TIDMSGI
RNS Number : 4587L
Stanley Gibbons Group PLC
03 October 2016
The Stanley Gibbons Group plc
("Stanley Gibbons" or the "Company")
Posting of Annual Report and Notice of General Meeting
Stanley Gibbons has today published its Annual Report and
Accounts for the year ended 31 March 2016 which is available on the
Company's website and is set out in full below.
The Annual Report contains a Notice of General meeting of
shareholders which will be held at Banjo Jersey, 8 Beresford
Street, St Helier, Jersey JE2 4WN at 11.30 a.m. on 27 October
2016.
For further information, contact:
The Stanley Gibbons Group plc
Harry Wilson - Chairman
Andrew Cook - Chief Finance Officer
+44 (0)1534 766 711
finnCap Ltd (Nomad & Broker)
Stuart Andrews / Christopher Raggett (Corporate finance)
Tim Redfern / Simon Johnson (Corporate broking)
+44 (0)20 7220 0500
Financial Highlights
Year ended Year ended
31 March 31 March
2016 2015
restated
Group Turnover (GBPm) 59.1 60.0
Trading profits (GBPm) (10.1) 5.4
(Loss)/Profit before taxation (GBPm) (28.9) 1.8
Adjusted (loss)/profit before taxation
(GBPm) (4.9) 5.1
Basic earnings per share (p) (62.17) 1.54
Adjusted earnings per share (p) (10.06) 10.28
Dividend per share (p) - 5.0
Net borrowings (GBPm) 20.4 11.7
Net assets per share (p) 81.5 143.2
Adjusted Net assets per share (p)* 22.0 n/a
*(as at 1 April 2016)
Chairman's Statement
Introduction
As the newly appointed Chairman of Stanley Gibbons this is my
first annual report for the Group. I joined the Board in May 2016
during a very difficult period for the Group which encompassed the
appointment of corporate restructuring specialists to undertake a
comprehensive review of all operational aspects of the Group, a
subsequent profit warning and a fundraising designed to nurse the
Group through a liquidity squeeze. In short, things had gone badly
adrift and urgent action was required to recover the situation. The
43% fall in net asset value, reflected in the table in the
Financial Review on page 14, has resulted from a combination of
both the inadequately integrated and managed acquisitions and
internet development activities of recent years alongside the more
pervasive impact of the reinvestment profile of the Groups
investment contracts which had an element of contractual buy-back.
These contracts were sold between 2005 and 2013 and have resulted
in a restatement of prior year earnings relating to all open
contracts as at 1 April 2014. Although much remains to be done,
substantial progress has been made over the last nine months with a
reconstituted Board and relocation of Executive Directors to the
UK, together with significant operational changes which are
described in detail in the Business Review below.
Trading and Operations
As announced today trading conditions have remained difficult
since we forecast an adjusted loss before tax of between GBP1m and
GBP2m, for the year ended 31 March 2016, on 23 February 2016,
with:
-- a 43% reduction in net assets as a result of a restatement of
prior years' results and a significant reduction in the carrying
value of certain other assets.
-- Turnover at GBP59.1m, being 28% below budget and 15% lower than the prior year;
-- Gross Margin at 40% (2015: 52%) was also lower, partly due to
high margins on major collections in the previous year and a
reduced auction schedule in both Baldwin`s and Dreweatts;
-- the adjusted loss before tax, excluding exceptional charges,
was GBP4.9m (after a prior year adjustment of GBP1.2m) largely
attributable to a loss of GBP2.0m at The Marketplace and a loss of
GBP1.3m at Mallett;
As a consequence of the poor performance outlined above bank
debt rose over the year to GBP21.9m (31 March 2015: GBP11.7m), ,
with actual debt peaking at GBP24m in March 2016 and currently at
GBP18m. The intention is to reduce the long-term gearing of the
business through a sharp focus on increasing sales and in
particular reducing the level of stock held which has grown
disproportionately in recent years.
Following the appointment in February 2016 of our new auditors,
BDO Limited ("BDO"), the Board has revisited the accounting
treatment previously adopted in connection with certain
transactions and has concluded that it was not in accordance with
the applicable accounting standards. Accordingly the Board has
decided to adopt the appropriate accounting policies in these
accounts. This has resulted in a restatement of prior years'
results and a substantial write-down of balance sheet assets. These
changes stem largely from fundamental errors in the accounting
treatment previously adopted, most notably of investment product
sales in previous years, and adjust for all open contracts in
existence as of 1 April 2014. Although the underlying products were
conceived in 2005, these changes do not affect the reported cash
position at 31 March 2016 and we have not sought to restate earlier
accounting periods. In addition to these adjustments, the Board has
also reduced the carrying value of certain other assets, in
particular goodwill relating to the acquisition of Noble
Investments and capitalised IT costs relating to the development of
The Marketplace which, following a decision that it was not
economically viable, was closed on 7 September 2016.
Furthermore, given the distorting effect of the March
fundraising completed on 1 April 2016, we have shown adjusted loss
per share and net asset per share figures too.
The restructuring programme, initiated in late December 2015, is
progressing to plan with annualised operating cost savings of some
GBP10m identified to date where full benefits will be seen in the
financial year to 31 March 2018. The main elements of the cost
rationalisation have involved the reduction of office/retail
premises, a dramatic down-sizing of the Interiors division together
with a relocation of the remaining website development activities
for the on-line trading from the USA to the UK. Cessation of the
development of The Marketplace accounts for GBP1.5m of the
identified cost savings. The Board remains confident that the Group
is now on track to deliver further progress in accordance with the
restructuring plan following a year of substantial transition.
Dividend
Given the results for the year, the Board is not recommending
the payment of a final dividend for the year to 31 March 2016 (12
months ended 31 March 2015: 5.00p inclusive of a final dividend of
1.75p paid on 17 August 2015). The Board will review the dividend
policy regularly taking into account trading conditions,
opportunities for reinvestment in future growth and working capital
requirements.
Management and Board Changes
The restructuring review identified the need for dramatic
changes across the Group which were long overdue and have now been
initiated. We remain committed to providing a top quality service
to our customers primarily through our world-class experts in their
respective fields. Within the internationally recognised brand
names the specialists differentiate us from our peers and we will
look to grow these teams.
All Executive Directors are now London based where they can
provide ongoing support to the individual teams as we rebuild the
business. As part of the review, there has been a significant
reduction in the head-count at both the Interiors division and The
Marketplace with further initiatives underway to reduce central
overheads. At Baldwins we have recently appointed a new managing
director to galvanise the restoration of the coins division
following the departure of a number of staff.
In light of the above I would like to thank all of our staff, on
behalf of the Board, for their hard work and support over what has
been a difficult time for the Group. The Group is fortunate to have
a dedicated workforce, with a great depth of historic knowledge,
commitment and expertise, and it is our intention to recognise this
contribution and loyalty through the issue of share options to
staff to align their interests with our shareholders.
There has been an almost complete change in the Board over the
last year. Martin Bralsford, Mike Hall, Donal Duff, Simon Perrée
and Clive Jones have all stepped down whilst Clive Whiley, Henry
Turcan, Andrew Cook and I have joined the Board. I would
particularly like to thank Martin Magee who has remained on the
Board during this transitional period and has chaired the Audit
Committee very diligently. Martin has indicated that he plans to
step down at the AGM.
Strategy for the Future
The objectives of our revised strategy are to ensure that we
build long-term relationships with our clients across a wide range
of international markets where we can provide differentiated
offerings and build brand recognition. By focusing investment on
our core businesses and providing premium service to our customers
we will seek to deliver long-term value to shareholders in the
process. We have already achieved significant progress with the
integration of the acquisitions made in recent years, to derive the
benefits which should have been gained. This will be a key part of
our plans over the coming months as we endeavour to establish a
sustainable and profitable business model for the Group.
The Board believes that only by re-focusing on Stanley Gibbons
core branded activities, whilst maintaining disciplined capital
allocation, will the fortunes of the Group be restored and along
with it shareholder value. Investment customers will continue to be
a key customer focus for our business, but we will also build on
the collector part of our trade which has historically been the
foundation of the Company.
Outlook
The market for rare collectibles and fine art remains buoyant
for collectors and given the low interest rate environment
continues to offer an attractive alternative for investment. The
Brexit vote has added a degree of uncertainty over the macro
environment but quality collectibles have traditionally maintained
their value and appeal over the long-term and particularly in times
of uncertainty.
The restructuring of Stanley Gibbons has been unsettling for all
concerned with the business, and the Directors would like to thank
all our stakeholders for their ongoing support during this
transitional period. There will inevitably be more challenges ahead
but we have taken definitive action with a view to restoring the
business and reputation of the Group.
Harry Wilson, Chairman
2 October 2016
Business Review
The March 2016 fundraising Circular highlighted that the year to
31 March 2016 had been an exceptionally difficult year for the
business with a marked downturn in like-for-like revenue, gross
margin and trading profits which, amongst other factors, had led to
a severely constricted cash position. In late December 2015, the
Board had appointed corporate restructuring specialists to
undertake an assessment of the banking and fundraising options and
to oversee a root and branch review of every facet of the Group`s
business, targeting annualised operating cost savings of GBP5m.
Clive Whiley, who has been overseeing the restructuring programme,
joined the Board as a director following the successful conclusion
of the fundraising on 31 March 2016.
The net proceeds of GBP12.4m, raised in March, were used to
repay a temporary bank overdraft, which had been taken out in
January 2016 to support the rationalisation exercise, to facilitate
the integration of previous acquisitions and to provide additional
working capital.
Restructuring Update
Summary
The restructuring process has required a number of difficult
decisions including a reduction in headcount , rationalisation of
premises and other overhead costs, the closure of cash-consuming
business lines and the down-sizing of non-core businesses in order
to concentrate resources on supporting activities deemed core to
the Group's future. There have also been changes to the senior
Board executives.
Harry Wilson was appointed as Chairman, in a non-executive
capacity, in May 2016 and as an executive following the board
departures in July 2016 of Mike Hall (Chief Executive) and Donal
Duff (Chief Financial Officer). At the same time, Andrew Cook, who
had been recruited to be the London-based Managing Director, joined
the board as Chief Financial Officer.
Significant progress has been made with the restructuring plan
including the closure of The Marketplace and the re-scoping and
scaling back of our Interiors division, with a view to better
aligning revenue and costs before the end of the current financial
year, as we completed the rationalisation and integration of the
Noble and Mallett acquisitions.
As a result, annualised operating cost reductions already exceed
the initial target of GBP5m, with a total of GBP10m of cost savings
now identified. The full cash benefit will be seen in the full year
results to March 2018. The projects requiring wholesale change have
either been completed or are currently underway however the
rationalisation and continued drive for more efficient correlation
between costs and revenue growth will be an ongoing process.
The dramatic changes were necessary and overdue and,
notwithstanding the continuing challenges confronting the business,
there has been strong internal recognition of the need for
change.
Significant accounting changes and balance sheet adjustments
Revenue Recognition
On 30 June 2016 we announced our 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. There
have been some significant adjustments in this year`s accounts and
these are summarised below:
The Board has revisited the accounting treatment previously
adopted in connection with certain transactions and has concluded
that it was not in accordance with the applicable accounting
standards. Accordingly the Board has decided to adopt some,
significantly changed, accounting policies in the presentation of
the accounts. These have resulted in a restatement of prior years'
results and a substantial write-down of balance sheet assets. These
changes stem largely from fundamental errors in the accounting
treatment previously adopted, most notably of investment product
"sales" recognised in previous years.
In conjunction with the audit the Board has reviewed its
accounting policy and past accounting treatment with regard to the
recognition of revenue in the philatelic trading business,
specifically in relation to the contractual terms of certain of the
investment plans which had been offered by the Group in earlier
years and the requirements of International Financial Reporting
Standards. The Board concluded that the recognition of revenue in
relation to certain of the investment plans had not been in
accordance with accounting standards and elected to adopt a new
policy in the 31 March 2016 financial statements and to correct the
accounting treatment in the financial statements for the period
from 1 April 2014 through to 31 March 2016 by way of a prior year
adjustment ("PYA"). The consequences of this correction of
accounting policy for revenue recognition have been:
-- an increase in the amount of creditors at 31 March 2015, by
GBP33.5m, to reflect the revenues that have been written back but
some of which is expected to be recognised in future years upon
maturity of the plans, and an increase in stock by GBP18.6m to
include those items where the Group has a contractual obligation to
repurchase them from clients at the end of the investment plan term
(notwithstanding that, historically, the majority of clients have
not exercised this option at the end of their contract);
-- a reduction of GBP3.6m in the carrying value of stock, in
order to reflect stock which has previously been repurchased from
maturing investment plans at original cost instead of at its
repurchase price;
-- 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 (Guernsey) Limited,
will fall to be recognised as revenue in later financial periods,
including GBP7.0m in the year ended 31 March 2016;
It is emphasised that there has been no change to the cash
position of the Group as a result of the above change in accounting
policy and consequential PYA's.
Whilst these and other accounting adjustments discussed
elsewhere have resulted in a reduction in the Group's underlying
net asset value, to GBP38.4m, as at 31 March 2016, the Board
considers that it is fundamental to the future of the Group that
all sales efforts are focused on selling stock on a profitable
basis and reducing the average stockholding period. The above
changes ensure that the historic inflated carrying value of certain
stock items is reversed and will hopefully provide a new basis from
which to generate profitable cash sales going forward.
Impairment of Goodwill and intangibles
In addition to the revenue recognition adjustments, the Board
has also reviewed the carrying value of certain other assets, in
particular goodwill relating to some of its recent investments and
capitalised IT costs. This has resulted in a write down, of
GBP14.2m, against the value of intangible assets during the year
ended 31 March 2016 although, again, it is emphasised that this has
had no impact on the reported cash position of the Group.
Provisions against trade Debtors and Stock
Similarly, following a review of the trade debtor balances,
which amount to GBP12.9m and some of which originate from over 2
years ago, the Board has considered that it would be prudent to
make some provision against these amounts due to the Group.
Accordingly, it has taken a total provision of GBP3.0m in the year
ended 31 March 2016 but has commenced an active debt collection
programme designed to both validate the substance of the debtors
and generate cash for the Group.
Additionally, following a review of the stock carrying values
certain items had been carried at above their net realisable value,
while it should be stressed that this was limited a small group of
items. There was also an issue in physically locating certain stock
items particularly within the interiors division, which had
accumulated within stocks over several years. The total impact of
these provisions was GBP1.4m
The Marketplace
Notwithstanding the substantial allocation of Group resource
since its inception, a full review of the E-Commerce strategy,
initiated in February 2016, determined that The Marketplace had
failed to deliver the platform hoped for at the outset and was
still someway short of doing so.
Accordingly, having consumed GBP10m over the last three years,
in order to significantly reduce the cash-burn, the Board took the
decision to:
-- cease development in the USA, as per the transition plan
outlined earlier, and to decouple all links between The Marketplace
and the continuing Stanley Gibbons website, which was transferred
contemporaneously to a new UK based platform in September
-- the Board continues to believe there is an opportunity to
grow online revenues and will now refocus resources upon selling
the Group`s own proprietary assets of high quality collectibles and
world renowned publications.
The closure of The Marketplace on 7 September finally brings to
an end an ill conceived, badly managed project which was allowed to
severely over-run budgeted expenditure. We will now seek to
retrieve as much of the embedded development IP as possible to
kick-start our revitalised E-Commerce strategy at Stanley
Gibbons.
Litigation
Following its acquisition of Mallett plc in October 2014, the
Company learned that government regulators in the United States
were investigating transactions that had occurred since 1 January
2010 involving a former client of Mallett Inc., Mallett's New
York-based subsidiary. The former client is not a related person or
affiliate of the Group. This issue had not been disclosed to the
Company by the directors of Mallett plc during the due diligence
process prior to the acquisition.
The Group continues to cooperate fully with the U.S. Securities
and Exchange Commission (the "SEC") and the Department of Justice
("DOJ"), including responding to a subpoena from the SEC requesting
documents and providing information to the Government regulators as
requested. Both the SEC and DOJ are aware that Mallett's new owners
were not involved in the events underlying the investigation, and
there have been discussions with the SEC regarding resolution of
these matters.
On 25 August 2015, the DOJ filed criminal charges against the
former client, arising in part out of his dealings with Mallett
Inc. As it relates to the Group, the former client was alleged to
have conspired with a then unnamed New York based employee of
Mallett Inc. to defraud a court-appointed receiver and to obstruct
the administration of justice in the United States. On 19 May 2016,
the DOJ filed criminal charges against Henry Neville, a former
director of Mallett plc and the previously unnamed New York based
employee of Mallett Inc., arising out of his dealings with the
former client, the court-appointed receiver, and the Government's
investigation into his conduct. On the same date, Mr Neville
pleaded guilty to all criminal charges against him. Mr Neville
awaits sentencing, as does the former client who has also pleaded
guilty to certain charges against him.
Whilst the investigations are ongoing, no criminal or civil
charges have been filed against Mallett Inc. or any Mallett group
company to date. The Group continues to retain the services of US
legal counsel to advise it in these matters. The investigations are
not being conducted in public, and the Directors cannot predict
with certainty whether Mallett Inc. or any other company or person
in the Mallett group will be named in civil or criminal claims or
litigation as a result of the investigations.
Though the transactions pre-dated the acquisition there was no
provision in the financial accounts of Mallett plc or its
subsidiaries for any costs relating to them. A fair value
adjustment was made subsequent to the acquisition as at that point
the costs in responding to the subpoena from the SEC and/or
assisting the US authorities with their investigations were
unavoidable. The estimate made at the time was GBP0.9m,.
Subsequently, with the involvement of the DOJ, this estimate has
proved to be inadequate.
At present the Board's best estimate of the subsequent costs as
at 31 March 2016 total an additional GBP1.1m. This amount is the
total accrual at the year end. Any further potential costs cannot
be estimated with any degree of accuracy and could have a material
adverse effect on the Group.
Funding
The existing borrowings and facilities, all of which are secured
and guaranteed by various members of the Group, comprise:
-- a GBP8.3million loan facility, originally GBP10m, taken out
to enable the acquisition of Noble in 2013 and currently
benefitting from a moratorium on capital repayments, which will
recommence at GBP500,000 per quarter from 31 March 2017 but subject
to earlier part-repayment in the event of a major asset disposal;
and
-- a GBP10m revolving credit/overdraft facility, which is available until 31 May 2018.
The Group's bank continues to be supportive as reflected in both
the moratorium on loan repayments and in the revision of the
ongoing banking covenants, at the time of the fundraising, in order
to accommodate the sharp decline in trading performance.
Furthermore on 20 September 2016 the bank agreed a variation in the
asset cover covenants, necessary as a result of the PYA, whilst the
restructuring programme is given time to take effect.
What went wrong?
Shareholders deserve an explanation of the combination of events
leading to the severely disappointing trading result and
significant diminution in shareholder value reflected in these
financial statements.
The commercial logic behind the acquisition of Noble, for GBP46m
in November 2013, appeared compelling:
ü the creation of a group of companies offering synergistic
goods and services;
ü integration and diversification opportunities;
ü a complementary, experienced management team with highly
incentivised key executives.
The subsequent build-up of debt, from a net cash position post
the Noble acquisition, peaked at some GBP22m in March 2016 and
included a number of significant outflows, as follows:
-- a GBP10m loan taken out to fund the acquisition of Mallett in
October 2014;
-- GBP10m of cash spend incurred in developing The Marketplace
on-line trading platform, a significantly higher amount than
budgeted, over the last 3 years; and
-- some GBP8m of additional working capital build-up in the
business, partly offset by the receipt of over GBP4m from the
post-acquisition sale of Noble's London premises, at a time when
trading was slowing down.
In fact, whilst the new management team has already acted
swiftly to resolve the first two cash outflows detailed above, it
is the last element which has both proved more complex to isolate
and represents a more fundamental deterioration in the Groups core
business. It is now clear that the non-cash sale/reinvestment
profile of the Stanley Gibbons Investment division`s investment
contracts, sold between 2005 and 2013, which also retained an
element of contractual buy-back, also fuelled the worsening net
debt position.
The Group no longer offers investment plans with contractual buy
back options of any kind .
Current management believes that the integration process,
following the acquisitions of Noble and Mallett, was poorly managed
and as a result failed to instil a cohesive, UK based management
structure with adequate challenge and competition for capital. In
our opinion this in turn led to:
-- a failure to integrate and derive synergies and opportunities from the acquisitions;
-- an over-investment in an the e-trading platform with no tangible return;
-- an over-dependence on too few clients;
-- an over-investment in illiquid assets as management time was diverted;
-- a Group increasingly leveraged as a consequence of retaining
existing customers by novating the customer
from one investment product into another alongside the recognition of non-cash revenue;
resulting in a loss of confidence in the management and brands,
client and earnings erosion, cash outflows and a materially
impaired balance sheet.
In consequence, the rationale for the relocation of the
Executive Directors to London, in July 2016, as reinforced with
specialist directors with change management, financial, retail and
collectibles experience, was to introduce a robust, cash-driven, UK
based backbone to the business.
Restructuring Timeline
The key actions addressed in the implementation of the
restructuring plan, which encompassed a wide bandwidth, were:
-- January: commencement of a 90 day review of the Interiors
division, alongside stabilization of the financial position, where
GBP6m of additional bank facilities were needed to bridge liquidity
through to bank covenant tests due on 31 March 2016;
-- February: initiation of a review of The Marketplace, based in
the USA, and addressing the vacuum created by the untimely
resignation of the former auditors, necessitating the appointment
of new auditors and professional advisors ahead of a
fundraising;
-- March: issued Circular to shareholders seeking to raise
additional funds through the issue of new equity, to allow us to
extinguish the GBP6m temporary bank overdraft and agree a lending
package consistent with the difficult trading conditions, extending
the bank facilities through to 31 May 2018;
-- April: receipt of GBP12.4m (net of costs) from the
fundraising, repayment of the temporary bank overdraft,
implementation of the restructuring of the Interiors division in
parallel with completing the protracted integration of the Noble
and Mallett acquisitions;
-- May: appointments of Harry Wilson, Henry Turcan and Andrew
Cook and exchange of contracts for the sale of the Group's Mayfair
property leases (net consideration of GBP2.4m) as well as the
sub-letting of a substantial part of the Manhattan, New York
premises at a premium;
-- June: commencement of a review of the investment plans
offered by Stanley Gibbons (Guernsey) Limited in earlier years. We
also announced a delay in the publication of the preliminary
results for the year ended 31 March 2016 owing to the additional
complexity of the audit due to the ongoing restructuring and the
appointment of new auditors;
-- July: announcement of the relocation of the Executive
Directors to London, the departure of Mike Hall (CEO), Donal Duff
(CFO), Martin Bralsford & Simon Perree as directors and that
the Board was 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 offered in earlier years;
-- August: the phased closure of the US based activities
associated with The Marketplace, together with the decoupling of
all links to the continuing Stanley Gibbons website, which was
transferred contemporaneously to a new, UK based, e-commerce
platform. We also completed on the lease of new premises, in Pall
Mall, London for the Interiors division, providing a fulcrum from
which the business can resume growth;
-- September: commencement of the restructuring of the
philatelic and coin businesses, announcement of the departure of
Clive Jones as a director, consolidation of the security available
to support bank facilities and the start to the unwinding of the
working capital squeeze. Finally, following the successful
completion of the initial phase of the restructuring plan a formal
independent review of the business over recent years has been
initiated to identify potential avenues of redress for the
Group.
Whilst significant progress has been made over the last nine
months, as highlighted above, there is no room for complacency as
the new management team seeks to:
Ø complete the realignment of total operating overheads to our
sustainable, brand-driven, revenue streams, to ensure that the
Company becomes both cash-generative and profitable, providing a
financially secure platform upon which to build the less
predictable, but incrementally profitable, one-off high value sales
or major auction consignments;
Ø actively manage the investment plan profile in a manner which
generates sound returns for both the customer and company;
Ø exploit product gaps, within the core stamp and coin
divisions, alongside harnessing any increased interest in rare
collectibles as an alternative investment; and
Ø identify a capital-light method of tapping into the increasing
interest in collectibles in parts of the world outside of the
Group's existing areas of operation, principally the UK and the
USA, in particular the growing interest from the Asian markets, in
all types of high quality collectibles.
Current Corporate Structure
As part of the rationalisation and repositioning of the business
the Board is reconsidering the benefits of off-shore status for the
Group as a whole, recognising that a majority of the Group's
activities, following the acquisitions of recent years, and the
closure of the US activities in September, are located in the UK.
The above diagram highlights the business entities within our Group
structure, as at 30 September, which:
-- preserves the Interiors division as a standalone legal entity
and aggregates the UK activities associated with the investment
business within the philatelic and coins head office at The Strand,
London;
-- recognises that the UK philatelic and numismatic businesses
should remain separate from the Interiors division in order to
provide a well-balanced allocation of executive resource;
-- protects the current location of the Channel Islands based,
client investment plan activities which are ring-fenced in
Guernsey; and
-- consolidates the Group assets in order to optimise the
security available to support the UK based bank facilities.
Operating Structure
Whilst the Group's registered office remains in Jersey, the
decision was taken to relocate the Executive Directors to the
London head office. This decision was driven by the detailed review
of the businesses which identified that performance had
deteriorated with an absence of executive direction at the London
head office. The new operating structure will enable:
-- more effective and cohesive use of existing executives and
see Board and Executive Committee costs reduced by over 40%;
-- the proposed flat management structure which will see a move
to a separate Interiors division operating board, alongside an SG
Executive Committee, including embedded stamps/coins representation
co-opted from within the business, based in London; and
-- marketing support, to be formed on an ad hoc basis, across
the various disciplines to support high-level, targeted pitches for
large estates, specialist collections and other opportunities.
Finally the Board has elected to follow best practice with all
Directors to be re-elected annually.
Interiors Division
The interiors division was formed from the acquisitions of Noble
and Mallett, in 2013 and 2014 respectively, and comprises The Fine
Art Auction Group ("TFAAG"), the holding company for the sub-group,
Dreweatt and Bloomsbury, both auction companies for paintings,
books, jewellery, decorative arts, etc and Mallett (UK and US),
which is a historically respected firm of fine and decorative art
and antiques dealers specialising in 18th Century English
Furniture.
There were several senior level departures in 2015, as a result
of both management friction and the ongoing Regulatory matters in
the USA, and the division was comprehensively restructured in the
first half of 2016. Accordingly, of the initial GBP5m of annualised
operating cost savings, most were achieved by premises and staffing
rationalisation in this division leading to a significantly reduced
cost base, including the disposal of the leasehold interests in New
York and London in order to accommodate a more realistic sales
budget.
Interiors was first to enter the restructuring phase, in January
2016, and the division has recently stabilised at the operating
level, will move into the new Pall Mall premises before the end of
the year and management is hopeful that, as the effects of the
cost-cutting come through, it will be better positioned to trade
profitability by the end of the financial year.
Operating Review
12 Months 12 Months
to 31 March to 31 March
Sales Profit Sales Profit
2016 2016 2015 2015
restated restated
GBP000 GBP000 GBP000 GBP000
Investments 22,447 1,151 20,628 4,604
Philatelic 7,545 (113) 9,394 984
Publishing 3,039 320 2,937 773
AH Baldwin 8,213 1,987 9,204 2,532
Interiors 16,961 (7,545) 14,861 1,135
Other 932 (1,819) 3,022 (1,146)
Corporate overheads - (3,734) - (3,228)
Finance charges - (392) - (255)
--------------------------- ------- --------- --------- ---------
Trading sales and Profits 59,137 (10,145) 60,046 5,399
Amortisation of customer
lists - (364) - (360)
Pension service and
share option charges - (437) - (518)
Finance charges related
to pensions - (176) - (170)
Exceptional operating
charges - (17,769) - (2,530)
--------------------------- ------- --------- --------- ---------
Group total sales and
(loss)/profit before
tax 59,137 (28,891) 60,046 1,821
--------------------------- ------- --------- --------- ---------
Overview
Group turnover for the year ended 31 March 2016 was GBP59.1m
(2015: GBP60.0m as restated) turnover was GBP0.9m, 2% lower than
the prior year.
The gross margin percentage for the year ended 31 March 2016 was
40.3% (2015: 51.5% as restated).
Trading losses, before accounting adjustments including
exceptional operating charges and finance charges related to
pensions, were GBP10.1m for the year ended 31 March 2016 (2015:
trading profit of GBP5.4m as restated). The substantial decline in
trading profits compared to the prior year was the result of a
decline in trading performance in all trading divisions in the
Group, particularly investments, philatelic trading and retail
operations and the Interiors division (comprising Mallett Antiques
and Dreweatts & Bloomsbury Auctions).
Philatelic and investment trading performance suffered from a
material reduction in revenues generated from sales of high value
philatelic rarities to high net worth clients compared to the prior
year. The Interiors division experienced a very challenging second
half trading during a period of substantial restructuring and
reorganisation.
Loss before tax for the year ended 31 March 2016 was GBP28.9m
(2015: profit before tax of GBP1.8m as restated). Losses incurred
in the year can broadly be attributed to the expenditure on the
development of the online marketplace of GBP2.0m and exceptional
charges of GBP24.0m relating primarily to the write-off of The
Marketplace and the impairment of goodwill arising from historic
acquisitions.
Investments
Investments sales were GBP1.8m (9%) higher than last year with
profit contribution down by GBP3.5m (75%).
Our offices in Asia (Hong Kong and Singapore) experienced a
strong second half performance following a difficult first half
contributing sales for the year of GBP3.4m (2015: GBP2.3m). The
recovery in trading performance in the second half of the year
vindicates our strategy to continue to focus on high-value
investment sales business.
Philatelic Trading and Retail Operations
Philatelic trading and retail sales were GBP1.8m (20%) lower
than last year with profit contribution down by GBP1.1m (111%).
The decline in sales was primarily in the GB stamp market where
sales continue to be sluggish.
Publishing and Philatelic Accessories
Publishing and philatelic accessory sales for the year ended 31
March 2016 were GBP0.1m (3%) higher although profit contribution
was down by GBP0.5m (59%).
The reduction in profit contribution, despite increased sales,
was due to lower gross margins, following the decision to outsource
distribution of a substantial proportion of our catalogues, albums
and accessory stock ranges at the beginning of the financial year.
The full cost savings from outsourcing have not yet been fully
realised and further overhead reductions planned will increase
profit contribution in subsequent financial periods. As a result of
outsourcing, the cost of inventories of catalogues, albums and
accessories reduced from GBP1.2m at 31 March 2015 to GBP0.3m at 31
March 2016.
A H Baldwin
Sales of coins and military medals, through Baldwin's, for the
year ended 31 March 2016 were GBP1.0m (11%) lower and profit
contribution was down by GBP0.5m (22%).
The second half trading performance of Baldwin's suffered to
some extent as a result of the unexpected resignation of its
Managing Director, who left the business in November 2015 and has
now been replaced. Trading performance was specifically held back
by lower levels of auction consignments compared to the prior year,
but still delivered a reasonable trading performance through
stronger retail and trade sales, reflecting the strength of the
market for rare coins at this time.
Interiors
Sales of antiques and other collectibles for the year ended 31
March 2016 were GBP17.0m (2015: GBP14.9m) incurring a loss of
GBP7.5m (2015: profit of GBP1.1m). This deterioration was mainly
caused by restructuring and exceptional costs mainly through the
areas highlighted below.
Dreweatts & Bloomsbury results were lower than anticipated
during a period of substantial restructuring and the departure of
senior executives within the team. As part of the fundamental
review of this part of the business, the fixed cost base has been
substantially reduced in terms of salary and property costs to
enable the business to operate profitably on reduced forecast
revenue assumptions.
The Mallett business underwent a fundamental restructuring in
the year, including the departure of the executives and senior
management team. Similarly to Dreweatts & Bloomsbury, the fixed
cost base has been substantially reduced and there is now a
credible business plan in place, which is based on a significantly
scaled back business and revenue assumptions.
Corporate Overheads
Corporate overheads for the year ended 31 March 2016 were
GBP3.7m (2015: GBP3.2m). Corporate overheads include Board costs,
executive management and support functions in managing the Group
including Finance, HR, Marketing and Customer Services. Corporate
overheads will be materially lower going forward following
completion of restructuring plans.
Other Accounting Adjustments & Finance Charges related to
pensions
Pension service and share option charges, amortisation of
customer lists and finance charges related to pensions for the year
ended 31 March 2016 were GBP0.9m (2015: GBP1.0m). In the opinion of
the Directors, such accounting charges do not form part of the
operating performance of the Group.
Exceptional Operating Charges
Exceptional operating charges/(income) can be further analysed
as follows:
Year ended Year ended
31 March 31 March
2016 2015
GBP'000 GBP'000
Impairment of intangible
assets
Marketplace intangible asset
written off
Loss on sale of business
Pension scheme (recovery)/costs
Professional fees for corporate
activity 13,895 -
Restructuring costs 5,986 -
Stock provisions - 2,331
Profit on disposal of tangible (1,968) 895
fixed assets 819 1,161
Deferred consideration 1,156 -
Impairment of tangible fixed 1,373 225
assets (189) (1,543)
Impairment of receivables - (363)
Other exceptional operating 230 -
charges 1,618 500
Legal costs in relation to - 49
SEC investigation 1,074 -
23,994 3,255
---------------------------------- ------------------------------- ----------------------------
The exceptional income of GBP2.0m recognised in the year relates
to the net recovery settlement in respect of legal action against
the professional advisers of the Company's defined benefit pension
scheme.
The impairment of intangibles comprises Baldwins (GBP11.0m),
Apex (GBP1.5m goodwill, GBP0.1m brands and GBP0.1m customer list)
Bid for Wine (GBP0.2m) and Mallett customer lists and computer
software (GBP0.8m).
As an integral element of the fund raising completed in March
2016, the Board initiated a rationalisation exercise as part of a
review of the Group's fixed cost base and effective utilisation of
properties and other resources. Exceptional one-off restructuring
costs incurred in the year were GBP1.2m.
Clive Whiley, Director
2 October 2016
Financial Review
Statement of Financial Position
As previously highlighted, there have been several historic and
current year accounting adjustments required to be processed in
these accounts. The impact of these adjustments on the consolidated
net assets is summarised below.
31 March
2016
GBP'000
Adjustment due to incorrect revenue
recognition - previous years (15,892)
Adjustment due to incorrect revenue
recognition - current year 679
Adjustment to correct incorrect
fair value calculation for Mallett 974
Impairment of goodwill and customer
list of Noble Group (13,895)
Marketplace intangible asset written
off (5,986)
Stock higher than net realisable
value, and written off (1,373)
Provisions against historic bad
debts (1,618)
--------------------------------------------------------- --------------------------------
(37,111)
Consolidated net assets before adjustment
listed above
75,503
Final consolidated net assets as
at 31 March 2016 38,392
--------------------------------------------------------- --------------------------------
The total adjustments of GBP37.1m include GBP19.9m of intangible
assets write-downs. The net assets at the balance sheet date of
GBP38.4m equates to 81p per share. On the 1 April, immediately
after the issue of new shares and the receipt of the net proceeds
of GBP12.4m, the net assets per share were 22p.
Despite these adjustments the Group continues to own some
valuable assets. Apart from the heritage brands, which are not
wholly recognised within the balance sheet, as only acquired brands
can be recognised, the most significant asset of the Group is its
stock which is summarised below.
31 March 31 March
2016 2015
restated
GBP000 GBP000
Philatelic rarities 44,019 50,839
Philatelic stock (general) 4,973 4,226
Coins and medals 6,987 6,553
Autographs, historical documents
and related memorabilia 3,027 5,397
Antiques 2,472 4,807
Publications, albums and accessories 326 1,226
--------- ---------
61,804 73,048
--------- ---------
Cash Resources
As at the balance sheet date the Group had a net overdraft
facility of GBP6.0m, a short term loan of GBP0.1m, a revolving
credit facility of GBP10.0m (the "RCF") and an additional loan
facility of GBP9.0m, totalling GBP25.1m. At the same date the
utilised amounts were GBP5.0m, GBP0.1m, GBP8.0m and GBP9.0m
respectively totalling GBP22.1m.
On the 1 April 2016 the Company received net proceeds from the
issue of new shares of GBP12.4m and GBP5.0m was applied in repaying
the overdraft facility that was subsequently cancelled.
In June 2016 the Group sold a leasehold property for GBP2.5m and
part of these proceeds were used to repay the GBP9.0m loan
facility, which subsequently remained at GBP8.3m.
As at 27 September 2016 the Group had GBP1.1m of headroom on the
GBP10.0m revolving credit facility and the loan A Facility was
GBP8.3m.
Following the reduction in the Group's net assets as detailed
above the bank covenant relating to net assets, which was a minimum
of GBP75.0m has now been reduced to GBP40.0m. Whilst the net assets
in the balance sheet as at 31 March were GBP38.4m, the share issue
in April 2016 increased this figure by approximately GBP12.4m so
this covenant will be met. The other covenants in the bank
facilities relate to stock cover ratios and our forecast show these
will continue to be met for the foreseeable future.
Finance costs
Finance costs of GBP611,000 (2015: GBP428,000)comprise loan
interest and charges on the finance facilities with RBS of
GBP435,000 (2015: GBP258,000) plus a cost of GBP176,000 (2015:
GBP170,000), representing the interest on net defined benefit
liabilities under IAS19 (Amendment) "Employee Benefits".
Taxation
The tax charge for the year to 31 March 2016 (excluding deferred
taxation & capital gains tax) was GBP0.3m (2015: GBP0.4m)
incurred on UK and overseas profits. Profits from Channel Island
trading companies are currently subject to tax at 0%.
Dividend
In light of current trading and liquidity considerations, the
Board is not proposing the payment of a dividend in respect of the
year ended 31 March 2016 (2015: 5.00p).
Prior year adjustment
These financial statements reflects two prior year adjustments,
one in respect of the incorrect fair value exercise on the
acquisition of Mallett reflected in the previous year's financial
statements and one in respect of the previously highlighted issues
regarding the treatment of revenue for some investment products.
Details of these prior year adjustments are detailed in note 31 a
and b.
Accounting Policies
Accounting policies are detailed in Note 1 to the Financial
Statements on pages 33 to 40.
Andrew Cook, Chief Finance Officer
2 October 2016
Corporate Governance
So far as is appropriate, the Board aims to apply the underlying
principles of the UK Corporate Governance Code, having regard to
the size of the Group. The principal areas where these are applied
in the running of the Group are set out below.
The Company holds board meetings regularly throughout the period
at which operating and financial reports are considered. The Board
is responsible for formulating, reviewing and approving the Group's
strategy, budgets, major items of capital expenditure and senior
personnel appointments.
Audit Committee
The Audit Committee comprises only independent Non-Executive
Directors. Following the resignation of C S Jones as a Director on
13 September 2016 the Board has resolved to vest, as a temporary
measure, the powers of the Audit Committee in M P Magee, the sole
independent Non-Executive Director and Chairman of the Audit
Committee, until further non-executive appointments to the
Committee are made.
The Committee met four times during the period since approval of
the previous financial statements. It has written terms of
reference, which were updated in March 2014, setting out its
responsibilities that include:
-- monitoring the financial reporting process, the integrity of
the company's financial statements and announcements relating to
financial performance and reviewing significant financial
judgements contained in them;
-- keeping under review the company's internal controls and risk management systems;
-- considering annually the need for a separate internal audit
function and making recommendations to the Board;
-- making recommendations to the Board regarding the
appointment, re-appointment or removal of the external auditor, and
approving the remuneration and terms of engagement of the external
auditor; and
-- reviewing and monitoring the external auditor's independence
and the effectiveness of the audit process.
In addition, following the publication of the revised version of
the UK Corporate Governance Code, the Board requested that the
Committee advise them on whether they believe the annual report and
accounts, taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders to assess
the company's performance, business model and strategy. M P Magee
has concluded that this is the case and has reported this to the
Board.
As announced on 23 February 2016, BDO Limited were appointed as
auditors following the resignation of Smith & Williamson Audit
Limited because they considered the risks and uncertainties
associated with the audit to exceed the level that they were
willing to accept.
Non-audit services are reviewed on a case by case basis and also
in terms of materiality of the fee. Note 4 to the Financial
Statements details the quantum and split of auditor fees.
In the course of its work the Audit Committee meets with the
external auditors and reviews the reports from them relating to the
financial statements. It also reviews the likely significant issues
in advance of publication both of the half and full year results
and in particular any critical accounting judgements identified by
both the Company and the external auditors most of which are
disclosed in Note 2 to the Financial Statements (Critical
Accounting Estimates and Judgements).
A number of significant accounting policy changes and balance
sheet adjustments were applied in arriving at the final figures in
the financial statements and these have been extensively covered
elsewhere in this document.
Nomination Committee
A separate Nomination Committee is in operation. It comprises
the Executive Chairman and a Non-Executive Director. The committee
considers appointments to the Board and is responsible for
nominating candidates to fill Board vacancies and for making
recommendations on Board composition. A Company wide policy exists
on diversity. The board recognises such benefits of and will
continue to appoint Executive and Non-Executive Directors to ensure
diversity of background and on the basis of their skills and
experience.
Members of the Nomination Committee at the date of this report
were HG Wilson and M P Magee.
Report on Remuneration
The Remuneration Committee comprises only Non-Executive
Directors. It reviews the performance of the Executive Directors
and sets the scale and structure of their remuneration and the
basis of their service agreements with due regard to the interests
of shareholders.
The Remuneration Committee has responsibility for making
recommendations to the Board on the Group's general policy on
remuneration and also specific packages for individual Directors.
It carries out the policy on behalf of the Board.
Members of the Remuneration Committee at the date of the report
were M P Magee and HAJ Turcan.
M P Magee is a shareholder and H A J Turcan is employed by
Henderson Group plc a significant shareholder in the Company.
Neither of the members of the committee have day to day involvement
in the running of the business.
Policy on Executive Directors' Remuneration
The Committee reviews remuneration of Executive Directors and
senior management each year. The main aim of the Group's executive
pay policy is to provide an appropriate reward for their work which
is sufficient to attract and retain the Directors needed to meet
the Group's objectives and satisfy shareholder expectations.
The Committee has given full consideration to the provisions of
Schedule A of the UK Corporate Governance Code.
Options
Executive Share options are granted to Directors and other
employees on a phased basis. The value of those options ensures
that this spreads any reward over a number of years, allied to
growth in shareholder value over the long term.
Options granted under the Group Share Option Plan 2010, Inland
Revenue approved 2000 UK Executive Share Option Scheme and the 2000
Jersey Executive Share Option Scheme are exercisable between the
third and tenth anniversaries of the date of grant. Options granted
are not normally exercisable unless the performance target is
satisfied.
Options issued in 2010 had the target of a minimum EPS of 17.3
pence for the year ended 31 December 2012. 25% of the granted
options vest if this target is reached, rising on a straight line
basis to 100% of options granted to vest if an EPS of 21.5 pence is
achieved.
Options issued in 2011 had the target of a minimum EPS of 19.2
pence for the year ended 31 December 2013. 25% of the granted
options vest if this target is reached, rising on a straight line
basis to 100% of options granted to vest if an EPS of 22.7 pence is
achieved.
Options issued in 2012 had the target of a minimum EPS of 21.8
pence for the year ended 31 December 2014.
25% of the granted options vest if this target is reached rising
on a straight line basis to 100% of options granted to vest if an
EPS of 25.7 pence is achieved.
Options issued in 2014 require that the Company's compound
average Total Shareholder Return ("TSR") growth over the
performance period must match or exceed 8% per annum. The options
shall vest over a number of shares determined as follows:
Compound average annual Percentage of Option
TSR growth over the performance which vests (with straight
period line vesting between
each point)
Less than 8% 0%
8% 25%
15% or more 100%
On 30 September 2014 the following members of the Company's
Board were granted nil cost options awards over ordinary shares of
1 pence each ("Ordinary Shares") under the Stanley Gibbons Group
plc Value Creation Plan (the "VCP") as noted below:
Executive Director Maximum number of Ordinary
Shares under option
-------------------- ---------------------------
Michael Hall 559,174
-------------------- ---------------------------
John Byfield 559,174
-------------------- ---------------------------
Donal Duff 372,782
-------------------- ---------------------------
Under the terms of the VCP, the number of Ordinary Shares
comprised within the awards that shall vest (if any) will
ordinarily be determined based on the level of total shareholder
return ("TSR Growth") achieved over a three year performance period
(that commenced on the grant of the awards) in excess of a
threshold level of TSR Growth of 7% per annum.
To the extent an award vests it shall be deemed to comprise
three distinct tranches ("Tranche A", "Tranche B" and "Tranche C")
each relating to a distinct one-third of the total number of vested
Ordinary Shares (if any) determined for the award. The earliest
dates from which each tranche may ordinarily become exercisable are
as follows:
-- in respect of Tranche A, the later of the date on which the
number of vested Ordinary Shares subject to the award is determined
and the third anniversary of the grant date;
-- in respect of Tranche B, the fourth anniversary of the grant date; and
-- in respect of Tranche C, the fifth anniversary of the grant date.
Once a tranche becomes exercisable, it shall ordinarily remain
exercisable until the eve of the sixth anniversary of the grant
date of the awards.
Awards shall ordinarily be forfeited prior to vesting in the
event of the grantee's departure from the Company, subject to the
terms of the VCP.
No consideration was paid for the grant of the awards and no
consideration is due on the vesting and/or exercise of the
awards.
An incentive plan for certain senior executives within the
Interiors Division (defined as The Fine Art Auction Group Limited
and its subsidiaries) was adopted by the Board on 2 February 2015
with grants subsequently made on 4 February 2015. Vesting of awards
is dependent on the achievement of a performance condition over a
performance period commencing on 1 April 2015 and ending on 31
March 2020 or under shorter period as may apply under the
performance condition.
Bonuses
Directors are awarded annual bonuses calculated on the basis of
defined criteria relating to Group performance compared to prior
year and budget and other specific objectives which contribute to
growth in earnings per share, cash generation and return on capital
employed.
Other benefits
The Company Secretary is a member of the Group's defined benefit
pension scheme, which is now closed. During the year contributions
were paid on behalf of M Hall and D Duff to defined contribution
schemes.
Benefits also include the provision of family private healthcare
insurance and death in service insurance.
Service contracts
No Director has a notice period exceeding twelve months.
Directors' Remuneration
For each Director remuneration for the year to 31 March 2016 can
be analysed as follows:
2016 2016 2016 2016 2016 2015
Salary Performance Other Pension Total Total
& Fees Related Benefits Contributions
Bonus
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
M Bralsford 60 - - - 60 59
M Hall 275 - 1 27 303 296
D Duff 182 - 3 18 203 202
J Byfield* 88 - 3 10 101 283
M Magee 35 - - - 35 35
S Perreé 35 - - - 35 44
C Jones 35 - - - 35 35
I Goldbart - - - - - 184
710 - 7 55 772 1,138
--------------- ---------- ------------ ---------- --------------- -------- --------
* Relates to period of employment as a Director.
Directors' Share Options
Date Earliest Expiry Exercise Number Granted Exercised Forfeited Number
of exercise date Price at in In in at
grant date (1p 31 period period period 31
shares) March March
2015 2016
M Hall 4/5/12** 4/5/15 3/5/22 227.50p 144,736 - - (144,736) -
27/1/14** 27/1/17 26/1/24 363.00p 137,741 - - - 137,741
10/4/14** 10/4/17 10/4/24 316.50p 157,977 - - - 157,977
See
See Pg See
30/9/14*** Pg 18 18 Pg18 559,174 - - - 559,174
D Duff 27/1/14** 27/1/17 26/1/24 363.00p 97,796 - - - 97,796
10/4/14** 10/4/17 10/4/24 316.50p 112,164 - - - 112,164
See
See Pg See
30/9/14*** Pg 18 18 Pg18 372,782 - - - 372,782
I Goldbart 27/1/14 27/1/17 26/1/24 363.00p 110,192 - - (110,192) -
10/4/14 10/4/17 10/4/24 316.50p 126,382 - - (126,382) -
See
See Pg See
30/9/14 Pg 18 18 Pg18 372,782 - - (372,782) -
J Byfield* 27/1/14** 27/1/17 26/1/24 363.00p 90,909 - - - 90,909
10/4/14** 10/4/17 10/4/24 316.50p 104,265 - - - 104,265
See
See Pg See
30/9/14*** Pg 18 18 Pg18 559,174 - - - 559,174
----------- ---------- -------------------- -------- --------- ------- --------- ---------- ---------
2,946,074 - - (754,092)- 2,191,982
------------------------------------------- -------- --------- ------- --------- ---------- ---------
* Relates to period of employment as a Director.
** Options granted under Group Share Option Plan 2010.
*** Options granted under the Stanley Gibbons plc Value Creation Plan
The market price of the Company's shares at 31 March 2016 was
18.5p and the range of market prices during the twelve month period
was between 15.5p and 273p.
Directors' Report
for the year ended 31 March 2016
The Directors present their report and the consolidated audited
financial statements for the year ended 31 March 2016.
Incorporation
The Company was incorporated in Jersey, Channel Islands on 13
June 1977.
Directors' responsibilities for the financial statements
Directors are required by the Companies (Jersey) Law 1991 to
prepare financial statements for each financial period which give a
true and fair view of the state of affairs of the Group as at the
end of the financial period and of the Group profit or loss for
that period. In preparing these financial statements, the Directors
are required to:
-- Select suitable accounting policies and then apply them consistently;
-- Make judgements and estimates that are reasonable and prudent;
-- State whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements;
-- Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group will continue
in business.
The Directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the
financial position of the Company and to enable them to ensure that
the financial statements comply with the Companies (Jersey) Law
1991. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention
and detection of fraud, error and non-compliance with law and
regulations.
The maintenance and integrity of the Stanley Gibbons web site is
the responsibility of the directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the accounts since they were initially
presented on the web site.
Legislation in Jersey governing the preparation and
dissemination of accounts may differ from legislation in other
jurisdictions.
In so far as each of the Directors is aware:
-- There is no relevant audit information of which the Group's auditors are unaware; and
-- Each of the Directors have taken all steps that he ought to
have taken to make himself aware of any relevant audit information
and to establish that the auditors are aware of that
information.
Principal activities
The principal activities of the Group are those of trading in
collectibles, dealing in antiques and works of art, auctioneering,
the development and operation of collectible websites, philatelic
publishing, mail order, retailing, and the manufacture of
philatelic accessories.
Business review
Included within this report is a fair review of the business of
the Group during the year ended 31 March 2016 and the position of
the Group at the end of the year. This review is contained in the
Chairman's Statement on pages 2 to 3 and the Operating and
Financial Review on pages 11 to 13. Key Performance Indicators and
a description of the principal risks and uncertainties are referred
to below
Principal risks and uncertainties
The principal risks faced by the Group, together with the
controls in place to manage those risks, are documented by the
Executives, Senior Management team, Audit Committee and wider Board
and are regularly reviewed throughout the period.
Investment Products
The Group is aware of the potential risk in connection with a
commitment to buy-back in the future certain assets sold under
collectible investment contracts in previous accounting periods.
The Group therefore bears the risk in the event that the underlying
assets go down in value during the contract period and continually
monitors it. Based on the level of quality and rarity of the assets
held under such contracts, and from historic pricing evidence over
the past 50 years, the Directors are of the opinion that the risk
of the assets going down materially in value in the future is
slight.
Further details on investment products containing buy back
guarantees is provided in note 1 'Accounting policies and
presentation' in the Revenue section.
Competition
The Group's markets are extremely competitive, with threats from
other dealers, auctioneers and online marketplaces. The Group
combats this risk by maintaining strong client relationships,
continued monitoring of competitor activity and a focus on client
service.
Key Personnel
The knowledge and expertise of the Group's specialists is
critical to maintaining the Group's reputation and success.
Accordingly the Group is highly dependent on attracting and
retaining appropriately qualified personnel. The Group manages this
risk by ensuring that remuneration is benchmarked against market
rates to ensure that it is competitive and providing appropriate
support and training.
Key Clients
A number of the Group's high value sales are made to a
relatively small number of existing key clients. The Group manages
this risk by maintaining strong client relationships, focussing on
client service and ensuring that it maintains an inventory of
highly attractive items.
Stock Valuation
The market in rare stamps, coins, other collectibles and
antiques is not a highly liquid trading market. As a result, the
realisable value of inventory is relatively subjective and may
fluctuate over time. The Group's management keeps a close eye on
market conditions and on a periodic basis we consult external
parties in our consideration of the carrying value of our
inventories.
Retirement Benefit Pension Obligations
Future costs and obligations relating to the Group's defined
benefit pension schemes are significantly influenced by changes in
interest rates, investment performance and actuarial assumptions,
each of which is unpredictable. Actuarial valuations are carried
out every three years with a recovery plan agreed with the
Trustees.
Key Performance Indicators (KPIs)
The Directors manage the business on a monthly cycle of
management reports and information combined with weekly sales and
margins reporting. A monthly information pack is provided to the
Board incorporating individual reports from each of the executive
committee members and commentary on key performance indicators.
Appropriate matters are summarised and appropriate decisions made
at Board meetings. Key performance measures are disclosed and
discussed in the Operating Review on pages 10 to12.
The diverse nature of the Group's activities dictates that
specific financial and non financial performance indicators and
reporting templates are in place unique to each department to
enable the successful management of each operating division.
Examples of some of the most important KPIs used in this reporting
environment are:
-- Sales and gross margins compared to last year and budget
-- Overhead variations against budget
-- Personnel and resource matters (eg. performance, attendance and training)
-- New customers recruited and marketing response rates
-- Value of stock purchases and stock levels at the end of each month against budget
-- Website visitor activity statistics
Results and dividends
The consolidated statement of comprehensive income of the Group
for the year ended 31 March 2016 is set out on page 29. The
Directors do not recommended a final dividend for the year ended 31
March 2016 (year ended 31 March 2015: 1.75p).
Directors
The following Directors have held office since 1 April 2015:
D M Bralsford (resigned 14 July 2016)
M R M Hall (resigned 14 July 2016)
D P J Duff (resigned 14 July 2016)
J Byfield (resigned 17 September 2015)
M P Magee (Non-Executive)
S Perrée (Non-Executive) (resigned 14 July 2016)
C S Jones (Non-Executive) (resigned 13 September 2016)
C P Whiley (appointed 31 March 2016)
H G Wilson (appointed 16 May 2016)
H A J Turcan (Non-Executive) (appointed 23 May 2016)
A Cook (appointed 14 July 2016)
M Bralsford, M Magee, S Perrée & C Jones were/are considered
to be Independent in accordance with the principles of the UK
Corporate Governance Code.
Biographical details of the current Directors are given on pages
75 and 76.
Directors' interests
The interests of the Directors in the shares of the Company, all
of which are beneficial, at 31 March 2016 together with their
interests at 31 March 2015 were:
Ordinary 1p Ordinary 1p
Shares Shares
31 March 2016 31 March 2015
D M Bralsford 182,800 182,800
M R M Hall 227,648 227,648
D P J Duff 100,000 100,000
M P Magee 9,456 9,456
S Perreé 52,400 52,400
CS Jones Nil Nil
CP Whiley Nil Nil
Since the year end Zodiac Executive Pension Scheme of which C P
Whiley is a beneficiary acquired 500,000 ordinary shares on 1 April
2016 under the Firm Placing.
HG Wilson held 2,000,000 ordinary shares in the name of Park
Securities Limited for Roselea Limited, both companies in which he
is a director and shareholder, at his appointment as a Director on
16 May 2016.
HAJ Turcan does not have any beneficial interest in the ordinary
shares of the Company. Henderson Group plc, Mr Turcan's ultimate
employer, holds 52,173,987 ordinary shares, representing 29.16% of
the Company's issued share capital.
Details of the Directors' share options are given in the
Remuneration Report on page 20.
Apart from service contracts and the transactions referred to in
note 29 of the financial statements, none of the Directors had a
material interest in any contract of significance to which the
Company or any of its subsidiaries was a party during the year.
Research and development
Costs associated with research and development relate to
internal web development work in the creation of an online
collectibles marketplace. Research and development costs are
capitalised in the year incurred and are disclosed under the
heading 'Computer Software' in note 11.
Financial Risk Management
The Group principally finances its operations through the
generation of cash from operating activities and has no interest
rate exposure on financial liabilities except those disclosed in
note 28. Liquidity risk is managed through forecasting the future
cash flow requirements of the business. Further disclosure on the
company's financial risk management can be found in note 17
(Provision for impairment of receivables and collateral held) and
note 28 (Financial instruments).
Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Operating Review on pages 11 to 13. The
financial position of the Group, its cash resources and borrowing
facilities are described in the Financial Review on page 14. In
addition note 28 in the financial statements include the Group's
objectives, policies and processes for managing its capital, its
financial risk management objectives, and its exposure to credit
risk and liquidity risk.
The Group's forecasts shows that it will remain in compliance
with its banking covenants for the foreseeable period and that it
will have access to sufficient liquidity. However the forecasts are
dependent upon the liabilities, particularly in relation to
investment plans redemption profiles, not materialising at a level
greater than forecast and trading improving from its current level
in line with management's expectations. In the event that either
liabilities increased or trading failed to improve, it is likely
that the Group would find itself in breach or likely breach of its
banking covenants and require access to additional liquidity.
The Directors acknowledge that the above risks may be considered
material uncertainties which could cast significant doubt on the
Group's ability to continue as a going concern. However the
Directors have anticipated a number of mitigating courses of
actions, including accelerated asset sales, further cost cutting
measures, actively pursuing overdue debt and ultimately they
believe that if necessary the company would have the support of
alternative capital providers whether it be equity or debt or a
combination of both.
As such, having regard to the matters above, and after making
reasonable enquiries and taking account of uncertainties discussed
above, the Directors have a reasonable expectation that the Company
and the Group have access to adequate resources to continue
operations and to meet its liabilities, as and when they fall due,
for the foreseeable future. For that reason, they continue to adopt
the going concern basis in the preparation of the accounts.
Intangible Assets
Except for those acquired in the Noble & Mallett
acquisitions, no value is attributed in the Statement of Financial
Position to the Group's brand names, the value of the Stanley
Gibbons stamp referencing system, editorial intellectual property
or its database of customer lists as an accurate valuation of these
items would be impractical to establish and the capitalisation of
internally generated assets is not allowed under IAS38. External
costs incurred in the development of the software for the Digital
Asset Management system and the redevelopment of the Group's
websites have been capitalised and are being amortised in
accordance with IAS38.
Substantial Shareholdings
As at 28 September 2016, the Company had been notified of the
following interests in 3% or more of its issued share capital:
Henderson Group plc 29.16%
Richard Griffiths and controlled undertakings 6.71%
Purchase of Own Shares
The Company did not purchase any of its shares for cancellation
during the year. The Company has authority to purchase up to 15% of
its own shares. A resolution to renew this authority will be
proposed at the AGM.
Employees
The Group's policy is to provide equal opportunities to all
present and potential employees. The Group gives full consideration
to applications for employment from disabled persons and where
existing employees become disabled, it is the Group's policy,
wherever practicable, to provide continuing employment under normal
terms and conditions.
The Group operates an annual performance review system with
employees to discuss performance against agreed objectives and
career development.
The Group believes in respecting individuals and their rights in
the workplace. With this in mind, specific policies are in place
covering harassment and bullying, whistle-blowing, equal
opportunities and data protection.
Secretary
Mr R K Purkis has been secretary for the entire year ended 31
March 2016.
Auditors
Nexia Smith & Williamson Audit Limited resigned as auditors
on 10 February 2016 and BDO Limited were appointed by the Directors
in their place. BDO Limited have expressed their willingness to
continue as auditors and a resolution to reappoint them as auditors
to the Company and to authorise the Directors to fix their
remuneration will be proposed at the AGM.
By order of the board Registered office:
2(nd) Floor
Minden House,
Minden Place
St Helier, Jersey
JE2 4WQ
R K Purkis
Secretary
2 October 2016
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF THE STANLEY GIBBONS
GROUP PLC
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF THE STANLEY GIBBONS
GROUP PLC
We have audited the consolidated financial statements (the
"financial statements") of The Stanley Gibbons Group plc for the
year ended 31 March 2016 which comprise the Consolidated Statement
of Comprehensive Income, the Consolidated Statement of Financial
Position, the Consolidated Statement of Changes in Equity, the
Consolidated Statement of Cash Flows and the related notes 1 to 33.
The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards as adopted by the European Union.
This report is made solely to the Company's members, as a body,
in accordance with Article 113A of the Companies (Jersey) Law 1991.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditors' report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of directors and auditors
As explained more fully in the Statement of Directors'
Responsibilities, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give
a true and fair view. Our responsibility is to audit and express an
opinion on the financial statements in accordance with applicable
law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Financial Reporting
Council's Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the Group's circumstances and have been consistently
applied and adequately disclosed; the reasonableness of significant
accounting estimates made by the directors; and the overall
presentation of the financial statements.
In addition, we read all the financial and non-financial
information in the Annual Report to identify material
inconsistencies with the audited financial statements and to
identify any information that is apparently materially incorrect
based on, or materially inconsistent with, the knowledge acquired
by us in the course of performing the audit. If we become aware of
any apparent material misstatements or inconsistencies we consider
the implication for our report.
Basis for qualified opinion on the consolidated financial
statements
In seeking to form an audit opinion on the financial statements,
the audit evidence available to us was limited due to us being
unable to obtain the necessary information prior to the date of
signing the financial statements in accordance with management's
imposed deadline:
-- In respect of stock, we were unable to obtain sufficient
appropriate audit evidence over the completeness and accuracy of
stock with a carrying value of GBP1.0 million consisting of all of
stock at Murray Payne Limited with a carrying value of GBP0.6
million and Mallett Inc. with a carrying value of GBP0.4 million,
within the total carrying value of stock of GBP61.8 million.
-- In respect of trade receivables, we were unable to obtain
sufficient appropriate audit evidence in respect of the
recoverability of trade receivables with a carrying value of GBP1.9
million. This consists of trade receivables in The Fine Art Auction
Group Limited with a carrying value of GBP1.2 million, trade
receivables in Mallett & Son (Antiques) Limited with a carrying
value of GBP0.5 million and trade receivables in H J Hatfield &
Sons Limited with a carrying value of GBP0.2 million, within the
total carrying value of trade receivables of GBP12.9m.
-- In respect of prepayments and accrued income having a total
carrying value of GBP1.7 million, we were unable to obtain
sufficient appropriate audit evidence over the recoverability of an
amount of GBP0.2m within Mallett & Son (Antiques) Limited.
-- In respect of revenue, we were unable to obtain sufficient
appropriate audit evidence over the completeness and accuracy of
GBP7 million of revenue recorded in The Fine Art Auction Group
Limited and GBP0.5 million recorded in Stanley Gibbons Limited,
within the total Group revenue of GBP59.1 million.
-- In respect of Bid for Wine Limited, which was acquired by the
Group during the year, we were unable to obtain sufficient
appropriate audit evidence to support the completeness and accuracy
of the amounts disclosed in note 31 in respect of the assets and
liabilities acquired and the revenue and expenditure in the period
to 31 March 2016.
-- In respect of the contingent liabilities arising from
investment products that were sold previously as disclosed in note
28a, we were unable to obtain sufficient appropriate audit evidence
to support the completeness and accuracy of the Director's
assessment of the contingent liability being GBP64.3m..
Emphasis of matter - Going concern
In forming our opinion on the financial statements, we have
considered the adequacy of the disclosure made in note 2 to the
financial statements concerning the Group's ability to continue as
a going concern. The Group has reported a net loss for the
financial year of GBP29.3 million. This, together with the other
matters explained in note 2 to the financial statements, indicates
the existence of a material uncertainty which may cast significant
doubt about the Group's ability to continue as a going concern. The
financial statements do not include the adjustments that would
result if the Group was unable to continue as a going concern.
Qualified opinion on the financial statements
In our opinion, except for the possible effects of the matters
described in the Basis for Qualified Opinion paragraph, the
financial statements:
-- give a true and fair view of the state of the Group's affairs
as at 31 March 2016 and of the Group's loss for the year then
ended;
-- have been properly prepared in accordance with International
Financial Reporting Standards as adopted by the European Union;
and
-- have been prepared in accordance with the requirements of the Companies (Jersey) Law, 1991.
Matters on which we are required to report by exception
In respect solely of the limitation on our work relating to the
matters identified above in the Basis of Qualified opinion
paragraph:
-- we have not received all the information and explanations we require for our audit; and
-- we were unable to determine whether proper accounting records have been kept.
We have nothing to report in respect of the following matters
where the Companies (Jersey) Law 1991 requires us to report to you
if, in our opinion:
-- proper returns adequate for our audit have not been received
from branches not visited by us; and
-- the financial statements are not in agreement with the accounting records and returns.
Philip Braun
For and on behalf of BDO Limited
Chartered Accountants
Jersey, Channel Islands
3 October 2016
Consolidated statement of comprehensive income
for the year ended 31 March 2016
Year Year
ended ended
31 March 31 March
2016 2015
Restated
Notes GBP'000 GBP'000
---------------------------- -----------------------------------------
1,
Revenue 3 59,137 60,046
Cost of sales (35,304) (29,108)
---------------------------- ----- ---------------------------- -----------------------------------------
Gross Profit 23,833 30,938
Administrative expenses
before
defined benefit pension
service
costs and exceptional
operating
costs (4,808) (3,768)
Defined benefit pension
service
costs 26 194 (368)
Exceptional operating
charges 5 (23,994) (3,255)
---------------------------- ----- ---------------------------- -----------------------------------------
Total administrative
expenses (28,608) (7,391)
---------------------------- ----- ---------------------------- -----------------------------------------
Selling and distribution
expenses (23,544) (21,302)
---------------------------- ----- ---------------------------- -----------------------------------------
Operating (loss)/profit 4 (28,319) 2,245
Finance income 39 4
Finance costs 28 (611) (428)
---------------------------- ----- ---------------------------- -----------------------------------------
(Loss)/profit before tax (28,891) 1,821
Taxation 8 (403) (1,099)
---------------------------- ----- ---------------------------- -----------------------------------------
(Loss)/profit for the
financial
year (29,294) 722
Other comprehensive income:
Amounts which may be
subsequently
reclassified to profit &
loss
Exchange differences on
translation
of foreign operations 89 (165)
Revaluation of financial
assets
for sale (58) (109)
Reclassification of realised
loss on disposal 68 -
Amounts which will not be
subsequently
reclassified to profit &
loss
Revaluation of reference
collection 12 22 -
Actuarial gains/(losses)
recognised
in the pension scheme 26 132 (1,074)
Tax on actuarial
gains/(losses)
recognised in the pension
scheme 121 178
Other comprehensive
income/(loss)
for the year net of tax 374 (1,170)
---------------------------- ----- ---------------------------- -----------------------------------------
Total comprehensive
(loss)/income
for the year (28,920) (448)
---------------------------- ----- ---------------------------- -----------------------------------------
Basic earnings per
Ordinary share 10 (62.17)p 1.54p
Diluted earnings
per Ordinary share 10 (62.17)p 1.47p
-------------------- -------- -----
Total comprehensive income is attributable to the owners of the
parent.
The notes on pages 33 to 74 are an integral part of these
consolidated financial statements.
Consolidated statement of financial position
as at 31 March 2016
31 March 31 March 1 April
2016 2015 2014
Restated Restated
Notes GBP'000 GBP'000 GBP'000
----- -------- -------- --------
Non-current assets
Intangible assets 11 19,631 37,846 32,571
Property, plant and equipment 12 4,916 7,974 6,294
Deferred tax asset 20 1,929 2,120 1,016
Available for sale financial
assets - 1,364 1,473
------------------------------- ----- -------- -------- --------
26,476 49,304 41,354
------------------------------- ----- -------- -------- --------
Current Assets
Inventories 13 61,804 73,048 63,999
Trade and other receivables 14 15,574 19,604 14,144
Assets held for sale 15 2,545 1,800 -
Current tax receivable - - 135
Cash and cash equivalents 1,542 - 9,499
------------------------------- ----- -------- -------- --------
81,465 94,452 87,777
------------------------------- ----- -------- -------- --------
Total assets 107,941 143,756 129,131
------------------------------- ----- -------- -------- --------
Current liabilities
Trade and other payables 17 30,409 31,991 19,858
Deferred consideration - - 2,153
Borrowings 19 5,159 2,522 276
Current tax payable 392 569 -
------------------------------- ----- -------- -------- --------
35,960 35,082 22,287
------------------------------- ----- -------- -------- --------
Non-current liabilities
Other payables 18 9,802 24,368 33,546
Retirement benefit obligations 26 5,222 5,816 3,285
Borrowings 19 16,788 9,173 528
Deferred tax liabilities 20 1,777 1,831 760
33,589 41,188 38,119
------------------------------- ----- -------- -------- --------
Total liabilities 69,549 76,270 60,406
------------------------------- ----- -------- -------- --------
Net assets 38,392 67,486 68,725
------------------------------- ----- -------- -------- --------
Equity
Called up share capital 21 471 471 466
Share premium account 23 63,682 63,682 62,565
Shares to be issued - - 209
Share compensation reserve 23 1,448 798 648
Capital redemption reserve 23 38 38 38
Revaluation reserve 23 276 244 353
Retained earnings 23 (27,523) 2,253 4,446
------------------------------- ----- -------- -------- --------
Equity shareholders'
funds 38,392 67,486 68,725
------------------------------- ----- -------- -------- --------
The financial statements on pages 29 to 74 were approved by the
board of Directors on 2 October 2016, were authorised for issue on
that date and were signed on its behalf by:
H G Wilson
A Cook Directors
The notes on pages 33 to 74 are an integral part of these
consolidated financial statements.
Consolidated statement of changes in equity
for the year ended 31 March 2016
Called Share Shares Share Capital
up share premium to be compensation Revaluation redemption Retained
capital account issued reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2015 471 63,682 - 798 244 38 2,253 67,486
(Loss)/profit for
the financial
year - - - - - - (29,294) (29,294)
Amounts which may
be subsequently
reclassified to
profit & loss
Exchange
differences
on translation
of
foreign
operations - - - - - - 90 90
Revaluation of
financial
asset - - - - (58) - - (58)
Reclassification
on sale of
financial
asset - - - - 68 - - 68
Amounts which
will
not be
subsequently
reclassified to
profit & loss
Revaluation of
reference
collection - - - - 22 - - 22
Remeasurement of
pension scheme
net
of deferred tax - - - - - - 253 253
Total
comprehensive
income/(loss) - - - - 32 - (28,952) (28,920)
Dividends - - - - - - (824) (824)
Cost of share
options - - - 650 - - - 650
Share options - - - - - - - -
exercised
At 31 March 2016 471 63,682 - 1,448 276 38 (27,523) 38,392
----------------- --------- --------- --------- -------------- ------------- ------------ ---------- ---------
At 1 April 2014
- as previously
stated 466 62,565 209 648 353 38 19,666 83,945
Prior year
adjustment
(see note 31 b) - - - - - - (15,220) (15,220)
----------------- --------- --------- --------- -------------- ------------- ------------ ---------- ---------
At 1 April 2014
- restated 466 62,565 209 648 353 38 4,446 68,725
Profit for the
financial
year - - - - - - 722 722
Amounts which may
be subsequently
reclassified to
profit & loss
Exchange
differences
on translation
of
foreign
operations - - - - - - (165) (165)
Revaluation of
financial
asset - - - - (109) - - (109)
Amounts which
will
not be
subsequently
reclassified to
profit & loss
Remeasurement of
pension scheme
net
of deferred tax - - - - - - (896) (896)
----------------- --------- --------- --------- -------------- ------------- ------------ ---------- ---------
Total
comprehensive
income - - - - (109) - (339) (448)
Dividends - - - - - - (3,385) (3,385)
Cost of share
options - - - 150 - - - 150
Adjustment to
fair
value (see note
31 a) - - - - - - 557 557
Adjustment to
fair
value (see note
31 a) - - - - - - 974 974
Share options
exercised 3 541 - - - - - 544
Shares issued as
deferred
consideration 2 576 (209) - - - - 369
At 31 March 2015 471 63,682 - 798 244 38 2,253 67,486
----------------- --------- --------- --------- -------------- ------------- ------------ ---------- ---------
The notes on pages 33 to 74 are an integral part of these
consolidated financial statements.
Consolidated statement of cash flows
for the year ended 31 March 2016
Year ended Year ended
31 March 31 March
2016 2015
Restated
Notes GBP'000 GBP'000
------- ---------- ----------
Cash outflow from operating
activities 24 (5,208) (7,400)
Interest paid (611) (258)
Taxes paid (322) (367)
-------------------------------- ------- ---------- ----------
Net cash outflow from operating
activities (6,141) (8,025)
-------------------------------- ------- ---------- ----------
Investing activities
Purchase of property, plant
and equipment (888) (1,442)
Purchase of intangible assets
(computer software) (2,450) (2,692)
Overdraft acquired with
subsidiary - (1,190)
Acquisition of business (218) (8,615)
Sale of financial asset 1,306 -
Sale of freehold property 466 4,411
Interest received 39 4
Net cash used in investing
activities (1,745) (9,524)
-------------------------------- ------- ---------- ----------
Financing activities
Proceeds from issue of ordinary
share capital - 544
Dividends paid to company
shareholders 9 (824) (3,385)
Net borrowings 6,455 9,652
Net cash generated from
financing activities 5,631 6,811
-------------------------------- ------- ---------- ----------
Net increase/(decrease)
in cash and cash equivalents (2,255) (10,738)
-------------------------------- ------- ---------- ----------
Cash and cash equivalents
at start of year (1,239) 9,499
-------------------------------- ------- ---------- ----------
Cash and cash equivalents
at end of year (3,494) (1,239)
-------------------------------- ------- ---------- ----------
The notes on pages 33 to 74 are an integral part of these
consolidated financial statements.
The Stanley Gibbons Group plc
Notes to the financial statements
for the year ended 31 March 2016
1 Accounting policies and presentation
The financial statements have been prepared in accordance with
International Financial Reporting Standards as approved for use in
the European Union applied in accordance with the provisions of
Companies (Jersey) Law 1991 on a historical cost basis except where
otherwise indicated.
The Group is listed on AIM, a market operated by the London
Stock Exchange. These financial statements have also been prepared
in accordance with AIM Rules.
The company has not prepared separate company accounts, as
permitted under Jersey Company Law 1991 Amendment 4 Part 16
(substituted), as consolidated accounts are prepared.
The consolidated financial statements are presented in British
Pounds Sterling, which is also the Group's
functional currency.
Amounts are rounded to the nearest thousand, unless otherwise
stated.
Accounting standards and interpretations adopted during the
period
The following Standards and amendments have been adopted by the
Group for the first time for the financial year beginning on or
after 1 April 2015:
IFRS 10 'Consolidated Financial Statements'
IFRS 11 'Joint Arrangements'
IFRS 12 'Disclosure of Interests in Other Entities'
IAS 12 (amended) 'Deferred Tax: Recovery of Underlying
Assets'
IAS 27 (revised) 'Separate Financial Statements'
IAS 28 (revised) 'Investments in Associates and Joint
Ventures'
The adoption of the amendments did not have any impact on the
financial statements of the Group for the current period of any
prior period and is not likely to affect future periods.
Standards, amendments and interpretations that are effective for
periods beginning on or after 1 April 2015 for standards,
amendments subject to EU endorsement:
IFRS 9, Financial Instruments, effective for annual periods
beginning on or after 1 January 2018, subject to EU endorsement.
The standard is part of a wider project to replace IAS 39,
Financial Instruments: Recognition and Measurement
IFRS 15, Revenue from contracts with customers (effective for
periods beginning on or after 1 January 2017, subject to EU
endorsement)
IFRS 16, Leases ( effective for periods beginning on or after 1
January 2019)
IAS 16 and IAS 38 (amended) 'Clarification of Acceptable Methods
of Depreciation and Amortisation' - effective for accounting
periods beginning on or after 1 January 2016
The Directors do not expect that the adoption of the standards
listed above will have a material impact on the financial
statements of the Group in future periods, except that IFRS 9 will
impact the measurement of financial instruments, IFRS 15 may have
an impact on revenue recognition and related disclosures and IFRS
16 will have an impact on operating leases. Beyond the information
above, it is not practicable to provide a reasonable estimation of
the effect of IFRS 9, IFRS 15 and IFRS 16 until a detailed review
has been completed.
The principal accounting policies applied in the preparation of
these consolidated financial statements are set out below. These
policies have been consistently applied to all years presented,
unless otherwise stated.
Basis of consolidation
Where the company has control over an investee, it is classified
as a subsidiary. The company controls an investee if all three of
the following elements are present: power over the investee,
exposure to variable returns from the investee, and the ability of
the investor to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicated
that there may be a change in any of these elements of control.
The consolidated financial statements present the results of the
company and its subsidiaries ("the Group") as if they formed a
single entity. Intercompany transactions and balances between group
companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of
business combinations using the acquisition method. In the
statement of financial position, the acquiree's identifiable
assets, liabilities and contingent liabilities are initially
recognised at their fair values at the acquisition date. The
results of acquired operations are included in the consolidated
statement of comprehensive income from the date on which control is
obtained. They are deconsolidated from the date on which control
ceases.
Impairment of non-financial assets (excluding inventories and
deferred tax assets)
Impairment tests on goodwill and other intangible assets with
indefinite useful economic lives are undertaken annually at the
financial year end. Other non-financial assets are subject to
impairment tests whenever events or changes in circumstances
indicate that their carrying value may not be recoverable Where the
carrying value of an asset exceeds its recoverable amount (i.e the
higher of value in use or fair value less costs to sell), the asset
is written down accordingly.
Where it is not possible to estimate the recoverable amount of
an individual asset, the impairment test is carried out on the
smallest group of assets to which it belongs for which there are
separately identifiable cash flows; its cash generating units
('CGUs'). Goodwill is allocated on initial recognition to each of
the Group's CGUs that are expected to benefit from a business
combination that gives rise to the goodwill.
Impairment charges are included in profit or loss, except to the
extent they reverse gains previously recognised in other
comprehensive income. An impairment loss recognised for goodwill is
not reversed.
Intangible Assets
Computer software
In accordance with IAS 38, purchased computer software that will
generate economic benefit beyond one year is capitalised as an
intangible asset and amortised over its expected useful economic
life of four years on a straight-line basis. This charge is
allocated to administrative expenses in the consolidated statement
of comprehensive income. The purchase and development of software
related to the Group's websites and the Digital Asset Management
system is capitalised and amortised over its expected useful
economic life of between five and ten years on a straight line
basis.
Brands
In accordance with IAS 38, brands acquired in a business
combination are recognised at fair value at the acquisition date.
The brands acquired are considered to have an indeterminate life
because of their longevity and heritage. As such, these brands are
not amortised but are the subject of an annual impairment
review.
Trademarks
Trademarks acquired in a business combination are recognised at
fair value at the acquisition date. They have a finite useful life
and are amortised using the straight line method over their
estimated useful life of 8 years.
Customer lists
In accordance with IAS 38, customer lists acquired have been
capitalised as an intangible asset and are amortised on a straight
line basis over 8 years. Internally generated customer lists are
not capitalised or shown as an intangible asset.
Goodwill
Goodwill represents the excess of the costs of a business
combination over, in the case of business combinations completed
prior to 1 January 2010, the Group's interest in the fair value of
intangible assets, liabilities and contingent liabilities acquired
and, in the case of business combinations completed on or after 1
January 2010, the total acquisition date fair value of the
identifiable assets, liabilities and contingent liabilities
acquired.
For business combinations completed prior to 1 January 2010,
cost comprised the fair value of assets given, liabilities assumed
and equity instruments issued, plus any direct costs of
acquisition. Changes in the estimated value of contingent
consideration arising on business combinations completed by this
date were treated as an adjustment to cost and, in consequence,
resulted in a change in the carrying value of goodwill.
For business combinations completed on or after 1 January 2010,
cost comprises the fair value of assets given, liabilities assumed
and equity instruments issued, plus the amount of any
non-controlling interests in the acquire plus, if the business
combination is achieved in stages, the fair value of the existing
equity interest in the acquiree. Contingent consideration is
included in cost at its acquisition date fair value and, in the
case of contingent consideration classified as a financial
liability, remeasured subsequently through profit or loss. For
business combinations completed on or after 1 January 2010, direct
costs of acquisition are recognised immediately as an expense.
Goodwill is capitalised as an intangible assets with any
impairment in carrying value being charged to the consolidated
statement of comprehensive income. Where the fair value of
identifiable assets, liabilities and contingent liabilities exceed
the fair value of consideration paid, the excess is credited in
full to the consolidated statement of comprehensive income on the
acquisition date.
Internally generated goodwill is not recognised as an intangible
asset.
Publishing rights
Publishing rights represent the cost paid to third parties to
acquire copyright of publications. Publishing rights are not
amortised but tested annually for impairment and carried at cost
less accumulated impairment losses.
Property, plant and equipment and depreciation
Tangible fixed assets other than the reference collection
Tangible fixed assets, other than the reference collection, are
stated at historical cost less depreciation. Historical cost
includes expenditure that is directly attributable to the
acquisition of the items, their purchase price, including any
incidental expenses of acquisition. Depreciation is calculated to
write down the net book value of tangible fixed assets less their
residual value on a straight-line basis, over the expected useful
economic lives of the assets concerned. The principal annual rates
used for this purpose are:
Freehold buildings 2%
Vehicles, plant and machinery 20-25%
Fixtures, fittings, tools and equipment 10-25%
Leasehold improvements Over period
of lease
Freehold land is not depreciated.
Reference collection
Fixed assets include a reference collection of certain stamps
& coins held on a long term basis. The reference collection for
stamps is subject to a full valuation every five years by a
qualified external valuer. The carrying value of the numismatic
reference library is revalued each year. Therefore not all the
reference collection is valued annually.
Where a reference collection or part of a collection has been
revalued the assets will be carried at the revised valuation.
Leased assets
When substantially all of the risks and rewards incidental to
ownership are not transferred to the Group (an "operating lease"),
the total rentals payable under the lease are charged to the
consolidated statement of comprehensive income on a straight-line
basis over the lease term. The aggregate benefit of lease
incentives is recognised as a reduction of the rental expense over
the lease term on a straight-line basis.
Available for sale financial assets
Available for sale financial assets comprise investments in
quoted equity instruments and are measured at level 1 of the fair
value hierarchy, as outlined in note 2 below. Purchases and sales
of financial assets are recognised on the trade date, the date on
which the Group commits to buy or sell the asset. Investments are
initially recognised at fair value plus transaction costs.
Financial assets are derecognised when the rights to receive cash
flows have expired or have been transferred and the Group has
transferred substantially all risks and rewards of ownership.
Available for sale financial assets are subsequently carried at
fair value. The fair values of quoted investments are determined
based upon current bid price.
Changes in the value of securities classified as available for
sale are recognised within other comprehensive income.
The balance as at 31 March 2015 relates to an investment in
Avarae Global Coins Plc which was disposed of on 18 May 2015.
Assets and businesses classified as held for sale
Assets and businesses classified as held for sale are measured
at the lower of carrying amount and fair value less costs to sell.
Impairment losses on initial classification as held for sale and
gains or losses on subsequent re-measurements are included in the
statement of comprehensive income. No depreciation is charged on
assets and businesses classified as held for sale.
Assets and businesses are classified as held for sale if their
carrying amount will be recovered or settled principally through a
sale transaction rather than through continuing use. The asset or
business must be available for immediate sale and the sale must be
highly probable within one year.
The balance held at 31 March 2016 relates to leasehold
properties held with Mallett that were disposed of in June 2016.
The balance as at 31 March 2015 relates to the assets of the Benham
first day cover business, the Plastic Wax retail business and the
general auction business of Dreweatts that were disposed of in May
2016.
Inventories
Inventories are valued at the lower of cost and net realisable
value after making allowance for obsolete and slow moving
items.
Due to the nature of collectibles and antiques it is not always
practicable to ascertain individual costs for items purchased.
The purchase of stamp, coins and antiques into inventory can be
classified in the way in which they are purchased. Some items will
be bought on itemised invoices from other dealers and auctioneers.
This will be costed based on these invoices. Other items will be
purchased via collections or group of assets where a price is
determined for the collection. These collections will often be
split into individual items and cost is apportioned between the
items purchased on the basis of the opinion of the Group's dealers
and experts
Work in progress
Work in progress comprises philatelic and other collectible
material which has been acquired but which has not yet been
described by our philatelic experts and therefore is unavailable
for sale at the balance sheet date.
Financial Instruments
Financial assets and financial liabilities are recognised on the
consolidated statement of financial position when the company
becomes a party to the contractual provisions of the
instrument.
Financial assets
Trade and other receivables are measured at initial recognition
at fair value and are subsequently measured at amortised cost using
the effective interest method. A provision is established when
there is objective evidence that the Group will not be able to
collect all amounts due. The amount of any provision is recognised
in the statement of comprehensive income.
Impairment provisions are recognised when there is objective
evidence (such as significant financial difficulties on the part of
the counterparty or default or significant delay in payment) that
the Group will be unable to collect all of the amounts due under
the terms receivable, the amount of such provision being the
difference between the net carrying amount and the present value of
the future expected cash flows associated with the impaired
receivable. For trade receivables, which are reported net, such
provisions are recorded in a separate allowance account with the
loss being recognised as an exceptional item in the consolidated
statement of comprehensive income. On confirmation that the trade
receivable will not be collectable, the gross carrying value for
the asset is written off against the associated provision.
Cash and cash equivalents comprise cash held by the company and
short term bank deposits with an original maturity of three months
or less. Bank overdrafts are shown within loans and borrowings in
current liabilities on the consolidated statement of financial
position.
Financial liabilities
Trade and other payables are initially measured at fair value,
and are subsequently measured at amortised cost using the effective
interest rate method.
Financial liabilities issued by the Group are classified in
accordance with the contractual arrangements entered into and the
definitions of a financial liability.
Borrowings are initially recognised at
fair value, net of transaction costs incurred.
Borrowings are subsequently measured at
amortised cost. Any difference between
the proceeds (net of transaction costs)
and the redemption amount is recognised
in profit or loss over the period of the
borrowings using the effective interest
method.
Taxation
The tax expense represents the sum of the tax currently payable
and any deferred tax.
The tax currently payable is based on the taxable profit for the
year. Taxable profit differs from profit before tax as reported in
the statement of comprehensive income because it excludes items of
income or expense that are taxable or deductible in other years and
it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the balance
sheet date.
Deferred tax is recognised on temporary differences between the
carrying amount of assets and liabilities in the statement of
financial position and the amounts attributed to such assets and
liabilities for tax purposes. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that future taxable profits will be available against
which deductible temporary differences can be utilised.
Deferred tax relating to charges made directly to equity is
recognised in other comprehensive income.
Foreign currencies
Transactions entered into by Group entities in a currency other
than the currency of the primary economic environment in which they
operate (their "functional currency") are recorded at the rates
ruling when the transactions occur. Foreign currency monetary
assets and liabilities are translated at the rates ruling at the
reporting date.
On consolidation, the results of overseas operations are
translated at rates approximating to those ruling when the
transactions took place. All assets and liabilities of overseas
operations are translated at the rate ruling at the reporting date.
Exchange differences arising on translating the opening net assets
at opening comprehensive income.
Retirement benefits
The Group operates two defined benefit pension schemes. The
assets of the schemes are held and managed separately from those of
the Group. In accordance with IAS 19 (Amendment) for Employee
Benefits, the liability in the statement of financial position
represents the present value of the defined benefit obligations at
that date less the fair value of plan assets. The defined benefit
obligation is calculated periodically by an independent
actuary.
Current service costs are recognised in administrative expenses
in the statement of comprehensive income. Interest costs on plan
liabilities and the expected return on plan assets are recognised
in finance charges. Actuarial gains and losses arising from
experience adjustments and changes in actuarial assumptions are
recognised in other comprehensive income.
Pension scheme assets are measured at their market value and
liabilities are measured on an actuarial basis using the projected
unit method and discounted at a rate equivalent to the current rate
of return on a high quality corporate bond of equivalent currency
and term to the scheme liabilities. The actuarial valuations are
performed by a qualified actuary on a triennial basis and are
updated at each balance sheet date. The resulting defined benefit
asset or liability is presented separately as a non-current asset
or liability on the face of the statement of financial
position.
Under IAS 19 the retirement benefit obligation is presented
gross of deferred tax.
The Group also maintains a number of defined contribution
pension schemes. For these schemes the Group has no further
obligations once the contributions have been paid. The
contributions are recognised as an employee benefit expense in the
statement of comprehensive income in the year when they are
due.
Share capital
Financial instruments issued by the Group are classified as
equity only to the extent that they do not meet the definition of a
financial liability of financial asset.
The Group's ordinary shares are classified as equity
instruments.
Share options and awards
The fair value of share options and awards granted to certain
employees and Directors is recognised as an expense. The total
amount to be apportioned over the vesting period of the benefit is
determined by reference to the fair value of the options and awards
determined at the grant date. The performance conditions (other
than market conditions) are reflected in assumptions about the
number of options and awards that are expected to become
exercisable. The estimate is revised at each reporting date and any
adjustments are charged or credited to profit or loss, with the
corresponding adjustment to equity.
The proceeds received on exercise of the options are credited to
equity.
Dividends
Dividends are recognised when they become legally payable. In
the case of interim dividends to equity shareholders, this is when
declared by the Directors. In the case of final dividends, this is
when approved by the shareholders at the AGM.
Revenue
Revenue represents amounts invoiced by the Group in respect of
goods sold and services provided during the year falling within the
Group's ordinary activities, excluding intra-group sales, estimated
and actual sales returns, trade discounts and any applicable value
added tax. Revenue from the provision of all goods and services is
only recognised when the amounts to be recognised are fixed or
determinable and collectability is reasonably assured.
Sale of goods retail
Revenue from the provision of goods is recognised when
substantially all the risks and rewards of ownership of goods have
transferred to the customer. The risks and rewards of ownership of
goods are deemed to have been transferred when the goods are
allocated to a customer and that customer has made an irrevocable
commitment to complete the purchase.
Sale of goods - Investment contracts
In respect of certain investment products offered by the Group,
income is recognised at the point of customer commitment in line
with the normal course of trade but not when there is a contractual
buyback commitment on the Company as part of the transaction to buy
back the products at the full sale price or higher amount. These
contracts do not pass the risk or reward of ownership to the
customer until the customer accepts stock at the end of the initial
contract term (between 5 and 10 years). At the point where the
contract matures the client has options to take a guaranteed cash
sum, keep or auction the assets of the contract or reinvest in
another of the Group's investment contracts. Until the point of
maturity the contractual buyback amount is shown in other payables
on the Group's balance sheet and the stock contained in these
contracts is reported in the Group's inventory numbers. At
maturity, if the customer reinvests or decided to keep the
collectible assets the contract is recognised in revenue and the
inventory released form the balance sheet.
A number of the Groups previous investment contracts, Guaranteed
Minimum Return Contract ("GMRC" and the Capital Protection Growth
Plan ("CPGP") both were contracts that had an element of
contractual buyback. The contractual buy backs within the CPGPs
were at a level of the original purchase price and within the GMRCs
were above the purchase price to include a finance charge. This
finance charge is recognised in the profit and loss throughout the
period of the contract. These contracts were sold between 2005 and
2013 and have resulted in a restatement of prior year earnings
relating to open contracts as at April 2014, as described in note
31b). The GMRC and CPGP contracts ceased to be sold in April 2011
and December 2013 respectively.
Investment contracts which transfer the risk and rewards of
ownership with the customer are recognised as revenue on completion
of the contract. These investment contracts do not offer a full
guaranteed return or protection of the principal invested.
Investment products sold in the year under review include
Capital Growth Plans (CGP), Flexible Trading Portfolios (FTP),
Portfolio Builders (PB) and Personal Managed Funds (PMF). The FTPs
and CGPs also include a buy back option of 75% of the Stanley
Gibbons catalogue value where appropriate or otherwise market
value. The Directors consider that the likelihood of these
investment plan holders exercising this right to accept a value
lower than market value to be remote.
Investment plans including contractual buy back options at any
level ceased to be sold in July 2016.
Sale of goods - auctions
In its role as auctioneer, the Group accepts property on
consignment and matches sellers to buyers through the auction
process. Following the auction, the Group invoices the buyer for
the purchase price of the property (including the commission owed
by the buyer), collects payment from the buyer, and remits to the
consignor the net sale proceeds after deducting its commissions,
expenses and applicable taxes and royalties.
The Groups auction commissions include those paid by the buyer
("buyer's premium") and those paid by the seller (vendors
commission") (collectively, "auction commission revenue"), both of
which are calculated as a percentage of the hammer price of the
property sold at auction.
On the fall of the auctioneer's hammer, the highest bidder
becomes legally obligated to pay the full purchase price, which
includes the hammer price of the property purchased plus the
buyer's premium, and the seller is legally obligated to relinquish
the property in exchange for the hammer price less any seller's
commissions. Therefore both buyer's premium and vendors commission
is recognised on the date of the auction sale upon the fall of the
auctioneer's hammer.
The Group is not obligated to pay the consignor for property
that has not been paid for by the buyer. If a buyer defaults on
payment, the sale may be cancelled, and the property will be
returned to the consignor.
The Group's management evaluates the collectability of amounts
due from individual buyers. If management determines that it is
probable that the buyer will default, a credit note is recorded in
the period in which this judgement is made and any commission due
to the Group from the buyer and the vendor is reversed.
Further detail of the Group's revenue streams can be found in
the operating review on pages 11 to 13.
Provisions
Provisions are recognised when the Group has a present legal or
constructive obligation to transfer economic resources as a result
of past events. Provisions are measured at management's best
estimate of the expenditure required to settle the present
obligation at the balance sheet date. Provisions are discounted if
the effect of the time value of money is material.
Rental Income
The Group sublets some of its property that it occupies under
operating leases. The rental income is recognised on an accruals
basis.
2 Critical Accounting Estimates and Judgements
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
In the future, actual experience may deviate from these
estimates and assumptions. The estimates, assumptions and
management judgements that have a significant risk of causing a
material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below.
Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Operating Review on pages 11 to 13. The
financial position of the Group, its cash resources and borrowing
facilities are described in the Financial Review on page 14. In
addition note 28 in the financial statements include the Group's
objectives, policies and processes for managing its capital, its
financial risk management objectives, and its exposure to credit
risk and liquidity risk.
The Group's forecasts shows that it will remain in compliance
with its banking covenants for the foreseeable period and that it
will have access to sufficient liquidity. However the forecasts are
dependent upon the liabilities, particularly in relation to
investment plans redemption profiles, not materialising at a level
greater than forecast and trading improving from its current level
in line with management's expectations. In the event that either
liabilities increased or trading failed to improve, it is likely
that the Group would find itself in breach or likely breach of its
banking covenants and require access to additional liquidity.
The Directors acknowledge that the above risks may be considered
material uncertainties which could cast significant doubt on the
Group's ability to continue as a going concern. However the
Directors have anticipated a number of mitigating courses of
actions, including accelerated asset sales, further cost cutting
measures, actively pursuing overdue debt and ultimately they
believe that if necessary the company would have the support of
alternative capital providers whether it be equity or debt or a
combination of both.
As such, having regard to the matters above, and after making
reasonable enquiries and taking account of uncertainties discussed
above, the Directors have a reasonable expectation that the Company
and the Group have access to adequate resources to continue
operations and to meet its liabilities, as and when they fall due,
for the foreseeable future. For that reason, they continue to adopt
the going concern basis in the preparation of the accounts.
Revenue recognition
Within the investment sales are a number of different products.
These include GMRCs and CPGPs. One of the options within these
products is a contractual buy back option to re-acquire at a level
equal to or above the original purchase price. These transactions
are considered by management not to meet the criteria for a sale
until such time as the underlying items are irrevocably sold. This
is because insufficient risk and reward is considered to have
passed to the client. For all other sales, including investment
plans with guarantee buy-back options at 75% of catalogue or market
value, revenue is recognised immediately as the risks and rewards
of ownership are deemed to have passed to the buyer.
Retirement benefits
The costs, assets and liabilities of the defined benefit
retirement schemes operating within the Group are determined using
methods relying on actuarial estimates and assumptions. Details of
the key assumptions are set out in note 26. The Directors take
advice from independent actuaries relating to the appropriateness
of the assumptions and challenge the reasonableness and
appropriateness of these assumptions before adapting them in these
financial statements. It is important to note, however, that
comparatively small changes in the assumptions used may have a
significant effect on the consolidated statement of comprehensive
income and the statement of financial position.
Inventory valuation
Inventory is valued at the lower of cost and net realisable
value. Cost comprises all costs of purchase, including auction
buyers premium where applicable. Where necessary, provision is made
for slow-moving and damaged stock. This provision represents the
difference between the cost of the stock and its estimated market
value, based upon stock turn rates, market conditions and trends in
consumer demand. For rare collectibles and antiques this includes
monitoring of sales of similar items and a degree of judgement
being applied by our specialists as to the relevance for items held
in stock.
Reference Collections
Reference collections of philatelic items are carried at cost or
valuation. Where the carrying value is above cost this will be
supported by an independent external valuation. If the carrying
value is below cost or independent value this will be as a result
of a review performed either by external or internal
specialists.
Intangible Assets
IFRS 3 (revised) 'Business Combinations' requires that goodwill
arising on the acquisition of subsidiaries is capitalised and
included in intangible assets. IFRS 3 (revised) also requires the
identification of other intangible assets at acquisition. The
assumptions involved in valuing these intangible assets require the
use of estimates and judgments which may differ from the actual
outcome.
IAS 38 'Intangible Assets' requires that development costs,
arising from the application of research findings or other
technical knowledge to a plan or design of a new or substantially
improved product, are capitalised, subject to certain criteria
being met. Determining the technical feasibility and estimating the
future cash flows generated by the products in development requires
judgments which may differ from the actual outcome.
The estimates and judgments made in relation to both acquired
intangible assets and capitalised development costs, cover future
growth rates, expected inflation rates and the discount rate
used.
Trade receivables - investment sales
Included within trade receivables are GBP4.1m (2015 - GBP5.7m)
of investment sales that are on credit terms which expire within
the next 12 months. The largest investment balance outstanding at
the year end was GBP1.7m (2015 - GBP3.6m). In most cases, the
recoverability of these balances is dependent on the ability of the
investors to realise these or other investment portfolios. The
directors are confident that these balances are recoverable but the
timing and value of these portfolio sales is currently uncertain.
Should the investors be unable to realise their portfolios within
the credit period the balances may not be recoverable when they
fall due.
Fair value measurement
A number of assets and liabilities included in the Group's
financial statements require measurement at, and/or disclosure of,
fair value. The fair value measurement of the Group's financial and
non-financial assets and
liabilities utilises market observable inputs and data as far as
possible. Inputs used in determining fair value measurements are
categorised into different levels based on how observable the
inputs used in the valuation technique utilised are (the 'fair
value hierarchy'):
- Level 1: Quoted prices in active markets for identical items
(unadjusted)
- Level 2: Observable direct or indirect inputs other than Level
1 inputs
- Level 3: Unobservable inputs (i.e. not derived from market
data).
The classification of an item into the above levels is based on
the lowest level of the inputs used that has a significant effect
on the fair value measurement of the item. Transfers of items
between levels are recognised in the period they occur. The
carrying amount of financial assets or financial liabilities is a
reasonable approximation of their fair value. Any differences
between these valuations would not be material.
3 Segmental Analysis
IFRS 8 requires operating segments to be identified based on
internal reporting.. Accordingly, the determination of the Group's
operating segments is based on the following organisation units for
which management accounting information is reported to the Group's
management and used to make strategic decisions. The operating
units have changed from those disclosed in previous years to ensure
they meet this basis and the previous year comparative has been
amended accordingly.
-- Sale of investment contracts;
-- Philatelic trading and retail operations;
-- Publishing and philatelic accessories;
-- Coins and medals
-- Interiors
Interiors encompasses autographs, historical documents,
memorabilia, rare books, records, antiques, watches, fine wine,
jewellery and Benham first day covers. The activities, products and
services of the reportable segments are detailed in the Operating
Review on pages 11 to 13.
Investments Philatelic Publishing Coins Interiors Unallocated Total
& Medals
Segmental income GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
statement
Year ended
31 March 2016
Revenue 22,447 7,545 3,039 8,213 16,961 932 59,137
Operating costs (19,281) (7,658) (2,669) (6,074) (21,041) (6,740) (63,463)
Exceptional
costs (2,015) - (50) (152) (3,225) (18,552) (23,994)
Net finance
costs - - - - (240) (331) (571)
---------------------- ------------ ----------- ----------- ---------- ---------- ------------ ---------
Profit/(loss)
before tax 1,151 (113) 320 1,987 (7,545) (24,691) (28,891)
Tax - (37) - (36) (201) (129) (403)
---------------------- ------------ ----------- ----------- ---------- ---------- ------------ ---------
Profit/(loss)
for the year 1,151 (150) 320 1,951 (7,746) (24,820) (29,294)
---------------------- ------------ ----------- ----------- ---------- ---------- ------------ ---------
Segmental balance
sheet as at
31 31 March
2016
Total assets 28,479 17,975 168 29,682 25,974 5,663 107,941
Total liabilities (24,994) (10,867) - (7,632) (24,928) (1,128) (69,549)
---------------------- ------------ ----------- ----------- ---------- ---------- ------------ ---------
Net assets 3,485 7,108 168 22,050 1,046 4,535 38,392
---------------------- ------------ ----------- ----------- ---------- ---------- ------------ ---------
Other segmental
items
Depreciation - 331 43 94 409 34 911
Amortisation
of other intangible
assets - - - - - 1,002 1,002
Capital expenditure - 119 - - 847 2,590 3,556
---------------------- ------------ ----------- ----------- ---------- ---------- ------------ ---------
3 Segmental Analysis (continued)
Investments Philatelic Publishing Coins Interiors Unallocated Total
& Medals
Segmental income GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
statement
Year ended
31 March 2015
Restated
Revenue 20,628 9,394 2,937 9,204 14,861 3,022 60,046
Operating costs (15,524) (8,185) (2,164) (6,672) (13,623) (8,378) (54,546)
Exceptional
costs (500) (225) - - - (2,530) (3,255)
Net finance
cost - - - - (103) (321) (424)
---------------------- ------------ ----------- ----------- ---------- ---------- ------------ ---------
Profit/(loss)
before tax 4,604 984 773 2,532 1,135 (8,207) 1,821
Tax - - - (943) (203) 47 (1,099)
---------------------- ------------ ----------- ----------- ---------- ---------- ------------ ---------
Profit/(loss)
for the year 4,604 984 773 1,589 932 (8,160) 722
---------------------- ------------ ----------- ----------- ---------- ---------- ------------ ---------
Segmental balance
sheet as at
31 31 March
2015
Total assets 35,343 23,365 (153) 26,235 26,678 32,288 143,756
Total liabilities (33,010) (16,107) - (6,137) (17,886) (3,132) (76,270)
---------------------- ------------ ----------- ----------- ---------- ---------- ------------ ---------
Net assets 2,333 7,258 (153) 20,098 8,792 29,156 67,486
---------------------- ------------ ----------- ----------- ---------- ---------- ------------ ---------
Other segmental
items
Depreciation - 348 - 91 300 39 778
Amortisation
of other intangible
assets - - - - 69 692 761
Capital expenditure - 1,455 - 24 485 2,170 4,134
---------------------- ------------ ----------- ----------- ---------- ---------- ------------ ---------
3 Segmental Analysis (continued)
Geographical information
Analysis of revenue by origin and destination
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2016 2016 2015 2015
Restated Restated
Sales by Sales by Sales by Sales by
destination origin destination origin
GBP'000 GBP'000 GBP'000 GBP'000
Channel
Islands 2,062 19,930 2,491 18,111
United
Kingdom 34,549 36,562 32,577 39,586
Hong Kong 3,115 2,645 2,686 2,349
Europe 4,063 - 4,172 -
North
America 10,678 - 10,208 -
Singapore 1,257 - 3,149 -
Rest of
Asia 474 - 2,157 -
Rest of
the
World 2,939 - 2,606 -
---------- ---------------------------------- ---------------------------------- ---------------------------------- ----------------------------------
59,137 59,137 60,046 60,046
---------- ---------------------------------- ---------------------------------- ---------------------------------- ----------------------------------
Destination is defined as the location of the customer. Origin
is defined as the country of domicile of the Group company making
the sale. All of the sales relate to external customers.
There were no other customers in either 2016 or 2015 from which
the Group earned more than 10% of its revenues.
Property, plant and equipment of GBP4,916,000 was split between
the UK GBP4,766,000 (2015 : GBP7,786,000) and the Channel Islands
GBP150,000 (2015: GBP188,000).
Intangible assets and available for sale financial assets of
GBP19,631,000 were split between the UK GBP19,631,000 (2015:
GBP34,310,000) and the Channel Island GBPnil (2015:
GBP3,536,000).
4 Operating (loss)/profit
5 The following table shows the material costs
by nature charged to cost of sales, administrative
expenses and selling and distribution costs.
Year ended Year ended
31 March 31 March 2015
2016
Restated
GBP'000 GBP'000
Cost of inventories recognized
as an expense 35,304 29,108
Employee benefit costs expensed
(see note 7) 13,920 13,169
Depreciation of property plant
and equipment 911 778
Amortisation of intangible
assets 1,002 761
Advertising & marketing expenses 4,592 3,524
Distribution & transport costs 511 254
Operating lease charges -
leased premises 2,685 1,827
IT operating expenses 936 522
Other property operating costs 1,213 605
Fees payable to the Group's
auditor for the audit of the
Group's annual accounts, including
subsidiaries 420 171
Fees payable to the Group's
auditor for tax compliance
& advisory services - 1
Fees payable to the Group's
auditor for other advisory
services 30 12
Other professional fees 636 416
Foreign exchange losses 170 18
Fees paid to the auditors in respect of non-audit work in the
year to 31 March 2016 are in respect of a review of inventory
valuations regarding a specific project commissioned by the
Company's bankers. These services are reviewed by the Directors to
ensure that the independence of the auditors is not
compromised.
5 Exceptional operating charges
The items of income and expenditure listed below are either
non-recurring or unusual in size and therefore distort the view of
the normal trading activities of the Group. They have therefore
been separately identified to give more clarity on the underlying
trend of the trading performance.
Year ended Year ended
31 March 31 March
2016 2015
GBP'000 GBP'000
Impairment of intangible
assets
Marketplace intangible asset
written off
Loss on sale of business
Pension scheme (recovery)/costs
Professional fees for corporate
activity 13,895 -
Restructuring costs 5,986 -
Stock provisions - 2,331
Profit on disposal of tangible (1,968) 895
fixed assets 819 1,161
Deferred consideration 1,156 -
Impairment of tangible fixed 1,373 225
assets (189) (1,543)
Impairment of receivables - (363)
Other exceptional operating 230 -
charges 1,618 500
Legal costs in relation to - 49
SEC investigation 1,074 -
23,994 3,255
---------------------------------- ------------------------------- ----------------------------
6 Directors' emoluments
The remuneration paid to the Directors of The Stanley Gibbons
Group plc was:
Year ended Year ended
31 March 2016 31 March 2015
GBP'000 GBP'000
Fees 165 173
Salaries 546 895
Benefits 6 7
Short-term employee benefits 717 1,075
Post-employment benefits 55 63
Share-based payment 140 71
-------------------------------------- ------------- -------------
Key management personnel compensation 912 1,209
-------------------------------------- ------------- -------------
Number of Directors included - -
in the defined benefit pension
scheme (note 26)
-------------------------------------- ------------- -------------
The detailed numerical analysis of Directors' remuneration is
included in the Report on Remuneration on page 20. The charge to
profit in respect of share options and awards issued to the
Directors was GBP140,000 (2015: GBP71,000).
M Hall and D Duff are members of the Company's defined
contribution pension scheme which they joined in 2010. The company
made payments into a personal pension plan of J Byfield which came
into effect in 2012. Total cost of these pension contributions to
the company were GBP55,000 (2015: GBP63,000). The Company made no
other pension contributions in respect of any Directors in the
period or the preceding year.
Details of share options forfeited by Directors during the
period are disclosed in the Report on Remuneration on page 20.
Management consider that the key management personnel comprise
the Directors.
7 Employee information
The average number of persons (including executive Directors)
employed by the Group during the period was 252 (2015: 293).
Year ended Year ended
31 March 31 March
2016 2015
No. No.
Management and Administration 92 108
Sales 115 119
Production and Editorial 17 46
Distribution 16 9
Marketing 12 11
------------------------------- ------------------------ -------------
252 293
------------------------------- ------------------------ -------------
Staff costs relating to those persons during the year amounted
to:
Year ended Year ended
31 March 2016 31 March
2015
GBP'000 GBP'000
Wages and salaries 11,868 10,969
Social security costs 1,284 1,047
Pension costs - defined benefit
scheme (note 26) (18) 538
Pension costs - defined contribution
scheme 486 465
Share option cost 300 150
------------------------------------- -------------------------------- --------------------------------
13,920 13,169
------------------------------------- -------------------------------- --------------------------------
8 Taxation
UK corporation tax and overseas tax on profits for the year
Year ended Year ended
31 March 2016 31 March
2015
restated
Current tax: GBP'000 GBP'000
UK corporation tax at 20% (2015:
21%) 30 348
Capital gains tax on sale of
property - 500
Overseas tax 115 66
Adjustment relating to earlier
periods - 5
--------------------------------- -------------------------------- --------------------------------
145 919
Deferred taxation 258 227
Deferred taxation movement
on pension scheme liability - (47)
--------------------------------- -------------------------------- --------------------------------
Tax charge 403 1,099
--------------------------------- -------------------------------- --------------------------------
8 Taxation (continued)
The Company is registered in the Channel Islands and has
subsidiaries in the Channel Islands, the UK, Hong Kong, Singapore
and the USA. However a significant proportion of the profits in the
Group are taxed in the UK. Accordingly, the difference between the
total tax expense shown above and the amount calculated by applying
the standard rate of UK corporation tax to the profit is as
follows:
Tax charge reconciliation
Year ended Year ended
31 March 2016 31 March
2015
% %
The standard rate of corporation
tax in the UK 20.0 21.0
Effects of:
Item subject to capital gains
tax - 15.9
Disallowable exceptional items (4.1) 4.6
Overseas profits taxable at
lower rates (16.2) 15.3
Losses for which no deferred
asset recognised (0.3) 2.4
Adjustments relating to prior
years charge - 0.1
Other (0.8) 1.1
--------------------------------- -------------------------------- -------------------------------
Effective rate of corporation
tax for year/period (1.4) 60.4
--------------------------------- -------------------------------- -------------------------------
The main rate of corporation tax in the UK was 21% for financial
year starting on 1 April 2014 and it was 20% from 1 April 2015.
9 Dividends
Year ended Year ended
31 March 31 March
2016 2015
GBP'000 GBP'000
Amounts recognised
as distribution to
equity holders in the
period/year:
Dividend declared and
paid in respect of
prior year 824 3,385
-------------------------- ------------------------ -----------------------
Dividend paid per share 1.75p 7.25p
-------------------------- ------------------------ -----------------------
Dividend proposed but
not paid at balance
sheet date - 825
-------------------------- ------------------------ -----------------------
Dividend proposed per
share - 1.75p
-------------------------- ------------------------ -----------------------
10 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 period.
Adjusted earnings per share has been calculated to exclude the
effect of exceptional operating costs, pension service costs, share
option charges and the amortisation of customer lists. The
Directors believe this gives a more meaningful measure of the
underlying performance of the Group.
Indicative new issue earnings per share, is purely an indicative
measure and simply increases the number of shares by those issued
on the 1 April 2016 and makes no adjustment to earnings.
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 period.
Year ended Year ended
31 March 31 March
2016 2015
restated
Weighted average number of
ordinary shares in issue (No.) 47,120,357 46,774,755
Dilutive potential ordinary
shares: Employee share options
(No.) 1,770,977 2,293,308
-------------------------------- ----------------------- ----------------------
(Loss)/profit after tax (GBP) (29,294,000) 722,000
Pension service cost (net
of tax) (14,220) 425,020
Cost of share options (net
of tax) 650,000 150,000
Amortisation of customer lists 360,000 360,000
Exceptional operating costs
(net of tax) 23,556,710 3,152,014
-------------------------------- ----------------------- ----------------------
Adjusted (loss)/profit after
tax (GBP) (4,741,510) 4,809,034
-------------------------------- ----------------------- ----------------------
Basic earnings per share -
pence per share (p) (62.17)p 1.54p
-------------------------------- ----------------------- ----------------------
Diluted earnings per share
- pence per share (p) (62.17)p 1.47p
Adjusted earnings per share
- pence per share (p) (10.06)p 10.28p
-------------------------------- ----------------------- ----------------------
Adjusted diluted earnings
per share - pence per share
(p) (10.06)p 9.80p
-------------------------------- ----------------------- ----------------------
Weighted average number of
ordinary shares in issue (No.) 47,120,357 46,774,755
Dilutive potential ordinary
shares: Employee share options
(No.) 1,770,977 2,293,308
Number of ordinary shares
issued 1 April 2016 (No.)
129,996,286 129,996,286
Indicative new issue basic
earnings per share - pence
per share (p) (16.37)p 0.40p
-------------------------------- ----------- -----------
Indicative new issue diluted
earnings per share - pence
per share (p) (16.37)p 0.40p
----------------------------- -------- -----
Net assets per share, as disclosed in the financial highlights,
are calculated using the net assets per the statement of financial
position divided by the number of shares at 31 March 2016 per note
21.
11 Intangible assets
Goodwill Publishing Computer Customer Brands Total
rights Software Lists & trademarks
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 April 2014 24,306 19 3,752 2,765 3,442 34,284
Additions -
internally developed - - 2,692 - - 2,692
Additions -
business combinations - - 162 828 2,610 3,600
Disposals (256) - - - - (256)
------------------------ ------------ -------------- ---------- -------------- -------------------- ---------
At 31 March
2015 24,050 19 6,606 3,593 6,052 40,320
------------------------ ------------ -------------- ---------- -------------- -------------------- ---------
Additions -
internally developed - - 2,450 - - 2,450
Additions -
business combinations 218 - - - - 218
Disposals - - - - - -
At 31 March
2016 24,268 19 9,056 3,593 6,052 42,988
------------------------ ------------ -------------- ---------- -------------- -------------------- ---------
Accumulated
amortisation
and impairment
At 1 April 2014 - - 1,584 127 2 1,713
Amortisation
charge - - 380 360 21 761
------------------------ ------------ -------------- ---------- -------------- -------------------- ---------
At 31 March
2015 - - 1,964 487 23 2,474
------------------------ ------------ -------------- ---------- -------------- -------------------- ---------
Impairment losses 13,003 - 6,202 676 - 19,881
Amortisation
charge - - 538 447 17 1,002
At 31 March
2016 13,003 - 8,704 1,610 40 23,357
------------------------ ------------ -------------- ---------- -------------- -------------------- ---------
Net book value
At 31 March
2016 11,265 19 352 1,983 6,012 19,631
------------------------ ------------ -------------- ---------- -------------- -------------------- ---------
At 31 March
2015 24,050 19 4,642 3,106 6,029 37,846
------------------------ ------------ -------------- ---------- -------------- -------------------- ---------
At 31 March
2014 24,306 19 2,168 2,638 3,440 32,571
------------------------ ------------ -------------- ---------- -------------- -------------------- ---------
The brought forward goodwill of GBP24,050,000 related to the
acquisition of the Noble Investments Group (GBP23,682,000), the
acquisition of Murray Payne (GBP221,000), the acquisition of the
magazine 'Philatelic Exporter' (GBP87,000), the album producer
'Frank Godden' (GBP23,000), the trade of an independent stamp
dealer (GBP10,000) and the acquisition of Stampwants.com
(GBP36,000). On 29 May 2015 the Group, through its wholly owned
subsidiary, The Fine Art Auction Group Limited, ("TFAAG") purchased
100% of Bid For Wine Ltd . Details of the acquisition are outlined
in note 30.
Goodwill has undergone an impairment review with reference to
expected future cash flows generated by these business units.
Management looks at five year projections, using a cost of capital
of 8.7% (2015: 5.8%), when determining if any impairment is likely.
The key assumptions used by management derived from current budgets
and forecast, are the growth in revenue and costs of between 2% to
3% (2015: 2% to 3%) over the period in question.
The forecasted levels of profits used in the impairment tests
are lower than in the past due to recent trading performance, which
coupled with the application of a higher cost of capital has
resulted in an impairment of goodwill relating to the Noble
Investments Group of GBP13,003,000 as at 31 March 2016. For these
reasons an impairment test was performed on the remaining
intangible assets, which resulted in an impairment of customer
lists relating to the Noble Group of GBP676,000 as at 31 March
2016.
Publishing rights represent the cost paid to third parties to
acquire copyright of publications.
The net book value of internally generated intangible assets as
at 31 March 2016 was GBPnil (2015: GBP3,536,000)
12 Property, plant and equipment
Reference Freehold Leasehold Fixtures, Vehicles, Total
collection land property fittings, plant
and and improvements tools and machinery
buildings and
equipment
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost or valuation
At 1 April
2014 1,527 3,187 1,849 1,327 967 8,857
Acquired on
acquisition - - 3,925 8 21 3,954
Additions 38 79 1,049 241 35 1,442
Disposals - (2,904) - - - (2,904)
Assets written
off in the
year - - - - (70) (70)
At 31 March
2015 1,565 362 6,823 1,576 953 11,279
------------------- ------------ ----------- ------------------ ----------- --------------- --------
Additions - - 323 163 402 888
Revaluation 22 - - - - 22
Disposals - (362) - - - (362)
Assets written
off in the
year - - (210) (320) (52) (582)
Transferred
to current
assets - - (2,672) - - (2,672)
At 31 March
2016 1,587 - 4,264 1,419 1,303 8,573
------------------- ------------ ----------- ------------------ ----------- --------------- --------
Accumulated
depreciation
At 1 April
2014 150 56 935 654 768 2,563
Charge for
the year - 56 362 272 88 778
Depreciation
on disposal - (36) - - - (36)
At 31 March
2015 150 76 1,297 926 856 3,305
------------------- ------------ ----------- ------------------ ----------- --------------- --------
Charge for
the year - 3 639 114 155 911
Impairment
for year 230 - - - - 230
Depreciation
on disposal - (79) (193) (338) (52) (662)
Transferred
to current
assets - - (127) - - (127)
At 31 March
2016 380 - 1,616 702 959 3,657
------------------- ------------ ----------- ------------------ ----------- --------------- --------
Net book value
At 31 March
2016 1,207 - 2,648 717 344 4,916
------------------- ------------ ----------- ------------------ ----------- --------------- --------
At 31 March
2015 1,415 286 5,526 650 97 7,974
------------------- ------------ ----------- ------------------ ----------- --------------- --------
At 31 March
2014 1,377 3,131 914 673 199 6,294
------------------- ------------ ----------- ------------------ ----------- --------------- --------
The reference collection is subject to a full valuation every
five years by a qualified external valuer and an interim valuation
is carried out in year three by the Group's expert stamp
dealers.
The last independent valuation of a part of the reference
collection was carried out in March 2016 by A F Norris, Philatelic
Consultant. The basis of the revaluation used was replacement
value. The surplus of GBP22,000 was transferred to the revaluation
reserve.
The revalued element of the reference collection is GBP366,000
(2015: GBP344,000). All other fixed assets are stated at historic
cost. If the reference collection had not been revalued it would
have been included at a net book value based on historic cost of
GBP841,000 (2014: GBP1,071,000).
A leasehold property was transferred to current assets as it was
sold after the balance sheet date, as disclosed in note 15.
Fully written down Property, Plant and Equipment with a cost of
GBP568,000 (2015: GBP835,000) remains in use by the Group.
13 Inventories
31 March 2016 31 March 2015
restated
GBP'000 GBP'000
Raw materials and - -
consumables
Work in progress 3,155 3,465
Finished goods and
goods for resale 58,649 69,583
-------------------- ------------- -------------
61,804 73,048
------------------- ------------- -------------
Included within the above inventories as at 31 March 2016 is
GBP14,719,000 owned by third parties (2015: GBP22,225,000). As at
31 March 2016 GBP38,557,000 (2015: GBP40,479,000) of the above
inventories were part of the security given in relation to the
borrowings detailed in note 19.
During the year GBP1,373,000 was charged to P&L for the
write down of inventories (2015:GBP225,000) following a review of
the Group's carrying value of its inventories, as a result of
comparison to net realisable value and checks for physical
existence.
The impact of the prior year adjustments on inventories are
given in note 31 b.
14 Current trade and other receivables
31 March 2016 31 March 2015
GBP'000 GBP'000
Amounts falling due
within one year
Trade receivables 12,935 15,685
Other receivables 972 1,042
Prepayments and accrued
income 1,667 2,877
------------------------- ------------- -------------
15,574 19,604
------------------------ ------------- -------------
15 Current assets held for sale
31 March 2016 31 March 2015
GBP'000 GBP'000
Leasehold property 2,545 -
Stock - 1,630
Fixed assets - 70
Intangibles - 100
-------------------- ------------- -------------
2,545 1,800
------------------- ------------- -------------
Included within the leasehold property at 31 March 2016 is a
property that was sold on the in June 2016 for GBP2,500,000.
16 Provision for impairment of receivables and collateral held
A provision is established for irrecoverable amounts where there
is objective evidence that amounts due under the original payment
terms will not be collected. Indications that the trade receivable
may become irrecoverable would include financial difficulties of
the debtor, likelihood of the debtor's insolvency and default or
significant failure of payment.
Provision for impairment of receivables
31 March 31 March
2016 2015
GBP'000 GBP'000
Relating to debt over 6 months
past due 1,323 515
-------------------------------- --------- ---------
As at 31 March 2016, excluding balances due under extended
payment terms detailed below, GBP2,249,000 (2015: GBP1,894,000) of
trade receivables, excluding those provided for by the impairment
provision, were past their due settlement date but not impaired.
The ageing analysis of these trade receivables is as follows:
31 March 31 March
2016 2015
GBP'000 GBP'000
Up to 3 months past
due 644 843
3 to 6 months past
due 926 718
Over 6 months past
due 679 333
---------------------- -------- --------
2,249 1,894
-------------------- -------- --------
The Group retains possession of the material sold under extended
payment terms, thus limiting credit risk from entering into such
arrangements to the margin achieved on the transaction. In most
cases the customers sign a formal credit agreement and pay a
minimum 10% non-refundable deposit. The balances fall due a maximum
of 24 months in the future although the option to settle early does
exist. There was an outstanding balance of GBP3,588,000 at 31 March
2016 (31 March 2015: GBP6,763,000) in respect of such extended
payment plans. Of the outstanding balance, GBP2,908,000 was past
their settlement date (31 March 2015: GBP923,000) but not
impaired.
There are instances where receivables have had their terms
renegotiated however the group has not had to call upon its
security due to default by customers at any time during the year.
Trade receivables that are neither past due nor impaired are
considered to be fully recoverable.
17 Current trade and other payables
31 March 31 March
2016 2015
restated
GBP'000 GBP'000
Trade payables 10,424 13,373
Other payables 15,741 12,991
Other taxes and social
security 1,246 1,681
Accruals and deferred
income 1,924 3,946
Provisions 1,074 -
30,409 31,991
----------------------- -------- ---------
18 Non-current other payables
31 March 31 March
2016 2015
Non-current restated
GBP'000 GBP'000
Due between 1 and 2
years 5,105 14,117
Due between 2 and 5
years 4,598 10,060
Due > 5 years 99 191
---------------------- --------- --------
9,802 24,368
-------------------- --------- --------
The above amounts, together with GBP9,322,000 (2015: 3,930,000)
within current payables are the amounts credited following the
de-recognition (see note 31a) of revenue on certain investment
plans. These total amounts represent the value of the relevant
extant investment plans and will be payable if the plan holder
chooses either not to hold their collectibles nor to reinvest in
other collectibles on expiry of the investment scheme.
19 Borrowings
31 March 31 March
2016 2015
Current GBP'000 GBP'000
Bank loans 123 1,283
Bank overdraft 5,036 1,239
----------------- -------- --------
5,159 2,522
--------------- -------- --------
Non-current
Bank loans 9,000 9,173
Bank overdraft 7,788 -
----------------- -------- --------
16,788 9,173
--------------- -------- --------
The bank loans outstanding at 31 March 2016 are repayable as
follows:
Amount Due < 1 year Due > 1 year Rate
GBP000 GBP000 GBP000
Facility A loan with Libor + margin
The Royal Bank of varying between
Scotland plc 9,000 - 9,000 1.3% and 2.75%
Murray Payne acquisition
loan with The Royal
Bank of Scotland
plc 123 123 - Libor + 1.5%
------------------------- ------ ------------ ------------ ----------------
9,123 123 9,000
------------------------- ------ ------------ ------------ ----------------
The Facility A loan was increased to GBP9.5m in April 2016 and
there is a moratorium on capital repayments until May 2017 unless
there is a disposal of a fixed asset, in which case 50% of the
proceeds will be applied in reducing the loan balance, subject to
any repayments being restricted to not more than GBP2.5m before May
2017. Amortisation of this loan commences at GBP0.5m per quarter
from May 2017 until May 2018 when the facilities are due for
review.
The Group also has a GBP10m revolving credit facility with The
Royal Bank of Scotland PLC repayable in May 2018. Interest is
charged at margins over LIBOR ranging between 1.3% and 2.75%. The
Group is required to satisfy stock cover and net asset cover
covenants until May 2017. The stock covenant is to maintain 2 times
cover for total stock to the combined total of the Facility A loan
and the revolving credit facility and 1.5 times cover for both the
philatelic stock and stock held by UK entities. The net asset
covenant is to maintain Group consolidated net assets of at least
GBP40,000,000, after the share issue on the 1 April 2016.
Thereafter, there are also fixed cost cover and interest cover
covenants to be calculated by reference to the Group's budget for
the year ended 31 March 2018.
Additionally the Group had an overdraft facility of GBP6m on the
31 March 2016, the balance as at 31 March 2016 was GBP5,036,000,
which was repaid with part of the proceeds from the shares issued
on 1 April 2016 and the overdraft facility was cancelled.
During the year the Group paid arrangement facility fees of
GBP210,000 (2015: GBP200,000) for the above facilities
The borrowings are secured by a full fixed and floating charge
debenture over the core assets of the group.
20 Deferred tax assets and liabilities
Assets Liabilities
2016 2015 2016 2015
restated restated
GBP'000 GBP'000 GBP'000 GBP'000
Defined benefit pension
scheme (note 26) 940 981 - -
Other timing differences 238 238 - -
Unutilised tax losses 751 901 - -
Deferred tax on revalued
fixed assets - - 941 941
Accelerated capital allowances - - 836 890
Full provision 1,929 2,120 1,777 1,831
------------------------------- --------- -------- --------- --------
21 Called up share capital
31 March 2016 31 March
2015
GBP'000 GBP'000
Authorised
250,000,000 (2015: 75,000,000) ordinary shares
of 1p each 2,500 750
----------------------------------------------- -------------------------------- -----------------------------
Allotted, issued and fully paid (all equity):
47,120,357 (2015: 47,120,357) ordinary shares
of 1p each 471 471
----------------------------------------------- -------------------------------- -----------------------------
During the year ended 31 March 2015, 304,650 ordinary shares
were issued at GBP1.79 to satisfy the exercise of options.
91,588 ordinary shares were issued at GBP2.28p on 15 October
2014 to satisfy deferred consideration obligations following the
acquisition of Stampwants.com Inc on 31 October 2012.
126,260 ordinary shares were issued at GBP2.95p on 1 December
2014 to satisfy deferred consideration of Noble Investments (UK)
Limited following the acquisition of the The Fine Art Group Limited
on 18 December 2012.
Capital risk management
Capital is managed to ensure that the entities within the Group
will be able to continue as a going concern whilst maximising the
returns to stakeholders through the optimisation of debt and equity
balances. Detail on capital structure is presented in the Statement
of Financial Position. Notes 21 and 22 provide details on equity.
Details of loans and overdrafts at the year end are disclosed on
page 14 in the Financial Review and further disclosure can be found
in note 19 and note 28. There are no externally imposed capital
requirements on the Group. Further detail on capital risk
management can be found in the Operating and Financial reviews on
pages 11 to 15.
22 Options in shares of The Stanley Gibbons Group plc
Executive Share options are granted to Directors and other
employees on a phased basis. The value of those options ensures
that this spreads any reward over a number of years, allied to
growth in shareholder value over the long term. Options granted
under the Inland Revenue approved UK Executive Share Option Scheme
and the Jersey Executive Share Option Scheme are exercisable
between the third and tenth anniversaries of the date of grant.
Options granted are not normally exercisable unless the performance
target is satisfied.
Options issued in 2010 had the target of a minimum EPS of 17.3
pence for the year ended 31 December 2012. 25% of the granted
options vest if this target is reached, rising on a straight line
basis to 100% of options granted to vest if an EPS of 21.5 pence is
achieved.
Options issued in 2011 had the target of a minimum EPS of 19.2
pence for the year ended 31 December 2013. 25% of the granted
options vest if this target is reached, rising on a straight line
basis to 100% of options granted to vest if an EPS of 22.7 pence is
achieved.
Options issued in 2012 had the target of a minimum EPS of 21.8
pence for the year ended 31 December 2014.
25% of the granted options vest if this target is reached rising
on a straight line basis to 100% of options granted to vest if an
EPS of 25.7 pence is achieved.
Options issued in 2014 require that the Company's compound
average Total Shareholder Return (TSR) growth over the performance
period must match or exceed 8% per annum. The options shall vest
over a number of shares determined as follows:
Compound average annual Percentage of Option
TSR growth over the performance which vests (with straight
period line vesting between
each point)
Less than 8% 0%
8% 25%
15% or more 100%
In addition to the Directors' share options disclosed in the
Report on Remuneration, detailed below are options which have been
granted to employees together with the periods in which they may be
exercised:
Granted Exercised Forfeited Number at
Earliest Expiry Exercise Number at in in In
Date of grant exercise date Date price 31 March 2015 Year Year Year 31 March 2016
(1p shares)
01/6/10 01/6/13 31/5/20 123.5p 22,830 - - - 22,830
06/5/11 06/5/14 05/5/21 179.0p 116,398 - - - 116,398
06/12/11 06/12/14 05/12/21 165.0p 4,774 - - - 4,774
04/5/12 04/5/15 03/5/22 227.5p 172,334 - - (172,334) -
06/11/12 06/11/15 05/11/22 220.5p 170,493 - - (170,493) -
27/01/14 27/01/17 26/01/24 363.0p 504,856 - - (168,501) 336,355
10/04/14 10/04/17 10/01/24 316.50p 129,855 - - (73,301) 56,554
18/12/14 18/12/14 18/12/24 294.5p 97,530 - - (23,562) 73,968
-------------- -------------- --------- ----------- ------------- ------- --------- --------- -------------
1,219,070 - - (608,191) 610,879
--------------------------------------- ----------- ------------- ------- --------- --------- -------------
Movements in the number of share options outstanding including
Directors share options and their related weighted average exercise
prices are as follows:
31 March 31 March 31 March 31 March
2016 2016 2015 2015
Average Options Average Options
exercise exercise
price per (thousands) price per (thousands)
share share
At 1 April 169p 4,165 276p 2,154
Granted - - 92p 2,638
Forfeited/lapsed 206p (1,362) 269p (244)
Exercised - - 177p (383)
------------------ ---------- ------------ ---------- ------------
At 31 March 151p 2,803 169p 4,165
------------------ ---------- ------------ ---------- ------------
Share options outstanding at the end of the period have the
following expiry date and exercise price:
Expiry date Exercise Options Options
Price per (thousands) (thousands)
share
31 March 31 March
2016 2015
31 May 2020 123.5p 23 23
5 May 2021 179.0p 116 116
5 December 2021 165.0p 5 5
3 May 2022 227.5p - 317
5 November 2022 220.5p - 170
26 January 2024 363.0p 663 941
10 April 2024 316.5p 431 631
30 September 2020 nil 1,491 1,864
18 December 2024 294.5p 74 98
------------------- ----------- ------------- -------------
2,803 4,165
------------------- ----------- ------------- -------------
Binomial and Black-Scholes models have been used to value the
awards. The awards issued in the year ended 31 March 2016 and the
year ended 31 March 2015 are set out below:
Dates of grant 18/12/14 30/09/14 10/04/14
Number of options
granted 97,530 1,863,912 676,653
Weighted average
fair value at date
of grant (per share) 30.03 nil 22.01p
Weighted average
share price on date
of grant 295.5p 277.5p 314.0p
Weighted average
exercise price 294.5p nil 316.5p
Expected term (from 6.5 years 3 years 6.5 years
date of grant)
Expected volatility 20.4% 22.5% 18.95%
Expected dividend
yield 2.68% 2.52% 2.68%
Risk-free interest
rate 1.22% 1.22% 1.22%
Expected volatility was determined by calculating historical
volatility of the Group's share price over a minimum 10 year
period.
On 2 February 2015 the Board approved the adoption by the
Company of an incentive plan for senior executives within the
Interiors Division (The Fine Art Auction Group Limited and its
subsidiaries). Awards were subsequently made on 4 February 2015.
Under the terms of the plan participants share in the growth in
value of the Interiors Division measured over the period 1 April
2015 to 31 March 2020. Pay out under the plan, which can be in cash
or shares, requires the value of the Interiors Division to achieve
a minimum compound annual growth rate of 10% above GBP28.5m.
Participants are entitled to share in a plan pool determined as a
percentage of the growth in value in excess of this minimum
requirement. The value at payout is referred to in the plan as the
"End Value". The minimum requirement is referred to as the
"Threshold Value". The maximum number of shares which can be issued
under the plan when added to the number of shares which can be
issued under any other plan operated by the Company cannot exceed
10% of the Company's issued share capital. Any additional
entitlement would be paid in cash. Payouts are subject to
appropriate deductions for tax and national insurance.
If all or part of the Interiors Division is sold during the
performance period or the Company is subject to a change of control
then there can be an earlier payout under the plan. The maximum
payout under the plan is GBP12.5m. Vesting other than following a
sale or change of control is in two tranches.
The plan pool will be calculated as follows:
On or before 31 March 2016 - 18% of the End Value minus the
Threshold Value
On or before 31 March 2020 - 14% of the End Value minus the
Threshold Value
On or after 1 April 2020 - 13% of the End Value minus the
Threshold Value.
The fair value of awards granted under this scheme has been
calculated at 9.6p based on an assumed maximum share number of
4,610,042 and the following assumptions:
Weighted average share price on grant date - 292p
Weighted average exercise price -nil
Expected term - 5 years
Expected volatility - 20%
Expected dividend yield - 2.00%
Risk free interest rate - 0.984%
23 Share premium and reserves
Share premium account
The share premium account is used to record the aggregate amount
or value of premiums paid when the Company's shares are issued at a
premium.
Share compensation reserve
The share compensation reserve relates to the fair value of
options granted which has been charged to the statement of
comprehensive income over the vesting period of the options.
Revaluation reserve
The revaluation reserve relates to the reserve movement in
respect of the revaluation of property, plant and equipment and
available for sale financial assets.
Capital redemption reserve
The capital redemption reserve represents the cumulative par
value of all shares bought back and cancelled by the Group.
Retained earnings
Retained earnings represents the accumulated profits not
distributed to shareholders.
24 Cash outflows from operating activities
Year ended Year ended
31 March 31 March 2015
2016
Restated
GBP'000 GBP'000
Operating (loss)/profit (28,319) 2,245
Profit on sale of property (183) (1,613)
Impairment of tangibles assets - 70
Depreciation 911 778
Amortisation 1,002 761
Loss on sale of financial asset 58 -
Impairment of intangible assets 19,881 156
Impairment of tangible assets 230 -
Decrease in provisions (462) (375)
Cost of share options 650 150
Decrease/(increase) In inventories 11,244 (7,170)
Decrease/(increase) in trade and other receivables 5,830 (3,250)
(Decrease)/increase in trade and other payables
(less deferred consideration) (16,139) 848
Net exchange differences 89 -
--------------------------------------------------- ---------- --------------
Cash outflows from operating activities (5,208) (7,400)
--------------------------------------------------- ---------- --------------
25 Capital and other commitments
Lease commitments
At 31 March 2016 the Group had future minimum lease payments
under non-cancellable operating leases as follows:
Land and Land and Buildings
Buildings
Payable: 31 March 31 March 2015
2016
GBP'000 GBP'000
Within one year 2,552 2,501
Between two and five years 6,691 6,313
In five years or more 7,145 7,112
--------------------------- ----------------------------------- -------------------------
16,388 15,926
--------------------------- ----------------------------------- -------------------------
These figures represent the aggregate payable until expiration
of all non-cancellable operating leases.
At 31 March 2016 the Group had future minimum rental payments
receivable under non-cancellable operating leases as follows:
Land and Land and Buildings
Buildings
Receivable: 31 March 31 March 2015
2016
GBP'000 GBP'000
Within one year 907 129
Between two and five years 4,395 388
Between two and five years 6,501 -
11,803 517
--------------------------- ----------------------------------- -----------------------------------
These operating leases are all sub leases and the lease terms
are coterminous with those of the company. The above rentals relate
to the sub lease at premises in Strand, London and Hill Street,
Jersey.
26 Retirement benefits
The Stanley Gibbons Group of Companies operates two defined
benefit pension schemes namely:
(a) The Stanley Gibbons Holdings PLC Pension and Assurance
Scheme ("the Scheme")
The scheme closed to new members with effect from 1 September
2002 and to future accrual with effect from 1 July 2014. All
employer costs are borne by Stanley Gibbons Limited. The assets of
the scheme are held under the provisions of a trust deed and are
invested in AAA rated Corporate Bonds and unitised equity funds
managed by two UK institutions. This investment policy mitigates
the actuarial risks that the scheme is exposed to such as
longevity, interest rate, inflation and investment risks. The
contributions are determined by a qualified actuary on the basis of
triennial valuations using the projected unit method. The Scheme is
funded with the assets held in separate trustee administered funds.
Employees are entitled to retirement benefits based on their final
pensionable salary and length of service.
The costs of insurance of the death-in-service benefits and all
administration expenses and levies to the Pension Protection Fund
are paid for by the employer.
The IAS19 disclosures for the year to 31 March 2016 are based on
the results of the actuarial valuation as at 30 June 2012 which
also encompassed the cleansing of member data. The actuarial
valuation of the Scheme as at 30 June 2015 is close to being
finalised. Previous valuations were based on a roll forward of the
Scheme's actuarial valuation as at 30 June 2009 as adjusted to
reflect benefit and data changes which subsequently came to
light.
Scheme assets are stated at their market value at 31 March 2016.
The Group currently pays deficit reduction contribution of
GBP250,000 per annum under a Recovery Plan agreed in June 2015.
(b) The Mallett Retirement Benefits Scheme
This is a separate trustee administered scheme holding the
pension plan assets to meet long term pension liabilities for
employees and former employees. The level of retirement benefit is
principally based on salary earned in the last three years of
employment prior to leaving active service and is linked to changes
in inflation up to retirement.
The plan is subject to the funding legislation outlined in the
Pensions Act 2004 which came into force on 30 December 2005. This,
together with documents issued by the Pensions Regulator, and
Guidance Notes adopted by the Financial Reporting Council, set out
the framework for funding defined benefit occupational pension
plans in the UK.
The trustees of the plan are required to act in the best
interest of the plan's beneficiaries. The appointment of the
trustees is determined by the plan's trust documentation.
A full actuarial valuation was carried out as at 1 May 2013 and
the funding of the plan is agreed between the company and the
trustees in line with those requirements. This actuarial valuation
showed a deficit of GBP1,602,000. The company agreed with the
trustees that it will aim to eliminate the deficit over a period of
9 years and 10 months from 1 June 2014 by the payment of monthly
contributions of GBP17,033 in respect of the deficit which includes
an allowance of GBP1,200 towards Friends Life's expenses of
administration. The company will also meet expenses of the plan and
levies to the Pension Protection Fund.
The IAS19 disclosures for the year to 31 March 2016 are based on
the actuarial valuation as at 1 May 2013 and updated on an
approximate basis to 31 March 2016.
26 Retirement benefits (continued)
The amounts recognised in the statement of financial position
are as follows:
31 March 31 March
2016 2015
GBP'000 GBP'000
Present value of funded obligation (18,232) (18,946)
Fair value of scheme assets 13,010 13,130
------------------------------------ --------- ---------
Net obligation (5,222) (5,816)
Deferred tax asset 940 981
------------------------------------ --------- ---------
Retirement benefit obligation (4,282) (4,835)
------------------------------------ --------- ---------
GBP'000 GBP'000
Cumulative amount of actuarial
losses recognised in other
comprehensive income (1,748) (1,880)
------------------------------------ --------- ---------
The amounts recognised in the statement of comprehensive income
for the period are as follows:
31 March 31 March
2016 2015
GBP'000 GBP'000
Current service cost (194) 368
Interest cost on net benefit
obligations 176 170
-------------------------------- --------- ---------
Total included in employee
benefit expense (18) 538
-------------------------------- --------- ---------
Actual return on scheme assets (106) 322
-------------------------------- --------- ---------
The amounts recognised in other comprehensive income are as
follows:
31 March 31 March
2016 2015
GBP'000 GBP'000
Actuarial gains/(losses) on
scheme obligations from financial
assumptions 659 (2,052)
Actuarial (losses)/gains on
fair value of scheme assets (527) 978
------------------------------------ --------- ---------
Remeasurement (losses)/gains 132 (1,074)
------------------------------------ --------- ---------
Changes in the present value of the defined benefit obligation
are as follows:
31 March 31 March
2016 2015
GBP'000 GBP'000
Present value of obligations
at start of year/period 18,946 10,579
Liabilities acquired at fair
value - 6,114
Current service cost (194) 368
Interest cost 596 563
Contributions by employees - 5
Remeasurement losses/(gains) (659) 2,052
Charges paid 194 (324)
Benefits paid (651) (411)
----------------------------- --------- ---------
Present value of obligations
at end of year/period 18,232 18,946
----------------------------- --------- ---------
26 Retirement benefits (continued)
Changes in the fair value of scheme assets are as follows:
31 March 2016 31 March 2015
GBP'000 GBP'000
Fair value of scheme assets
at start of year/period 13,130 7,294
Assets acquired at fair value - 4,971
Expected return on scheme assets 420 393
Remeasurement gains / (losses) (527) 978
Contributions by employees - 5
Contributions by company 444 224
Charges paid 194 (324)
Benefits paid (651) (411)
--------------------------------- -------------- --------------
Fair value of scheme assets
at end of year/period 13,010 13,130
--------------------------------- -------------- --------------
The Group currently expects to contribute GBP474,000 to its
defined benefit schemes in the financial year to 31 March 2017.
The major categories of scheme assets as a percentage of the
fair value of total scheme assets are as follows:
31 March 2016 31 March 2015
% %
Equities 26.4% 31.1
Corporate bonds 33.9% 28.9
Diversified growth funds 13.3% 12.2
Insurance policies 20.8% 21.1
Gilts/cash/other 5.6% 5.7
Principal actuarial assumptions at the reporting date:
31 March 31 March 2015
2016
Future salary increases 2.00% 2.00%
Price inflation - RPI 2.80% 2.80%
Price inflation - CPI 1.80% 1.80%
Future pension increases -
pension accrued before 6 April
1997 (per annum) 0.00% 0.00%
Future pension increases -
pension accrued after 6 April
1997 (per annum) 1.80% 1.80%
Discount rate 3.40% 3.20%
Equities (long term expected
rate of return) 3.40% 3.20%
Corporate bonds (long term
expected rate of return) 3.40% 3.20%
Fixed interest gilts (long
term expected rate of return) 3.40% 3.20%
Cash (long term expected rate
of return) 3.40% 3.20%
26 Retirement benefits (continued)
Mortality Assumptions
The mortality trends of the scheme were assessed at 31 March
2016 by the actuary using the mortality tables SAPS projected by
birth year, with an allowance for medium cohort mortality
improvements, and an underpin of 1%. The Directors consider that,
statistically, this table gives the best indicators of the life
expectancy of pension scheme members taking into account their
employment history, lifestyle and job location.
The mortality assumptions imply the following life
expectation:
The Stanley Gibbons Holdings 31 March 31 March
PLC Pension and Assurance 2016 2015
Scheme
In years In years
Retiring at 60 at reporting
date
Male 26.7 26.6
Female 29.4 29.3
------------------------------ --------- ----------
Retiring at 60 at reporting
date + 20 years
Male 28.8 28.7
Female 31.4 31.3
------------------------------ --------- ----------
The Mallett Retirement Benefits 31 March 31 March
Scheme 2016 2015
In years In years
Retiring at 65 at reporting
date
Male 21.9 21.5
Female 24.5 24.1
--------------------------------- --------- ----------
Retiring at 65 at reporting
date + 20 years
Male 23.8 23.4
Female 26.3 26.0
--------------------------------- --------- ----------
Sensitivity of results
The value placed on the benefit obligation is particularly
sensitive to changes in some of the key assumptions as detailed
below:
The Stanley Gibbons Holdings Change in (Deficit)
PLC Pension and Assurance the benefit
Scheme
Obligation GBP'000s
- %
Assumption as per IAS 19
disclosures n/a (3,911)
0.25% p.a. reduction in discount
rate 3.8% (4,355)
0.25% increase in CPI inflation 2.1% (4,165)
Pensions payable for 1 year
longer due to mortality assumptions 2.0% (4,142)
The Mallett Retirement Benefits Change in (Deficit)
Scheme the benefit
Obligation GBP'000s
- %
Assumption as per IAS 19
disclosures n/a (1,311)
0.25% p.a. reduction in discount
rate 4.4% (1,541)
0.25% increase in inflation 1.9% (1,427)
Pensions payable for 1 year
longer due to mortality assumptions 3.0% (1,400)
26 Retirement benefits (continued)
Amounts for the current and previous four periods are as
follows:
31 31 31 31 31
March March March December December
2016 2015 2014 2012 2011
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
restated
Present value of defined
benefit obligations (18,232) (18,946) (10,579) (9,941) (8,942)
Fair value of scheme
assets 13,010 13,130 7,294 6,780 6,181
---------------------------------------------- --------- --------- --------- ------------ ------------
Deficit (5,222) (5,816) (3,285) (3,161) (2,761)
---------------------------------------------- --------- --------- --------- ------------ ------------
Experience adjustments
on scheme assets (527) 978 544 544 (492)
Effects of changes
in the demographic
and financial assumptions
underlying scheme
liabilities
659 (2,077) (297) (664) (342)
* Amount 3.6% -10.9% -2.80% -6.68% -3.83%
* Percentage of benefit obligation
---------------------------------------------- --------- --------- --------- ------------ ------------
Future profile of the Stanley Gibbons Holdings PLC Pension and
Assurance Scheme
The Stanley Gibbons Holdings PLC Pension and Assurance Scheme
closed to new members with effect from 1 September 2002. This will
result in the age profile of the active membership rising over time
and hence, under the method required to calculate IAS 19
liabilities, the future cost in relation to this Scheme will rise
in the long-term.
The Group has considered the impact of the IAS 19 deficit in
respect of the Group, its employees and pensioners. The deficit has
decreased from GBP4,285,000 at 31 March 2015 to GBP3,911,000 at 31
March 2016 principally arising from changes in scheme data and a
change from the approximate methodology used in previous
disclosures.
Future profile of the Mallet Retirements Benefits Scheme
The Mallet Retirements benefits Scheme was closed to new members
in 2002. This will result in the age profile of the active
membership rising over time and hence, under the method required to
calculate IAS 19 liabilities, the future cost in relation to this
Scheme will rise in the long-term.
The Group has considered the impact of the IAS 19 deficit in
respect of the Group, its employees and pensioners. The deficit has
decreased from GBP1,531,000 at 31 March 2015 to GBP1,311,000 at 31
March 2016 principally arising from changes in scheme data and a
change from the approximate methodology used in previous
disclosures.
27 a Contingent liability - Investment Plans
The Group's wholly owned subsidiary Stanley Gibbons (Guernsey)
Ltd, has potential liabilities that would be due to customers of
certain previously sold investment products still extant. They will
become payable if the customer chooses to exercise a guarantee or
undertaking within their contracts to require the Group to buy back
their collectibles at 75% of the latest Stanley Gibbons catalogue
price where appropriate, or otherwise at 75% of the market value.
As at 31 March 2016 the maximum potential liability was
GBP64,300,000 (2015: GBP51,400,000).These amounts will not become
due if the customer chooses to either hold their collectibles,
reinvest in other collectibles or sell their collectibles to a
third party at above these discounted levels. Any payments made in
relation to this liability would mean that the collectibles would
be returned to stock and could be resold at full market value at a
profit. It is expected that once the collectible item is resold the
long term impact to assets and particularly cash would be
significantly lower.
27 b Contingent liability - Litigation
Following its acquisition of Mallett plc in October 2014, the
Company learned that government regulators in the United States
were investigating transactions that had occurred since 1 January
2010 involving a former client of Mallett Inc., Mallett's New
York-based subsidiary. The former client is not a related person or
affiliate of the Group. This issue had not been disclosed to the
Company by the directors of Mallett plc during the due diligence
process prior to the acquisition.
The Group continues to cooperate fully with the U.S. Securities
and Exchange Commission (the "SEC") and the Department of Justice
("DOJ"), including responding to a subpoena from the SEC requesting
documents and providing information to the government regulators as
requested. Both the SEC and DOJ are aware that Mallett's new owners
were not involved in the events underlying the investigation, and
there have been discussions with the SEC regarding resolution of
these matters.
Whilst the investigations are ongoing, no criminal or civil
charges have been filed against Mallett Inc. or any Mallett group
company to date. The Group continues to retain the services of
special legal counsel to advise it in these matters. The
investigations are not being conducted in public, and the Directors
cannot predict with certainty whether Mallett Inc. or any other
company or person in the Mallett group will be named in civil or
criminal claims or litigation as a result of the
investigations.
Though the transactions pre-dated the acquisition there was no
provision in the financial accounts of Mallett plc or its
subsidiaries for any costs relating to them. A fair value
adjustment was made subsequent to the acquisition as at that point
the costs in responding to the subpoena from the SEC and/or
assisting the US authorities with their investigations were
unavoidable.
The estimate made at the time was GBP0.9m. Subsequently, with
the involvement of the DOJ, this estimate has proved to be
inadequate. At the year end the Group had an accrual of GBP1.1m,
which represents the Board's best estimate for subsequent costs.
There is a possibility that costs may exceed this level, though
they may be covered by insurance or counter claims. The Board
consider the likelihood of additional costs to be both remote and
difficult to measure so are unable to meaningfully quantify.
28 Financial instruments
The Group is exposed through its operations to the following
risks:
- Credit risk
- Interest rate risk
- Liquidity risk
The Group is exposed to the risk that arises from its use of
financial instruments. The Group's financial instruments comprise
cash and available banking facilities and various items such as
trade receivables and trade payables which arise directly from
operations. The Group financed its operations with a bank loan,
details of the loan facility can be found in note 19. The main
purpose of these financial instruments is to raise finance for the
Group's operations.
The Group's policies and procedures in managing these risks are
detailed in the Financial Review on pages 14 to 15.
Summary of financial assets and liabilities by category
The principal financial instruments used by the Group, from
which financial instrument risk arises are shown below summarised
by category:
31 March 31 March
2016 2015
GBP'000 GBP'000
(restated)
Financial assets - Loans
and receivables
Available for sale financial
assets (see below) - 1,364
Trade and other receivables 15,574 19,604
Cash at bank 1,542 -
-------------------------------- --------- -----------
17,116 20,968
-------------------------------- --------- -----------
Financial liabilities measured
at amortised cost
Trade and other payables 40,211 56,359
Borrowings 21,947 11,695
-------------------------------- --------- -----------
62,158 68,054
-------------------------------- --------- -----------
(45,042) (47,086)
-------------------------------- --------- -----------
Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or contractual party to a financial instrument fails to
meet its contractual obligations. The Group is mainly exposed to
credit risk from credit sales. In order to manage risk the Group
has implemented policies that require appropriate credit checks on
potential customers before sales are made. These checks are
performed at a local level. The amount of any exposure to any
individual counterparty is subject to a limit which is regularly
reviewed by the Directors.
Credit risk also arises from cash and cash equivalents and
deposits with banks and financial institutions. Risks associated
with cash deposits are limited as the banks used have high credit
ratings assigned by international credit rating agencies.
The Group's exposure to credit risk is limited to the carrying
amount of financial assets recognised in the statement of financial
position as noted in the above table.
The Directors of the Company consider that all the above
financial assets for each of the statement of financial position
dates under review are of a good credit quality, including those
past due settlement dates. See note 16 for more information on
financial assets that are past due settlement dates.
28 Financial Instruments (continued)
Interest rate risk
The Group finances its operations through a combination of bank
loans and overdraft (see note 19), and through the generation of
cash from operating activities and has no interest rate exposure on
any other financial liabilities.
The finance charge of the Group for the year to 31 March 2016 of
GBP572,000 (2015: GBP428,000) comprised loan interest & charges
of GBP441,000 (2015: GBP258,000) and net finance costs from its
defined benefit pension scheme liabilities of GBP131,000 (2015:
GBP170,000).
The bank loans are linked to LIBOR. A 0.05% (5 basis point
movement) movement in LIBOR would have resulted in an additional
interest charge of GBP8,000 (2015: GBP3,000).
Foreign exchange risk
The Group had no material exposure to foreign exchange risk in
the year ended 31 March 2016. The Group did have assets and
liabilities denominated in foreign currencies relating to its USA
activities for both the internet and Mallett. Neither of these
activities was deemed as a material risk of foreign currency
exposure to the group. Liabilities that arises in US $ are managed
from cash generated by the sale of assets in these currencies or by
the use of foreign currency earnings generated elsewhere within the
Group.
Following the closure of the USA marketplace activities and the
significant reduced USA Mallett activities post 31 March 2016 the
exchange rate risk to the Group has diminished further.
Liquidity risk
Liquidity risk arises from the Group's management of its working
capital and the finance charges and principal repayment on its bank
borrowings. It is the risk that the Group will encounter difficulty
in meeting its financial obligations as they fall due.
The Group seeks to manage financial risk by ensuring sufficient
liquidity is available to meet foreseeable needs. The Group's
liquidity risk is managed by the Group finance function. Budgets
and forecasts are prepared throughout the year for the Directors.
These are monitored to ensure that the Group has sufficient
headroom within its cash facilities to meet liabilities as they
fall due. The Group's forecasts shows that it will remain in
compliance with its banking covenants throughout the foreseeable
period and that it will have access to adequate resources to
continue operations and to meet its liabilities, as and when they
fall due. However the forecasts are dependent upon the liabilities
and contingent liabilities, particularly in relation to investment
plans redemption profiles, not materialising at a level greater
than forecast and trading improving from its current level in line
with management's expectations. .
The Group's financial liabilities have contractual maturities
(representing undiscounted contractual cash flows) as summarised
below:
Within Between Between Total
6 months 6 and 12 1 and
months 5 years
GBP'000 GBP'000 GBP'000 GBP'000
At 31 March
2016
Trade and other
payables 21,986 8,423 9,802 40,211
Borrowings 5,431 271 17,726 23,428
------------------ ---------- ---------- --------- --------
27,417 8,694 27,528 63,639
At 31 March
2015 (restated)
Trade and other
payables 24,642 7,349 23,918 55,909
Borrowings 577 1,394 10,937 12,908
------------------ ---------- ---------- --------- --------
25,219 8,743 34,855 68,817
------------------ ---------- ---------- --------- --------
Included within trade and other payables is an amount of
GBP23,918,000 (GBP33,546,000 - 31 March 2015) relating to previous
customers of certain investment plans and will be payable if the
customer chooses not to hold their collectibles or reinvest in
other collectibles. During the year ended 31 March 2016
GBP9,628,000 of these contracts fell due and off these contracts
GBP1,450,000 was paid to customers who chose not to hold or
reinvest.
The Directors monitor these liabilities as they fall due and
have procedures in place to ensure that the liquidity risk from
these maturing investments in minimised.
A further liquidity risk is disclosed in note 27 and relates to
investment plans which the Group has a GBP64,300,000 (2015:
GBP51,400,000) contingent liability exposure. The Director's
current opinion is that an event to crystalise this liability is
remote.
29 Identity of related parties
The Company has a controlling related party relationship with
its subsidiary companies (see note 33). The Group also had a
related party relationship with its Directors.
Transactions between parent and subsidiaries
The parent company charged management fees of GBP3,239,000 in
the year to 31 March 2016 (2015: GBP3,231,000) to its
subsidiaries.
Transactions with Directors and key management personnel
The remuneration of the Directors and details of share options
granted are disclosed in the Report on Remuneration and in note 6.
There are no key management personnel, as defined in IAS 24, aside
from the Directors.
Year ended 31 March 2016
Mr Hall forfeited share options during the year to 31 March 2016
as follows:
Shares forfeited
No Price
Mr M Hall 144,736 227.50p
M Hall, Director, made purchases during the year to the value of
GBP17,657. He had a net sales ledger balance of GBP13,359 at the
year end.
H G Wilson had a purchase ledger balance of GBP21,415 at the
year end.
The Group received rental income of GBP21,600 during the year
from Marbral Limited, a company 100% owned by Mr Bralsford.
During the year the Group paid GBP75,000 to Evolution Securities
China Ltd for corporate consultancy services. C P Whiley is the
Managing Director of this company
Year ended 31 March 2015
M Hall & D Duff exercised share options during the year to
31 March 2015 as follows:
Shares acquired Shares disposed
No Price No Price
Mr M Hall 112,000 179.0p 112,000 310.0p
Mr D Duff 70,000 179.0p 70,000 310.0p
M Hall, Director, had a purchase ledger balance of GBP865 at the
year end.
J Byfield, Director, redeemed portfolios to the value of
GBP409,777 during the year and there was GBP8,786 due to him at the
year end.
I Goldbart, former Director, purchased and sold coins from/to A
H Baldwin & Sons Limited to the value of GBP3,750 and GBP1,550
respectively during the year. Relatives of I Goldbart, former
Director, purchased and sold coins from/to A H Baldwin & Sons
Limited to the value of GBP8,333 and GBP1,030 during the year.
There was GBP2,118 owed by AH Baldwin & Sons Limited to
relatives of Mr Goldbart at the year end.
On 21 November 2014, I Goldbart sold 122,853 Ordinary 1p shares
at GBP3.00.
30 Acquisitions
On 29 May 2015, the Group, through its wholly owned subsidiary,
The Fine Art Auction Group Limited, ("TFAAG") purchased 100% of the
share capital of Bid for Wine Limited for GBP217.500. A further
GBP300,000 of consideration is deferred depending on the business
achieving gross merchandise value of GBP1,500,000 per annum.
Bid for Wine Limited is a peer to peer wine sales platform with
auction capabilities. The Group has used the auction capability to
hold on line auctions for its Dreweatts business.
The provisional fair values of the assets acquired at the time
along with the final fair values determined in the current year are
as follows:
At date of acquisition Bid for Wine
GBP000
----------------------------- -------------
Intangible assets 12
Inventories 36
Trade debtors 43
Loan (91)
------------------------------ -------------
Book and fair value of net -
assets at acquisition date
Goodwill 218
------------------------------
Consideration paid 218
------------------------------ -------------
After completion the Loan which was with the previous Directors
of Bid for Wine Limited was repaid.
In the period from acquisition to 31 March 2016 Bid for Wine
contributed GBP62,000 of revenue and a loss of GBP300,000.
At 31 March 2016 the Directors reviewed the carrying value of
the business based on its performance since 29 May 2015 and its
predicted future profits. As a result of this review the Directors
required a full impairment (GBP218,000) against the carrying value
of goodwill.
As a result of this review it is the Directors opinion that the
deferred consideration is unlikely to be paid and therefore no
provision has been made in the Group accounts.
31 a Prior year adjustment - fair value on acquisition
On 20 October 2014, the Group, through its wholly owned
subsidiary, The Fine Art Auction Group Limited, ("TFAAG") purchased
100% of Mallett plc ("Mallett"). Provisional fair values were
calculated for inclusion in 31 March 2015.
A review of the provisional fair value adjustments was conducted
at 31 March 2016. From this review the Directors concluded that the
interpretation of fair value accounting adjustments at the date of
acquisition had been incorrectly applied and a number of the assets
and liabilities were misstated.
As a result the Directors felt that it was appropriate to
restate net assets of the acquired company, fair value adjustments
and goodwill on acquisition by way of a prior year adjustment. The
following amendments to net assets and fair value at acquisition
have been applied.
At date of acquisition Mallett
Net assets Net assets
at acquisition at acquisition
as stated restated
in 31 March 31 March
2015 Financial 2016
Statements
GBP'000 GBP000
Property, plant & equipment 2,508 2,508
Intangible assets 162 162
Financial assets 6 6
Inventories 11,252 8,305
Trade debtors 1,182 1,182
Other debtors 335 335
Cash (1,190) (1,190)
Trade payables (945) (945)
Tax 6 6
Accruals (2,104) (2,104)
Pensions (1,417) (1,417)
----------------------------- ---------------- ----------------
Book value of net assets
at acquisition date 9,795 6,848
Fair value adjustments Fair value Final FV
adjustments adjustments
as at 31 as at 31
March 2015 March 2016
Customer relationships 828 828
Brands 2,610 2,610
Property - 1,446
Inventory (5,805) (324)
Debtors (175) (175)
Deferred tax asset 3,147 1,087
Deferred tax liability (687) (976)
Accruals (1,304) (1,304)
Pensions 212 212
----------------------------- ---------------- ----------------
Fair value of net assets
acquired 8,621 10,252
Goodwill - (1,631)
-----------------------------
Consideration paid 8,621 8,621
----------------------------- ---------------- ----------------
Impact on the financial statements of the fair value prior year
adjustment
The correction of net assets and fair values on acquisition
results in negative goodwill of GBP1,631,000 as a result of net
assets being higher than consideration.
As the business was acquired at 20 October 2014 there is no
impact on opening reserves at 1 April 2014. However, there is an
impact on both the statement of comprehensive income and the
statement of financial position at 31 March 2015.
Impact on Statement of Comprehensive income
As a result of the changes in stock fair value provision there
is an impact on comprehensive income for the year ending 31 March
2015. The previous year's financial statements included a fair
value stock provision release of GBP655,000 and a deferred tax
asset release associated with this of GBP98,000.
The impact of this prior year adjustment on the statement of
comprehensive income and statement of financial position as at 31
March 2015 shown in the table at the end of note 31 b:
31 b Prior year adjustment - revenue recognition
As part of the audit process the Board reviewed its accounting
policy and past accounting treatment with regard to the recognition
of revenue in relation to certain of the investment plans which
were offered by the Group in earlier years. This review was
undertaken in light of the contractual terms of those investment
plans and the appropriate accounting standards.
The Board considers that the previous recognition of revenue
related to certain of the investment plans was not in line with
appropriate accounting standards and this has been corrected by way
of a prior year adjustment.
The review of the accounting policy impacts the opening net
assets of the Group at 31March 2014 as explained below. The net
impact of the review is to reduce net assets at 31 March 2014 by
GBP15,220,000.
Revenue recognition on investment plans - The Group offered
investment plans to clients which included at the end of the
contract term an option to sell back the items at the original
purchase price (Capital Protected Growth Plan "CPGP") and in some
cases with a guaranteed return (Guaranteed Minimum Return Contract
"GMRC"), to Stanley Gibbons. These contracts were over a fixed
period between 1-10 years, with the majority being 5 year
contracts.
At the end of the contract the buyback is one option open to
clients, along with other options such as where the client chooses
to sell the item at market value, reinvests in other items or
retains the item. On reviewing the appropriate accounting standards
against the contractual terms of these plans it was the Directors
opinion that the recognizing the revenue from these investment
plans at the contract inception was incorrect and that revenue that
had been recognised in previous accounting periods relating to the
CPGP and GMRC products should be reversed.
Depending on subsequent events (the decision that the client
makes at the end of the contract term), the value of outstanding
the CPGP and GMRC investment plans, would fall to be recognised as
revenue in later financial periods, if the buyback option is not
chosen. Although the trading results of later years are likely to
be beneficially effected, the historic reported revenue and profit
have been materially reduced as a consequence of the unwinding of a
material part of the previously reported investment plan revenues
and profits.
The accounting adjustment applied to the opening balance sheet
at 1 April 2014 brings back into stock those items where the Group
retains a contractual obligation to repurchase the items from
clients at the end of the investment plan term and the value of the
potential obligations are recorded as a liability on the balance
sheet. Therefore a creditor was created for the potential
obligations to clients of GBP37,101,000. Inventory brought back
into stock as a result of these investment plans was
GBP24,930,000.
During the year ended March 2015, holders of these plans that
chose to retain their collectible items after their GMRC or GPGP
expired, would result in revenue being now being recognised in that
year that previously would have been recognised in previous
years.
The Group's exposure to such contracts is limited to those
contracts still extant and the GMRC and CPGP ceased to be sold in
April 2011 and December 2013, respectively.
Stock repurchased on expired plans - Additionally in the past
where guarantees were exercised, the transaction was recorded as a
purchase of stock at the guaranteed value . As the original
transaction is no longer recognised as a sale, the item should have
remained in stock at its original purchase price, albeit the
exercise of the guarantee would have passed legal title back to the
Stanley Gibbons.
The accounting adjustment, relating to the items exercised under
the guarantee, is for the carrying value of the related element of
stock to be reduced from the price at which it was repurchased back
to original cost and results in a decrease in the Group's inventory
of GBP3,049,000 at 1 April 2014.
The net adjustment to the Group's inventory as a result of the
two transactions is an increase in stock of GBP21,881,000.
The impact of this prior year adjustment on the statement of
comprehensive income and statement of financial position as at 31
March 2015 was as follows:
Statement 31 March Increase Increase 31 March
of 2015 /(Decrease) /(Decrease) 2015
comprehensive (previously - (note - (note (Restated)
income stated) 31a 31b)
(extract)
GBP'000 GBP'000 GBP'000 GBP'000
Sales 56,865 3,181 60,046
Cost of
sales (24,600) (655) (3,853) (29,108)
--------------- ------------- ------------ ------------- ------------- ------------- ------------- ------------
Profit before
tax 3,148 (655) (672) 1,821
Taxation (1,197) 98 (1,099)
--------------- ------------- ------------ ------------- ------------- ------------- ------------- ------------
(Loss)/profit
before tax 1,951 (557) (672) 722
Statement 31 March Increase Increase 31 March 1 April Increase 1 April
of financial 2015 / /(Decrease) 2015 2014 /(Decrease) 2014
position (previously (Decrease) - (note (Restated) (previously - (note (restated)
(extract) stated) note 31b) stated 31b)
31 March 31a
2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- ------------- ------------ ------------- ------------- ------------- ------------- ------------
Property,
plant &
equipment 6,528 1,446 - 7,974 6,528 - 6,528
Deferred
tax assets 4,063 (1,943) - 2,120 1,016 - 1,016
Inventories 53,822 1,878 17,348 73,048 42,118 21,881 63,999
--------------- ------------- ------------ ------------- ------------- ------------- ------------- ------------
Total assets 125,027 1,381 17,348 143,756 107,250 21,881 129,131
Trade and
other
payables
- current 22,363 - 9,628 31,991 15,928 3,930 19,858
Other payables
- non current 756 - 23,612 24,368 375 33,171 33,546
Deferred
tax
liabilities 1,424 407 - 1,831 1,424 - 1,424
--------------- ------------- ------------ ------------- ------------- ------------- ------------- ------------
Total
liabilities 42,623 407 33,240 76,270 23,305 37,101 60,406
Net assets 82,404 974 (15,892) 67,486 83,945 (15,220) 68,725
Retained
earnings 17,171 974 (15,892) 2,253 19,666 (15,220) 4,446
--------------- ------------- ------------ ------------- ------------- ------------- ------------- ------------
Total equity
shareholders
funds 82,404 974 (15,892) 67,486 83,945 (15,220) 68,725
--------------- ------------- ------------ ------------- ------------- ------------- ------------- ------------
32 Post Balance Sheet Events
Issue of share capital
On 1 April 2016, the Company issued 131,796,286 Ordinary Shares
at an issue price of 10p a share. These shares were admitted to the
Alternative Investment Market on that date. 129,996,286 shares were
issued to shareholders by way of a fundraising exercise and
1,800,000 shares were issued to Evolution Securities China Limited
(ESCL) for consultancy services supplied by ESCL to the Company.
Clive Whiley is managing director of ESCL. The net proceeds of this
issue were GBP12,350,000
At the date of this report the Company's issued and fully paid
share capital stands at 178,916,643 ordinary shares of 1p each with
a value of GBP1,789,166.
Sale of lease
During May 2016 the Group sold its leases over Ely House, Dover
Street, London and an adjacent property for GBP2.5m. After costs,
this reduced the Group's indebtedness by GBP2.4, The Group also
sublet a substantial part of its New York premises.
Resignation of Directors
On 14 July 2016 D M Bralsford, S Perree, M R M Hall and D P J
Duff resigned as Directors of the company. On 13 September 2016 C S
Jones resigned as a Director of the company.
33 Principal subsidiaries
The principal subsidiary undertakings of the Company, all of
which are 100% owned are as follows:
Country Description Principal activity
of incorporation of shares
Name held
Stanley Gibbons Guernsey Ordinary GBP1 Philatelic
(Guernsey) Limited shares dealer and
dealer in memorabilia
Stanley Gibbons Jersey Ordinary GBP1 Philatelic
(Jersey) Limited shares dealer and
dealer in memorabilia
Stanley Gibbons Jersey Ordinary GBP1 E-commerce
E-commerce Limited shares retailing
Stanley Gibbons England Ordinary GBP0.25 Holding Company
Holdings Limited shares
Stanley Gibbons England Ordinary GBP1 Philatelic
Limited* shares dealer and
retailer, and
dealer in memorabilia
Stanley Gibbons Hong Ordinary HK$1 Philatelic
(Asia) Limited Kong shares dealer and
dealer in memorabilia
Stanley Gibbons Singapore Ordinary S$1 Philatelic
(SEA) Pte Limited shares dealer and
dealer in memorabilia
Stanley Gibbons United Common stock Web development
US, Inc* States US$0.0001
Minden House Jersey Ordinary GBP1 First day cover
Limited shares dealer
Concept Court England Ordinary GBP1 First day cover
Limited shares dealer
Murray Payne England Ordinary GBP1 Philatelic
Limited shares dealer and
auctioneer
Noble Investments England Ordinary 1p Holding Company
(UK) Limited shares
AH Baldwin & England Ordinary GBP1 Dealer and
Sons Limited* shares auctioneer
in rare coins
and other collectibles
Greenfield Auctions England Ordinary GBP1 Auctioneers
Limited* shares of works on
paper
The Fine Art England Ordinary GBP0.45 Auctioneers
Auction Group shares and valuers
Limited* Preferred of art, antiques
GBP1 shares and collectibles
Preferred
GBP0.25 shares
Deferred GBP0.25
shares
Mallett Limited* England Ordinary GBP0.05 Holding company
shares
Mallett & Son England Ordinary GBP1 Antique dealers
(Antiques) Limited* shares
Mallett Overseas England Ordinary GBP1 Antique dealers
Limited* shares
Mallett, Inc* United Common stock Antique dealers
States US$1
H J Hatfield England Ordinary GBP1 Restorers
& Sons Limited* shares
(1)
Masterpiece London England Ordinary GBP1 Exhibition
Limited* (2) shares organiser
* Indirect holding
1 60% holding
2 23.75% holding
Directors' Biographical Details
Henry George Wilson, Director and Executive Chairman
Date of Birth: 18 September 1952. Date of Appointment as
Director: 16 May 2016.
Harry Wilson received a BSc in physics from Manchester
University in 1973. Following graduation he spent 17 years in
various roles at British Petroleum and attended the Executive
Programme at the INSEAD Business School in France in 1985.
Harry has over 35 years business experience, initially in the
oil industry but successively in a wide range of business sectors.
He has been founder, CEO and Chairman of a number of independent
oil companies and led public listings for five companies including
Dragon Oil Plc and Eland Oil & Gas Plc. He has been an
executive and non-executive director of listed companies in the UK
and abroad and has built up an extensive range of London and
international contacts in the investment, broking and advisory
communities.
Throughout his business career Harry has taken a keen interest
in collectibles, particularly stamps and antiques. He is a
longstanding member of the Royal Philatelic Society London, the
Malaya Study Group and the India Study Group.
Harry was appointed a Director on 16 May 2016 and became
Executive Chairman on 14 July 2016. He is a member of the
Nomination Committee.
Andrew Cook, Chief Financial Officer
Date of Birth: 24 March 1963. Date of Appointment as Director:
14 July 2016.
Andrew Cook, who was appointed Group Managing Director on 31 May
2016, joined the Board as Chief Financial Officer on 14 July
2016.
Andrew 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 Andrew
held senior finance, commercial and executive roles for various
companies including Kelly Services, The Body Shop and The Virgin
Group.
Clive Peter Whiley, Director
Date of Birth: 16 June 1960. Date of Appointment as Director: 31
March 2016.
Clive Whiley became a Member of The London Stock Exchange in
1983 and a Fellow of the Securities Institute in 1995. He has
extensive main board executive director experience across a broad
range of financial services, engineering, manufacturing,
distribution & leisure businesses covering the UK, Europe,
North America, Australasia and the People's Republic of China.
Mr Whiley is currently Managing Director of Evolution Securities
China Limited, and Chief Executive of Camper & Nicholsons
Marinas Ltd and a Director of Camper & Nicholsons Marina
Investments Limited.
He is also Chairman of China Venture Capital Management Limited,
First China Venture Capital Limited and Y-Lee Limited.
Directors' Biographical Details (continued)
Martin Paul Magee, Non-Executive - Independent
Date of birth: 26 June 1960. Date of appointment as Director: 1
August 2012
Martin qualified as a Chartered Accountant in Scotland in 1984.
Following qualification he worked for nine years with Stakis plc,
(now part of the Hilton Hotels Group) and then with Scottish Power
plc in a variety of senior finance roles. In 2002 he was appointed
Finance Director of Jersey Electricity plc.
He is also Non-Executive Chairman of the Standard Life Offshore
Strategy Fund Limited, Chairman of Jersey Deep Freeze Limited and a
Director of the Channel Islands Electricity Grid Limited.
Additionally, Martin was a member of the States of Jersey Public
Accounts Committee for five years until 2011.
He is Chairman of the Audit Committee and a member of the
Remuneration and Nomination Committees.
Henry Arthur John Turcan, Non-Executive
Date of Birth: 31 January 1974. Date of Appointment as Director:
23 May 2016.
Henry Turcan is an experienced corporate financier based in
London, having worked in the City for approaching two decades. In
2015, he joined Henderson Volantis Capital as a director of UK
Smaller Companies. Before joining Henderson Volantis Capital, he
was a director of Novum Securities, an independent UK based
stockbroking house which he cofounded in 2006. Prior to this, Henry
was a corporate finance director at Evolution Group.
His focus areas are corporate finance advice and broking within
equity capital markets and he has extensive experience on a broad
range of transactions including IPOs on the Main Market and AIM,
rights issues, takeovers and corporate finance advice to unquoted
companies. Henry is Chairman of the Remuneration Committee.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR AKNDPPBDKKKK
(END) Dow Jones Newswires
October 03, 2016 02:03 ET (06:03 GMT)
Stanley Gibbons (LSE:SGI)
Historical Stock Chart
From May 2024 to Jun 2024
Stanley Gibbons (LSE:SGI)
Historical Stock Chart
From Jun 2023 to Jun 2024
