2004. The financial information for the year ended 31 December 2004 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 2005 has beenextracted from the audited financial statements of the Group for the year ended31 December 2005 which were approved by the Board of Directors on 2 March 2006. The prior year profit and loss account and balance sheet have been restated totake account of the change in accounting policies as a result of theintroduction of FRS 17 "Retirement Benefits", FRS 20 "Share-based Payment" andFRS 21 "Events after the Balance Sheet Date". The effects of these changes in the Group's previously reported results and netassets are as follows: Year ended 31 December 2004 £'000Profit on ordinary activities beforetaxationAs previously reported 3,728Impact of FRS 17:Operating profit (69)Interest receivable and similar 53incomeImpact of FRS 20 (23) Net movement (39) As restated 3,689 Net assetsAs previously reported 7,289Impact of FRS 17:Debtors: amounts falling due after (179)more than one yearProvisions for liabilities and (305)charges: net pension liabilityProvisions for liabilities and 145charges: deferred taxationImpact of FRS 21 366Net movement 27 As restated 7,316 2. Dividends The final dividend of 2p net per Ordinary Share will be paid on 18 April 2006 toall shareholders on the register on 17 March 2006. 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. and exceptionaloperating costs. The Directors believe this gives a more meaningful measure ofthe underlying performance 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. Year ended Year ended 31 December 31 December 2005 2004 As restated Weighted average number of ordinary shares in 24,682,753 24,404,298issue (No.)Dilutive potential ordinary shares: Employee 218,617 523,776share options (No.)Profit after tax (£) 2,229,000 3,196,000Add: exceptional operating costs net of tax 66,000 -(£)Less: profit on sale of fixed asset - (1,985,000)investment (£)Adjusted profit after tax (£) 2,295,000 1,211,000 Basic earnings per share - pence per share 9.03p 13.10p(p)Add: exceptional operating costs net of tax 0.27p -(p)Less: profit on sale of fixed asset - (8.14p)investment (p)Adjusted earnings per share - pence per share 9.30p 4.96p(p)Diluted earnings per share - pence per share 8.95p 12.82p(p) 4. Annual report Copies of this announcement are available from the Company Secretary. Copies ofthe Annual Report for the year ended 31 December 2005 will be posted toshareholders in the week commencing 6 March 2006 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