TIDMSGI
RNS Number : 8975Z
Stanley Gibbons Group PLC
23 March 2012
THE STANLEY GIBBONS GROUP PLC
FOR IMMEDIATE RELEASE 23 March 2012
THE STANLEY GIBBONS GROUP PLC ("the Company" or "the Group")
Audited Results for the year ended 31 December 2011
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 2011.
Key Financial Highlights
-- Sales of GBP35.7m (2010: GBP26.4m) up 35%
-- Online sales of GBP4.3m (2010: GBP2.5m) up 72%
-- Statutory profit before tax of GBP5.1m (2010: GBP4.3m) up 19%
-- Adjusted profit before tax, before exceptional charges, of GBP5.2m (2010: GBP4.5m) up 17%
-- Earnings per share of 18.5p (2010: 15.2p) up 22%
-- Adjusted earnings per share of 18.9p (2010: 15.7p) up 20%
-- Proposed final dividend of 3.5p per share (2010: 3.25p per
share), up 8%, giving a total dividend for the year of 6p (2010:
5.5p) up 9%
-- Cash generated from operating activities in year of GBP4.1m
(2010: GBP2.2m). Cash funds at 31 December 2011 of GBP3.2m (2010:
GBP1.8m)
-- Stock levels at 31 December 2011 stated at historic cost of
GBP16.8m (2010: GBP14.8m), representing 280 days stock held (2010:
363 days), a reduction of 23%
Key Operational Highlights
-- Increase in online revenue following redesign of core
website, www.stanleygibbons.com, at the end of May with conversion
rates doubling over past six months
-- Increase in sales to investors and high net worth clients,
benefitting from effectiveness of marketing campaigns and
diversification into different collectible asset classes
-- Development of trading relationships and sales into the Chinese Market
-- Strong contribution from client recruitment in Jersey,
Channel Islands, and Hong Kong investment offices
-- Strengthened the auction division, with the appointment of
Richard Watkins as "Head of Auctions" in May 2011, and recently
secured a major British Commonwealth stamp collection, "The Arnhold
Collection", with an auction estimate in excess of GBP1m. The sale
will be held over two auctions in May and September 2012
Outlook
-- Focus on developing the online strategy as the internet and
other forms of electronic communication will become our primary
sales channel
-- Review strategic opportunities to progress this strategy with
the aim of accelerating and maximising returns from an online
trading platform
-- International expansion provides a leverage opportunity for
our brand and sales. During 2012, potentially open new satellite
investment offices, which are relatively low risk and similar to a
"franchise model", whilst progressing identified opportunities in
the US
-- Benefit from the sale of commemorative collectibles in
relation to the celebration of the Queen's Diamond Jubilee together
with the substantial interest expected both in the UK and overseas
for collectibles produced specifically to mark the London Olympics
2012
-- Aim to launch a rare stamp fund in the collectibles market, subject to regulatory approval
Martin Bralsford, Chairman, commented:
"The record performance of the Group last year and a positive
start to this, with our order book at record levels, is the result
of a combination of the strong market for rare collectibles and the
achievements of our management in execution of our strategy.
There is evidence of a substantial shift in clients' behaviour
away from traditional dealing and mail order to the internet and
auction channels. Consequently, we have invested more Group
resources in these services.
We have begun to see the results of these investments, with our
websites generating one-eighth of Group revenues in 2011 and the
recent procurement of a first major collection for our auction
business. The forthcoming year will see greater returns from our
online strategy as it progressively becomes our primary sales
channel for non-investment grade items. We expect our long term
growth in our traditional business to be driven by an online and
auction based model.
Our international development through the opening of overseas
offices complements this strategy. They provide a key geographical
presence to promote awareness of our online services and also
unique investment grade items in collectibles and auction
services.
We have adequate cash reserves available to finance growth
opportunities, and are reviewing a number of potential acquisitions
which would strengthen and complement our overall service
capability. At the same time we will maintain our progressive
dividend policy.
Your Board remains very positive about the future of your
business based on the underlying strength of the collectibles
market, our brand and the expected returns from the execution of
our strategy".
For further information, contact:
The Stanley Gibbons Group plc
Michael Hall, Chief Executive +44 (0) 1534 766711
Peel Hunt LLP, NOMAD/Broker
Dan Webster/Matthew Armitt/Richard Brown +44 (0) 20 7418 8900
Chairman's Statement
Introduction
These record results of The Stanley Gibbons Group plc are only
one of the achievements of our management for the year ended 31
December 2011. The exceptional growth in sales and profits achieved
was after charging expenditures in 2011 to create future growth. I
believe we are now at the brink of realisation of the benefits of
prior year efforts in building a strong base.
More important in the current economic climate, the strength of
our business model is re-inforced by the strong generation of cash
in the year. The Group enjoys financial security and substantial
resources to fund future growth opportunities at the same time as
maintaining our progressive dividend policy, which we believe is
greatly appreciated by Shareholders, in comparison with the low
running yields elsewhere in the financial markets.
The positive overall result is the product of both management's
progress made in delivering against the Board's strategic
objectives and also the favourable current trends in collectibles.
The strong market conditions are partly attributable to the
increasing international interest in the ownership of tangible
assets generally as a means of both storing and growing wealth in
the current volatile economic climate against low yields on
traditional saving products.
Financials
Turnover for the year was GBP35.7m, over one-third up on the
previous year and profit before tax was GBP5.1m, up nearly
one-fifth. Underlying profit before tax, excluding one-off
exceptional charges incurred in the rationalisation of the
Publishing division, was GBP5.2m. EBITDA, which is calculated as
operating profit before all exceptional items and non cash charges,
was GBP5.7m (2010: GBP4.7m).
Earnings per share was 18.54 pence (2010: 15.22 pence),
representing an increase of 22%. Adjusted earnings per share,
excluding exceptional costs, were 18.9 pence (2010: 15.7
pence).
Dividend
Your Board is pleased to recommend to Shareholders for their
approval at the forthcoming AGM, a final dividend of 3.5 pence per
share (2010: 3.25 pence). This would give a total dividend from
2011 earnings of 6.0 pence (2010: 5.5 pence), an increase of nearly
one-tenth on last year and covered over 3 times by earnings in
2011.
The proposed dividend increase for 2011 is lower than the growth
in profits, recognising our policy of re-investment of profits to
fund attractive future growth opportunities.
Key Operational Highlights
Online
Key developments in our online offering made in the year towards
the aim of providing a much improved online experience to the
collecting community were:
-- Newly designed website for autographs,
www.frasersautographs.com, launched in February 2011. Online
revenues of autographs were up 57% in the year.
-- Core website, www.stanleygibbons.com, redesign and new
functionality launched at the end of May 2011. Online revenues for
the second half of the year were up 67%.
-- New high net worth client leads sourced from the website
generated sales of GBP3.4m (2010: GBP1.8m), up 89%, benefiting from
improved content and presentation of our investment services
online.
-- New websites enabled improved search engine optimisation and
better management of regular exclusive web offers increasing site
traffic. Conversion rates from site visitors doubled over past six
months.
-- Our extensive stockholding of lower value stamps made
available to purchase online for the first time using this cost
effective distribution channel.
-- Online price catalogue and stamp album management
functionality developments progressed during the year, enabling
collectors to access up to date stamp pricing information
online.
We are currently reviewing strategic options before progressing
to the next stage of the planned online developments with an aim of
accelerating and maximising returns from the launch of an online
trading platform and auctions.
In addition to the proposed trading platform launch, we also
intend to develop our online services in 2012 to include:
-- Enhanced online stamp catalogue to comprise specialised philatelic information
-- Launch of foreign language versions of website to support international developments
-- Provision of mobile applications for our primary online content
We see the internet and other forms of electronic communication
to clients as progressively becoming our primary sales channel over
time and believe the reputation of our brand combined with our
offering in this respect will consolidate our position as leader in
our core markets.
Overseas development
We opened a new office in Hong Kong at the end of September,
contributing GBP0.5m of sales to Hong Kong residents and generating
a profit in its first quarter of trading. Furthermore, we developed
trading relationships in Greater China during the year enabling a
further GBP0.5m of sales directly into the Chinese market.
The move to an investment sales office in Jersey, Channel
Islands, including our corporate office, was completed in August.
That, together with the continued success of our investment offices
in Guernsey, generated an increase in sales to Channel Islands
residents of 149% to GBP4.9m (2010: GBP2m).
We completed our initial investigations of opportunities to grow
into the United States market, which still represents the biggest
collectibles market in the world, despite the recent growth in the
number of collectors in China and India. The Stanley Gibbon's brand
is already well recognised in the United States and a number of
options were identified to develop sales into that market. We
intend to begin progressing those opportunities during the current
year.
Our expansion plans outside the United Kingdom are made easier
by the fact that the Stanley Gibbons brand has worldwide
recognition. Our goal is simply to gain market penetration into the
most lucrative overseas markets, whilst maintaining strong control
over activities conducted from our satellite offices. During 2012,
we will be investigating the potential opening of new offices in
Switzerland, Singapore, Monaco, Gibraltar, Brazil and, closer to
home, Edinburgh, all significant wealth management centres. This
represents a relatively low risk aspect of our strategy based on
the application of our prestigious brand presentation and values to
a wider audience, similar to a "franchise" model.
Auctions
We instigated a number of structural changes within the auction
division in the year as part of the strategy to grow our auction
brand in light of the increasing amount of business being
transacted through this route in recent years. Structural changes
included the appointment of Richard Watkins as "Head of Auctions"
in May 2011. Richard has a wealth of experience having previously
held senior positions in Christie's, Spink and Grosvenor where he
was, latterly, Managing Director.
We believe we now have a strong team to take forward this part
of our strategy and have recently secured a major British
Commonwealth stamp collection, "The Arnhold Collection", with an
auction estimate in excess of GBP1m. The sale will be held over two
auctions in May and September.
Other collectibles
We successfully diversified our product offering in the year to
include rare coins, commemorative medals and military medals. We
intend to continue to develop our internal expertise in these areas
providing material growth opportunities going forward.
The Benham Group acquisition, completed in September 2010,
delivered a strong full year trading performance, contributing
sales of GBP2.6m and profits, after attributable financing costs,
of GBP0.5m.
Opportunities exist in the current year to benefit from the sale
of commemorative collectibles in relation to the celebration of the
Queen's Diamond Jubilee together with the substantial interest
expected both in the UK and overseas for collectibles produced
specifically to mark the London Olympics 2012.
Investment services
The persistent economic volatility, together with higher
response rates from our promotional activities, has enabled us to
continue to recruit new high net worth investment clients. Many of
our investment clients have developed such an interest in their
investments to the extent that they could equally be classified as
collectors.
People
It is not enough just to have the right strategy in an exciting
growth market to succeed. It will always come down to having the
right people to execute the strategy successfully. We have made
some important enhancements to our management team in recent years
and business performance thus far indicates the success in putting
in place the right resource to deliver on our plans. On behalf of
the Board, I wish to extend my thanks to our dedicated and
professional team and their contribution to the record result
delivered in 2011.
Board
Your Company's management team was further enhanced in February
2012 with the appointment of John Byfield as Corporate Development
Director reporting to our Chief Executive. John had previously
acted as a non-executive director of the Group since April 2011 and
possesses a wealth of experience, which will enable the
acceleration of the achievement of some of our business objectives.
John will specifically assist with the execution of the Group's
acquisition strategy of businesses that add complementary brands or
otherwise enhance the strategic objectives of the Group.
Donal Duff, our Chief Operating Officer, has also taken over
responsibility as Finance Director on the departure of our former
Finance Director, Mark Henley, at the end March 2012. Prior to his
current role, Donal was Finance Director of a large AIM listed
conglomerate and is already building the resource in our Group
Finance team. I take this opportunity to thank Mark for his
valuable contribution to supporting the growth of the Group over
the past five years.
Following completion of two terms of office Bob Henkhuzens has
decided to retire from his position as non-executive director at
the conclusion of the AGM in May 2012. Bob served not only as
Chairman of the Audit Committee and member of the Remuneration and
Nomination Committees but also as Interim Chairman of the Company
in 2007. We thank him for his outstanding commitment to good
governance and his wise counsel.
Outlook
We have never started a financial year with the order book at
such a high level as we have in 2012. However, it is always about
"right product at the right time" and we must constrain our
investment sales to those high quality items that we can source
realistically at fair prices. We are now seeing a growing
acceptance from the wealth management sector at large that
allocating a small but significant proportion of wealth into
collectibles as both a means of diversification and a long term
hedge against inflation is a valid proposition.
We have been in discussions for a number of years with various
external parties regarding the setting up of a rare stamp
investment fund. The economic climate during the past few years has
naturally made many investors and advisers wary of new investment
products and it was felt that ultimately raising the necessary
capital would prove harder in practice than in theory.
We are creating an appropriate fund structure to enable
interested parties to invest in the collectibles market, our long
stated objective. Our aim is to be in a position to launch a rare
stamp fund, subject to regulatory approval in 2012. The opportunity
to launch a rare stamp fund provides an exciting opportunity and
potentially could generate new and recurrent profit streams for the
long term.
Martin Bralsford, Chairman
22 March 2012
Operating Review
Operating results for the year
2011 2011 2010 2010 2009 2009
Sales Profit Sales Profit Sales Profit
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Philatelic trading and retail
operations 27,727 5,943 19,422 4,621 17,657 4,056
Publishing and philatelic accessories 2,980 677 3,146 672 3,057 742
Dealing in other collectibles 4,955 835 3,820 1,082 2,610 990
35,662 7,455 26,388 6,375 23,324 5,788
Internet development 42 (127) 41 (24) 41 (138)
Corporate overheads - (2,108) - (1,914) - (1,521)
Interest and similar (charges)
/ income - (3) - 17 - (16)
-------------------------------------- ------ ------- ------ ------- ------ -------
Before exceptional costs 35,704 5,217 26,429 4,454 23,365 4,113
-------------------------------------- ------ ------- ------ ------- ------ -------
Exceptional operating costs - (112) - (150) - -
Group total sales and profit
before tax 35,704 5,105 26,429 4,304 23,365 4,113
-------------------------------------- ------ ------- ------ ------- ------ -------
Overview
Group turnover increased by GBP9.3m (35%) compared to last year.
The profit before tax for the year of GBP5.1m represented an
increase of 19%. Earnings per share were 18.54p (2010: 15.22p), up
22%. Adjusted profit before tax, when excluding exceptional costs,
was GBP5.2m and adjusted earnings per share were 18.87p (2010:
15.69p), up 20%.
The key contributors to the growth in sales and profit in the
year were:
-- Increase in sales to investors and high net worth clients,
benefiting from effectiveness of our marketing campaigns and
diversification into rare coins and Chinese stamps
-- Strong contribution from client recruitment in our new
investment offices in Jersey and Hong Kong
-- Increase in online revenue following redesign of our core
website, www.stanleygibbons.com, at the end of May
-- Strong full year's trading from the Benham Group acquired in September 2010
-- Development of trading relationships and sales into the Chinese market
The gross margin percentage for the year was 38.7% compared to
43.8% in the prior year. The lower gross margin percentage is
reflective of the substantial change in sales mix in the year with
an increase in the sale of high value rarities at lower trading
spreads. Lower margins are also generated in trading of Chinese
stamps, rare coins and military medals. The gross margin percentage
was further impacted by an increase in the provision against
previous investment products sold with guaranteed returns of
GBP0.3m and a one-off accounting adjustment of GBP0.1m relating to
prior years.
Overheads were GBP1.5m (21%) higher than the prior year at a
total of GBP8.6m. Like-for-like overheads, excluding the Benham
Group acquisition, were up GBP0.8m (13%). Overhead increases
primarily related to increased salary and marketing costs to
support the increasing levels of business. Overheads in the year
also included an increase of GBP0.3m relating to higher IT and
website development costs and depreciation charges.
Philatelic Trading and Retail Operations
Philatelic trading and retail sales were GBP8.3m (43%) higher
than last year with profit contribution up by 29%. Growth was
achieved through a combination of increased trading to collectors,
investors and members of the trade.
Sales in the year included GBP1.1m (2010: GBP1m) of Chinese rare
stamps. Despite high levels of demand for this lucrative area of
the market experienced in the year, potential growth was restricted
by the inherent difficulties in sourcing quality material in a
competitive market to satisfy such demand. Following the opening of
our new Hong Kong office in September last year, we hope to
increase opportunities to acquire material directly in the market
to satisfy demand.
Sales to residents of the Channel Islands were up by GBP2.9m
benefiting from our move to larger investment offices in Jersey in
August. The Hong Kong office, opened at the end of September,
generated additional sales of GBP0.5m in the last quarter of the
year. Philatelic sales further benefited from the sale of "fine
used" penny blacks to the Chinese market.
Retail sales from 399 Strand were up 15% primarily the result of
our investment of GBP0.8m in the refurbishment of our retail
premises in the first quarter of 2010. We have further investment
in refurbishments scheduled for 2012 to enhance the presentation of
our auction areas and to improve the quality of the offices
occupied by our staff.
Auction revenues were slightly down (3%) on the prior year with
profit contribution down GBP0.1m, reflecting the fact that our
auction division was undergoing a period of change as we
strengthened the team and invested in developing the underlying
strength of our auction service. We expect the benefits of these
investments to generate growth during the current year.
Publishing and Philatelic Accessories
Publishing and philatelic accessory sales were GBP0.2m (5%)
lower than last year although profit contribution was maintained in
line with the prior year. Following the completion of the
rationalisation programme in April, our Publishing division
delivered an improved performance in the second half of the year.
Profit contribution in the second half of the year was up 8% from
the corresponding prior period on lower revenues, showing the
benefit of the improved efficiencies implemented during the first
half.
Lower sales from the prior year reflected a weaker publishing
schedule together with production delays experienced during the
period of reorganisation which were caught up to some extent by the
year end. We also experienced a reduction in orders from trade
distributors of our publishing titles in the year as many reduced
their order sizes reflective of the challenges they are
experiencing in the current economic climate.
Despite lower sales, production efficiencies including
negotiation of lower print costs on our key catalogue titles,
helped to improve profitability in the second half. Furthermore, we
improved the online distribution of our catalogue titles in 2011
including a 9% increase in online sales through our own website
together with extending the distribution through eBay.com and
Amazon.com, contributing additional sales of GBP0.2m.
Dealing in Other Collectibles
Sales of other collectibles were GBP1.1m (30%) higher, although
profit contribution was down by GBP0.2m (23%). The lower level of
profits despite growth in sales reflects a substantial change in
the mix of sales to lower margin products compared to the prior
year. Dealing in other collectibles can be further analysed as
follows:
2011 2011 2010 2010 2009 2009
Sales Profit Sales Profit Sales Profit
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Dealing in autographs, records
and related memorabilia 1,567 127 3,244 904 2,610 990
Dealing in rare coins and military
medals 800 133 - - - -
Benham first day covers and other
collectibles 2,588 575 576 178 - -
Total sales and profit contribution 4,955 835 3,820 1,082 2,610 990
------------------------------------ ------ ------ ------ ------ ------ ------
Autographs, historical documents, memorabilia and record sales
were GBP1.7m (52%) down in the year with profit contribution down
by 86%. The fall in revenues and profits were due to lower sales in
the year of high value rarities to investors. This was primarily
the result of our marketing focus being directed towards new
investment offerings of Chinese stamps, rare coins and military
medals. We are confident that the strong stockholding of rare
historical documents and signatures we hold will ensure that we can
re-build sales in rare signatures and historical documents during
the current year.
Despite the reduction in autograph sales to investors, sales to
collectors and trade clients were up 44% in the year, benefiting
from high value sales of rare historical documents and increased
sales online following the launch of the new
www.frasersautographs.com website in February 2011.
We successfully diversified our product offering to include rare
coins and military medals in the year, generating additional sales
of GBP0.8m in the seven-month period since we commenced this
offering and profits of GBP0.1m. We aim to continue to develop
further into these markets during the current year and intend to
strengthen our in-house knowledge to ensure that we can provide the
quality of service and expertise in these new areas that our
clients would expect. Both of these markets possess similar
investment qualities to the rare stamp market and offer clients the
means of further diversifying their investments into
collectibles.
The Benham Group acquisition, completed in September 2010 for a
purchase consideration of GBP1.5m, delivered a strong full year
trading performance in 2011, contributing sales of GBP2.6m and
profits of GBP0.6m. Trading in the year benefited from GBP0.3m of
sales through our Chinese trade distributors of other collectibles
and the sale of Royal Wedding commemorative collectibles.
We completed a small acquisition in July 2011 of the assets and
business of "Greetings Direct", purchased from Flying Flowers
(Jersey) Limited. The purchase was made at a consideration
representing 10% of the net revenues of the business for the first
twelve months after acquisition. The business contributed
additional revenues of GBP0.1m in the year and provides synergies
with our existing database of club members to provide future
revenue and profit streams.
Internet Development
Sales reported within this department relate to online
subscription revenue only. Online sales were up 30% on the prior
year, when excluding investment sales. We substantially redesigned
our core website, www.stanleygibbons.com, during the year resulting
in a re-launch at the end of May 2011.
In the six-month period since re-launch, average monthly unique
visitor numbers showed an increase of 83% with a 126% increase in
the number of page views. Conversion rates from visitor numbers
have increased from 1.03% to 2.11%, which remain very low meaning
there is substantial room for improvement as we progressively
develop our online offering.
Corporate Overheads
Corporate overheads were GBP0.2m (10%) higher than last year,
representing primarily higher IT resource and web development costs
in support of our website development projects, from which, returns
are beginning to materialise.
Corporate overheads include accounting charges, which have no
cash impact, in respect of our defined benefit pension scheme and
IFRS share option charges totalling GBP0.2m (2010: GBP0.2m).
Exceptional Operating Costs
Exceptional operating costs incurred in the year were GBP0.11m
(2010: GBP0.15m). These primarily relate to the staff and legal
costs in respect of the re-organisation of the Publishing division
completed in the year.
Strategic Focus and Opportunities
We have made substantial investment in recent years in our
systems, websites and in recruiting the right quality team to
enable us to exploit the opportunities within our market. We are
now beginning to enjoy the benefits of these investments reflected
in the strong performance over the past year.
In particular, we are now crystallising some returns from the
investment in our online strategy, although this remains in its
infancy from where we intend to be in the future. We are currently
reviewing strategic options to ensure that we maximise the
potential returns from the technical developments recently
undertaken.
We expect long-term growth to be driven predominantly by an
online and auction based trading model in all key collectible
categories. We have already taken the first steps towards achieving
these goals, with some measurable success to give us confidence in
the validity of our aspirations.
We intend to become progressively more of a "market maker" or
"market facilitator" generating commission income as agent.
Consequently, the traditional collectibles dealing model that
requires profit increases to be supported by a corresponding growth
in assets (predominantly inventory), does not apply to our
strategic model. As such, we expect our return on capital to
improve considerably as the implementation of our strategy
progresses.
We remain very positive about our future based on the underlying
strength of our business and expected returns from the
implementation of our strategy. It is also reassuring that the
collectibles market has shown remarkable resilience and support
during the current economic crisis. It is this stability and growth
that is encouraging an increasing number of individuals to
seriously look at the collectibles market for the first time as a
means of protecting and growing their wealth for the long term.
Michael Hall, Chief Executive
22 March 2012
Financial Review
The Group's cash funds at 31 December 2011 were GBP3.2m,
compared to GBP1.8m 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 collectibles, IT
systems and value enhancing acquisitions. It is not Group policy to
engage in speculative activity using financial derivatives or other
complex financial instruments.
At 31 December 2011, the Group had bank borrowings of GBP0.44m
(2010: GBP0.69m) 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%. The deferred element to the
consideration on the purchase of the Benham Group of GBP0.75m, due
to the vendors one year after completion, carried an interest rate
of LIBOR plus 2.25% and was settled in full in September 2011. The
Group also currently has use of an overdraft facility, if required,
of GBP1.0m. This facility is renewable in April 2012.
Balance Sheet and Cash Flow
Cash generated from operating activities was GBP4.1m (2010:
GBP2.2m). A summary reconciliation of the operating profit to cash
generated from operating activities is given below:
2011 2010
GBP000 GBP000
Operating profit 5,108 4,287
Non-cash charges to profits 503 107
IFRS2 actuarial accounting charge for share options 108 81
------------------------------------------------------- -------- --------
Operating profit after adding back accounting charges
to profit which do not impact on cash flows 5,719 4,475
Increase in inventories (2,027) (4,081)
Payment of deferred consideration on acquisition (750) -
of The Benham Group
Cash generated from other working capital movements 1,109 1,817
------------------------------------------------------- -------- --------
Operating cash generated in year 4,051 2,211
------------------------------------------------------- -------- --------
The strong cash generation in the year reflects the conversion
of operating profits into cash. Operating profits, after adding
back accounting charges, which do not affect cash flows, were
GBP5.7m. Non-cash charges include depreciation, amortisation and
accounting provision increases. The cash generated in the year
funded the payment of the deferred consideration due on the
acquisition of The Benham Group of GBP0.75m.
We continued to re-invest cash generated in our stockholding of
rare collectibles. As a result, stock levels at 31 December 2011
were GBP16.8m (2010: GBP14.8m), representing an increase of 14%.
The increase in stock includes the build up of a stockholding in
rare coins and military medals of GBP1.1m. This is in line with our
strategy and provides scalability and diversification within our
investment offering.
The increased stockholding must be considered in conjunction
with the increased levels of trading experienced in the year. At 31
December 2011, the company held stock with a cost representing 280
days (2010: 363 days). The number of day's stock held has reduced
by 23%, illustrating an improved stock turn on the prior year.
Our increased investment in our stockholding was predominantly
in high value rare collectibles, which we believe to be a better
investment of Shareholder Funds than holding surplus cash balances,
which do not generate a material return.
The increase in cash during the year of GBP1.4m (2010: decrease
of GBP1.2m) is net of dividends paid of GBP1.4m (2010: GBP1.3m),
tax paid of GBP0.4m (2010: GBP0.4m) and repayment of borrowings of
GBP0.25m (2010: 0.06m).
The Group invested GBP0.6m (2010: GBP1.7m) in capital
expenditure during the year and can be analysed as follows:
2011 2010
GBP000 GBP000
Goodwill arising on the acquisition of The Benham
Group - 256
System upgrades 116 266
Refurbishment of offices 172 772
Website development costs 140 301
Other tangible and intangible capital expenditure 147 136
Total Capital Expenditure in the year 575 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.
Finance income/costs
Group cash funds generated GBP1,000 (2010: GBP2,000) bank
interest for the year. Included within "Finance income" is
GBP52,000 (2010: GBP34,000), 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 GBP56,000 (2010: GBP19,000) include interest
payable of GBP41,000 (2010: GBP15,000) in respect of financing the
Benham Group.
Taxation
The tax charge for the year (excluding deferred taxation) was
GBP441,000 (2010: GBP462,000) incurred on UK and Hong Kong profits,
resulting in an effective rate of 8.5% (2010: 10.7%). Profits from
Channel Island trading companies are currently subject to tax at
zero percent.
Dividends
The Board is recommending a final dividend of 3.5p per Ordinary
Share (2010: 3.25p) giving a total dividend of 6p for the year
ended 31 December 2011 (2010: 5.5p). Subject to Shareholders'
approval, the final dividend will be paid on 21 May 2012 to
Shareholders on the register at 10 April 2012.
Accounting Policies
Accounting polices, which remain unchanged from the prior year,
are detailed in Note 1 to the Financial Statements.
Donal Duff, Finance Director
22 March 2012
Consolidated statement of comprehensive income
for the year ended 31 December 2011
Year ended Year ended
31 December 2011 31 December 2010
Notes GBP'000 GBP'000
------------------------------------------ -----------------------------------------
Revenue 35,704 26,429
Cost of sales (21,872) (14,859)
---------------------------- ----------------------------------------- -----------------------------------------
Gross Profit 13,832 11,570
Administrative expenses
before
exceptional operating costs (2,730) (2,269)
Selling and distribution
expenses (5,882) (4,864)
---------------------------- ----------------------------------------- -----------------------------------------
Operating profit before
exceptional
items 5,220 4,437
Exceptional operating costs (112) (150)
---------------------------- ----------------------------------------- -----------------------------------------
Operating Profit 5,108 4,287
Finance income 53 36
Finance costs (56) (19)
---------------------------- ----------------------------------------- -----------------------------------------
Profit before tax 5,105 4,304
Taxation (430) (473)
---------------------------- ----------------------------------------- -----------------------------------------
Profit for the financial
year 4,675 3,831
Other comprehensive
income:
Actuarial (losses) / gains
recognised in the pension
scheme (809) 354
Tax on actuarial losses /
(gains)
recognised in the pension
scheme 172 (113)
Revaluation of the reference
collection net of deferred
tax 53 -
Other comprehensive (loss)
/ income for the year, net
of tax (584) 241
---------------------------- ----------------------------------------- -----------------------------------------
Total comprehensive income
for the year 4,091 4,072
---------------------------- ----------------------------------------- -----------------------------------------
Basic earnings per Ordinary
share 318.54p 15.22p
Diluted earnings per Ordinary
share 318.30p 15.17p
------------------------------ ------ ------
Statement of financial position
as at 31 December 2011
Group Group Company Company
31 December 31 December 31 December 31 December
2011 2010 2011 2010
Notes GBP'000 GBP'000 GBP'000 GBP'000
------ ------------ ------------- --------------- -------------
Non-current assets
Intangible assets 1,133 1,014 - -
Property, plant and equipment 2,032 1,862 - -
Deferred tax asset 224 32 - -
Trade and other receivables 420 - - -
Investment in subsidiary
undertakings - - 6,163 6,055
--------------------------------------- ------------ ------------- --------------- -------------
3,809 2,908 6,163 6,055
-------------------------------------- ------------ ------------- --------------- -------------
Current Assets
Inventories 16,801 14,774 - -
Trade and other receivables 9,178 8,866 2,168 1,454
Cash and cash equivalents 3,230 1,838 43 39
--------------------------------------- ------------ ------------- --------------- -------------
29,209 25,478 2,211 1,493
-------------------------------------- ------------ ------------- --------------- -------------
Total assets 33,018 28,386 8,374 7,548
--------------------------------------- ------------ ------------- --------------- -------------
Current liabilities
Trade and other payables 6,641 5,550 1,319 944
Borrowings 250 252 - -
Current tax payable 370 349 - -
--------------------------------------- ------------ ------------- --------------- -------------
7,261 6,151 1,319 944
-------------------------------------- ------------ ------------- --------------- -------------
Non-current liabilities
Retirement benefit obligations 842 114 - -
Borrowings 188 435 - -
Deferred tax liabilities 213 194 - -
Provisions 685 504 - -
1,928 1,247 - -
-------------------------------------- ------------ ------------- --------------- -------------
Total liabilities 9,189 7,398 1,319 944
--------------------------------------- ------------ ------------- --------------- -------------
Net assets 23,829 20,988 7,055 6,604
--------------------------------------- ------------ ------------- --------------- -------------
Equity
Called up share capital 253 252 253 252
Share premium account 5,285 5,195 5,285 5,195
Share compensation reserve 352 244 352 244
Capital redemption reserve 38 38 38 38
Revaluation reserve 254 201 - -
Retained earnings 17,647 15,058 1,127 875
--------------------------------------- ------------ ------------- --------------- -------------
Equity shareholders' funds 23,829 20,988 7,055 6,604
--------------------------------------- ------------ ------------- --------------- -------------
Statement of changes in equity
for the year ended 31 December 2011
The Group
Called Share Share Capital
up share premium compensation Revaluation redemption Retained
capital account reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2011 252 5,195 244 201 38 15,058 20,988
Profit for the
financial
year - - - - - 4,675 4,675
Actuarial loss
on pension
scheme net of
deferred
tax - - - - - (637) (637)
Revaluation of
the reference
collection
net of
deferred
tax - - - 53 - - 53
-------------- -------------------- -------------------- -------------------- -------------------- ------------------- -------------------- -------
Total
comprehensive
income - - - 53 - 4,038 4,091
Dividends - - - - - (1,449) (1,449)
Cost of share
options - - 108 - - - 108
Share options
exercised 1 90 - - - - 91
At 31 December
2011 253 5,285 352 254 38 17,647 23,829
-------------- -------------------- -------------------- -------------------- -------------------- ------------------- -------------------- -------
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
-------------- -------------------- -------------------- -------------------- -------------------- ------------------- -------------------- -------
Called Share Share Capital
up share premium compensation Revaluation redemption Retained
capital account reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2011 252 5,195 244 - 38 875 6,604
Profit and
total
comprehensive
income for
the year - - - - - 1,701 1,701
Dividends - - - - - (1,449) (1,449)
Share options
exercised 1 90 - - - - 91
Cost of share
options - - 108 - - - 108
At 31 December
2011 253 5,285 352 - 38 1,127 7,055
-------------- -------------------- -------------------- -------------------- -------------------- ------------------- -------------------- -------
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
-------------- -------------------- -------------------- -------------------- -------------------- ------------------- -------------------- -------
Statement of cash flows
for the year ended 31 December 2011
Group Group Company Company
31 December 31 December 31 December 31 December
2011 2010 2011 2010
Notes GBP'000 GBP'000 GBP'000 GBP'000
----- ----------- ------------- ----------- --------------
Cash generated from / (used
in) operations 4 4,051 2,211 (87) 7
Interest paid (56) (19) - -
Taxes paid (420) (408) - -
---------------------------------- ----- ----------- ------------- ----------- --------------
Net cash generated from
/ (used in) operating activities 3,575 1,784 (87) 7
---------------------------------- ----- ----------- ------------- ----------- --------------
Investing activities
Purchase of property, plant
and equipment (344) (871) - -
Purchase of intangible
assets (231) (604) - -
Acquisition of businesses - (900) - -
Interest received 1 2 - -
Loans granted to subsidiary
undertakings - - - (750)
Dividends received - - 1,449 2,072
Net cash (used in) / generated
by investing activities (574) (2,373) 1,449 1,322
---------------------------------- ----- ----------- ------------- ----------- --------------
Financing activities
Dividends paid to company
shareholders (1,449) (1,322) (1,449) (1,322)
Proceeds from borrowings - 750 - -
Repayments of borrowings (251) (63) - -
Net proceeds from issue
of ordinary share capital 91 - 91 -
---------------------------------- ----- ----------- ------------- ----------- --------------
Net cash used in financing
activities (1,609) (635) (1,358) (1,322)
---------------------------------- ----- ----------- ------------- ----------- --------------
Net increase / (decrease)
in cash and cash equivalents 1,392 (1,224) 4 7
---------------------------------- ----- ----------- ------------- ----------- --------------
Cash and cash equivalents
at start of year 1,838 3,062 39 32
---------------------------------- ----- ----------- ------------- ----------- --------------
Cash and cash equivalents
at end of year 3,230 1,838 43 39
---------------------------------- ----- ----------- ------------- ----------- --------------
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 2011 and 31 December 2010.
The financial information for the year ended 31 December 2010
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 2011 has been extracted
from the audited financial statements of the Group for the year
ended 31 December 2011 which were approved by the Board of
Directors on 22 March 2012.
2. Dividends
Subject to approval at the AGM on 2 May 2012, the final dividend
of 3.5p per Ordinary Share will be paid on 21 May 2012 to all
shareholders on the register on 10 April 2012.
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
2011 2010
Weighted average number of ordinary
shares in issue (No.) 25,217,437 25,177,443
Dilutive potential ordinary shares:
Employee share options (No.) 327,837 84,101
Profit after tax (GBP) 4,675,000 3,831,000
Exceptional operating costs (net of
tax) 83,000 120,000
------------------------------------- ----------- -----------
Adjusted profit after tax (GBP) 4,758,000 3,951,000
------------------------------------- ----------- -----------
Basic earnings per share - pence per
share (p) 18.54p 15.22p
------------------------------------- ----------- -----------
Diluted earnings per share - pence
per share (p) 18.30p 15.17p
Adjusted earnings per share - pence
per share (p) 18.87p 15.69p
------------------------------------- ----------- -----------
Adjusted diluted earnings per share
- pence per share (p) 18.63p 15.64p
------------------------------------- ----------- -----------
4 Cash generated from operations
31 December (Group) 31 December (Company)
2011 2010 2011 2010
GBP'000 GBP'000 GBP'000 GBP'000
Operating profit 5,108 4,287 144 119
Depreciation 239 170 - -
Amortisation 112 32 - -
Increase / (decrease) in
provisions 152 (95) - -
Cost of share options 108 81 108 -
Increase in inventories (2,027) (4,081) - -
(Increase) / decrease in
trade and other receivables (732) 1,181 (714) (704)
Increase in trade and other
payables 1,091 636 375 592
----------------------------- ---------- --------- ----------- ----------
Cash generated from / (used
in) operations 4,051 2,211 (87) 7
----------------------------- ---------- --------- ----------- ----------
5. Annual report and accounts
The Annual Report and Accounts for the year ended 31 December
2011 will be posted to shareholders shortly. Further copies can be
obtained from the Company Secretary at 18 Hill Street, St Helier,
Jersey, JE2 4UA, or the Company's Broker, Peel Hunt LLP at Moor
House, 120 London Wall, London EC2Y 5ET 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 BKBDQQBKDQNB
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