27th Jul 2006 07:01
Stanley Gibbons Group Limited27 July 2006 The Stanley Gibbons Group Ltd Interim report for six months ended 30 June 2006 The Company today announces its Interim Results for the six months to 30 June2006. Highlights include: • Profit before tax up 92% at £1,361,000 (2005: £710,000) • Earnings per share up 80% to 3.97p (2005: 2.20p) • Sales up 44% to £7,623,000 (2005: £5,278,000) • Cash balances of £3,386,000 (2005: £1,517,000) • Interim dividend declared of 1.5p net per Ordinary Share (2005: 1p net per Ordinary Share), representing an increase of 50%, payable on 4 September 2006 to all holders on the Register at the close of business on 4 August 2006. • Internet sales increased 18% compared to the prior period • Strong customer recruitment with a 15% increase in new customers recruited compared to the prior period • Demand for quality rare stamps and autographs still outstripping supply, with increasing premiums to current catalogue prices Commenting on current trading, Paul Fraser, Chairman said: "I am delighted to be able to report yet another record result achieved in our150th year as a stamp company. Trading during July 2006 has been particularlystrong with consistent high levels of demand. We recognise that, in order tocontinue to achieve the high levels of growth experienced over the past threeyears, we will need to fully implement a more aggressive buying strategy whichenables us to follow market prices more closely and to ensure that we are thebiggest international buyer of rare stamps and autographs. The relocation of ourinvestment activities to Guernsey at the end of July gives us the opportunity todevelop our existing business model, increasing our worldwide supply chain, andstepping up to the next level to facilitate the full realisation of our growthpotential." For further information, contact: The Stanley Gibbons Group LimitedPaul Fraser, Chairman 020 7836 8444Michael Hall, Chief Executive 01425 472363 Seymour Pierce Limited Jonathan Wright 020 7107 8000 Chairmans Statement I am very pleased to report another record result for The Stanley Gibbons GroupLimited. Profit before tax was £1,361,000 (2005: £710,000) representing anincrease of 92% on the same period last year. Turnover increased by 44% to£7,623,000 (2005: £5,278,000). Earnings per Ordinary Share for the six months ended 30 June 2006 were 3.97pcompared with 2.20p for the same period to 30 June 2005, representing anincrease of 80%. As at 30 June 2006, the Company has cash balances of £3,386,000 (2005:£1,517,000). The Company paid a final dividend of 2p net per Ordinary Share, inrespect of the year ended 31 December 2005, on 18 April 2006. Your Board ispleased to declare an interim dividend of 1.5p net per Ordinary Share (2005:1p), representing an increase of 50%, payable on 4 September 2006 to holders ofOrdinary Shares on the Register at the close of business on the record date of 4August 2006. The proposed dividend of 1.5p net per Ordinary Share is expected toresult in a distribution to shareholders of £376,000. Internet sales continue their momentum, up 18% on the prior period. We arerecruiting an ever-increasing amount of new customers through the Internet andare continuing to attract new customers by traditional methods, strengtheningour global reach and underlining the value of the brand. Good quality rare stamps continue to be in short supply, resulting in strongprices at auctions, often exceeding catalogue prices. Collectors are prepared topay an ever-increasing premium for the very best material, with an extra premiumfor larger blocks and strips of rare stamps. The SG 100 Stamp Index is up 7.3% (2005: 6%) in the first six months and wecontinue to see an appreciation by collectors and investors of the true scarcityand rarity of many classic issues of stamps and early autograph material. OurInvestment Department's growth is now the engine room for the whole Group and isonly tempered by the opportunity to source sufficient material of quality andacceptable price. All areas of the business have performed well but special mention should begiven to the Auction, Specialist Stamp and Fraser's Autographs departments. The Auction Department has performed well across each of its auction types -postal, Internet and public - and produced a particularly good result for thepublic auction in June, including the individual auction of Indian States. The Specialist Stamp Department is sourcing larger amounts of material but isalso selling an ever-greater amount, so locating material of the right qualityremains the key objective, an essential for success in the second half. Fraser's Autographs has achieved a better result than for a long time andreflects the continuing move to the quality rare end of the market. We open our Guernsey office at the end of July and look forward to reporting onhow that is developing at the year-end. We are celebrating our 150th year as a stamp company and I am sure that StanleyGibbons himself would be proud of the progress and the success that the Group isnow enjoying. In conclusion, I thank once again all my colleagues at Stanley Gibbons for theirhard work as we continue to push the Group onto higher ground for the benefit ofall stakeholders. Paul Fraser Chairman 26 July 2006 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 2006 2006 2005 2005 2005 2005 Sales Profit Sales Profit Sales Profit £000 £000 £000 £000 £000 £000Philatelictrading andretailoperations 5,634 1,373 3,709 885 10,076 2,789Publishing andphilatelicaccessories 1,201 270 1,262 362 2,818 871Dealing inautographs,records and 773 350 301 70 748 205relatedmemorabilia ------------------ ------ ------ ------ ------ ------ ------ 7,608 1,993 5,272 1,317 13,642 3,865Corporateoverheads (691) (562) (1,045)New businessdevelopment 15 (24) 6 (8) 33 (2)Interest andsimilarincome/charges 83 53 95------------------ ------ ------ ------ ------ ------ ------ Beforeexceptionalitems 7,623 1,361 5,278 800 13,675 2,913Exceptionaloperatingcosts - (90) (94)------------------ ------ ------ ------ ------ ------ ------ Group totalsales andprofit beforetax 7,623 1,361 5,278 710 13,675 2,819------------------ ------ ------ ------ ------ ------ ------ Sales Overall group turnover increased by £2,345,000 (44%) compared to the same periodlast year. Sales growth continues to be driven primarily by the InvestmentDepartment although strong growth was also achieved in the sale of specialiststamps to collectors and in all auction activity. As a result of our continuedmove to the quality rare end of the market, average order values have increasedby 31% compared to the same period last year. The increasing number of newcollectors entering the market and our global presence through our Internet sitehas ensured an ongoing expansion in the size of our customer database. Newcustomers recruited were 15% up on the same period last year. Philatelic trading and retail sales increased by 52% against the same periodlast year. Demand from high spending collectors continues to be strong andquality stock acquired in rare British stamps and stamps from the most popularlycollected Commonwealth countries have been converted to sales with ease. Sales to investors include guaranteed minimum return investment contracts, forwhich demand has exceeded our ability to supply; both by reason of the scarcityin supply of rare stamps and as a result of our internal restrictions placed onthe sale of this product in order to limit our overall exposure to the futurefinancial obligations. Out of approximately 3,000,000 stamps in stock, 142 itemsare currently being recommended as investment grade highlighting the exclusivityof our investment material and the quality controls which we have in place. Sales from our Auction Department were 41% above the same period last year. Thepublic auction held in June delivered an exceptional result assisted by astronger range of material and the individual auction sale of an Indian Statescollection which achieved a 100% realisation with all lots being sold. Moreprivate individuals are taking this opportunity, based on strong marketconditions prevailing, to sell material through auction where prices realisedare in some cases higher than catalogue prices. Publishing and philatelic accessory sales fell by 5% from the same period lastyear. A weaker publishing schedule in the first half of this year has limitedour ability to achieve any growth in sales. Sales to the various wholesalers anddistributors of our products were 16% down whereas direct sales to retailcustomers were increased by 10% and accounted for 62% of total publication salescompared to 56% in the prior period. We will be focussing on increasing ourdirect marketing to retail customers in the second half. Autographs and memorabilia sales were 157% increased from the same period lastyear. The improved performance is mainly a result of our success in developingsales of investment grade autograph material. Autograph investment sales includethe sale of one investment portfolio during the period of £250,000. Auction andonline autograph sales increased as focus has been moved towards the clearanceof lower value items through auction in line with our strategy put in place lastyear together with the benefit of design and functionality improvements made tothe website. Gross Margins The gross margin for the six months ended 30 June 2006 was 48% compared to 54%for the same period last year. Cost of sales includes a provision of £121,000made in the period against guaranteed minimum return investment contracts. Theguaranteed minimum return offered on investment contracts of between 4% and 7%per annum is being fully provided for against cost of sales over the length ofthe contract term. Excluding the impact of this provision, gross margins wouldhave been 50%. The remaining reduction in the gross margin percentage was inline with expectations and is attributable to the increased investment salescompared to the prior period which attract lower gross margins. Profitability The profit before tax for the period of £1,361,000 compares to a profit for thesame period last year of £710,000, representing an increase of 92%. The historicweighting of profits to the second half of the year, a consequence of theseasonality of stamp collecting, is being reduced by the increased proportion ofprofits now derived from investment activities which are less seasonal innature. Group overheads were 10% higher than in the same period last year mainly as aresult of increased salary and bonus payments which have increased in line withthe improved performance of the Group. Salary overhead was up 15% although permanent staff headcount at 30 June 2005was 99, unchanged from the prior period. Salaries represented 17.4% of salescompared to 21.8% for the same period last year demonstrating an improved returnon staff. Other overheads were 5% up on the prior period relating mainly to increases invariable costs associated with the rise in sales including publicity andmailing, freight and packing and credit card charges. Marketing costs haveincreased mainly to support the publicity and advertising of investment serviceswhich provides the highest return in sales. The implementation of our marketingplan in this area will result in extended advertising during the second half inmediums already proven to deliver a strong return. New Business Development Direct sales generated through our web sites increased by 18%. We continue toreceive over 2,000,000 visitors to our websites each year, representing 7% ofthe total estimated number of stamp collectors worldwide. We continue to sell new subscriptions for our online service "My Collection" andare currently working on the automation of pricing updates from our cataloguedatabase together with the uploading of GB Concise catalogue data. Current dataavailable on British stamps is of a simplified format only and we expect thedemand to increase substantially once this information is available. We have secured premises in Guernsey and our relocation of investment activitieswill take place at the end of July. The key aim of the relocation is to increaseour supply chain outside of normal trading activities to improve our ability tomeet the high levels of demand being experienced for our investment products. Corporate Overheads Corporate overheads were £129,000 (23%) higher than the same period last yeardue mainly to increased central salary and bonus payments as a result of thehigher levels of profitability of the Group. Consolidated Profit and Loss Account 6 months to 6 months to Year ended 30 June 30 June 31 December 2006 2005 2005 (unaudited) (unaudited) (audited) Notes £'000 £'000 £'000 ---------- -------- -------- Turnover 7,623 5,278 13,675Cost of sales (3,946) (2,451) (6,679)--------------------- ------ ---------- -------- -------- Gross Profit 3,677 2,827 6,996 Administration expenses (845) (730) (1,393)Selling and distributionexpenses (1,554) (1,351) (2,785)Exceptional operating costs - (90) (94)--------------------- ------ ---------- -------- -------- Operating Profit 1,278 656 2,724Interest receivable andsimilar 83 53 95incomeInterest payable and similarcharges - 1 ---------------------- ------ ---------- -------- -------- Profit on ordinary activitiesbefore taxation 1,361 710 2,819Tax on profit on ordinaryactivities 2 (369) (166) (590)--------------------- ------ ---------- -------- -------- Profit for the financial 992 544 2,229period --------------------- ------ ---------- -------- -------- Earnings per Ordinary Share 3 3.97p 2.20p 9.03pDiluted earnings per OrdinaryShare 3 3.96p 2.17p 8.95p Continuing operations: all items dealt with in arriving at the operating profitabove relate to continuing operations. There is no material difference between the profit on ordinary activities beforetaxation and the profit for the financial period stated above and theirhistorical cost equivalents. Statement of total recognised gains and losses 6 months to 6 months to Year ended 30 June 2006 30 June 2005 31 December 2005 (unaudited) (unaudited) (audited) £'000 £'000 £'000Profit for the financialperiod 992 544 2,229Actuarial gains recognised inthe pension scheme (note 1) - 226 1Deferred tax attributable toactuarial gains - (67) -Prior period adjustment (note1) - 27 27----------------------- -------- -------- ---------- Total gains and lossesrecognised since lastfinancial statements 992 730 2,257----------------------- -------- -------- ---------- Consolidated Balance Sheet 30 June 30 June 31 December 2006 2005 2005 (unaudited) (unaudited) (audited) Notes £'000 £'000 £'000 --------- -------- -------- Fixed AssetsTangible assets 1,076 1,195 1,117---------------------- ------ --------- -------- -------- Current AssetsStocks 5,882 5,588 5,949Debtors: amounts falling duewithin 2,382 2,312 2,949one yearCash at bank and in hand 3,386 1,517 2,585---------------------- ------ --------- -------- -------- 11,650 9,417 11,483 Creditors: amounts falling duewithin one year (2,596) (2,725) (3,200)---------------------- ------ --------- -------- -------- Net current assets 9,054 6,692 8,283---------------------- ------ --------- -------- -------- Total assets less currentliabilities 10,130 7,887 9,400Provision for liabilities andcharges (261) (105) (133)---------------------- ------ --------- -------- -------- Net assets excluding pensionliabilities 9,869 7,782 9,267Pension liabilities (net ofdeferred taxation) (278) (78) (258)---------------------- ------ --------- -------- -------- Net assets including pensionliabilities 9,591 7,704 9,009---------------------- ------ --------- -------- -------- Capital and reservesCalled up share capital 251 247 248Share premium account 5,134 5,038 5,056Capital redemption reserve 38 38 38Revaluation reserve 206 206 206Profit and loss account 3,962 2,175 3,461---------------------- ------ --------- -------- -------- Equity shareholders' funds 9,591 7,704 9,009---------------------- ------ --------- -------- -------- Consolidated Cash Flow Statement 6 months to 6 months to Year ended 30 June 30 June 31 December 2006 2005 2005 (unaudited) (unaudited) (audited) Notes £'000 £'000 £'000 -------- -------- --------- Net cash inflow/(outflow) fromoperating activities 4 1,698 (43) 1,897--------------------- ------ -------- -------- --------- Returns on investments andservicing of financeInterest received 49 29 49Interest paid - 1 ---------------------- ------ -------- -------- --------- 49 30 49TaxationUK corporation tax paid (471) (3) (636)Jersey tax paid (1) - (4)--------------------- ------ -------- -------- --------- (472) (3) (640)Capital expenditure andfinancial investmentsPayments to acquire tangiblefixed assets (54) (72) (97) Equity dividends paid (501) (366) (614)--------------------- ------ -------- -------- --------- Net cash inflow/(outflow) beforefinancing 720 (454) 595--------------------- ------ -------- -------- --------- FinancingShares issued 81 41 60--------------------- ------ -------- -------- --------- Net cash inflow from financing 81 41 60--------------------- ------ -------- -------- --------- Increase/(decrease) in cash 801 (413) 655--------------------- ------ -------- -------- --------- Analysis of changes in cash during the period 6 months to 6 months to Year ended 30 June 30 June 31 December 2006 2005 2005 (unaudited) (unaudited) (audited) £'000 £'000 £'000Net cash at the beginning of theperiod 2,585 1,930 1,930Net cash inflow/(outflow) 801 (413) 655--------------------- -------- -------- --------- Net cash at the end of the period 3,386 1,517 2,585--------------------- -------- -------- --------- Reconciliation of movements in equity shareholders' funds 6 months to 6 months to Year ended 30 June 2006 30 June 2005 31 December 2005 (unaudited) (unaudited) (audited) £'000 £'000 £'000Profit for the financialperiod 992 544 2,229Dividends (501) (366) (614)----------------------- -------- -------- ---------- Retained profit for thefinancial period 491 178 1,615Shares issued on exercise ofshare options 81 41 60Actuarial gains in pensionscheme net of tax - 159 1Adjustment to cost of shareoptions 10 10 17----------------------- -------- -------- ---------- Net increase in shareholders'funds 582 388 1,693Opening equity shareholders'funds as previously stated 9,009 7,289 7,289Prior period adjustment - 27 27----------------------- -------- -------- ---------- Opening equity shareholders'funds as restated 9,009 7,316 7,316----------------------- -------- -------- ---------- Closing equity shareholders'funds 9,591 7,704 9,009----------------------- -------- -------- ---------- The proposed dividend of 1.5p net per Ordinary Share is expected to result in adistribution from reserves of £376,000. Notes to the unaudited interim report 1 Accounting policies and presentation The results for the six months ended 30 June 2006 and 30 June 2005 are unauditedand have been prepared using accounting policies consistent with those set outin the Annual Report and Accounts for the year ended 31 December 2005. Thefinancial information in this report does not comprise full financialstatements. Full financial statements for the year ended 31 December 2005, onwhich the auditors gave an unqualified report, have been delivered to the JerseyRegistrar of Companies. These interim financial statements were approved by theboard of directors on 26 July 2006. The 2005 results included the adoption, for the first time, of FRS 17(Retirement Benefits), FRS 20 (Share-based Payment) and FRS 21 (Events after theBalance Sheet date) and the prior period results for 2004 were restatedaccordingly.The FRS 17 operating and financing costs of the pension scheme are recognised inthe profit and loss account for the six months ended 30 June 2006 based on theestimated charge provided by a qualified actuary. An FRS 17 valuation to assessthe liabilities of the pension scheme at 30 June 2006 was not carried out. Inthe opinion of the Directors there would be no material impact on the reportedresults if an actuarial valuation had been performed as at 30 June 2006. 2 TaxationThe tax charge is based on the expected full year tax rate together with themovement in the provision for deferred taxation. 3 Earnings per ordinary shareThe 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 ofexceptional operating costs. The Directors believe this gives a more meaningfulmeasure of the 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 2006 30 June 2005 31 December 2005 (unaudited) (unaudited) (audited)Weighted average number ofordinary shares in issue 24,975,737 24,737,896 24,682,753Dilutive potential ordinaryshares: Employee shareoptions 46,754 298,784 218,617Profit after tax (£) 992,000 544,000 2,229,000Add: exceptional operatingcosts net of tax (£) - 62,000 66,000----------------------- --------- --------- ---------- Adjusted profit after tax (£) 992,000 606,000 2,295,000----------------------- --------- --------- ---------- Basic earnings per share -pence per share (p) 3.97p 2.20p 9.03pAdd: exceptional operatingcosts net of tax (p) - 0.25p 0.27p----------------------- --------- --------- ---------- Adjusted earnings per share -pence per share (p) 3.97p 2.45p 9.30p----------------------- --------- --------- ---------- Diluted earnings per share -pence per share (p) 3.96p 2.17p 8.95p----------------------- --------- --------- ---------- 4 Reconciliation of operating profit to net cash inflow/(outflow) fromoperating activities 6 months to 6 months to Year ended 30 June 2006 30 June 2005 31 December 2005 (unaudited) (unaudited) (audited) £'000 £'000 £'000Operating profit 1,278 656 2,724Depreciation 95 116 219Increase in provisions 198 56 137Cost of share options 10 10 17Decrease/(increase) in stocks 67 - (361)Decrease/(increase) indebtors 567 (692) (1,329)(Decrease)/increase increditors (517) (189) 490----------------------- --------- --------- ---------- Net cash inflow/(outflow)from operating activities 1,698 (43) 1,897----------------------- --------- --------- ---------- 5 Further copies of this statementCopies 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