RNS Number:2360Z
Stanley Gibbons Group Limited
03 March 2006
THE STANLEY GIBBONS GROUP LIMITED
THE STANLEY GIBBONS GROUP LIMITED ("the Company" or "the Group")
Audited Results for the year ended 31 December 2005
The Stanley Gibbons Group Limited, incorporating Stanley Gibbons, Fraser's
Autographs, Collector Cafe and other collectible-related Internet sites, today
announced its audited results for the year ended 31 December 2005.
Highlights
* Profit before tax up 65.4% to #2,819,000 (2004: #1,704,000*, excluding
profit on the sale of Provide Commerce, Inc.)
* Adjusted earnings per share of 9.30p (2004: 4.96p) up 87.5%. Adjusted
earnings exclude the profit on sale of Provide Commerce, Inc. in 2004 and
exceptional operating costs in 2005
* Sales up 36.1% to #13,675,000 (2004: #10,051,000)
* Bank and cash balances at 31 December 2005 of #2,585,000 (2004:
#1,930,000)
* Recommended final dividend of 2p net per share, giving a total net
dividend for the year of 3p (2004: 2p net per share) up 50%
* Sales overseas represented 41% of total sales (2004: 31%)
* Internet sales increased by 23% compared to the previous year
* Expansion plans to include the opening of an office in Guernsey, Channel
Islands to progress investment activities
* Great Britain Rarities Stamp Price Index up a further 20% over past
twelve months
* Stanley Gibbons celebrates its 150th Anniversary in 2006
* Figures for the year ended 31 December 2004 have been restated for FRS 17
(Retirement Benefits), FRS 20 (Share-based Payment) and FRS 21 (Events after
the Balance Sheet Date)
Commenting on current trading, Paul Fraser, Chairman said:
"I am both delighted and excited to be involved with Stanley Gibbons at this
time. Never before has the brand name been positioned better to benefit from
both the strong market in collectibles and the growing alternative investment
market. Our Internet sites are now increasing our visibility within overseas
markets, as per our original strategic plans, enabling consistently strong
levels of customer recruitment year on year. We have maintained high levels of
demand for our financial-based investment products since the year end as we
start 2006 with an ever increasing momentum."
For further information, contact:
The Stanley Gibbons Group Limited
Paul Fraser, Chairman - 020 7836 8444
Michael Hall, Chief Executive - 01425 472363
Seymour Pierce Limited
Jonathan Wright - 020 7107 8000
Chairman's Statement
Financials
I am very happy to report yet another record-breaking year, with profit before
tax of #2,819,000 (2004: #1,704,000, excluding profit on the sale of Provide
Commerce, Inc) representing an increase of 65.4%. Turnover increased by 36.1% to
#13,675,000 (2004: #10,051,000).
Earnings per Ordinary Share for the year ended 31 December 2005 were 9.03p
compared with 13.10p for the previous year. Adjusted earnings per share were
9.30p (2004: 4.96p) representing an increase of 87.5%. Adjusted earnings exclude
the profit on the sale of Provide Commerce, Inc. in 2004 and exceptional
operating costs in 2005.
These results include the changes in accounting for pensions, share options and
dividends in both the prior and current years as a result of the introduction of
new Accounting Standards as detailed in the Operating Review and note 1 to the
financial statements. In summary, though, they are not material to our overall
reported results.
As at 31 December 2005, the Company had cash balances of #2,585,000, despite the
increased dividends paid and increases in stock purchasing necessary to support
a higher level of demand.
Dividend
Your Board is pleased to recommend an increased net final dividend of 2p per
share, giving a total net dividend for the year of 3p (2004: 2p) representing an
increase of 50%. We remain committed to maintaining dividend growth in both the
short and medium term.
Outlook
All areas of the Group have performed well. However, special mention once again
must go to our Investment and Specialist Stamp Departments. Stamps as an
alternative investment are receiving very favourable press comment and we have
now developed a number of financial-based products to suit the various needs of
collectors and investors. Supply and demand pressures are increasing prices of
the very best material across the board and beginning to reflect the true value
of how rare some material is.
Our Auction Department is stronger, with good performances in public, postal and
online auctions. Retail has performed well, within the general backdrop of the
retail malaise, and is a strong new customer recruitment route. We have
strengthened our buying team and increased advertising and roadshows across the
country to be more aggressive in this competitive environment.
We continue to develop new profitable titles in our Publishing Division and
advertising sales have benefited from this and our strong market position in
catalogues, magazines and expansion of our Internet content and services.
The Internet has increased our brand exposure worldwide, provided cost-effective
communication, recruited thousands of new customers and has shown an ability to
grow sales year-on-year by over 30%, which should produce increasing sales in
the years to come. The Internet, as a route to market, reminds us that we have
less than 1% of the global stamp market which presents a huge potential for
Stanley Gibbons.
In 2006, Stanley Gibbons is celebrating the 150th anniversary of Edward Stanley
Gibbons starting the business in his father's chemist shop in Plymouth. We have
a number of events planned and we will keep all shareholders aware of what we
are doing.
The Stanley Gibbons Group is a Jersey-based company, as a legacy of our
involvement with Flying Brands, and we intend, this year, to open an office in
Guernsey, which will support our further international expansion and satisfy
many of our clients who would welcome the benefits of a Channel Islands base.
Employees
Our strategy continues to pay dividends for all stakeholders and the commitment
of all of my colleagues at Stanley Gibbons has provided the growing momentum
which is reflected in the current profitability and will serve us well in
attaining similar growth and results in 2006 and beyond.
Operating Review
Operating results for the year
2005 2005 2004 2004 2003 2003*
Sales Profit Sales Profit Sales Profit
As
restated
#000 #000 #000 #000 #000 #000
Philatelic trading and 10,076 2,789 6,718 1,719 5,391 1,362
retail operations
Publishing and philatelic 2,818 871 2,660 846 2,481 659
accessories
Dealing in autographs, 748 205 660 265 739 239
records and
related memorabilia
13,642 3,865 10,038 2,830 8,611 2,260
Corporate overheads (1,045) (1,017) (799)
New business development 33 (2) 13 (214) 11 (254)
Interest and similar 95 105 20
income/charges
Before exceptional items 13,675 2,913 10,051 1,704 8,622 1,227
Profit on sale of fixed - 1,985 -
asset investment
Exceptional operating (94) - -
costs
Group total sales and 13,675 2,819 10,051 3,689 8,622 1,227
profit before tax
*2003 results have not been restated for FRS 17 "Retirement Benefits" or FRS 20
"Share-based Payment"
Sales
Overall group turnover increased by #3,624,000 (36.1%) compared to last year.
Sales growth has been driven primarily by the development of the investment
department. New financial-based products launched towards the end of the year
received exceptional levels of demand, particularly our fixed term investment
contracts. The launch of these new financial products has enabled the Group to
sell stamps and autographs as alternative investments to a much wider class of
investor worldwide.
The continuing enhancement of our website, widely recognised as the best
philatelic website in the world, together with the prominence of our 399 Strand
retail outlet represent the flagship of the Group, which both protect and enable
the development of our brand name. We have experienced a 30% rise in new clients
recruited compared to the previous year.
Philatelic and retail sales were 50% higher than last year, with the majority of
growth achieved in the sale of stamps to investors, the trading of high value
stamps to collectors and auction activities. Demand experienced during the year
for top grade material exceeded our ability to acquire philatelic material of
the right quality with sufficient margin despite the implementation of more
aggressive buying activities. It is clear that our infrastructure now needs to
grow to meet these new levels of demand. The opening of an office in Guernsey
this year dedicated to the development of our investment activities will have
the key aims of increasing our supply chain worldwide to become the biggest
international buyer of rare stamps and to provide a team committed to the
promotion of our investment services and management of investment clients.
Sales from our auction department were 17.7% above last year. Sales growth was
achieved from an increased focus on the breadth of stock being offered through
auction together with increased investment in the quality of our presentation.
Roadshows held throughout the country proved to be a successful means of
sourcing new material. The further strategic development of auction activities
continues to form part of our overall plan.
Publishing and philatelic accessory sales were 5.9% higher than last year.
Publication sales benefited from an increase in the number of new titles
published during the year compared to the prior year, including the publication
of the 150th Anniversary Special Edition of Gibbons Stamp Monthly in October.
Growth in this area of our business is being driven by increased direct sales
from our website and improved responses from direct mailings. Direct sales to
retail customers accounted for 50% of total sales compared to 46% last year
demonstrating our success in recruiting new retail customers hence reducing our
dependence on wholesalers and other distributors of our products.
Autographs and memorabilia sales were 13.3% higher than last year. Declining
retail and auction sales as a result of increased competition are being more
than compensated by the growth being achieved in the sale of autographs as an
alternative investment. We have improved the quality of our stockholding with
investment directed towards high quality pieces and key rarities where our
return on capital is highest.
Gross Margins
The gross margin for the year ended 31 December 2005 was 51.2% (2004: 57.7%).
The reduction in the gross margin percentage was in line with expectations based
on the shift in emphasis towards higher value sales to the investment market. In
striving to achieve scalability and growth, we have acquired top-end specialist
material at lower margins in order to transact an increasing amount of sales of
higher value items. Our gross margins have increased or remained consistent in
all other areas of our business.
Profitability
The profit before tax for the year of #2,819,000 compares to a profit last year
(as restated) of #3,689,000. Last year's profit included a capital gain of
#1,985,000 on the sale of our stake in Provide Commerce, Inc. Excluding the
one-off capital gain, profit before tax was #1,115,000 (65.4%) higher than last
year. Increased profitability has been achieved through growth in turnover
whilst maintaining overheads broadly in line with the previous year.
Overheads were 1.6% higher than last year, although this includes exceptional
operating costs of #94,000 in respect of the closure and relocation of
activities from our premises in Nailsea to Ringwood, Hampshire. Overheads were
0.6% lower than last year when excluding exceptional operating costs with profit
before tax up #1,209,000 (71%).
Our investment in new staff during the year has resulted in an increase in
salary overhead of 4.8%. Graduate recruits made over the past few years are
progressing well within their roles and are becoming increasing contributors to
Group performance. Overall headcount remained broadly unchanged from the
previous year.
Other overheads were, in total, materially consistent with the previous year.
Total rental income in the year ended 31 December 2005 was #160,000 (2004:
#140,000).
New Business Development
Direct sales generated through our websites increased by 23%. We launched a new
online service in October "My Collection" signing up over 1,000 new subscribers
in the first three months. "My Collection" is a new tool which has been
developed by our in-house team enabling collectors to manage, view and value
their collections online. Feedback from users of the new service has been very
encouraging.
New business development costs have been integrated into operating business
activities located in Ringwood, Hampshire, which have resulted in overall cost
savings to the Group, although increased overheads within the publishing and
philatelic accessories division compared to the prior year.
Corporate Overheads
Corporate overheads were #28,000 (2.8%) higher than last year due mainly to the
reclassification of salary costs in respect of the web development team from new
business development costs to the IT and internet department reported within
corporate overheads.
Accounting Policies
Accounting policies are detailed in note 1 to the financial statements. These
policies are in accordance with UK generally accepted accounting practice. We
have reported the results and restated the prior year results in order to comply
with the provisions of FRS 17 (Retirement Benefits), FRS 20 (Share-based
Payment) and FRS 21 (Events after the Balance Sheet Date). As a result of the
implementation of new accounting standards, the profit before tax for the year
ended 31 December 2005 was reduced by #17,000 and net assets at 31 December 2005
were increased by #158,000. Details of the restatement of prior year results is
given in note 1.
Consolidated Profit and Loss Account
For the year ended 31 December 2005
Year ended Year ended
31 December 2005 31 December 2004
As restated
Notes #'000 #'000
Turnover 13,675 10,051
Cost of sales (6,679) (4,248)
Gross profit 6,996 5,803
Administration expenses (1,393) (1,401)
Selling and distribution (2,785) (2,803)
expenses
Exceptional operating (94) -
costs
Operating profit 2,724 1,599
Profit on sale of fixed - 1,985
asset investments
Interest receivable and 95 109
similar income
Interest payable and - (4)
similar charges
Profit on ordinary 2,819 3,689
activities before taxation
Tax on profit on ordinary (590) (493)
activities
Profit for the financial 2,229 3,196
year
Earnings per Ordinary share 3 9.03p 13.10p
Diluted earnings per 3 8.95p 12.82p
Ordinary share
Continuing operations: all items dealt with in arriving at the operating profit
for 2005 and 2004 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
2005
Year ended Year ended
31 December 31 December
2005 2004
As restated
#'000 #'000
Profit for the financial year 2,229 3,196
Surplus on revaluation of assets - 37
Actuarial gains/(losses) recognised in the 1 (186)
pension scheme
Deferred tax attributable to actuarial - 55
gains/(losses)
Prior year adjustment (note 1) 27 -
Total gains and losses recognised since 2,257 3,102
last financial statements
Reconciliation of movements in equity shareholders' funds for the year ended 31
December 2005
Year ended Year ended
31 December 31 December
2005 2004
As restated
#'000 #'000
Profit for the financial year 2,229 3,196
Dividends (614) (2,074)
Retained profit for the financial year 1,615 1,122
Purchase of own shares - (1,060)
Shares issued on exercise of share options 60 224
Surplus on revaluation of assets - 37
Actuarial gains/(losses) in pension scheme 1 (131)
net of tax
Adjustment for cost of share options 17 23
Net increase in shareholders' funds 1,693 215
Opening equity shareholders' funds as 7,289 7,299
previously stated
Prior year adjustment (note 1) 27 (198)
Opening equity shareholders' funds as 7,316 7,101
restated
Closing equity shareholders' funds 9,009 7,316
Balance Sheets
at 31 December 2005
Group Group Company Company
31 31 31 31
December December December December
2005 2004 2005 2004
As As
restated restated
#'000 #'000 #'000 #'000
Notes
Fixed Assets
Tangible assets 1,117 1,239 - -
Investments - - 5,811 5,811
1,117 1,239 5,811 5,811
Current assets
Stocks 5,949 5,588 - -
Debtors: amounts falling due 2,949 1,620 - -
within one year
Cash at bank and in hand 2,585 1,930 10 22
11,483 9,138 10 22
Creditors: amounts falling (3,200) (2,729) (470) (542)
due within one year
Net current assets/ 8,283 6,409 (460) (520)
(liabilities)
Total assets less current 9,400 7,648 5,351 5,291
liabilities
Provision for liabilities (133) (119) - -
and charges
Net assets excluding pension 9,267 7,529 5,351 5,291
liabilities
Pension liabilities (net of (258) (213) - -
deferred taxation)
Net assets including pension 9,009 7,316 5,351 5,291
liabilities
Capital and reserves
Called up share capital 248 244 248 244
Share premium account 5,056 5,000 5,056 5,000
Capital redemption reserve 38 38 38 38
Revaluation reserve 206 206 - -
Profit and loss account 3,461 1,828 9 9
Equity shareholders' funds 9,009 7,316 5,351 5,291
Consolidated Cash Flow Statement
For the year ended 31 December 2005
Year ended Year ended
31 December 2005 31 December 2004
Notes #'000 #'000
Net cash inflow from 1,897 1,024
operating activities
Returns on investment and
servicing of finance
Interest received 49 56
Interest paid - (4)
49 52
Taxation
UK corporation tax paid (636) (134)
Jersey tax paid (4) (10)
(640) (144)
Capital expenditure and
financial investments
Payments to acquire (97) (138)
tangible fixed assets
Receipts from sales of - 2,208
fixed asset investment
(97) 2,070
Equity dividends paid (614) (2,074)
Net cash inflow before 595 928
financing
Financing
Purchase of own ordinary - (1,060)
shares
Shares issued 60 224
Repayment of Loan notes - (47)
Net cash inflow/(outflow) 60 (883)
from financing
Increase in cash 655 45
Reconciliation of operating profit to net cash inflow from operating activities
Year ended Year ended
31 December 31 December
2005 2004
As restated
#'000 #'000
Operating profit 2,724 1,599
Depreciation 219 243
Increase in provisions 137 105
Cost of share options 17 23
Increase in stocks (361) (710)
Increase in debtors (1,329) (497)
Increase in creditors 490 261
Net cash inflow from operating activities 1,897 1,024
Notes to Accounts
1. Changes in accounting policies and presentation
The financial information set out in this announcement does not constitute the
Group's statutory financial statements for the years ended 31 December 2005 and
31 December 2004.
The financial information for the year ended 31 December 2004 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 2005 has been
extracted from the audited financial statements of the Group for the year ended
31 December 2005 which were approved by the Board of Directors on 2 March 2006.
The prior year profit and loss account and balance sheet have been restated to
take account of the change in accounting policies as a result of the
introduction of FRS 17 "Retirement Benefits", FRS 20 "Share-based Payment" and
FRS 21 "Events after the Balance Sheet Date".
The effects of these changes in the Group's previously reported results and net
assets are as follows:
Year ended
31
December
2004
#'000
Profit on ordinary activities before
taxation
As previously reported 3,728
Impact of FRS 17:
Operating profit (69)
Interest receivable and similar 53
income
Impact of FRS 20 (23)
Net movement (39)
As restated 3,689
Net assets
As previously reported 7,289
Impact of FRS 17:
Debtors: amounts falling due after (179)
more than one year
Provisions for liabilities and (305)
charges: net pension liability
Provisions for liabilities and 145
charges: deferred taxation
Impact of FRS 21 366
Net movement 27
As restated 7,316
2. Dividends
The final dividend of 2p net per Ordinary Share will be paid on 18 April 2006 to
all shareholders on the register on 17 March 2006.
3. Earnings per ordinary share
The calculation of basic earnings per ordinary share is based on the 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. and 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.
Year ended Year ended
31 December 31 December
2005 2004
As restated
Weighted average number of ordinary shares in 24,682,753 24,404,298
issue (No.)
Dilutive potential ordinary shares: Employee 218,617 523,776
share options (No.)
Profit after tax (#) 2,229,000 3,196,000
Add: exceptional operating costs net of tax 66,000 -
(#)
Less: profit on sale of fixed asset - (1,985,000)
investment (#)
Adjusted profit after tax (#) 2,295,000 1,211,000
Basic earnings per share - pence per share 9.03p 13.10p
(p)
Add: exceptional operating costs net of tax 0.27p -
(p)
Less: profit on sale of fixed asset - (8.14p)
investment (p)
Adjusted earnings per share - pence per share 9.30p 4.96p
(p)
Diluted earnings per share - pence per share 8.95p 12.82p
(p)
4. Annual report
Copies of this announcement are available from the Company Secretary. Copies of
the Annual Report for the year ended 31 December 2005 will be posted to
shareholders in the week commencing 6 March 2006 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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