TIDMSGI
RNS Number : 2661E
Stanley Gibbons Group PLC
15 July 2016
THE STANLEY GIBBONS GROUP PLC
(the "Company" or the "Group")
Corporate Update, Board Changes and Audit Update
Tax Restructuring and Board Update
The Stanley Gibbons Group plc (AIM:SGI) announces that, as part
of its rationalisation and repositioning, which has already
exceeded the targeted annualised operating cost savings of GBP5
million, and which was referred to in the Circular to Shareholders
dated 11 March 2016 and recognising that the majority of the
Group's activities, following the acquisitions of recent years, are
now located in the UK, the Board is reconsidering the benefits of
off-shore status for the Group as a whole. Having regard to the
fact that most of the activities are now in the UK, the Board has
also concluded that the geographical locations of the Executive
Board and management team should have more UK emphasis in order
that they may be better able to meet the needs of the Group.
Accordingly, the following management and board changes take
immediate effect:
-- Due to the proposed relocation of the key executive positions
to the UK, both Mike Hall's and Donal Duff's roles as Chief
Executive and Chief Financial Officer, respectively, will become
redundant and they have stepped down from the Board. However, both
remain committed to the Group and will be available to advise on
investment sales and financial reporting respectively for a
handover period at least until the conclusion of the audit for the
year ended 31 March 2016;
-- Andrew Cook, who was appointed Group Managing Director on 31
May 2016, has joined the Board as Chief Financial Officer. Mr Cook
is an experienced finance executive having previously held the
position of Group Finance Director at Orchard & Shipman Group
plc and at Medina Dairy Ltd. Prior to this Mr. Cook held senior
finance, commercial and executive roles for various companies
including Kelly Services and The Body Shop;
-- Harry Wilson, who joined the Board on 17 May 2016, will
become Executive Chairman. His interest and expertise in philately
has had an immediate and positive impact on staff and his
leadership is proving instrumental in the ongoing rationalisation
of the Group;
-- Further to the announcement of 17 May that Martin Bralsford
had stepped down as Chairman he has resigned as a director of the
Company. In addition, Simon Perree, having served a three year term
as Non-Executive Director has decided not to seek re-election at
the Company's next AGM and has decided to resign as a director with
immediate effect.
The Board believe that despite its recent difficulties, the
Group is fortunate to have a loyal and dedicated workforce with a
great depth of experience and expertise. These staff have enabled
the individual businesses within the Group to retain the support of
their customers, both collectors and investors alike, who, in this
period of economic uncertainty can be provided with access to
tangible assets of lasting value.
Business Rationalisation
In addition to the measures outlined above, the initial actions
of the business rationalisation exercise have been directed towards
realigning the business around predictable revenue streams, such
that the Company does not have to rely upon material one-off high
value sales or major auction consignments to achieve profitability,
and in developing coherent and reliable plans for the underlying
businesses that will enable the Group to operate within its
available funding resources. In particular, the following has been
achieved:-
-- the target of reducing annualised operating costs, by not
less than GBP5 million, has already been exceeded and this process
remains ongoing with further savings identified;
-- the Interiors Division has been comprehensively restructured
over the last six months leading to a significantly reduced cost
base (including the disposal of leasehold interests in New York and
London as announced on 24 May 2016) to accommodate a lower and more
realistic revenue target. The division is currently operating
broadly in line with those revenue targets and, as the effects of
the cost-cutting come through, should begin to return to
profitability once more;
-- the Company is undertaking a full review of its E-Commerce
strategy which will refocus resources upon selling its own
proprietary assets of high class collectibles and world renowned
publications. The Board continues to believe there is an
opportunity to grow online revenues and, at the same time
materially reducing the monthly cash outflow;
-- the Group continues to operate within it's available funding
resources and, indeed, has been able to reduce the amount of the
term loan with part of the proceeds from the disposal of its
leasehold interests;
-- the Group has appointed a new Executive Chairman, Harry
Wilson, an experienced public company chairman with a keen interest
and good knowledge of philately, and a Managing Director of the
London-based businesses, Andrew Cook, who has extensive experience
of both managing change and of the retail industry. Andrew Cook has
today also been appointed as Chief Financial Officer to the
Group;
Audit Update
On the 30 June 2016 the Company announced its intention to
release results for the year ended 31 March 2016 later than in
previous years, reflecting the additional complexity of the audit
due to the ongoing restructuring and the appointment of new
auditors.
As part of the audit process the Board is currently reviewing
its accounting policy and past accounting treatment with regard to
the recognition of revenue in the philatelic trading business,
specifically in relation to certain of the investment plans which
have been offered by the Group in earlier years, this review is
being undertaken in light of the contractual terms of those
investment plans and the requirements of International Financial
Reporting Standards. The new auditors consider that the previous
recognition of revenue related to certain of the investment plans
may not have been appropriate and the Board are likely to correct
this in the 31 March 2016 financial statements by way of a prior
year adjustment. The consequence of any such adjustment and
correction of the accounting policy for revenue recognition is that
there will be a reduction to the philatelic trading business
revenue recognised in prior years, which will now be de-recognised.
Depending on subsequent events, the value of outstanding investment
plans, which offer clients an option at the end of the contract
term to sell back to Stanley Gibbons, would fall to be recognised
as revenue in later financial periods, including in the year ended
31 March 2016. Although the trading results of later years are
likely to be beneficially effected, the historic reported revenue
and profit will be materially reduced as a consequence of the
unwinding of a material part of the previously reported investment
plan revenues and profits. The necessary accounting adjustments
will also increase the carrying value of creditors at 31 March 2016
and require the carrying value of a related element of stock to be
reduced from the price at which it was repurchased back to original
cost. Any accounting adjustment would also bring back into stock
those items where the Group retains a contractual obligation to
repurchase the stock from clients at the end of the investment plan
term, notwithstanding the fact that many clients do not exercise
this option at the end of their contract. It is emphasised that
there would be no change to the cash position or the trading
prospects for the Group.
Whilst these accounting adjustments would result in a reduction
in the Group's underlying net asset value, the Board considers that
it would also encourage and support the Group sales strategy to
reduce the historic stock build up and to generate cash. In
addition to these adjustments, the Board is also reviewing the
carrying value of certain other assets, in particular goodwill
relating to some of its recent investments and capitalised computer
costs. The Board expects that a write down will be made against
these intangible assets as at 31 March 2016 although, again, it is
emphasised that this will not impact the reported cash position of
the Group.
Harry Wilson commented:
"The restructuring of Stanley Gibbons is unsettling for all
concerned with the business and the Directors would like to thank
both its staff and customers for their ongoing support. Whilst
there are undoubtedly challenges ahead, at the heart of the
business are some of the leading experts in their respective fields
together with stock items that are the envy of our competitors the
world over. This combination is an excellent platform from which to
restore the trading fortunes and reputation of the Group."
The following information regarding the appointment of Andrew
Cook, aged 53, is disclosed under Schedule 2(g) of the AIM Rules
for Companies:
Andrew Cook
Current directorships Former directorships
and/or partnerships: and/or partnerships (within
the last five years):
None Kiosk Limited
Orchard & Shipman Group
plc
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation
596/2014
For further information, contact:
The Stanley Gibbons Group plc
Harry Wilson +44 (0)1534 766
Andrew Cook 711
finnCap Ltd (Nomad & Broker)
Stuart Andrews / Christopher Raggett
(corporate finance)
Tim Redfern / Simon Johnson (corporate +44 (0)20 7220
broking) 0500
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCZMGMNZDKGVZZ
(END) Dow Jones Newswires
July 15, 2016 02:00 ET (06:00 GMT)
Stanley Gibbons (LSE:SGI)
Historical Stock Chart
From Jun 2024 to Jul 2024
Stanley Gibbons (LSE:SGI)
Historical Stock Chart
From Jul 2023 to Jul 2024