RNS Number:3259J
Stanley Gibbons Group Limited
04 March 2005
THE STANLEY GIBBONS GROUP LIMITED
("the Company" or "the Group")
Audited Results for the year ended 31 December 2004
The Stanley Gibbons Group Limited, incorporating Stanley Gibbons, Fraser's
Autographs, Collector Cafe and other collectible-related Internet sites, today
announced its audited results for the year ended 31 December 2004.
Highlights
* Record profit before tax (excluding profit on sale of holding in Provide
Commerce, Inc.) of #1,743,000 (2003: #1,227,000), up 42%
* Adjusted earnings per share (excluding profit on sale of Provide
Commerce, Inc.) of 5.10p (2003: 3.61p) up 41%
* Sales #10,051,000 (2003: #8,622,000), up 16.6%
* Sale of investment in Provide Commerce, Inc. during year for 10 times
book value, realising profit on sale of #1,985,000
* Bank and cash balances at 31 December 2004 of #1,930,000 (2003:
#1,885,000)
* Recommended final dividend of 1.5p net per share against 1p net per
share forecast. Special dividend of 8p net per share and 0.5p net interim
dividend already paid for the year
* Repurchase of 1,322,394 shares for #1,060,000 on 15 March 2004
* Sales overseas represented 31% of total sales (2003: 29%)
* Net assets per share retained in line with previous year at 30p despite
a total return to shareholders for the year of #3,500,000 (14p per share)
through dividends and buyback.
* 20 million hits in December 2004 to Internet sites (2003: monthly
average of 9 million).
* Great Britain Rarities Stamp Price Index up 31% over past twelve months.
Commenting on current trading, Paul Fraser, Chairman said:
"We are very pleased with our progress made during 2004 and 2005 to date. We
have continued to achieve exceptional profit growth, which is now being fuelled
by a sustainable growth in sales from our investment department and Internet
sites. We have cemented our position as the UK number one adviser in stamp
investment and I am very excited about the prospects in 2005 with the creation
of a stamp investment fund. Progress in this area represents a key opportunity
to substantially exceed expectations."
For further information, contact:
The Stanley Gibbons Group Limited
Paul Fraser, Chairman 020 7836 8444
Michael Hall, Chief Executive 01425 472363
Seymour Pierce Limited
Louise Carpenter 020 7107 8000
Jonathan Wright 020 7107 8000
Chairman's Statement
Financials
I am very pleased to report another record profit before tax of #3,728,000
(2003: #1,227,000), representing an increase of 204%. Excluding the profit on
the sale of Provide Commerce, Inc., profit before tax was #1,743,000,
representing an increase of 42%. Turnover increased by 17% to #10,051,000 (2003:
#8,622,000).
Earnings per Ordinary Share for the year ended 31 December 2004 were 13.23p
compared with 3.61p for the previous year. Excluding the profit on the sale of
Provide Commerce, Inc., earnings per Ordinary Share were 5.10p, representing an
increase of 41%.
As at 31 December 2004, the Company had cash balances of #1,930,000 despite the
payment of a special 8p dividend, an ordinary dividend of 0.5p and buying back
1,322,394 shares at a cost of #1,060,000; total spend of #3,134,000.
Dividend
Your Board is pleased to recommend an increased net final dividend of 1.5p per
share, giving a total net dividend for the year of 2p against 1.5p forecast. The
Group is committed to maintaining dividend growth and believes that this is an
important part of the return to shareholders.
Outlook
Our Investment and Specialist Stamp Departments have performed exceptionally
well and the demand for the scarcest stamp material is still increasing
strongly. We are working hard to buy fresh material and larger collections
whenever possible. This includes working closely with the top dealers and
collectors in the world to offer their material through various channels,
including outright purchase, private treaty and auction.
We are taking the next step to set up a stamp investment fund with the support
of a major international bank. There has been considerable interest from
investors who would rather own units in a fund than have their own individual
stamp portfolio. We believe there should be a very positive knock-on effect from
a fund owning a large chunk of extremely scarce material both in the prices at
the top end of the market and as demand and prices then cascade down to the
lower levels.
The 'SG 100' Stamp Index is up a further 10% in 2004, (2003: 15% increase), with
the GB Rarities Index up 31% over the year, further demonstrating the continuing
growth and liquidity in the market.
Our Internet sites reached a new milestone in December with over 20 million hits
(2003: 8 million), sales up 30% and a large increase in the content across all
areas.
Sales of our catalogues and philatelic literature have continued to grow and we
now produce most in full colour, with opportunities to produce a broader range
of both philatelic and non-philatelic publications.
We are currently developing the Publications department and recruiting the
necessary skills to realise this potential. We have seen as well, an increase in
advertising revenue, which should continue to rise in 2005 as we open up these
further avenues.
We believe that the combination of our specialist stamp department, investment
portfolios and stamp fund, as well as our renewed efforts to develop the
publishing area, should give us significant benefits in terms of profits and
added value to shareholders which in turn, should drive the business forward in
2005 and beyond.
Directors
I am pleased to have welcomed Peter John Wright to the Board, who joined us in
May 2004 as a Non-Executive Director. His wealth of experience gained during a
long career at Royal Mail has added a new dimension to the Board.
Stephen Feigen resigned as a Non-Executive Director during the year and I take
this opportunity again to thank Steve for his valuable contribution in the early
stages of our Internet development projects.
Employees
We continue to aim for higher levels of performance and we can only thank all
our staff for rising, once again, to the challenge and achieving another record
profit.
We aim to develop the strength and depth of management and specialised staff in
line with growth and to ensure that our goals will continue to be attained.
Paul Fraser
Chairman
3 March 2005
Operating Review
Operating results for the year
2004 2004 2003 2003 2002 2002
Sales Profit Sales Profit Sales Profit
#000 #000 #000 #000 #000 #000
Philatelic trading and
retail operations 6,718 1,719 5,391 1,362 4,742 814
Publishing and
philatelic accessories 2,660 846 2,481 659 2,605 679
Dealing in autographs,
records and 660 265 739 239 765 189
related memorabilia
-------------------------------------------------------------------------------
10,038 2,830 8,611 2,260 8,112 1,682
Corporate overheads (925) (799) (847)
New business
development 13 (214) 11 (254) 9 (293)
Interest 52 20 (5)
-------------------------------------------------------------------------------
Before sale of fixed
asset investment 10,051 1,743 8,622 1,227 8,121 537
-------------------------------------------------------------------------------
Profit on sale of fixed
asset investment - 1,985 - -
-------------------------------------------------------------------------------
Group total sales and
profit before tax 10,051 3,728 8,622 1,227 8,121 537
-------------------------------------------------------------------------------
Sales
Overall Group turnover increased by #1.4m (16.6%) compared to last year. The
growth has been assisted by prevailing strong philatelic market conditions, the
realisation of the benefits of our website development and an increased
investment in our stockholding of key rarities and items of exceptional quality.
We have continued to attract new customers through our website and visitors to
our 399 Strand retail outlet and have experienced a 7% increase in new clients
recruited compared to the previous year. New customers recruited during the year
contributed #2.2m to turnover. Customer retention is a performance measure on
which we will give added focus in 2005 and we intend to improve our analysis in
this area during the year to enable us to achieve our objective of increasing
the average lifetime spend of new customers.
Philatelic trading and retail sales were 24.6% higher than last year, with sales
growth achieved in all key areas of trading. The sale of stamps as an
alternative investment constituted a substantial element of the growth achieved
and is proving a highly profitable new area of business. Our attendance at major
philatelic and alternative investment shows worldwide this year has proved
highly lucrative, both directly through sales generated, and indirectly through
the increased exposure of the services we offer to a global audience.
Our focus on philatelic dealing has been towards achieving high value sales to
key customers through the acquisition of top quality philatelic items most in
demand. Levels of demand are continuing to increase and consequently we are
currently reviewing our resource in this area, with a view to recruiting further
experienced philatelic staff to enable us to acquire and process the increased
levels of stock required to support demand.
Revenue from auction activities has continued to enjoy strong growth. We held
two public auctions this year, compared to only one in the previous year. The
higher prices currently being achieved at auction, due to the increase in demand
in the philatelic market, have enabled us to improve margins in this area from
the sale of our own material through auction, with sales values often exceeding
listed catalogue prices. Our return to public auctions has proved highly
profitable and we believe there is further potential to develop sales through
the auction route, which will be an area of increased focus during 2005.
Publishing and philatelic accessory sales were 7.2% higher than last year.
Advertising revenues were 22% ahead of last year and we are currently building a
stronger team in this area to ensure that we can improve focus on the sale of
internet advertising and the development of non-philatelic advertising
relationships. We have continued to enjoy strong growth in sales of our
catalogue titles, which has been assisted by the ability to produce all titles
in full colour for the first time and the return of WH Smith as a distributor,
which has started stocking our key titles again after a period of absence during
their internal reorganisations.
Autographs and memorabilia sales were 10.7% below those in the previous year. A
reduction in marketing activity has resulted in a fall of turnover, compensated
by increased gross margins from the implementation of better controls in stock
systems during the year and a reduction in overheads. We are currently
undertaking a strategic review of the autograph division with the objective of
improving focus on servicing the top end collectible and investment markets, at
the same time as improving sales and profitability on the sale of lower value
items.
Gross Margins
The gross margin for the year ended 31 December 2004 was 57.7% (2003: 60.6%).
The reduction in the gross margin percentage is attributable to reduced margins
from philatelic trading, particularly in specialist philatelic dealing. In order
to take advantage of the "real asset value" of philatelic stock at this time, we
increased our buying efforts to secure as much quality material as possible,
often at the expense of short term margins due to our commitment to sell at our
current listed catalogue prices. We are undertaking a pricing policy review to
ensure that our retail prices going forward reflect the true supply and demand
equation in the marketplace.
Profitability
The profit before tax for the year of #3,728,000 compares to a profit last year
of #1,227,000, representing an increase of 204%. This year's profit includes a
capital gain of #1,985,000 on the sale of our stake in Provide Commerce, Inc.
Excluding the one-off capital gain, profit before tax was #1,743,000,
representing an increase of 42%. The increase in profitability from the previous
year was achieved through growth in turnover, although at a lower gross margin
percentage, with overheads #95,000, (2.3%) higher than in the prior year.
Salary overhead increased by #104,000, (5.2%). Increased salary costs are
primarily due to the payment of sales and profit related bonuses totalling
#116,000, as a reward for the improved performance. Underlying fixed salary
overhead is in line with the previous year, with a permanent staff headcount at
31 December 2004 of 98 compared to 99 at 31 December 2003.
Other overheads were materially consistent with the previous year, although
marketing costs were #84,000 lower as we benefit from the improved analysis of
returns from marketing activities. This has enabled us to become more dynamic in
our approach to product offerings and to deliver a better return at a lower
cost. Total rental income in the year ended 31 December 2004 was #140,000,
(2003: #69,000).
New Business Development
Direct sales generated through our websites increased by 30% and represented
7.2% of total sales in 2004, (2003: 6.5%). The internet has enabled the exposure
of the Stanley Gibbons brand name internationally and sales to customers outside
of the UK were 25% up on last year.
The redesign and integration of our websites went live in September and was
welcomed with strong positive feedback from users, the success of which is
evidenced from the resultant increase in visitors and online sales. All web
development work was performed internally and all costs associated with the
development have been written off to the profit and loss account as incurred.
Website development in 2005 will include the re-launch of the Fraser's autograph
site with design improvements similar to those already implemented in the
Stanley Gibbons site. We have recently developed an electronic link between our
online catalogue data and the Stanley Gibbons online shop which allows users to
view stock available for sale from both sources. The real benefit of this new
functionality will be evidenced during 2005 as we upload to the site our full
stock range including lower value stamps which, at present, are only available
for purchase at our 399 Strand retail outlet.
Corporate Overheads
Corporate overheads were #126,000 higher than last year mainly due to higher
remuneration of Board Directors, together with the payment of performance
related bonuses totalling #65,000.
Consolidated Profit and Loss account
For the year ended 31 December 2004
Year ended Year ended
31 December 2004 31 December 2003
Notes #'000 #'000
Turnover 10,051 8,622
Cost of sales (4,248) (3,398)
-------- --------
Gross profit 5,803 5,224
Administration expenses (1,309) (1,183)
Selling and distribution (2,803) (2,834)
expenses ----- --------
Operating profit 1,691 1,207
Profit on sale of fixed asset
investments 1,985 -
Interest receivable and similar
income 56 27
Interest payable and similar
charges (4) (7)
------- --------
Profit on ordinary activities
before taxation 3,728 1,227
Tax on profit on ordinary
activities (499) (346)
------- --------
Profit for the financial year 3,229 881
Dividends paid and proposed 2 (2,440) -
------- --------
Retained profit for the
financial 789 881
year ------- --------
Earnings per Ordinary share 3 13.23p 3.61p
Adjusted earnings per Ordinary Share 3 5.10p 3.61p
Diluted earnings per Ordinary share 3 12.95p 3.49p
Continuing operations: all items dealt with in arriving at the operating profit
for 2004 and 2003 relate to continuing operations.
There is no material difference between the profit on ordinary activities before
taxation and the retained profit for the year stated above and their historical
cost equivalents.
Statement of total recognised gains and losses for the year ended 31 December
2004
Year ended Year ended
31 December 2004 31 December 2003
#'000 #'000
Profit for the financial year 3,229 881
Surplus on revaluation of assets 37 -
----------- -----------
Total gains and losses recognised since
last financial statements 3,266 881
----------- -----------
Reconciliation of movements in equity shareholders' funds for the year ended 31
December 2004
Year ended Year ended
31 December 2004 31 December 2003
#'000 #'000
Profit for the financial year 3,229 881
Dividends (2,440) -
----------- -----------
Retained profit for the financial year 789 881
Purchase of own shares (1,060) -
Shares issued on exercise of share
options 224 -
Other recognised gains 37 -
----------- -----------
Net (decrease)/increase in shareholders'
funds (10) 881
Opening equity shareholders' funds 7,299 6,418
----------- -----------
Closing equity shareholders' funds 7,289 7,299
----------- -----------
Balance sheets
at 31 December 2004
Group Group Company Company
31 31 31 31
December December December December
2004 2003 2004 2003
------- ------- -------- ---------
#'000 #'000 #'000 #'000
Fixed Assets
Tangible assets 1,239 1,307 - -
Investments - 223 5,811 5,811
------- ------- -------- ---------
1,239 1,530 5,811 5,811
------- ------- -------- ---------
Current assets
Stocks 5,588 4,878 - -
Debtors: amounts
falling due after more
than one year 179 259 - -
Debtors: amounts
falling due within one
year 1,620 1,079 - 316
Cash at bank and in
hand 1,930 1,885 22 -
------- ------- -------- ---------
9,317 8,101 22 316
Creditors: amounts
falling due within one
year (3,095) (2,097) (542) -
------- ------- -------- ---------
Net current
assets/(liabilities) 6,222 6,004 (520) 316
------- ------- -------- ---------
Total assets less
current liabilities 7,461 7,534 5,291 6,127
Creditors: amounts falling due after
more than
one year - (47) - -
Provision for
liabilities and
charges (172) (188) - -
------- ------- -------- ---------
Net assets 7,289 7,299 5,291 6,127
------- ------- -------- ---------
Capital and reserves
Called up share
capital 244 244 244 244
Share premium account 5,000 5,834 5,000 5,834
Capital redemption
reserve 38 25 38 25
Revaluation reserve 206 169 - -
Profit and loss
account 1,801 1,027 9 24
------- ------- -------- ---------
Equity shareholders'
funds 7,289 7,299 5,291 6,127
------- ------- -------- ---------
Consolidated Cash Flow Statement
For the year ended 31 December 2004
Year ended Year ended
31 December 2004 31 December 2003
#'000 #'000
Net cash inflow from operating
activities 1,024 1,373
------- --------
Returns on investment and servicing of
finance
Interest received 56 27
Interest paid (4) (7)
------- -------- ------- --------
52 20
Taxation
UK corporation tax paid (134) (12)
Jersey tax paid (10) -
------- -------- ------- --------
(144) (12)
Capital expenditure and financial
investments
Payments to acquire tangible fixed
assets (138) (134)
Receipts from sales of fixed asset
investment 2,208 -
------- -------- ------- --------
2,070 (134)
Equity dividends paid (2,074) -
------- -------- ------- --------
Net cash inflow before financing 928 1,247
------- -------- ------- --------
Financing
Purchase of own ordinary shares (1,060) -
Shares issued 224 -
Loan repayments - (55)
Repayment of Loan notes (47) (16)
------- -------- ------- --------
Net cash outflow from financing (883) (71)
------- -------- ------- --------
Increase in cash 45 1,176
------- -------- ------- --------
Reconciliation of operating profit to net cash inflow from operating activities
Year ended Year ended
31 December 2004 31 December 2003
#'000 #'000
Operating profit 1,691 1,207
Depreciation 243 282
Increase in stocks (710) (331)
Increase in debtors (461) (228)
Increase in creditors 261 443
----------- -----------
Net cash inflow from operating
activities 1,024 1,373
----------- -----------
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 2004 and
31 December 2003.
The financial information for the year ended 31 December 2003 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 2004 has been
extracted from the audited financial statements of the Group for the year ended
31 December 2004 which were approved by the Board of Directors on 3 March 2005.
2. Dividends
The final dividend of 1.5p net per Ordinary Share will be paid on 19 April 2005
to all shareholders on the register on 18 March 2005.
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 the
profit on the sale of the investment in Provide Commerce, Inc. 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.
Year ended Year ended
31 December 2004 31 December 2003
Weighted average number of ordinary
shares in issue (No.) 24,404,298 24,376,736
Dilutive potential ordinary shares:
Employee share options 523,776 865,251
Profit after tax (#) 3,229,000 881,000
Less: profit on sale of fixed asset
investment (#) (1,985,000) -
----------- -----------
Adjusted profit after tax (#) 1,244,000 881,000
----------- -----------
Basic earnings per share - pence per
share (p) 13.23p 3.61p
Less: profit on sale of fixed asset
investment (8.13p) -
----------- -----------
Adjusted earnings per share - pence per
share (p) 5.10p 3.61p
----------- -----------
Diluted earnings per share - pence per
share (p) 12.95p 3.49p
----------- -----------
4. Annual report
Copies of this announcement are available from the Company Secretary. Copies of
the Annual Report for the year ended 31 December 2004 will be posted to
shareholders in the week commencing 7 March 2005 and will be available at the
registered office of the Company, Pirouet House, Union Street, St Helier, Jersey
JE1 3WF or alternatively on our website www.stanleygibbons.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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