TIDMSGI
RNS Number : 6075D
Stanley Gibbons Group PLC
25 March 2011
THE STANLEY GIBBONS GROUP PLC
FOR IMMEDIATE RELEASE 25 March 2011
THE STANLEY GIBBONS GROUP PLC ("the Company" or "the Group")
Audited Results for the year ended 31 December 2010
The Stanley Gibbons Group plc, whose principal businesses
comprise Stanley Gibbons, Fraser's Autographs and Benham First Day
Covers, today announced its audited results for the year ended 31
December 2010.
Key Financial Highlights
-- Sales of GBP26.4m (2009: GBP23.4m) up 13%
-- Adjusted profit before tax, before exceptional charges, of
GBP4.5m, up 8%
-- Statutory profit before tax of GBP4.3m (2009: GBP4.1m), up
5%
-- Adjusted earnings per share of 15.69p (2009: 14.70p), up
7%
-- Proposed final dividend of 3.25p per share (2009: 3p per
share), up 8%, giving a total dividend for the year of 5.5p (2009:
5p) up 10%
-- Cash generated in year of GBP6.3m (2009: GBP2.4m) reinvested
in stockholding of investment grade items, representing a better
investment of Shareholder Funds than holding surplus cash balances.
Net cash generated from operating activities in year of GBP2.2m
(2009: GBP4.9m).
-- Cash funds at 31 December 2010 of GBP1.8m (2009: GBP3.1m)
after payment in the year of GBP1.3m in dividends, GBP0.4m in tax
and investment in capital expenditure of GBP1.7m
-- Stock levels at 31 December 2010 of GBP14.8m (2009: GBP9.3m),
increased by 59% and providing a strong asset base to deliver
future growth
-- The increased value of stockholding is primarily in
exceptional and rare collectibles and top quality rare stamps. Such
assets generally appreciate in value over time, although remain
prudently stated in our balance sheet at historic cost, not market
value
Outlook
-- New website for Fraser's Autographs,
www.frasersautographs.com, was launched in February this year and
has already reported an encouraging uplift in online revenues
-- Principal components of our primary website,
www.stanleygibbons.com, will be launched shortly and we look
forward to developing the opportunities that this new site now
affords us
-- Online trading platform scheduled for launch in the second
quarter of this year
-- The Chinese market expected to represent a key growth area
benefiting from our development of internal expertise in rare
stamps from China and from the key trading relationships built
during 2010
-- Investigating opportunities to build our presence in the US
market, representing the biggest collectibles market in the world,
with a view to creating new sales and distribution channels there
across our entire product offering
-- Plans to replicate the success of our investment office in
Jersey with the opening of new offices in Switzerland and Hong
Kong
-- Currently working with a highly respected financial
institution in Jersey towards the launch of a rare stamp investment
fund
-- Acquisitions of Benham Group and M & N Haworth in 2010
expected to deliver additional predictable revenue and profit
streams
-- One-off benefit in 2011 from the Royal Wedding in April 2011
and sale of associated first day covers and other commemorative
collectible products. Similar benefits expected in 2012 from the
London Olympics
-- Market for rare stamps and signatures remains resilient
highlighted by an increase of 7% in both the GB30 Rarities Index
and Autograph100 index in the year ended 31 December 2010
-- We continue to review potential acquisitions in both stamps
and other collectibles where we believe they would strengthen and
compliment our overall brand offering
Martin Bralsford, Chairman, commented:
"The strong performance of the Group in 2010 and a positive
start to 2011 is a result of the enduring strength in the market of
collectibles, at the same time as important elements of our
strategy come to fruition.
Whilst the persistent political and economic turmoil causes a
frustrating constraint on the Company's return to shareholders in
terms of share price, they also represent a key opportunity to our
businesses.
The uncertainty, together with prevailing low interest rates,
generate a desire amongst wealthy individuals to own tangible
assets as a means of wealth protection and steady capital
growth.
Our investment products in rare stamps and historical signatures
offer an opportunity to own a tangible asset with a value embedded
in history and yielding average historic returns of over 10% per
annum over the past 50 years. We are pleased to be able to help
wealthy individuals improve their investment returns at the same
time as achieving wealth diversification into an asset not
correlated with traditional investments.
We have invested in our management structure, IT systems and
marketing to recruit new high net worth clients over the preceding
two to three years. Now, we have a much stronger platform to
exploit the large number of opportunities to build our market share
in our traditional and other collectible markets. The launch of our
long awaited new websites represents a key milestone.
As a result of the above, your Board has confidence in the
Company's future and the delivery of good returns to
Shareholders."
For further information, contact:
The Stanley Gibbons Group plc
Michael Hall, Chief Executive +44 (0) 1534 766711
Peel Hunt LLP, NOMAD/Broker
Dan Webster/Daniel Harris/Matthew Armitt +44 (0) 20 7418
8900
Chairman's Statement
Once again, I can report another year of growth in sales and
profits of the Group; 2010 was an important period in our longer
term strategy of creating the biggest collectibles business in the
world. Stanley Gibbons is, arguably, already the biggest
collectibles brand name in the world. In simple terms, our
objective is to create a higher return from this, our principal
asset, to generate much more profits. With a huge market to play
for and a rising ambition amongst wealthy individuals to own
tangible assets with relatively stable values as a means of wealth
protection, the Board is both confident and excited about the
future of your business.
Primary focus in 2010 was in longer term development projects,
particularly the substantial modernisation of 399 Strand, the
development of the Group's websites and activation of our Digital
Asset Management system. The financial benefits of these projects
are expected to be seen in future years.
Despite the higher revenue expenditure on business development
in the current year and the additional burden this placed on
management, the strength of the market of collectibles, together
with success from the delivery of elements of our strategy to date,
has resulted in another year of growth delivered to
shareholders.
Financials
Turnover for the year was GBP26.4m, over 13% up on the previous
year and profit before tax was GBP4.3m, up 5%. Underlying profit
before tax, excluding one-off exceptional charges, was GBP4.5m, up
just over 8%.
Earnings per share were 15.22p (2009: 14.70p), representing an
increase of 4%. Adjusted earnings per share, excluding exceptional
costs, were 15.69p, up 7%.
Your Board's view is that adjusted profits, when excluding
exceptional charges, present a more meaningful presentation of the
performance of the Group for the year relative to the preceding
years.
Dividend
Your Board is pleased to recommend to Shareholders, for their
approval at the next AGM, a final dividend of 3.25p per share
(2009: 3p). This would give a total dividend from 2010 earnings of
5.5p (2009: 5p), an increase of 10% over 2009. This, if approved,
produces a dividend covered 2.75 times by earnings in 2010. Our
proposed dividend increase for 2010 is based on growth in
underlying profits delivered but takes into account our substantial
investment in capital expenditure during the year on projects
supporting future profit growth.
Outlook
During the past three years we have invested substantially in
our senior management and IT systems, both of which we see as
essential to delivering the levels of growth in the future.
Furthermore, over the past two years, we have committed to a larger
marketing spend to recruit new high net worth clients and towards
developing a database with a substantial lifetime value to the
business. We look forward to the coming year as we begin to reap
further rewards from the implementation of our strategy.
The most important of these developments is the long awaited
re-launch of our substantially developed websites this year. The
new website for Frasers autographs, www.frasersautographs.com, was
launched in February 2011 and has already reported an encouraging
uplift in online revenues benefiting from enhanced usability and
dedicated e-commerce marketing initiatives. The principal
components of our primary website, www.stanleygibbons.com, will be
launched shortly. The online trading platform, which is an
extension of the auction functionality, will be launched in the
second quarter of this year.
We intend to build further on last year from our successful
entry into the Chinese stamp market. This is the biggest stamp
market in the world and an untapped opportunity to grow sales and
profits in a new geographical area. We will be investigating the
potential benefits from opening a Stanley Gibbons investment office
in Hong Kong, being the primary location for Chinese region
philatelic dealing.
Our forays into China have confirmed to us the power of the
Stanley Gibbons brand. Our brand name is internationally recognised
and our brand heritage is perceived worldwide to equate to
integrity, honesty and expertise. This illustrates the potential
for Stanley Gibbons to capitalise on the brand's immediate
recognition through penetration into new geographical markets.
The largest and most obvious market in this respect is the US,
which still represents the biggest collectibles market in the
world. We intend to build our presence in the US later this year
with a view to creating new sales and distribution channels across
our entire product offering.
Our investment office in Jersey generated GBP1.8m sales in 2010
from a standing start in 2009, which included GBP0.7m sales to new
investment clients recruited in Jersey. This is a relatively low
risk means of growth, generating a strong return on capital. During
the current year, we will consider the opening of new investment
offices in Switzerland which we believe is another market ideal for
the promotion of our investment offering.
The long awaited launch of a rare stamp investment fund remains
on our agenda. The fund will only be launched when we are confident
that we can both deliver a competitive return to investors in the
fund at the same time as making an acceptable profit for Stanley
Gibbons management activity, commensurate to our effort and the
specialist service we would provide. We continue the setting up of
a suitable fund structure, with a select number of ultra high net
worth individuals introduced to us by a highly respected financial
institution in Jersey.
We were delighted with the recent acquisitions of the businesses
of M & N Haworth and the Benham Group, both of which further
strengthen our brand offering delivering additional predictable
revenue and profit streams in future years.
The Royal Wedding taking place in April 2011 will provide a
one-off benefit to the revenues and profits of the Benham business
this year through sales of associated first day covers and other
commemorative collectible products. This timely event, marking the
most exciting Royal event in recent years, will accelerate the
delivery of the return on our investment in this acquisition.
Our strategy combines delivering organic growth with growth
through making suitable acquisitions where we believe they would
strengthen and compliment our brand. We are currently reviewing a
number of target acquisitions in both rare stamps and in other
collectibles with similar characteristics such as rare coins,
medals and first edition books.
The values of rare stamps and signatures have proved resilient
yet again in 2010, highlighted by an increase of 7% in both the
GB30 Stamp Rarities Index and Autograph100 index in the year. We
therefore remain confident in the defensive qualities rare stamps
and signatures provide as a diversification tool in a class of
non-correlating assets. This view is supported by authoritative
academic research. Consequently, we were happy to increase our
investment in our stockholding during the year, which provides a
better return for shareholders than building up low yielding
surplus cash balances. The increased value of our stockholding is
primarily in exceptional and rare collectible "trophy" items and
top quality rare stamps providing the backbone to support future
growth. Furthermore, such assets generally appreciate over time,
although remain prudently stated in our balance sheet at historic
cost, not market value.
People
Our employees are even more important than our stockholding.
Their widely recognised integrity, honesty and expertise define the
values associated with our brand and the service we provide to our
clients. On behalf of the Board, I wish to extend my thanks to all
of them for their commitment during the year and their contribution
towards the continued growth in sales and profitability and
development of the business in line with our strategy.
Board
Your Company's Board was further strengthened this year by the
appointment of John Byfield as a Non-Executive Director in April
2010, replacing John Wright who had served term as a Director. His
contribution to the enhancement of our strategy together with the
benefits from tapping in to his network of contacts and legal
expertise has already generated new opportunities for the
Group.
Operating Review
Operating results for the year
2010 2010 2009 2009 2008 2008
Sales Profit Sales Profit Sales Profit
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Philatelic
trading and
retail
operations 19,422 4,621 17,657 4,056 13,801 3,251
Publishing and
philatelic
accessories 3,146 672 3,057 742 2,899 785
Dealing in
autographs,
records and 3,244 904 2,610 990 2,655 1,179
related
memorabilia
Benham first
day covers and
other
collectibles 576 178 - - - -
--------------------------- ------ ------- ------ ------- ------ -------
26,388 6,375 23,324 5,788 19,355 5,215
Internet
development 41 (24) 41 (138) 39 (140)
Corporate
overheads - (1,914) - (1,521) - (1,377)
Interest and
similar income
/ (charges) - 17 - (16) - 91
--------------------------- ------ ------- ------ ------- ------ -------
Before
exceptional
costs 26,429 4,454 23,365 4,113 19,394 3,789
--------------------------- ------ ------- ------ ------- ------ -------
Exceptional
operating
costs - (150) - - - (88)
Group total
sales and
profit before
tax 26,429 4,304 23,365 4,113 19,394 3,701
--------------------------- ------ ------- ------ ------- ------ -------
Overview
Group turnover increased by GBP3.06m (13%) compared to last
year. The statutory profit before tax reported of GBP4.3m compared
to a profit in 2009 of GBP4.11m, representing an increase of 5%.
Basic earnings per share were 15.22p (2009: 14.7p), up 4%.
The Board believes that the adjusted profit and earnings per
share provide a more meaningful presentation of the underlying
performance of the Group for the year. Adjusted profit before tax
was up GBP0.34m (8%) and adjusted earnings per share were 15.69p,
up 7%.
The key contributors to the growth in sales and profits in the
year were:
-- Strong sales to ultra high net worth clients benefiting from
our ability to source exceptional and rare collectible "trophy"
items and top quality rare stamps known to be in areas of interest
to our clients
-- Development into the market for rare Chinese stamps
generating total sales in the year of GBP0.95m
-- Contribution from our investment office in Jersey generating
sales of GBP0.7m to new Jersey based clients
-- Recruitment of, and sales to, new high net worth clients as a
result of strong responses generated from our extensive
international marketing and PR campaigns during the year
-- Contribution from the acquisition of the Benham Group,
generating sales of GBP0.58m and profits of GBP0.18m in the last
quarter of the year
-- Continued effectiveness of communicating with and selling to
our clients by e-mail "newsletters" further benefiting from our
online recruitment campaigns resulting in an increase of 14% in the
size of our investment client e-mail database
The gross margin percentage for the year was 43.8% compared to
42.9% in the prior year. The Board took the decision at the
beginning of 2010 to cease the promotion of investment products
providing clients with guaranteed minimum rates of return. Gross
margins therefore benefited in the year due to there no longer
being any need to make provisions against such investment
products.
Overheads were GBP1.24m (21%) higher than the prior year.
Overheads for the year included the Benham Group in the last
quarter accounting for GBP0.24m of the increase. Excluding Benham,
overhead increases related primarily to increased salary costs
(GBP0.4m), marketing expenditure (GBP0.42m), and higher
depreciation charges (GBP0.08m).
Increased salary costs reflect the investment in the executive
and management team essential to better manage and control the
successful implementation of our strategy. Salary costs in 2010
also include additional commission payments of GBP0.1m
corresponding to the increased sales performance.
Marketing expenditure was in line with plan and reflected our
increased investment in new client recruitment through
international advertising and media campaigns. The 18% increase in
new clients recruited in the year compared to the prior year,
together with sales contributed from new clients, vindicated this
increased investment.
Depreciation charges were higher mainly as a result of
depreciation being charged from May 2010 in respect of the capital
refurbishment costs at 399 Strand.
Philatelic Trading and Retail Operations
Philatelic trading and retail sales were GBP1.77m (10%) higher
than last year with profit contribution up by 14%. Sales in the
year are stated net of a reduction of GBP1.55m with associated
profit of GBP0.31m relating to a sale made to an investment client
in the prior year. In October 2010, a decision was made to
repurchase the client's investment portfolio to assist with meeting
the high levels of demand being experienced for our investment
products at that time. It was however deemed appropriate to account
for the repurchase as an unwinding of the sale in the current year
with the impact of reducing revenue and associated profit against
the current year trading performance. Excluding the impact of this
exceptional adjustment, philatelic sales were GBP3.32m (19%) higher
than last year.
Sales growth in the year included additional sales of GBP0.95m
from our development into the Chinese rare stamp market together
with new clients recruited from our Jersey investment office
contributing additional sales of GBP0.7m.
Sales to specialist collectors were up 20% in the year
compensating for the loss of retail sales during the period of
refurbishment works to the 13(th) of April. Retail sales through
399 Strand were down 18% at end of April compared to the prior
period. The majority of this deficit was recovered by the end of
the year, with retail sales for the full year finishing down only
1%. The impact of adverse weather conditions experienced towards
the end of last year held back the recovery to some extent.
Following the recent appointment of a dedicated retail manager, we
aim to deliver the full benefits from the refurbishment during
2011.
Commissions from holding of third party auctions were up 22% on
the prior year reflecting the growing strength of this area of our
business together with the benefits of the prevailing strong market
conditions resulting in higher auction realisations.
Publishing and Philatelic Accessories
Publishing and philatelic accessory sales were 3% higher than
last year although profit contribution was down 9%. Profits in our
Publishing division have deteriorated in the past two years despite
small increases in the level of sales. This disappointing
performance has highlighted weaknesses in the current management
structure which are now being addressed by a rationalisation
programme aimed at implementing the cost and efficiency savings
necessary in this low growth part of our business.
Performance in the Publishing division was hampered during the
year by a significant diversion of effort in the implementation of
the new Digital Asset Management system. Our biggest selling title,
"Stamps of the World", was produced through this new system in the
latter part of the year, a milestone event in itself as we now look
to capture all our other catalogue data as part of a phased
implementation programme over the next two years. The new system
provides us with the platform to embrace the online publishing
opportunities as, over time, we expect our customers to convert
more from traditional print based information to accessing such
information electronically.
Autographs, Records and Related Memorabilia
Autographs, records and related memorabilia sales were 24% up on
the prior year although profit contribution was down 9%. The
reduction in profitability, whilst achieving a substantial increase
in sales during the year, reflects a fundamental change in the
sales mix as a result of our increased focus towards rare
signatures and historical documents, rather than celebrity
signatures. We have successfully developed our investment offering
in historical documents and signatures this year, which similar to
the rare stamp market, offers investors a means of protecting their
wealth in a tangible asset with a value embedded in history.
Lower value retail sales were down 10% in the year, whilst sales
to high net worth collectors and investors were up 48%. Our
increased focus on developing the business in top quality unique
pieces and items of historical importance has been a success.
Through building up a detailed knowledge of our clients' interests,
we are able to source items of specific interest to them. Margins
available from high value pieces are, however, substantially lower
than those obtained from trading in celebrity autographs.
Retail sales from 399 Strand were 43% lower than in the prior
year as a result of the closure of the "Autograph Gallery" at 399
Strand as part of our refurbishment programme. The substantial loss
of sales from retail activities was compensated to some extent by
an increase in the production of and responses from e-mail
"newsletters" to make clients aware of exciting and exceptional new
stock items.
Following the launch of the new website,
www.frasersautographs.com, in February 2011, we expect retail sales
to recover as we move more towards online retailing, which will
provide a better return than our traditional in-store offering.
Benham First Day Covers and other Collectibles
The newly acquired Benham First Day Cover and other collectibles
business contributed sales of GBP0.58m in the last quarter of the
year and profits of GBP0.18m. The business was acquired for a total
consideration of GBP1.5m, settled GBP0.75m on completion with the
remaining GBP0.75m due to the vendor 12 months after
completion.
Trading performance since acquisition was broadly in line with
expectations and will benefit in 2011 from collectibles produced
commemorating the Royal Wedding. We are developing a number of
other opportunities to grow the Benham business including
development into the Chinese market this year.
Internet Development
Sales reported within this department relate to online
subscription revenue only. Online sales represented 7% of revenue
and were 5% up on the prior year, when excluding investment sales.
The website generated investment sales of GBP1.78m (2009: GBP1.18m)
benefiting from our increased marketing through online affiliate
websites and Google adwords to direct investment enquires to the
investment section of our website and encouraging prospective
clients to download our "Free Investment Report".
Corporate Overheads
Corporate overheads were GBP0.39m (26%) higher than last year at
a total of GBP7.13m. Corporate overheads include accounting charges
in respect of our defined benefit pension scheme of GBP0.11m (2009:
GBP0.06m) and IFRS2 share option charges of GBP0.08m (2009:
GBP0.07m). Such charges are not relevant to the reporting of
trading performance as they are merely accounting charges based on
actuarial assumptions required by existing accounting
standards.
Increased corporate overheads primarily relate to higher salary
and travel costs from the enlarged executive team required to
support and manage the implementation of our strategy. Furthermore,
bonus payments made in the year to executive directors and senior
management were GBP0.06m higher than in the prior year reflected in
the improved performance of the Group.
Exceptional Items
Exceptional operating costs incurred in the year of GBP0.15m
include the redundancy and legal costs associated with the
restructuring of the web development team (GBP0.02m) and
professional fees incurred on the acquisition of the Benham Group
(GBP0.13m). In the past, such capital costs on acquisition would
have formed part of goodwill acquired. New accounting standards now
require such costs to be written off in the year incurred.
Strategic Focus and Opportunities
Whilst our brand is internationally recognised and respected,
our market share of the stamp market remains less than 1%. The
primary reasons for this are:
1. We mainly trade in rare stamps of catalogue quality (i.e.
around 1 in 100 stamps are of catalogue quality)
2. We only trade in stamps from Great Britain, British
Commonwealth countries and, more recently, China (meaning we do not
trade in some significant geographical areas of the market
including, for example, USA, Russia, Germany, France and Japan)
Whilst we do not want to become a trader of low value stamps in
"below-catalogue" condition, we do recognise the size and potential
within the lower value end of the stamp market. We intend to obtain
market share, not through trading, but by facilitating this market
online through our website. We believe that by providing an online
trading platform, similar to the Amazon.com and eBay.com models,
www.stanleygibbons.com will progressively become the focal point
for stamp trading online. This will generate income through trading
commission charges and fees for the use of our authentication
services.
We also intend to build upon our success in 2010 from developing
internal expertise and trading relationships in the Chinese rare
stamp market by extending this approach into other overseas
markets. We are currently reviewing opportunities of developing
into the market for US stamps, which still represents the biggest
collectible market in the world.
Furthermore, with a brand of our heritage and reputation, we are
capable of extending our product offering into other collectibles.
This will provide increased scalability to our business model. We
are currently reviewing other areas of the collectibles market,
which possess similar qualities to rare stamps such as coins,
medals and first edition books. We intend to gain access into these
new markets through a mixture of recruitment of specialist
expertise, building of trading partnerships with key specialists
and acquisition.
We look forward to maximising the potential from some immediate
benefits in the coming year including the launch of our new
websites, the Royal Wedding and further development of trading in
the Chinese market.
We now have a more rounded executive team in place to implement
the strategy effectively, further enhanced by the recruitment of
Tony Grodecki (Managing Director of the Benham Group). Tony brings
a general commercial acumen from his extensive experience in the
collectibles market together with specific skills in building mail
order continuity programmes.
Overall, the business is well placed to generate growth in sales
and profits to the benefit of our Shareholders as we look forward
to the current year with continued enthusiasm and optimism.
Financial Review
The Group's cash funds at 31 December 2010 were GBP1.84m,
compared to GBP3.06m at the end of last year. The Board is
satisfied that the Group has sufficient funds to meet its forecast
working capital and capital expenditure plans over the next 12
months.
Surplus funds are currently invested in short term deposits into
UK clearing banks which generate low rates of interest in the
current economic climate but with low risk. It is Group policy to
re-invest cash funds into business assets, which deliver a higher
return on capital including its inventory of rare stamps and
historical signatures, IT systems and value enhancing acquisitions.
It is not Group policy to engage in speculative activity using
financial derivatives or other complex financial instruments.
The Group has bank borrowings of GBP0.69m at 31 December 2010
with NatWest Bank PLC. In total GBP0.75m was borrowed over a term
of three years (commencing September 2010) at an interest rate of
LIBOR plus 4%. There was also a deferred element to the
consideration on the purchase of the Benham Group of GBP0.75m due
to the vendors one year after completion carrying an interest rate
of LIBOR plus 2.25%. The Group also currently has use of an
overdraft facility, if required, of GBP1.0m. This facility is
renewable in April 2011.
Balance Sheet and Cash Flow
Cash generated from operating activities was GBP2.21m (2009:
GBP4.90m). A summary reconciliation of the operating profit to cash
generated from operating activities is given below:
2010 2009
GBP000 GBP000
Operating profit 4,287 4,129
Non-cash charges to profits 107 262
IFRS2 actuarial accounting charge for share options 81 71
------------------------------------------------------- -------- --------
Operating profit after adding back accounting charges
to profit which do not impact on cash flows 4,475 4,462
(Increase)/decrease in inventories (4,081) 2,456
Cash generated from / (used in) other working capital
movements 1,817 (2,021)
------------------------------------------------------- -------- --------
Operating cash generated in year 2,211 4,897
------------------------------------------------------- -------- --------
Operating cash generated in the year was re-invested in our
stockholding of rare stamps and historical signatures to support
the expected increases in demand over the next 12 months. The newly
acquired Benham Group contributed GBP0.2m of the operating cash
generated.
Stock levels at 31 December 2010 were GBP14.77m, 59% higher than
at 31 December 2009. The increase in stock during the year includes
stock acquired at fair value in the Benham Group with a cost of
GBP1.10m and stock acquired from the acquisition of the dealer M
& N Haworth of GBP0.26m. Excluding stock purchased on the
acquisition of businesses in the year, stock levels were still up
by GBP4.12m (44%).
An element of the increased stockholding at the year end is
timing related as a consequence of high levels of buying in
December, driven by the timing of major auctions and the need for
top quality material to support budgeted demand in the coming
year.
Our increased investment in our stockholding was predominantly
in high value rare stamps and historical signatures, which we
believe to be a better investment of Shareholder Funds than holding
surplus cash balances, which do not generate a material return. The
benefits of reinvesting operating cash generated into our
stockholding of rare stamps and historical signatures are as
follows:
1. Improved presentation of our brand image in top quality
collectibles
2. Recruitment of new high net worth clients by virtue of the
depth of our stockholding of key rarities
3. Historic short turn around time for high value items,
generating an average return on capital of over 20% per annum
4. Investment in an asset which has generated annual
appreciation on average at 10% per annum, although remains stated
at historic cost and not market value in our balance sheet
The reduction in cash during the year of GBP1.22m is net of
dividends paid of GBP1.32m (2009: GBP1.2m) and tax paid of GBP0.41m
(2009: GBP0.78m).
The Group invested GBP1.73m (2009: GBP0.39m) in capital
expenditure during the year and can be analysed as follows:
GBP000
Goodwill arising on the acquisition of The Benham Group 256
Refurbishment of 399 Strand 772
Development of Digital Asset Management System 266
Website development costs 301
Other tangible and intangible capital expenditure 136
--------------------------------------------------------- -------
Total Capital Expenditure in the year 1,731
--------------------------------------------------------- -------
Such capital investment is expected to increase the long term
value of the business and to generate substantial cashflows in
future accounting periods.
Capital expenditure commitments in 2011 are expected to be
substantially lower as the core development work on our IT systems
and websites was materially completed in 2010. Capital expenditure
forecast for 2011 includes the replacement of our accounting system
together with ongoing enhancements to our websites and other IT
systems.
Finance income/costs
Group cash funds generated GBP2,000 (2009: GBP2,000) bank
interest for the year. Included within "Finance income" is
GBP34,000 (2009: Finance costs of GBP14,000), representing the
difference between interest cost and the expected return on assets
in the Group's defined benefit pension scheme under the disclosure
requirements of IAS19 "Employee Benefits".
Finance costs of GBP19,000 (2009: GBP18,000) include interest
payable of GBP15,000 on acquisition financing of the Benham
Group.
Taxation
The tax charge for the year (excluding deferred taxation) was
GBP462,000 (2009: GBP424,000) incurred on UK profits, resulting in
an effective rate of 10.7% (2009: 10.3%). Profits from our Channel
Island trading companies are currently subject to tax at zero
percent.
Dividends
The Board is recommending a final dividend of 3.25p per Ordinary
Share (2009: 3p) giving a total dividend of 5.5p for the year ended
31 December 2010 (2009: 5p). Subject to Shareholders' approval, the
final dividend will be paid on 16 May 2011 to Shareholders on the
register at 8 April 2011.
Accounting Policies
Accounting policies applied are consistent with those disclosed
in note 1 to the 2009 financial statements except for the revision
to IFRS 3 that has impacted on how acquisitions are accounted for
in respect that previously capitalised acquisition expenses are now
immediately expensed through the income statement.
Consolidated statement of comprehensive income for the year
ended 31 December 2010
Year ended Year ended
31 December 2010 31 December 2009
Notes GBP'000 GBP'000
----------------- ----------------
Revenue 26,429 23,365
Cost of sales (14,859) (13,345)
-------------------------------------- ---------------- ----------------
Gross Profit 11,570 10,020
Administrative expenses
before exceptional operating
costs (2,269) (1,817)
Selling and distribution
expenses (4,864) (4,074)
-------------------------------------- ---------------- ----------------
Operating profit before
exceptional items 4,437 4,129
Exceptional operating
costs (150) -
-------------------------------------- ---------------- ----------------
Operating Profit 4,287 4,129
Finance income 36 2
Finance costs (19) (18)
-------------------------------------- ---------------- ----------------
Profit before tax 4,304 4,113
Taxation (473) (413)
-------------------------------------- ---------------- ----------------
Profit for the financial
year 3,831 3,700
Other comprehensive income:
Actuarial gains / (losses)
recognised in the pension
scheme 354 (352)
Tax on actuarial (gains)
/ losses recognised in
the pension scheme (113) 80
Other comprehensive income
/ (loss) for the year,
net of tax 241 (272)
-------------------------------------- ---------------- ----------------
Total comprehensive income
for the year 4,072 3,428
-------------------------------------- ---------------- ----------------
Basic earnings per Ordinary 3 15.22p 14.70p
share
Diluted earnings per Ordinary 3 15.17p 14.69p
share
----------------------------- ------ ------
Statement of financial position as at 31 December 2010
Group Group Company Company
31 December 31 December 31 December 31 December
2010 2009 2010 2009
GBP'000 GBP'000 GBP'000 GBP'000
----------- ----------- ----------- -----------
Non-current assets
Intangible assets 1,014 186 - -
Property, plant and
equipment 1,862 1,103 - -
Deferred tax asset 32 124 - -
Trade and other
receivables - 118 - -
Investment in subsidiary
undertakings - - 6,055 5,974
-------------------------- ----------- ----------- ----------- -----------
2,908 1,531 6,055 5,974
-------------------------- ----------- ----------- ----------- -----------
Current Assets
Inventories 14,774 9,289 - -
Trade and other
receivables 8,866 9,848 1,454 -
Cash and cash equivalents 1,838 3,062 39 32
-------------------------- ----------- ----------- ----------- -----------
25,478 22,199 1,493 32
-------------------------- ----------- ----------- ----------- -----------
Total assets 28,386 23,730 7,548 6,006
-------------------------- ----------- ----------- ----------- -----------
Current liabilities
Trade and other payables 5,550 4,014 944 352
Borrowings 252 - - -
Current tax payable 349 296 - -
-------------------------- ----------- ----------- ----------- -----------
6,151 4,310 944 352
-------------------------- ----------- ----------- ----------- -----------
Non-current liabilities
Retirement benefit
obligations 114 442 - -
Borrowings 435 - - -
Deferred tax liabilities 194 161 - -
Provisions 504 660 - -
1,247 1,263 - -
-------------------------- ----------- ----------- ----------- -----------
Total liabilities 7,398 5,573 944 352
-------------------------- ----------- ----------- ----------- -----------
Net assets 20,988 18,157 6,604 5,654
-------------------------- ----------- ----------- ----------- -----------
Equity
Called up share capital 252 252 252 252
Share premium account 5,195 5,195 5,195 5,195
Share compensation reserve 244 163 244 163
Capital redemption reserve 38 38 38 38
Revaluation reserve 201 201 - -
Retained earnings 15,058 12,308 875 6
-------------------------- ----------- ----------- ----------- -----------
Equity shareholders' funds 20,988 18,157 6,604 5,654
-------------------------- ----------- ----------- ----------- -----------
Statement of changes in equity for the year ended 31 December
2010
Called
up Share Share Capital
share premium compensation Revaluation redemption Retained
The Group capital account reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2010 252 5,195 163 201 38 12,308 18,157
Profit for the
financial
year - - - - - 3,831 3,831
Actuarial gain
on pension
scheme net of
deferred tax - - - - - 241 241
-------------- ------- ------- ------------ ----------- ---------- -------- -------
Total
comprehensive
income - - - - - 4,072 4,072
Dividends - - - - - (1,322) (1,322)
Cost of share
options - - 81 - - - 81
At 31 December
2010 252 5,195 244 201 38 15,058 20,988
-------------- ------- ------- ------------ ----------- ---------- -------- -------
At 1 January
2009 252 5,195 92 182 38 10,076 15,835
Profit for the
financial
year - - - - - 3,700 3,700
Actuarial loss
on pension
scheme net of
deferred tax - - - - - (272) (272)
-------------- ------- ------- ------------ ----------- ---------- -------- -------
Total
comprehensive
income - - - - - 3,428 3,428
Dividends - - - - - (1,196) (1,196)
Cost of share
options - - 71 - - - 71
Revaluation of
the reference
collection
net of
deferred tax - - - 19 - - 19
-------------- ------- ------- ------------ ----------- ---------- -------- -------
At 31 December
2009 252 5,195 163 201 38 12,308 18,157
-------------- ------- ------- ------------ ----------- ---------- -------- -------
Called
up Share Share Capital
share premium compensation Revaluation redemption Retained
The Company capital account reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2010 252 5,195 163 - 38 6 5,654
Profit and
total
comprehensive
income for
the year - - - - - 2,191 2,191
Dividends - - - - - (1,322) (1,322)
Cost of share
options - - 81 - - - 81
At 31 December
2010 252 5,195 244 - 38 875 6,604
-------------- ------- ------- ------------ ----------- ---------- -------- -------
At 1 January
2009 252 5,195 92 - 38 6 5,583
Profit and
total
comprehensive
income for
the year - - - - - 1,196 1,196
Dividends - - - - - (1,196) (1,196)
Cost of share
options - - 71 - - - 71
At 31 December
2009 252 5,195 163 - 38 6 5,654
-------------- ------- ------- ------------ ----------- ---------- -------- -------
Statement of cash flows for the year ended 31 December 2010
Group Group Company Company
31 31 31 31
December December December December
2010 2009 2010 2009
Notes GBP'000 GBP'000 GBP'000 GBP'000
----- -------- -------- -------- --------
Cash generated from
operations 4 2,211 4,897 7 1
Interest paid (19) (4) - -
Taxes paid (408) (783) - -
----------------------- ----- -------- -------- -------- --------
Net cash generated from
operating activities 1,784 4,110 7 1
----------------------- ----- -------- -------- -------- --------
Investing activities
Purchase of property,
plant and equipment (871) (275) - -
Purchase of intangible
assets (604) (114) - -
Acquisition of
businesses (900) - - -
Interest received 2 2 - -
Loans granted to
subsidiary
undertakings - - (750) -
Dividends received - - 2,072 1,196
Net cash (used in) /
generated by investing
activities (2,373) (387) 1,322 1,196
----------------------- ----- -------- -------- -------- --------
Financing activities
Dividends paid to
company shareholders (1,322) (1,196) (1,322) (1,196)
Proceeds from
borrowings 750 - - -
Repayments of
borrowings (63) - - -
----------------------- ----- -------- -------- -------- --------
Net cash used in
financing activities (635) (1,196) (1,322) (1,196)
----------------------- ----- -------- -------- -------- --------
Net (decrease) /
increase in cash and
cash equivalents (1,224) 2,527 7 1
----------------------- ----- -------- -------- -------- --------
Cash and cash
equivalents at start
of year 3,062 535 32 31
----------------------- ----- -------- -------- -------- --------
Cash and cash
equivalents at end of
year 1,838 3,062 39 32
----------------------- ----- -------- -------- -------- --------
Notes
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 2010 and 31 December 2009.
The financial information for the year ended 31 December 2009
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 2010 has been extracted
from the audited financial statements of the Group for the year
ended 31 December 2010 which were approved by the Board of
Directors on 24 March 2011.
2. Dividends
Subject to approval at the AGM on 27 April 2011, the final
dividend of 3.25p per Ordinary Share will be paid on 16 May 2011 to
all shareholders on the register on 8 April 2011.
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 198,500 options issued under the Company's 2007
Long-Term Incentive Plan (LTIP). These options were not dilutive at
31 December 2010.
Year ended Year ended
31 December 31 December
2010 2009
Weighted average number of ordinary
shares in issue (No.) 25,177,443 25,177,443
Dilutive potential ordinary shares:
Employee share options (No.) 84,101 5,842
Profit after tax (GBP) 3,831,000 3,700,000
Exceptional operating costs (net of
tax) 120,000 -
------------------------------------- ----------- -----------
Adjusted profit after tax (GBP) 3,951,000 3,700,000
------------------------------------- ----------- -----------
Basic earnings per share - pence per 15.22p 14.70p
share (p)
------------------------------------- ----------- -----------
Diluted earnings per share - pence 15.17p 14.69p
per share (p)
Adjusted earnings per share - pence 15.69p 14.70p
per share (p)
------------------------------------- ----------- -----------
Adjusted diluted earnings per share 15.64p 14.69p
- pence per share (p)
------------------------------------- ----------- -----------
4 Cash generated from operations
31 December (Group) 31 December (Company)
2010 2009 2010 2009
GBP'000 GBP'000 GBP'000 GBP'000
Operating profit 4,287 4,129 119 -
Depreciation 170 99 - -
Amortisation 32 23 - -
(Decrease) / increase in
provisions (95) 140 - -
Cost of share options 81 71 - -
(Increase) / decrease in
inventories (4,081) 2,456 - -
Decrease / (increase) in
trade and other receivables 1,181 (3,168) (704) -
Increase in trade and other
payables 636 1,147 592 1
------------------------------ ---------- --------- ----------- ----------
Cash generated from operations 2,211 4,897 7 1
------------------------------ ---------- --------- ----------- ----------
5. Annual report and accounts
The Annual Report and Accounts for the year ended 31 December
2010 will be posted to shareholders shortly. Further copies can be
obtained from the Company Secretary at 6 Vine Street, St Helier,
Jersey, JE2 4WB, or the Company's Broker, Peel Hunt LLP at 111 Old
Broad Street, London EC2N 1PH 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
END
FR DKQDQFBKDPNB
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