29th Jul 2005 07:00
Stanley Gibbons Group Limited29 July 2005 THE STANLEY GIBBONS GROUP LIMITED INTERIM REPORT FOR SIX MONTHS ENDED 30 JUNE 2005 The Company today announces its Interim Results for the six months to 30 June2005. Highlights include: • Profit before tax up 23% at £710,000 (2004: £579,000) • Earnings per share up 31% to 2.20p (2004: 1.68p). Excluding exceptional operating costs, earnings per share were up 46% to 2.45p • Sales up 15% to £5,278,000 (2004: £4,607,000) • Cash balances of £1,517,000 (2004: £788,000) • Interim dividend declared of 1p net per Ordinary Share (2004: 0.5p net per Ordinary Share) payable on 12 September 2005 to all holders on the register at the close of business on 12 August 2005. Ordinary Shares will go ex-dividend on 10 August 2005. • Hits to our Internet sites now approaching 30 million per month (2004: 10 million) • Investment department has over £3 million of rare stamp portfolios under management * Figures for the six months ended 30 June 2004 have been restated for FRS 17(Retirement Benefits), FRS 20 (Share-based Payment) and FRS 21 (Events after theBalance Sheet date) Commenting on current trading, Paul Fraser, Chairman said: "Senior management is now focusing on the launch of the Stamp Investment Fund,which we believe is an exciting opportunity to take The Stanley Gibbons GroupLimited to a new higher level of sales and profitability. The global stampmarket is very exciting at the moment, with renewed interest in stampcollecting, especially at the top end of the market, where demand continues tooutstrip supply of rare stamps in top quality condition. This is reinforced bythe growth of traffic to our Internet sites, where the monthly hits areapproaching 30 million, which is three times greater than traffic levels oneyear ago. We are looking forward with confidence to achieving our objectives for thesecond half and meeting the expectations of all stakeholders." For further information, contact: The Stanley Gibbons Group LimitedPaul Fraser, Chairman 020 7836 8444Michael Hall, Chief Executive 01425 472363 Seymour Pierce Limited 020 7107 8000Jonathan Wright Chairman's Statement Once again, I am able to report a very positive result for The Stanley GibbonsGroup Limited. Profit before tax was £710,000 (2004: £579,000) representing anincrease of 23% on the same period last year. Turnover increased by 15% to£5,278,000 (2004: £4,607,000). Earnings per Ordinary Share for the six months ended 30 June 2005 were 2.20pcompared with 1.68p for the same period to 30 June 2004. Excluding exceptionaloperating costs, earnings per Ordinary Share were 2.45p, representing anincrease of 46%. These results include the changes in accounting for pensions, share options anddividends in both the prior and current periods as a result of the introductionof new Accounting Standards as detailed in the Operating Review and note 1. Insummary, though, they are not material to our overall reported results. As at 30 June 2005, the Company has cash balances of £1,517,000 (2004:£788,000). The Company paid a final dividend of 1.5p net per Ordinary Share, in respect ofthe year ended 31 December 2004, on 19 April 2005. Your Board is pleased todeclare an interim dividend of 1p net per Ordinary Share (2004: 0.5p),representing an increase of 100% payable on 12 September 2005 to holders ofOrdinary Shares on the register at close of business on the record date of 12August 2005. The shares will go ex-dividend on 10 August 2005. The Group's Internet sites are now receiving close to 30 million hits per month(2004: 10 million), which has resulted in Internet sales up 16%. This hasresulted in a greater interest from non-philatelic advertisers and corporatepartners wishing to become associated with our brand. We believe this will stillbe one of our key profit drivers for the future. Stamps as an 'Alternative Investment' continue their rise and move into theinvestment mainstream. Demand is still outstripping supply and the price ofinvestment grade material is now reaching levels more in tune with the currentmarket forces. We have become evermore aggressive in our buying in the market,both at auction and purchasing privately from stamp collectors. However, we arestill falling short of the increasing needs of both our current and new clients. This is very positive for the market and the launch of our Stamp Investment Fundwill further strengthen the demand and reduce the supply of the top levelinvestment-grade material. We did expect the Fund to launch in the first half ofthis financial year but, because to our knowledge this is the very first stampfund, everyone has had a steep learning curve. This, though, will increase thebarrier of entry to others and, with our brand name, the backing of a majorinternational bank and support of other financial institutions wishing to breakthis new ground with us; we should be the prime vehicle for this section of theinvestment market. A certain level of demand has now built up from people wishing to take part inthe positive growth that rare stamps have shown over a number of years and somewho clearly prefer to invest in units in a fund rather than direct ownership ofa stamp portfolio. This extends both our client options and our ability toservice the complete market. Again, this will be a key driver for StanleyGibbons in the future and should be a major contributor in the second half. Finally, I would like to thank all of my colleagues at Stanley Gibbons for onceagain achieving our Group objectives and being part of the drive for growth andprofitability which has given an increasing return to all stakeholders. Paul FraserChairman28 July 2005 Operating Review 6 months 6 months 6 months 6 months Year ended Year ended to 30 to 30 to 30 to 30 31 31 June June June June December December 2005 2005 2004 2004 2004 2004 As As restated restated Sales Profit Sales Profit Sales Profit £000 £000 £000 £000 £000 £000Philatelictrading andretailoperations 3,709 885 3,122 787 6,718 1,719Publishing andphilatelicaccessories 1,262 362 1,146 286 2,660 846Dealing inautographs,records and 301 70 332 115 660 265relatedmemorabilia ------ ------ ------ ------ ------ ------ 5,272 1,317 4,600 1,188 10,038 2,830Corporateoverheads (562) (554) (1,017)New businessdevelopment 6 (8) 7 (96) 13 (214)Interest andsimilarincome/charges 53 41 105 ------ ------ ------ ------ ------ ------ Beforeexceptionalitems 5,278 800 4,607 579 10,051 1,704Profit on saleof fixed assetinvestment - - 1,985Exceptionaloperatingcosts (90) - - ------ ------ ------ ------ ------ ------ Group salesand profitbefore tax 5,278 710 4,607 579 10,051 3,689 ------ ------ ------ ------ ------ ------ Sales Overall group turnover increased by £671,000 (15%) compared to the same periodlast year. Sales growth continues to be driven by our increased trading in highvalue stamps (retail value of £1,000 and more) where our investment in stock hasbeen concentrated and supported by an increasing demand from investment clients.As a result of our increasing move to the top end of the philatelic market,average order values have increased by 18% compared to the same period lastyear. We continue to attract new customers through our website and visitors toour 399 Strand retail outlet and have experienced a 23% increase in newcustomers recruited compared to the same period last year. Philatelic trading and retail sales increased by 19% against the same periodlast year. Increased effort has been placed during the period on the developmentof the investment department within philatelic dealing in all areas of buying,sales and marketing. The historic evidence which is building up through ourstamp price indices and printed catalogues demonstrate consistent growth invalues of rare stamps and is improving the marketability of stamps as aninvestment. Our ability to scale up to the new levels of demand beingexperienced in terms of stock acquisition and to adapt to the current aggressivepricing conditions in the market are paramount to our objectives for the secondhalf of the year. Sales from our auction department were 15% above the same period last yeardemonstrating that we are gradually regaining our credibility within auctiondealing. Our presentation and efficiency of service have improved which willgive us a better opportunity to attract higher value collections for salethrough our auctions in the future. Publishing and philatelic accessory sales increased by 10% from the same periodlast year. Sales benefit from catalogue titles in higher demand being releasedthis year together with the benefits from producing one of our main titles,"Great Britain Concise", in colour this year for the first time. Stamp albumsand accessory sales were also 10% improved, achieved through a combination ofenhancements to our product range, more proactive management of trade andwholesale customers together with the benefits from improved returns onmarketing activity. Autographs and memorabilia sales were 9% below the same period last year. Thereduction in sales occurred mainly in auction sales both online and offline. Aclearer strategy is now in place to resurrect the department from the recentdownturn in trade with a return to common sense procedures and sellingtechniques. We have recently transferred autograph auction activities to ourphilatelic auction department which is already having a positive impact. Gross Margins The gross margin for the six months ended 30 June 2005 was 54% compared to 57%for the same period last year. The reduction in the gross margin percentage wasin line with expectations and is attributable to reduced margins available onthe sale of high value specialist material. Return on capital is however highestin the sale of high value stamps due to lower overheads associated in dealingand processing a lower quantity of stock items at a higher realisable value. Profitability The profit before tax for the period of £710,000 compares to a profit for thesame period last year (as restated) of £579,000, representing an increase of23%. The increase in profitability against the prior period was achieved throughgrowth in turnover, although at a lower gross margin percentage. Overheads were 3% higher than in the same period last year although thisincludes exceptional operating costs of £90,000 in respect of the closure andrelocation of activities from our premises in Nailsea to Ringwood, Hampshire.Overheads were 1% lower than last year when excluding exceptional operatingcosts with profit before tax up £221,000 (38%). We have continued to manage overheads through close daily control at Directorlevel. We have increased our investment in new staff during the period resultingin a 5% increase in salary overhead and an increase in the permanent staff witha headcount at 30 June 2005 of 99 compared to 88 at 30 June 2004. Establishment costs were increased by £54,000 compared to the prior year periodmainly as a result of the rent review of 399 Strand resulting in an increasedannual rent charge of £62,000. Rental income was consistent with the same periodlast year. All empty property has now been sublet. New Business Development Direct sales generated through our web sites increased by 16%. Websitedevelopment work during 2005 is progressing well as we further improve ouronline services towards meeting all the needs of all collectors worldwide. New business development costs have been integrated into operating businessactivities located in Ringwood, Hampshire which will result in cost savings inthe second half of the year from the consequent rationalisation together withthe benefits from future efficiencies in catalogue production. Accounting Policies We have reported the results and restated the prior period results in order tocomply with 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 sixmonths ended 30 June 2005 was reduced by £10,000 and net assets at 30 June 2005were reduced by £171,000. Details of the restatement of prior period results isgiven in note 1. Consolidated Profit and Loss Account 6 months to 6 months to Year ended 30 June 30 June 31 December 2005 2004 2004 As restated As restated (unaudited) (unaudited) (audited) Notes £'000 £'000 £'000 ---------- -------- -------- Turnover 5,278 4,607 10,051Cost of sales (2,451) (1,966) (4,248) ---------- -------- -------- Gross Profit 2,827 2,641 5,803 Administration expenses (730) (736) (1,401)Selling and distribution (1,351) (1,367) (2,803)expenses ---------- -------- -------- Operating Profit beforeexceptional 746 538 1,599operating costsExceptional operating costs (90) - - ---------- -------- -------- Operating Profit afterexceptional 656 538 1,599operating costs Profit on sale of fixed assetinvestments - - 1,985Interest receivable and similarincome 53 42 109Interest payable and similarcharges 1 (1) (4) ---------- -------- -------- Profit on ordinary activitiesbefore taxation 710 579 3,689Tax on profit on ordinaryactivities 2 (166) (170) (493) ---------- -------- -------- Profit for the financial period 544 409 3,196 ---------- -------- -------- Earnings per Ordinary Share 3 2.20p 1.68p 13.10pDiluted earnings per Ordinary 3 2.17p 1.64p 12.82pShare Continuing operations: all items dealt with in arriving at the operating profitabove relate to continuing operations. The 2005 results include the adoption of FRS 17 (Retirement Benefits), FRS 20(Share-based Payment) and FRS 21 (Events after the Balance Sheet date) and the2004 results have been restated accordingly. Details of these changes inaccounting policies are detailed in note 1. Consolidated Balance Sheet 30 June 30 June 31 December 2005 2004 2004 As restated As restated (unaudited) (unaudited) (audited) Notes £'000 £'000 £'000 --------- -------- -------- Fixed AssetsTangible assets 1,195 1,235 1,239Investments - 223 - --------- -------- -------- 1,195 1,458 1,239 Current AssetsStocks 5,588 5,262 5,588Debtors: amounts falling duewithin 2,312 1,241 1,620one yearCash at bank and in hand 1,517 788 1,930 --------- -------- -------- 9,417 7,291 9,138 Creditors: amounts falling duewithin one year (2,725) (1,873) (2,729) --------- -------- -------- Net current assets 6,692 5,418 6,409 --------- -------- -------- Total assets less currentliabilities 7,887 6,876 7,648Provision for liabilities andcharges (105) (120) (119) --------- -------- -------- Net assets excluding pensionliabilities 7,782 6,756 7,529Pension liabilities (net ofdeferred taxation) (78) (198) (213) --------- -------- -------- Net assets including pensionliabilities 7,704 6,558 7,316 --------- -------- -------- Capital and reservesCalled up share capital 247 244 244Share premium account 5,038 5,000 5,000Capital redemption reserve 38 38 38Revaluation reserve 206 169 206Profit and loss account 2,175 1,107 1,828 --------- -------- -------- Equity shareholders' funds 7,704 6,558 7,316 --------- -------- -------- Consolidated Cash Flow Statement 6 months to 6 months to Year ended 30 June 30 June 31 December 2005 2004 2004 (unaudited) (unaudited) (audited) Notes £'000 £'000 £'000 -------- -------- --------- Net cash (outflow)/inflow fromoperating activities 4 (43) (179) 1,024 -------- -------- --------- Returns on investments andservicing of financeInterest received 29 22 56Interest paid 1 (1) (4) -------- -------- --------- 30 21 52TaxationUK corporation tax paid (3) - (134)Jersey tax paid - (10) (10) -------- -------- --------- (3) (10) (144)Capital expenditure andfinancial investmentsPayments to acquire tangiblefixed assets (72) (46) (138)Receipts from sale of fixedasset investment - - 2,208 -------- -------- --------- (72) (46) 2,070 Equity dividends paid (366) - (2,074) -------- -------- ---------Net cash (outflow)/inflow beforefinancing (454) (214) 928 -------- -------- --------- FinancingPurchase of own ordinary shares - (1,060) (1,060)Shares issued 41 224 224Repayment of Loan notes - (47) (47) -------- -------- ---------Net cash inflow/(outflow) fromfinancing 41 (883) (883) -------- -------- ---------(Decrease)/increase in cash (413) (1,097) 45 -------- -------- --------- Analysis of changes in cash during the period 6 months to 6 months to Year ended 30 June 30 June 31 December 2005 2004 2004 (unaudited) (unaudited) (audited) £'000 £'000 £'000Net cash at the beginning of theperiod 1,930 1,885 1,885Net cash (outflow)/inflow (413) (1,097) 45 -------- -------- --------- Net cash at the end of the period 1,517 788 1,930 -------- -------- --------- Statement of total recognised gains and losses 6 months to 6 months to Year ended 30 June 2005 30 June 2004 31 December 2004 As restated As restated (unaudited) (unaudited) (audited) £'000 £'000 £'000Profit for the financialperiod 544 409 3,196Surplus on revaluation ofassets - - 37Actuarial gains/(losses)recognised in the pensionscheme 226 (178) (186)Deferred tax attributable toactuarial gains/(losses) (67) 53 55Prior period adjustment 27 - - -------- -------- ---------- Total gains and lossesrecognised since lastfinancial statements 730 284 3,102 -------- -------- ---------- Reconciliation of movements in equity shareholders' funds 6 months to 6 months to Year ended 30 June 2005 30 June 2004 31 December 2004 As restated As restated (unaudited) (unaudited) (audited) £'000 £'000 £'000Profit for the financialperiod 544 409 3,196Dividends (366) - (2,074) -------- -------- ---------- Retained profit for thefinancial period 178 409 1,122Purchase of own shares - (1,060) (1,060)Shares issued on exercise ofshare options 41 224 224Surplus on revaluation ofassets - - 37Actuarial gains/(losses) inpension scheme net of tax 159 (125) (131)Adjustment to cost of shareoptions 10 9 23 -------- -------- ---------- Net increase/(decrease) inshareholders' funds 388 (543) 215Opening equity shareholders'funds as previously stated 7,289 7,299 7,299Prior period adjustment 27 (198) (198) -------- -------- ---------- Opening equity shareholders'funds as restated 7,316 7,101 7,101 -------- -------- ---------- Closing equity shareholders'funds 7,704 6,558 7,316 -------- -------- ---------- The proposed dividend of 1p net per Ordinary Share will result in a distributionfrom reserves of £247,000. Notes to the unaudited interim report 1 Changes in accounting policies and presentation The results for the six months ended 30 June 2005 and 30 June 2004 are unauditedand have been prepared using accounting policies consistent with those set outin the Annual Report and Accounts for the year ended 31 December 2004 except asdetailed below. The financial information in this report does not comprise fullfinancial statements. Full financial statements for the year ended 31 December2004, on which the auditors gave an unqualified report, have been delivered tothe Jersey Registrar of Companies. These interim financial statements wereapproved by the board of directors on 28 July 2005. The prior period profit and loss account and balance sheet have been restated totake account of a number of changes in accounting policies as a result of theintroduction of new Accounting Standards as follows: FRS 17 "RetirementBenefits", FRS 20 "Share-based Payment" and FRS 21 "Events after the BalanceSheet date". The effects of these changes in the Group's previously reported results and netassets are as follows: 6 months to Year ended 30 June 31 December 2004 2004 (unaudited) (audited) £'000 £'000Profit on ordinary activities before taxationAs previously reported 603 3,728 -------- ---------Impact of FRS 17:Operating profit (35) (69)Interest receivable and similar income 20 53Impact of FRS 20 (9) (23) -------- ---------Net movement (24) (39) -------- --------- As restated 579 3,689 -------- --------- Net assetsAs previously reported 6,891 7,289 -------- ---------Impact of FRS 17:Debtors: amounts falling due after more than oneyear (192) (179)Provisions for liabilities and charges: net pensionliability (283) (305)Provisions for liabilities and charges: deferredtaxation 142 145Impact of FRS 21 - 366 -------- ---------Net movement (333) 27 -------- --------- As restated 6,558 7,316 -------- --------- 2 Taxation The tax charge is based on the expected full year tax rate together with themovement in the provision for deferred taxation. 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 period. 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 period. 6 months to 6 months to Year ended 30 June 2005 30 June 2004 31 December 2004 As restated As restated (unaudited) (unaudited) (audited)Weighted average number ofordinary shares in issue (No) 24,737,896 24,406,570 24,404,298Dilutive potential ordinaryshares: Employee shareoptions 298,784 536,579 523,776Profit after tax (£) 544,000 409,000 3,196,000Add: exceptional operatingcosts net of tax (£) 62,000 - -Less: profit on sale of fixedasset investment (£) - - (1,985,000) --------- --------- ----------Adjusted profit after tax (£) 606,000 409,000 1,211,000 --------- --------- ----------Basic earnings per share -pence per share (p) 2.20p 1.68p 13.10pAdd: exceptional operatingcosts net of tax (p) 0.25p - -Less: profit on sale of fixedasset investment (p) - - (8.14p) --------- --------- ----------Adjusted earnings per share -pence per share (p) 2.45p 1.68p 4.96p --------- --------- ----------Diluted earnings per share -pence per share (p) 2.17p 1.64p 12.82p --------- --------- ---------- 4 Reconciliation of operating profit to net cash (outflow)/inflow from operating activities 6 months to 6 months to Year ended 30 June 2005 30 June 2004 31 December 2004 As restated As restated (unaudited) (unaudited) (audited) £'000 £'000 £'000 Operating profit 656 538 1,599Depreciation 116 118 243Increase in provisions 56 58 105Cost of share options 10 9 23Increase in stocks - (384) (710)Increase in debtors (692) (118) (497)(Decrease)/increase increditors (189) (400) 261 --------- --------- ---------- Net cash (outflow)/inflowfrom operating activities (43) (179) 1,024 --------- --------- ---------- 5 Further copies of this statement Copies of this statement are being sent to shareholders. Further copies areavailable on request from: The Company Secretary, The Stanley Gibbons GroupLimited, 399 Strand, London, WC2R 0LX. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
SGI.L