| Company |
Stanley Gibbons Group Limited |
| TIDM |
SGI |
| Headline |
Final Results |
| Released |
07:00 14-Mar-08 |
| Number |
0866Q |
RNS Number:0866Q
Stanley Gibbons Group Limited
14 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's Autographs and Collector Cafe today announced its audited results for the year ended 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%. We continued to grow organically whilst maintaining our financial resources and without any acquisitions.
Stanley Gibbons has a clear comparative advantage in our markets - we are the biggest brand in our field yet still command only a small market share. Our aim remains to bring the fragmented world of collectibles to one location online through use of our popular websites. Collectibles as an asset class are growing and tighter economic conditions are resulting in an increasing number of investors turning to our products as a means of protecting their wealth by diversifying their asset holdings.
Increasing demand for our investment products, coupled with a better quality stockholding, place us in a strong position as we start 2008 with an increased momentum."
For further information, contact:
The Stanley Gibbons Group Limited
Michael Hall, Chief Executive Tel: +44 (0) 20 7836 8444
www.stanleygibbons.com
Seymour Pierce Ltd, NOMAD/ Broker Tel: +44 (0) 20 7107 8000
Jonathan Wright
Bishopsgate Communications Ltd, Financial PR Tel: +44 (0) 20 7562 3350
Jenni Herbert/Nick Farmer
mailto:stanleygibbons@bishopsgatecommunications.com
Chairman's Statement
After just four months as your Board's Chairman it is a great pleasure to present to Shareholders yet another year of exceedingly good results, maintaining the growth momentum in the Group's businesses. The Senior executive team has fulfilled the expectations of the Board for 2007. These results illustrate both the Group's sound strategy and also its well managed execution. The outcome is 2007 achieving record results.
Financial Performance
Turnover increased to £20.2 million, an increase of more than one-fifth over the preceding year, and profit before tax grew in line with turnover, and before exceptional 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 again in line with the other measures of profit.
Your Board is conscious of the need to retain adequate liquid resources, with cash balances held steady at just over £3 million, underpinning the Group's ability to fund further growth in its business without being constrained by lack of liquidity.
Dividend
As a consequence of all the above, your Board is pleased to recommend to Shareholders, for approval at the forthcoming AGM, a final dividend of 2.75 pence per share (net of Jersey tax) which would produce a total dividend out of 2007 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 than three times covered by earnings in 2007 compared with 2.75 times in 2006, having had regard to projected cash flow requirements in 2008 and beyond.
Outlook
Collectibles as a potential Savings and Wealth Management asset class are growing. As they continue to be more fully recognised as an "alternative" investment, your Company is well positioned to participate in this growth in value and volume terms. Even now, our stamp and autograph indices are available on Bloomberg information terminals for institutional investors. A small increase in acceptance by institutional investors would make a significant positive impact on the growth potential of our businesses.
We have continued to increase our inventories of high-end quality stamps and autographs. Such investment will support the future growth we anticipate. We are also particularly pleased that we have significantly reduced our low value and slow moving inventory items which has been achieved through the development of a number of successful trading relationships during the year, facilitating an increase in trade sales at acceptable margins. This combination, coupled with a faster inventory turnover, gives us a very strong potential to fuel the increased 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 potential business clients' "wants list" of over £12 million of rare items they are seeking.
Stock holding is clearly an important part of our strategy to allocate resources to areas of our business experiencing faster growth and where we believe we can add value. This is in parallel with investment in the structure and recruiting the key personnel which will enable this strategy to be fully implemented.
We have successfully added to our network of agents and Independent Financial Advisers around the world, which has increased both our sales and brand awareness 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 we are 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 our decision to open it in August 2006. We are looking at other opportunities to repeat this, possibly in Jersey and other places.
There is great trust and awareness of our brand and we are always looking at ways to improve our products and services to fully capitalise on this and I am delighted 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 - four prerequisites for success in our businesses.
Board
The 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 Fraser during his longstanding association with the business up to him stepping down in August 2007.
Secondly, our thanks to Bob Henkhuzens in succeeding Paul Fraser as Interim Chairman and continuing the seamless progress of the business during 2007, along with the other Board members, as well as chairing the Audit Committee.
Since joining the Board, and as Chairman of its Nominations Committee, I proposed that the Board's corporate governance would be strengthened by the addition of a further Independent Director and Sir Michael Wilkes was appointed in early 2008. Following this the composition of the various Board Committees was reviewed, with Sir Michael taking the chair of the Remuneration Committee.
Your Board is now well balanced and capable of fulfilling its role in the development of the Company and its businesses and I am grateful for their support.
Stakeholders
I would also like to thank all our colleagues in the Group for their hard work and contribution. They have a combination of skills, knowledge and experience that are key drivers behind the success shown consistently in recent years. I also extend my gratitude to other stakeholders associated with our activities who have supported our continued growth and look forward to meeting Shareholders at 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 £000
Philatelic trading and
retail operations 14,945 3,868 12,194 3,231 10,076 2,789
Publishing and
philatelic accessories 2,919 868 2,787 814 2,818 871
Dealing in autographs,
records and 2,284 1,076 1,664 793 748 205
related memorabilia
-------------------- ------ ------- ------- ------- ------- -------
20,148 5,812 16,645 4,838 13,642 3,865
Internet development 43 (65) 39 (40) 33 (2)
Corporate overheads (1,269) (1,228) (1,045)
Interest and similar
income 147 176 95
-------------------- ------ ------- ------- ------- ------- -------
Before exceptional items 20,191 4,625 16,684 3,746 13,675 2,913
-------------------- ------ ------- ------- ------- ------- -------
Exceptional operating
costs (117) - (94)
-------------------- ------ ------- ------- ------- ------- -------
Group total sales and
profit 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. The profit 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 operating costs incurred in the year of £117,000, profit before tax was £4,625,000 representing an increase of 23%. Growth was achieved organically through the continued successful implementation of our strategy which, based on the power of our brand, yet small global market share, still has a long way to run. The key areas 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 resulting in the spend from new clients added in the year increasing by 26% compared to the prior year. Our marketing spend increased by 27% to £552,000 as our average response rates improved providing confidence to increase the frequency of our magazine advertising, mailings and overseas exhibitions. An increasing proportion of our marketing spend is being used to grow and develop the size of our e-mail database which is an area we believe will provide the platform to secure future sustainable and consistent growth.
Philatelic trading and retail operations
Philatelic trading and retail sales were 23% higher than last year with profit contribution up by 20%. Our confidence to invest in our stockholding particularly in higher value philatelic pieces has paid dividends and driven an increase in philatelic sales to collectors. This, together with strong market conditions prevailing, led to an increase in sales to collectors of stamps from Great Britain of 48%.
Sales to investment clients increased by 36% benefiting from improved responses from our marketing activities. Our stamp and autograph price indices are now available on Bloomberg terminals for institutional investors adding credence to collectibles as an alternative asset class. During 2007 we have developed core sales copywriting skills in-house. The resultant improvements to the quality of sales copy in our e-mail marketing has improved response rates dramatically and this will form an integral part of our future growth.
The development of stronger relationships with members of the philatelic trade has provided an outlet for the sale of lower value material. Such deals ensure that our stockholding remains fresh and that cash does not become tied up in slow moving stock. At the same time, we have increased our investment in high value rarities leading to a significant improvement in the profile and quality of our stockholding.
Publishing and philatelic accessories
Publishing and philatelic accessory sales were 5% higher than last year with profit contribution up 7%. Modest growth was supported by a 12% increase in online sales benefiting from improved presentation of our stock range online and the expansion of our range of third party stamp albums and accessories.
Some progress was made in developing our world-renowned range of printed price guide catalogues. In December, we published our first ever edition of "Collect Autographs" which has been received well in the market. We also enhanced our most respected publication this year with the extension of the "Commonwealth & British Empire" catalogue to cover the period from 1840 to 1970, (previously 1840 to 1952). This change received strong recognition from collectors and members of the trade.
Autographs, records and related memorabilia
Autographs, records and related memorabilia sales were 37% higher than last year with profit contribution up 36%. We have continued to make significant progress in the marketing and sales of rare historical signatures as an "alternative" investment. Sales to investors were highest in December following the successful acquisition of a collection of Royalty signatures of exceptional quality and rarity.
As with stamps, our strategy of investing in our stockholding of high value rarities has been a success. Retail sales in our London Gallery at 399 Strand were 33% up on the prior year despite a lower footfall with higher average transaction values. Our e-mail marketing has been particularly effective in generating sales of high value autographs.
Internet development
Sales reported within this department relate to online subscription revenue only. In the year ended 31 December 2007 £3,582,000 (18%) of sales were made to customers recruited from our websites compared to £1,652,000 (10%) of sales in the prior year. Our websites received 3,800,000 visitors during 2007 compared to 2,700,000 in the prior year representing an increase of 41%.
The website remains a core part of our strategy in achieving global recognition of our brand together with growing our sales penetration overseas. We have recently increased our investment in IT and web development staff in order to accelerate some of the planned changes to our websites and IT systems.
Corporate overheads
Corporate overheads were £41,000 (3%) higher than last year. We have strengthened the Board during the year to support our ambitious growth aspirations and to provide improved corporate governance to shareholders. Following the resignation of Paul Fraser as executive Chairman, we have strengthened the executive team. Mark Henley was appointed as Finance Director in August and Steve Sjuggerud was appointed as executive director in May. We have also strengthened our Board of non-executive directors with the appointment of Martin Bralsford as non-executive Chairman in November and General Sir Michael Wilkes as non-executive director and Chairman of the remuneration committee in January 2008. As a result, we now have an equal split on the Board between executives and non-executives.
Exceptional operating costs
Exceptional operating costs of £117,000 relate to remuneration paid to Paul Fraser 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 will provide the solution to this conundrum. Our continued focus on developing our website and communicating with an increasing number of customers at a low cost more regularly through our e-mail marketing should drive continued organic growth.
Further investment, most notably in human resource, will be required to provide the scalability to our growth plans particularly in the sourcing of an increasing level of rare stamps and autographs to meet the rising demand we are creating.
We are proud of what we have achieved over the past eight years and believe that we still have significant opportunities in front of us. We therefore remain very confident about our prospects and consider that continued growth is sustainable.
Accounting Policies
The Group adopted International Financial Reporting Standards (IFRS) for the first time in the presentation of its interim results for the six months ended 30 June 2007. This is our first full set of financial statements prepared under IFRS. The adoption of IFRS has had no material impact on the financial results reported.
Consolidated Income Statement for the year ended 31 December 2007
Year ended Year ended
31 December 2007 31 December 2006
Notes £'000 £'000
------------- -------------
Revenue 20,191 16,684
Cost 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 3,570
Finance income 149 176
Finance costs (2) -
------------------- ----- ------- -------- --- ------- --------
Profit before tax 4,508 3,746
Taxation (1,125) (972)
------------------- ----- ------- -------- --- ------- --------
Profit for the financial year 3,383 2,774
------------------- ----- ------- -------- --- ------- --------
Basic Earnings per Ordinary share 3 13.46p 11.07p
Diluted 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) for
the financial year 3,383 2,774 (1) (1)
Surplus on revaluation
of assets - 47 - -
Deferred tax
attributable to
revaluation of assets 5 (14) - -
Actuarial
(losses)/gains
recognised in the
pension scheme (115) 348 - -
Deferred tax
attributable to
actuarial gains 31 (105) - -
----------------------- ------- -------- -------- ---------
Total recognised
income/(expense) for
the year 3,304 3,050 (1) (1)
----------------------- ------- -------- -------- ---------
All activities have arisen from continuing operations.
Balance Sheets
at 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 assets
Intangible assets 37 83 - -
Property, plant and
equipment 978 1,034 - -
Deferred tax asset 71 25 - -
Trade and other
receivables 2,846 610 - -
Investment in
Subsidiary - - 5,855 5,811
-------------------- ----- ------- ------- -------- ---------
3,932 1,752 5,855 5,811
-------------------- ----- ------- ------- -------- ---------
Current Assets
Inventories 7,109 6,035 - -
Trade and other
receivables 4,248 3,254 - -
Cash and cash
equivalents 3,013 3,083 27 32
-------------------- ----- ------- ------- -------- ---------
14,370 12,372 27 32
-------------------- ----- ------- ------- -------- ---------
Total assets 18,302 14,124 5,882 5,843
-------------------- ----- ------- ------- -------- ---------
Current liabilities
Trade and other
payables 3,118 1,894 394 398
Current tax payable 908 513 - -
-------------------- ----- ------- ------- -------- ---------
4,026 2,407 394 398
-------------------- ----- ------- ------- -------- ---------
Non-current
liabilities
Retirement benefit
obligations 252 84 - -
Deferred tax
liabilities 150 179 - -
Other financial
liabilities 300 171 - -
Other provisions
for liabilities 62 50 - -
-------------------- ----- ------- ------- -------- ---------
764 484 - -
-------------------- ----- ------- ------- -------- ---------
Total liabilities 4,790 2,891 394 398
-------------------- ----- ------- ------- -------- ---------
Net assets 13,512 11,233 5,488 5,445
-------------------- ----- ------- ------- -------- ---------
Equity
Called up share
capital 251 251 251 251
Share premium
account 5,148 5,148 5,148 5,148
Shares to be issued 44 - 44 -
Capital redemption
reserve 38 38 38 38
Revaluation reserve 182 177 - -
Retained earnings 7,849 5,619 7 8
-------------------- ----- ------- ------- -------- ---------
Equity
shareholders' funds 13,512 11,233 5,488 5,445
-------------------- ----- ------- ------- -------- ---------
Consolidated Cash Flow Statements
for 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 generated
from/(used in)
operations 1,782 2,293 (6) 22
Interest paid (2) - - -
Taxes paid (770) (978) - -
-------------------- ----- ------- -------- ------- --------
Net cash generated
from/(used in)
operating
activities 1,010 1,315 (6) 22
-------------------- ----- ------- -------- ------- --------
Investing activities
Purchase of
property, plant and
equipment (88) (120) - -
Purchase of
intangible assets (7) (25) - -
Interest received 83 110 1 -
Dividends received - - 1,068 877
-------------------- ----- ------- -------- ------- --------
Net cash used in
investing
activities (12) (35) 1,069 877
-------------------- ----- ------- -------- ------- --------
Financing activities
Dividends paid to
company
shareholders (1,068) (877) (1,068) (877)
Net proceeds from
issue of ordinary
share capital - 95 - -
-------------------- ----- ------- -------- ------- --------
Net cash used in
financing
activities (1,068) (782) (1,068) (877)
-------------------- ----- ------- -------- ------- --------
Net (decrease) /
increase in cash
and cash
equivalents (70) 498 (5) 22
-------------------- ----- ------- -------- ------- --------
Cash and cash
equivalents at
start of year 3,083 2,585 32 10
-------------------- ----- ------- -------- ------- --------
Cash and cash
equivalents at end
of 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 other
receivables (3,230) (915) - -
Increase/(decrease) in trade
and other payables 1,224 (810) (4) 23
------------------------ ------- -------- -------- --------
Cash generated from/(used
in) 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 the Group's statutory financial statements for the years ended 31 December 2007 and 31 December 2006.
The financial information for the year ended 31 December 2006 has been extracted from the audited statutory financial statements for that year which include an unqualified audit report and have been filed with the Registrar of Companies in Jersey. The financial information for the year ended 31 December 2007 has been extracted from the audited financial statements of the Group for the year ended 31 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 2008 to 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 weighted average number of shares in issue during the year. Adjusted earnings per share has been calculated to exclude the effect of exceptional operating costs. The Directors believe this gives a more meaningful measure of the underlying performance of the Group.
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The Group has only one category of dilutive ordinary shares: those share options granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the year. Also in existence were 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 2006
Weighted average number of ordinary
shares in issue (No.) 25,137,443 25,051,638
Dilutive potential ordinary shares:
Employee share options (No.) 81,113 21,257
Profit after tax (£) 3,383,000 2,774,000
Exceptional operating cost (net of tax) 94,000 -
----------------------------- ----------- -----------
Adjusted profit after tax (£) 3,477,000 2,774,000
----------------------------- ----------- -----------
Basic earnings per share - pence per
share (p) 13.46p 11.07p
----------------------------- ----------- -----------
Diluted earnings per share - pence per
share (p) 13.41p 11.06p
----------------------------- ----------- -----------
Adjusted earnings per share - pence per
share (p) 13.83p 11.07p
----------------------------- ----------- -----------
4. Annual report and accounts
The Annual Report and Accounts for the year ended 31 December 2007 will be posted to shareholders shortly. Further copies can be obtained from the Company Secretary at 399 Strand, London WC2R 0LX or the Company's Broker, Seymour Pierce Limited at 20 Old Bailey, London EC4M 7EN or can be viewed on the Company's website at www.stanleygibbons.com.
This information is provided by RNS
The company news service from the London Stock Exchange