RNS Number:6403S
Stanley Gibbons Group Limited
09 March 2007
THE STANLEY GIBBONS GROUP LIMITED
FOR IMMEDIATE RELEASE 9 March 2007
THE STANLEY GIBBONS GROUP LIMITED ("the Company" or "the Group")
Audited Results for the year ended 31 December 2006
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 2006.
Highlights
* Profit before tax up 32.9% to #3,746,000 (2005: #2,819,000)
* Earnings per share of 11.07p (2005: 9.03p) up 22.6%
* Sales up 22% to #16,684,000 (2005: #13,675,000)
* Bank and cash balances at 31 December 2006 of #3,083,000 (2005:
#2,585,000)
* Recommended final dividend of 2.5p net per share, giving a total net
dividend for the year of 4p (2005: 3p net per share) up 33.3%
* Sales overseas represented 46% of total sales (2005: 42%)
* Internet sales increased by 9% compared to the previous year
* Increase in unique visitors to the websites to nearly 3 million for 2006
* Successful opening of new offices in Guernsey providing international
base for investment business
* Sales from auction activities up 27.3% compared to prior year
Commenting on current trading, Paul Fraser, Chairman said:
"This was another excellent result, with a 32.9% increase in profit before tax.
Investment in rare stamps as an asset class has now been adopted into the
mainstream of investment products. Our share of the international stamp market
continues to grow, but still remains below 0.5%, giving us a huge opportunity to
play for, in all areas of our business."
For further information, contact:
The Stanley Gibbons Group Limited
Paul Fraser, Chairman 020 7836 8444
Michael Hall, Chief Executive 020 7836 8444
Seymour Pierce Limited
Jonathan Wright 020 7107 8000
Chairman's Statement
Financials
The results for 2006 continued to show another significant increase in
profitability for the Group, with profit before tax of #3,746,000 (2005:
#2,819,000) representing an increase of 32.9%. Turnover increased by 22% to
#16,684,000 (2005: #13,675,000).
Earnings per Ordinary Share for the year ended 31 December 2006 were 11.07p
(2005: 9.03p) representing an increase of 22.6%.
As at 31 December 2006, the Company had cash balances of #3,083,000 (2005:
#2,585,000) irrespective of increased dividends, taxation, stock purchasing and
higher levels of sales made on interest-free credit terms.
Dividend
Your Board is pleased to recommend an increased net final dividend of 2.5p per
share (2005: 2p), giving a total net dividend for the year of 4p (2005: 3p),
representing an increase of 33.3%. We remain committed to maintaining dividend
growth balanced with the need to retain funds in order to grow the business.
Outlook
All areas of the Group have performed well and the overall result is
particularly pleasing because a major contribution was expected from the launch
of the "Stamp Fund" which did not proceed.
The Investment Department, once again, showed exceptional growth and the demand
for high-value quality stamps remains extremely strong across the world. All
forms of collectibles are experiencing a revaluation and an understanding by
collectors as to true rarity and scarcity. Both fixed-return contracts and
interest-free payment schemes have helped to secure sales. We have made
provisions to cover our exposure to losses which might arise from guarantees on
all contracts issued. This assumes that all material sold in contracts will
revert to the Group on expiry. We believe that this would be a positive outcome
as it will give us a steady flow of rare material, which is our key challenge
for driving sales higher in the future.
In 2006 we have tried to rebalance the various opportunities within the Group to
have more than one "iron in the fire" and protect our strategy for growth. Our
success towards this aim in 2006 is evidenced by the fact that sales, excluding
the Investment Department, increased by 14% compared to the prior year.
International expansion, mostly through our Internet site, is crucial to growing
the value of our brand and being the first port of call for clients in both
emerging markets (including Brazil, Russia, India and China) and the important
US marketplace. Sales made overseas accounted for 46% of revenue in 2006 (2005:
42%).
Our Auction Department goes from strength to strength and we have some exciting
plans for 2007 to increase growth and profitability. Our Publishing Department
intends to release further catalogues and non-philatelic products to support
increased revenue for 2007.
We are continuing to develop www.stanleygibbons.com and build traffic to the
site, which has shown an increase in unique visitors to nearly 3 million for
2006. Again, we have some initiatives underway for 2007 which should ensure we
build further on our status as the Number 1 philatelic website in the world.
Our Specialist Stamp Department and Autograph Department have both achieved
record results in 2006 and look very positive for 2007. This is a very exciting
time for Stanley Gibbons and we are now beginning to achieve the levels of
profitability across the Group that we always felt possible. We still only
represent a small percentage of the overall worldwide philatelic market. There
is still a lot to play for and much potential to increase market share.
Our office has opened successfully in Guernsey which has helped the development
of our international sales, and we have also sourced a number of new customers
from the Channel Islands.
Stakeholders
Our strategy is very much on track and all stakeholders benefit from our
continued success. Thank you to all my colleagues who have once again shown that
they were ready for the challenge and are totally committed to creating further
value in 2007 and beyond.
Operating Review
Operating results for the year
2006 2006 2005 2005 2004 2004
Sales Profit Sales Profit Sales Profit*
As
restated
#000 #000 #000 #000 #000 #000
Philatelic trading and
retail operations 12,194 3,231 10,076 2,789 6,718 1,719
Publishing and philatelic
accessories 2,787 814 2,818 871 2,660 846
Dealing in autographs,
records and
related memorabilia 1,664 793 748 205 660 265
16,645 4,838 13,642 3,865 10,038 2,830
Corporate overheads (1,228) (1,045) (1,017)
New business development 39 (40) 33 (2) 13 (214)
Interest and similar
income/charges 176 95 105
Before exceptional items 16,684 3,746 13,675 2,913 10,051 1,704
Profit on sale of fixed
asset investment - - 1,985
Exceptional operating
costs - (94) -
Group total sales and
profit before tax 16,684 3,746 13,675 2,819 10,051 3,689
*2004 results have been restated for FRS 17 "Retirement Benefits" and FRS 20
"Share-based Payment"
Sales
Overall group turnover increased by #3,009,000 (22%) compared to last year
despite the absence of revenue expected from the launch of the stamp investment
fund which did not proceed. Sales growth continues to be supported by a
sustained high level of demand for our stamp and autograph investment products.
Strong growth was also achieved in philatelic dealing, auction activities and in
the sale of autographs. We have continued to successfully recruit new high value
customers to the business with 17% of turnover for the year coming from new
customers recruited.
Philatelic trading and retail sales were 21% higher than last year. Collectors
and investors regularly competed to acquire the same material this year and our
challenge has been to source sufficient levels of high quality rare stamps to
meet demand. We have built stronger relationships with members of the stamp
trade during the year which has increased our ability to secure the levels of
material required. The increased investment in our stockholding during the year
has proven to be the key facilitator to growth.
We re-positioned our marketing of investment services during the year to limit
the sale of guaranteed minimum return investment contracts. The internal
restrictions imposed on the sale of contracts were set at a level to ensure that
the Group can meet its future obligations as they fall due out of working
capital generated from normal trading activities. We have since experienced an
increased take up on our interest free credit options and active management
investment portfolios. Neither of these products offers any guarantees on the
value of re-purchase prices but provide other unique benefits to help maximise
potential returns to investors.
Sales from our auction department were 27.3% above last year assisted by an
exceptional result achieved in our June auction which included the individual
auction sale of an outstanding Indian States collection. Online auction sales
were 39.9% higher than the previous year due to an increase in the number of
items offered online. This represents a key area of opportunity where further
web development work scheduled for 2007 could further enhance online auction
revenues achievable. Strong market conditions prevailing enable an increased
level of material which can be acquired for auction, an increased number of
auction bidders and higher realisations.
Publishing and philatelic accessory sales were 1.1% lower than last year.
Publication sales benefited last year from the publication of the 150th
Anniversary Special Edition of Gibbons Stamp Monthly. Sales to the various
wholesalers and distributors of our products were 6.4% down whereas direct sales
to retail customers increased by 8.9% and accounted for 53% of total sales
compared to 50% last year. The growth in retail sales is largely being driven by
new customer recruitment from the website and a higher response from direct
mailings during the year.
Autographs and memorabilia sales were 122.5% higher than last year. A large part
of the sales growth achieved was a result of our success in the development of
autographs as an alternative investment, which has, to some extent, reduced the
supply pressure during the year on philatelic material. We have also
successfully developed a number of trading relationships this year enabling the
reduction of stock levels in lower value material, in line with our overall
strategy.
Gross Margins
The gross margin for the year ended 31 December 2006 was 49.4% (2005: 51.2%).
The reduction in the gross margin percentage is attributable mainly to reduced
margins on investment sales which include a provision made during the year of
#165,000 against guaranteed minimum return investment contracts. Excluding the
impact of this provision, gross margins would have been 50.4%.
Stock levels at 31 December 2006 were 1.4% higher than at 31 December 2005. We
have achieved an increase in gross margin of #1,240,000 without the need to
materially increase the level of our stockholding. This highlights the better
return on capital and stock turn we are achieving from the sale of high value
stamps and autographs to both investors and collectors.
Profitability
The profit before tax for the year of #3,746,000 compares to a profit last year
of #2,819,000 representing an increase of 32.9% achieved primarily through sales
growth.
Group overheads were 11.7% higher than last year mainly as a result of increased
salary and bonus payments, which have increased in line with the improved
performance of the Group. Variable overheads including marketing and postage
costs have increased in line with the higher levels of trade.
Salary overhead was up 11% which includes the payment of performance related
bonuses. Excluding bonus payments, fixed salary costs increased by 4.8% compared
to last year. Salaries represented 14.8% of sales compared to 16.3% last year
demonstrating an improved return on staff.
Other overheads include #64,000 costs associated with the opening of our offices
in Guernsey in August and the ongoing running costs from that date. Total rental
income in the year ended 31 December 2006 was #180,000 (2005: #160,000).
New Business Development
Direct sales generated through our websites increased by 9% which excludes sales
made to investment clients who originated from viewing our information online.
The opening of our international base in Guernsey for servicing investment
clients has proved profitable in the period of trading from August to December
2006 and is enabling improved focus, management and control in this important
part of our business. We have made some progress by increasing the sources of
supply for investment material which should continue to evolve during 2007.
Corporate Overheads
Corporate overheads were #183,000 (17.5%) higher than last year due mainly to
increased central salary and bonus payments.
Accounting Policies
Accounting policies are detailed in note 1 to the financial statements. These
policies are in accordance with UK generally accepted accounting practice.
Consolidated Profit and Loss Account
for the year ended 31 December 2006
Year ended Year ended
31 December 2006 31 December 2005
Notes #'000 #'000
Turnover 16,684 13,675
Cost of sales (8,448) (6,679)
Gross profit 8,236 6,996
Administration expenses (1,569) (1,393)
Selling and distribution expenses (3,097) (2,785)
Exceptional operating costs - (94)
Operating profit 3,570 2,724
Interest receivable and similar income 176 95
Profit on ordinary activities
before taxation 3,746 2,819
Tax on profit on ordinary activities (972) (590)
Profit for the financial year 2,774 2,229
Earnings per Ordinary share 3 11.07p 9.03p
Diluted earnings per 3 11.06p 8.95p
Ordinary share
Continuing operations: all items dealt with in arriving at the operating profit
for 2006 and 2005 relate to continuing operations.
There is no material difference between the profit on ordinary activities before
taxation and the profit for the financial year stated above and their historical
cost equivalents.
Statement of Total Recognised Gains and Losses for the year ended 31 December
2006
Year ended Year ended
31 December 31 December
2006 2005
#'000 #'000
Profit for the financial year 2,774 2,229
Surplus on revaluation of assets 47 -
Actuarial gains recognised in the pension scheme 348 1
Deferred tax attributable to actuarial gains (105) -
Prior year adjustment - 27
Total gains and losses recognised since last
financial statements 3,064 2,257
The prior year adjustment in the 2005 accounts was included to take account of
the change in accounting policies as a result of the implementation of FRS 17
"Retirement Benefits", FRS 20 "Share-based Payment" and FRS 21 "Events after the
Balance Sheet Date".
Reconciliation of movements in equity shareholders' funds for the year ended 31
December 2006
Year ended Year ended
31 December 31 December
2006 2005
#'000 #'000
Profit for the financial year 2,774 2,229
Dividends (877) (614)
Retained profit for the financial year 1,897 1,615
Shares issued on exercise of share options 95 60
Surplus on revaluation of assets 47 -
Actuarial gains in pension scheme net of tax 243 1
Cost of share options 18 17
Net increase in shareholders' funds 2,300 1,693
Opening equity shareholders' funds 9,009 7,316
Closing equity shareholders' funds 11,309 9,009
Balance Sheets
at 31 December 2006
Group Group Company Company
31 31 31 31
December December December December
2006 2005 2006 2005
#'000 #'000 #'000 #'000
Notes
Fixed assets
Tangible assets 1,117 1,117 - -
Investments - - 5,811 5,811
1,117 1,117 5,811 5,811
Current assets
Stocks 6,035 5,949 - -
Debtors: amounts falling due
after more than one year 610 - - -
Debtors: amounts falling due
within one year 3,254 2,949 - -
Cash at bank and in hand 3,083 2,585 32 10
12,982 11,483 32 10
Creditors: amounts falling
due within one year (2,407) (3,200) (398) (470)
Net current assets/
(liabilities) 10,575 8,283 (366) (460)
Total assets less current
liabilities 11,692 9,400 5,445 5,351
Provision for liabilities
and charges (324) (133) - -
Net assets excluding pension
liabilities 11,368 9,267 5,445 5,351
Pension liabilities (net of
deferred taxation) (59) (258) - -
Net assets including pension
liabilities 11,309 9,009 5,445 5,351
Capital and reserves
Called up share capital 251 248 251 248
Share premium account 5,148 5,056 5,148 5,056
Capital redemption reserve 38 38 38 38
Revaluation reserve 253 206 - -
Profit and loss account 5,619 3,461 8 9
Equity shareholders' funds 11,309 9,009 5,445 5,351
Consolidated Cash Flow Statement
for the year ended 31 December 2006
Year ended Year ended
31 December 2006 31 December 2005
Notes #'000 #'000
Net cash inflow from
operating activities 2,293 1,897
Returns on investment and
servicing of finance
Interest received 110 49
Taxation
UK corporation tax paid (977) (636)
Jersey tax paid (1) (4)
(978) (640)
Capital expenditure and
financial investments
Payments to acquire
tangible fixed assets (145) (97)
Equity dividends paid (877) (614)
Net cash inflow before
financing 403 595
Financing
Shares issued 95 60
Net cash inflow from
financing 95 60
Increase in cash 498 655
Reconciliation of operating profit to net cash inflow from operating activities
Year ended Year ended
31 December 31 December
2006 2005
#'000 #'000
Operating profit 3,570 2,724
Depreciation 192 219
Increase in provisions 324 137
Cost of share options 18 17
Increase in stocks (86) (361)
Increase in debtors (915) (1,329)
(Decrease)/increase in creditors (810) 490
Net cash inflow from operating activities 2,293 1,897
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 2006 and
31 December 2005.
The financial information for the year ended 31 December 2005 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 2006 has been
extracted from the audited financial statements of the Group for the year ended
31 December 2006 which were approved by the Board of Directors on 8 March 2007.
2. Dividends
The final dividend of 2.5p net per Ordinary Share will be paid on 23 April 2007
to all shareholders on the register on 23 March 2007.
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.
Year ended Year ended
31 December 31 December
2006 2005
Weighted average number of ordinary shares in
issue (No.) 25,051,638 24,682,753
Dilutive potential ordinary shares: Employee
share options (No.) 21,257 218,617
Profit after tax (#) 2,774,000 2,229,000
Add: exceptional operating costs net of tax (#) - 66,000
Adjusted profit after tax (#) 2,774,000 2,295,000
Basic earnings per share - pence per share (p) 11.07p 9.03p
Add: exceptional operating costs net of tax (p) - 0.27p
Adjusted earnings per share - pence per share (p) 11.07p 9.30p
Diluted earnings per share - pence per share (p) 11.06p 8.95p
4. Annual report
Copies of this announcement are available from the Company Secretary. Copies of
the Annual Report for the year ended 31 December 2006 will be posted to
shareholders in the week commencing 12 March 2007 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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