TIDMSGI
RNS Number : 9112U
Stanley Gibbons Group PLC
28 November 2019
28 November 2019
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF EU REGULATION 596/2014
THE STANLEY GIBBONS GROUP PLC
(the "Company" or the "Group")
Interim Results for the six months ended 30 September 2019
The Company has today published its Interim Results for the six
months to 30 September 2019 which are available on the Company's
website and are set out in full below.
For further information, contact:
The Stanley Gibbons Group plc
Harry Wilson (Chairman)
Graham Shircore (Chief Executive Officer)
Anthony Gee (Chief Finance Officer) +44 (0)207 836 8444
Liberum Capital Limited (Nomad and Broker)
Andrew Godber
Edward Thomas
Laura Hamilton +44 (0)20 3100 2000
Group Interim Report and Accounts
for the six months ended 30 September 2019.
Directors and Advisers
Directors H G Wilson Non-Executive Chairman
G E Shircore Chief Executive Officer
A M Gee Chief Finance Officer
L E Castro Non-Executive Director*
M West Non-Executive Director*
* Independent
Company Secretary R K Purkis
Registered Office 18 Hill Street
St. Helier
Jersey JE2 4UA
Tel: +44(0)20 7836 8444
Company Registration Registered in Jersey
Number 13177
Legal Form Public Limited Company limited by shares
Nominated Adviser and Broker Liberum Capital Limited
25 Ropemaker Street
London EC2Y 9LY
Auditors Jeffreys Henry LLP
Finnsgate
5-7 Cranwood Street
London EC1V 9EE
Legal Advisers Mourant Ozannes
22 Grenville Street
St Helier
Jersey JE4 8PX
Bird & Bird LLP
12 New Fetter Lane
London EC4A 1JP
Bankers Barclays Bank PLC
1 Churchill Place
London E14 5HP
Registrars Link Market Services (Jersey)
Limited
Shareholder Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Tel: 0871 664 0300; from overseas +44(0)37
1664 0300
Website Further financial, corporate and shareholder
information is available in the investor relations
section of the Group's website: www.stanleygibbonsplc.com.
Chairman's Statement
It is now 20 months since the refinancing and the start of an
ambitious plan to transform the Group. I am pleased to say that
these are the first results which clearly show the progress which
is being made - not least by the publication of this interim report
well ahead of recent years. Of particular note are the 34% increase
in sales and the 72% reduction in the loss from continuing
operations over the comparable period for 2018. As the legacy
issues fall away behind us, we are hopeful this positive trend will
continue.
Having looked at a number of options, we have recently committed
to make our flagship store in the Strand our home for the
foreseeable future. A major redevelopment of the premises will
commence early in the new year and will complement the rebranding
which we launched a few months ago. We look forward to seeing you
in the shop where you will be given a warm welcome. We have also
been busy on the technology side with the release of new websites
for both Stanley Gibbons & Baldwin's and significant
improvements on digital publishing & marketing. Positive
feedback has been received on all of these advances.
Corporate overheads for the last 6 months are 23% down on the
comparable period in 2018 but we expect this rate of reduction will
slow as we continue to rebuild. Stock levels will be re-balanced,
with the mix adjusted to better fit what our clients are interested
in. This in turn should lead to sales and profitability improving.
Staff numbers have stabilised now following the painful cuts of
recent years and we are fortunate to have retained leading
specialists in both stamps and coins who enable us to offer our
clients a first-class service
While most of the legacy issues are behind us we have not become
complacent and recognise that there is still a lot to do to rebuild
trust from our clients and the market. We are working hard to
achieve this on a variety of fronts which are described more fully
in the following section of this report. The collectibles market
for stamps and coins has remained strong despite the economic
uncertainties elsewhere and we have two of the strongest brands in
the world to take advantage of this. The support from all of our
stakeholders is very much appreciated but our staff deserve a
particular word of thanks for their hard work and commitment which
is driving the progress we are making. I look forward to reporting
on our continued progress in my next statement.
Harry Wilson
Chairman
27 November 2019
Chief Executive's Report
Introduction
In previous reports, we have attempted to clearly communicate
with our shareholders details of the journey on which we embarked
at the start of the last financial year and which we believe has
the potential, over time, to be transformational for the Group.
This interim set of results is perhaps the first where the progress
which is being made in terms of underlying trading can clearly be
seen, with less impact from 'legacy' issues and tangible
improvement in many areas of the business.
More specifically, in the last interim report I also highlighted
several initiatives which we were aiming to achieve over the coming
12 months and it would be remiss not to update you on the progress
we have made with regard to these. I said that we expected to make
tangible progress on the following:
- Clarity around and development of our flagship, London location.
- Significant improvement in our technological capability,
including our publishing processes and offering and improved
websites for both Baldwin's and Stanley Gibbons.
- A rebranding exercise for both brands which will make us more
up to date and bring much needed consistency to what our customers
see and experience when they come into contact with us.
- A range of initiatives aimed at increasing the addressable market.
I am pleased to be able to say that a lot has been done with
regard to each of these:
- We have secured our long term home at 399 Strand and plans for
its redevelopment are well advanced with work expected to begin
early in the new year.
- Both brands have new websites and the introduction of an
entirely new intellectual property database and publishing process
is also well advanced and already in use for certain types of
publications.
- Both brands have been through a rebranding exercise which also
incorporated some improvements to our retail experience.
- We have increased the level of publicity we are involved in
both for the brands and the hobbies themselves as well as trialling
a range of initiatives to broaden their appeal.
Nevertheless a lot more work remains if we are to be successful
on our journey and I look forward to being able to share with you
the results of further initiatives in the future.
Operating Review
Continuing Operations
6 months 6 months 6 months 6 months 12 months 12 months
to 30 Sep to 30 Sep to 30 Sep to 30 Sep to 31 Mar to 31 Mar
2019 2019 2018 2018 2019 2019
Sales Profit Sales Profit Sales Profit
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------------- --------- --------- --------- --------- --------- ---------
Philatelic 3,416 39 1,841 (381) 4,942 (487)
Publishing 935 (3) 936 (50) 2,199 53
Coins & medals 1,734 158 1,633 218 3,216 538
Legacy interiors property 659 93 616 9 1,320 161
Other & corporate overheads - (1,173) - (1,534) - (3,086)
Net finance charges on borrowings* - (297) - (300) - (497)
--------------------------------------- --------- --------- --------- --------- --------- ---------
Trading sales and losses 6,744 (1,183) 5,026 (2,038) 11,677 (3,318)
Amortisation of customer
lists - (120) - (120) - (220)
Pension service and share
option charges - (25) - (90) - (389)
Finance charges related
to pensions - - - - - (133)
Exceptional operating income/(charges) - 667 - (118) - (203)
--------------------------------------- --------- --------- --------- --------- --------- ---------
Group sales and loss from
continuing operations 6,744 (661) 5,026 (2,366) 11,677 (4,263)
--------------------------------------- --------- --------- --------- --------- --------- ---------
* excludes IFRS16 interest cost at 30 September 2019 which has
been included in overheads for divisions in line with rent expense
in previous periods.
Overview
Whilst the business remained both cash and profit negative
through the period, we have clearly started moving in the right
direction. It was a positive step that our Philatelic division
generated a small profit and that turnover grew in both the
Philatelic and Coins & medal divisions. The Stanley Gibbons
brand is beginning to restore some of its reputation which was
damaged during the period up until March 2018 and we are seeing a
building of both trust and willingness to trade with the Group from
both our customers and vendors. Overheads continue to decline
although the rate at which these costs can continue to fall will
naturally now reduce.
During the period, the Group benefited from a resolution of a
legal claim, receiving a settlement of GBP850,000 which is shown in
exceptional operating income/(charges) in the table above.
Philatelic
The Philatelic division reflects the results for our stamp
dealing, retail and auctions business. The division has made good
progress in the period with sales increased by GBP1,575,000 and the
division generated a profit of GBP39,000 compared to a loss of
GBP381,000 in the six months to 30 September 2018. The retail,
auction and dealing operations all saw improvements in revenue.
Margins were lower than in the previous period mainly as a result
of selling down old inventory. These older, in many cases lower
value items, were typically sold at lower margins than we are able
to achieve on our newer inventory where margins have largely been
maintained. We will continue this process in the second half of the
year as we attempt to both reduce and refresh our inventory to
match the demands of our collectors. The division's overheads were
GBP100,000 lower resulting from the savings from the reorganisation
carried out in the previous year.
Publishing
Publications revenue was in line with the previous year. The
loss reduced by GBP47,000 which was primarily a result of improved
margins due to a reorganisation of our procurement process.
We continue to work on new initiatives in this division. We
launched a new look for our philatelic catalogues and an updated
range of albums and accessories in September as well as extending
our app based digital catalogue offering into a web based format.
We are continuing to work to further digitise the wealth of unique
and historical intellectual property we have.
Coins & Medals
During the period, Baldwin's sales increased by 6% on the
previous year. However, due to competitive trading conditions the
gross margin achieved during the period was 4% down. Profit of
GBP158,000 was generated compared to GBP218,000 in the previous
period.
As we have stated before, the coin business suffered the most
from our period of financial difficulty and we are still rebuilding
the stock levels which will enable our turnover and profit to grow
in the future. Our inventory levels were higher than at 31 March
2019 but not yet at the levels required to generate the level of
turnover growth we are aiming for. We are currently reviewing
initiatives that have the potential to widen the customer base,
turnover and profit of the division.
Corporate Overheads
Corporate overheads in the six months to 30 September 2019 fell
to GBP1,173,000 compared to GBP1,534,000 in the previous period.
Head count is now at a level which is required to support the
resized Group and a number of corporate costs have been reduced.
The number of legacy issues is now significantly reduced and our
professional fees are accordingly lower. Therefore the significant
savings in corporate overhead seen in the last two to three years
is reflected in these results and further significant savings will
be harder to come by.
We do, however, continue to identify areas where savings can
still be targeted, particularly as contracts from various service
providers expire and the cost benefits of further IT investment
come through.
Exceptional Operating Income/(Charges)
Exceptional operating charges can be further analysed as
follows:
6 months 6 months 12 months
to to to
30 Sep 2019 30 Sep 2018 31 Mar 2019
GBP000 GBP000 GBP000
-------------------------------------------- ----------- ----------- -----------
Resolution of legal claim* 846 - -
Stock provisions (159) - (8)
Dilapidations on leased property 6 - (18)
Exceptional legal fees - - (39)
Professional fees for corporate activity - (118) -
Legacy wind-down costs of overseas entities (26) - (138)
-------------------------------------------- ----------- ----------- -----------
667 (118) (203)
-------------------------------------------- ----------- ----------- -----------
* For details of the GBP846,000 for the resolution of the legal
claim please see the litigation section
Funding & Cash Flow
As at the balance sheet date the Group had cash balances of
GBP2.3m and a loan of GBP12.8m repayable in March 2023, provided
there is no event of default in the meantime. This loan is due to
Phoenix S. G. Limited, the Group's controlling shareholder.
As a result of Stanley Gibbons (Guernsey) Limited being in
liquidation, the Group is currently in default on its loan
facilities. Although during periods of default the facilities are
repayable on demand, Phoenix S. G. Limited has not requested
repayment. Phoenix S.G. Limited advanced a further GBP1,000,000 of
funds during the period, part of the GBP5m facility agreed in
December 2018. The Group has headroom of GBP3m remaining on this
facility
Net cash outflows from operating activities for the six months
ended 30 September 2019 were GBP0.5m (2018: GBP3.1m), although this
includes GBP850,000 of funds from the resolution of a legal claim
(see Litigation section). Contributions to the Group's pension
scheme were GBP265,000 in the period.
As at 25 November 2019 the Group had net cash balances of
GBP1.5m. The Group is anticipating that work will commence on the
refurbishment of its main trading premises, 399 Strand, London
during the early part of 2020.
Litigation
On 14 June 2019 the Group announced that all outstanding claims
involving certain former directors of Mallett plc had been
resolved, bringing the matter to a full and final conclusion. The
Group received GBP850,000 in relation to this settlement and net of
fees this is shown as exceptional income in the Consolidated
statement of comprehensive income.
All funds had been received by 30 September 2019.
Dividend
The Directors do not recommend an interim dividend for the six
months ended 30 September 2019 (2018 : GBPnil).
Outlook
Regular readers of our reports will be well aware of the
overarching goals of the Group and our approach to achieving these
is unchanged.
I stated in the last interim report, 'while the Group remains in
a challenging position and will continue to be so for some time,
every indication is that both brands have huge potential if given a
stable platform from which to grow and it is delivery of this on
which we are all focused' and this remains true in all senses.
While there is still a lot of work to be done, particularly in
terms of our use of technology, we are well advanced in terms of
creating that platform. This allows us to begin to spend more time
thinking about and working on the next step of making the most of
that potential.
However these are only the early stages and it is vital that we
not only continue the momentum we have begun to create but
accelerate it still further. This is no small task, particularly as
we go through the redevelopment of our main trading location at 399
Strand, but we are focused on and working extremely hard to achieve
exactly that.
Your ongoing support, that of our customers and in particular
the hard work of everybody within the Group is recognised and very
much appreciated by everybody on the Board.
Graham Shircore
Chief Executive Officer
27 November 2019
Condensed statement of comprehensive income
for the 6 months ended 30 September 2019
6 months 6 months 12 months
to to to
30 Sep 2019 30 Sep 2018 31 Mar 2019
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
------------------------------------------------ ----- ------------ ------------ ------------
Revenue 3 6,744 5,026 11,677
Cost of sales (3,738) (2,474) (5,711)
------------------------------------------------ ----- ------------ ------------ ------------
Gross Profit 3,006 2,552 5,966
------------------------------------------------ ----- ------------ ------------ ------------
Administrative expenses before defined
benefit pension service costs and exceptional
operating costs (2,038) (2,012) (5,320)
Defined benefit pension service cost - - (438)
Exceptional operating charges 667 (118) (203)
------------------------------------------------ ----- ------------ ------------ ------------
Total administrative expenses (1,371) (2,130) (5,961)
------------------------------------------------ ----- ------------ ------------ ------------
Selling and distribution expenses (1,815) (2,488) (3,880)
------------------------------------------------ ----- ------------ ------------ ------------
Operating Loss (180) (2,066) (3,875)
Finance income 15 19 45
Finance costs (496) (319) (542)
Share of net profits of joint venture - - 109
------------------------------------------------ ----- ------------ ------------ ------------
Loss before tax (661) (2,366) (4,263)
Taxation 4 - - (36)
------------------------------------------------ ----- ------------ ------------ ------------
Loss from continuing operations (661) (2,366) (4,299)
Profit/(loss) from discontinued operations 29 (30) 74
------------------------------------------------ ----- ------------ ------------ ------------
Loss for the financial period/year (632) (2,396) (4,225)
Other comprehensive income:
Exchange differences on translation
of foreign operations 3 46 -
Actuarial gains recognised in the pension
scheme - - (246)
Tax on actuarial gains recognised in
the pension scheme - - (465)
------------------------------------------------ ----- ------------ ------------ ------------
Other comprehensive income for the period/year,
net of tax 3 46 (711)
------------------------------------------------ ----- ------------ ------------ ------------
Total comprehensive loss for the period/year (629) (2,350) (4,936)
------------------------------------------------ ----- ------------ ------------ ------------
Earnings per share - continuing operations
Basic loss per Ordinary Share 5 (0.16)p (0.55)p (1.01)p
Diluted loss per Ordinary Share 5 (0.16)p (0.55)p (1.01)p
Earnings per share - discontinued operations
Basic earnings per Ordinary Share 5 0.01p (0.01)p 0.02p
Diluted earnings per Ordinary Share 5 0.01p (0.01)p 0.02p
------------------------------------------------ ----- ------------ ------------ ------------
Total comprehensive income is attributable to the owners of the
parent.
Condensed statement of financial position
as at 30 September 2019
30 Sep 2019 30 Sep 2018 31 Mar 2019
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
------------------------------- ----- ----------- ----------- -----------
Non-current assets
Intangible assets 5,459 5,707 5,600
Property, plant and equipment 2,041 2,385 2,099
Right-of-use assets 8 8,246 - -
Deferred tax asset 281 1,190 281
Investments 95 113 95
------------------------------- ----- ----------- ----------- -----------
16,122 9,395 8,075
------------------------------- ----- ----------- ----------- -----------
Current assets
Inventories 17,438 18,142 18,001
Trade and other receivables 1,591 2,860 2,187
Cash and cash equivalents 2,292 1,789 2,160
------------------------------- ----- ----------- ----------- -----------
21,321 22,791 22,348
------------------------------- ----- ----------- ----------- -----------
Total assets 37,443 32,186 30,423
------------------------------- ----- ----------- ----------- -----------
Current liabilities
Trade and other payables 3,744 6,378 6,040
Lease liability 8 774 - -
Borrowings 12,842 10,250 -
------------------------------- ----- ----------- ----------- -----------
17,360 16,628 6,040
------------------------------- ----- ----------- ----------- -----------
Non-current liabilities
Borrowings - - 11,529
Lease liability 8 8,098 - -
Retirement benefit obligations 5,258 5,227 5,523
Deferred tax liabilities - 408 -
------------------------------- ----- ----------- ----------- -----------
13,356 5,635 17,052
------------------------------- ----- ----------- ----------- -----------
Total liabilities 30,716 22,263 23,092
------------------------------- ----- ----------- ----------- -----------
Net assets 6,727 9,923 7,331
------------------------------- ----- ----------- ----------- -----------
Equity
Called up share capital 4,269 4,269 4,269
Share premium account 78,217 78,217 78,217
Share compensation reserve 2,173 2,154 2,148
Capital redemption reserve 38 38 38
Revaluation reserve 346 346 346
Retained earnings (78,316) (75,101) (77,687)
------------------------------- ----- ----------- ----------- -----------
Equity shareholders' funds 6,727 9,923 7,331
------------------------------- ----- ----------- ----------- -----------
Condensed statement of changes in equity
for the 6 months ended 30 September 2019
Called Share Capital
up share premium Share compensation Revaluation redemption Retained
capital account reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- --------- -------- ------------------ ----------- ----------- --------- -------
At April 2019 4,269 78,217 2,148 346 38 (77,687) 7,331
Loss for the period - - - - - (632) (632)
Exchange differences
on translation of foreign
operations - - - - - 3 3
------------------------------- --------- -------- ------------------ ----------- ----------- --------- -------
Total Comprehensive loss - - - - - (629) (629)
Cost of share options - - 25 - - - 25
------------------------------- --------- -------- ------------------ ----------- ----------- --------- -------
At 30 September 2019 4,269 78,217 2,173 346 38 (78,316) 6,727
------------------------------- --------- -------- ------------------ ----------- ----------- --------- -------
At 1 April 2018 4,269 78,217 2,064 346 38 (72,751) 12,183
Loss for the period - - - - - (2,396) (2,396)
Exchange differences
on translation of foreign
operations - - - - - 46 46
------------------------------- --------- -------- ------------------ ----------- ----------- --------- -------
Total Comprehensive loss - - - - - (2,350) (2,350)
Cost of share options - - 90 - - - 90
------------------------------- --------- -------- ------------------ ----------- ----------- --------- -------
At 30 September 2018 4,269 78,217 2,154 346 38 (75,101) 9,923
------------------------------- --------- -------- ------------------ ----------- ----------- --------- -------
At April 2018 4,269 78,217 2,064 346 38 (72,751) 12,183
Loss for the financial
year - - - - - (4,225) (4,225)
Amounts which may be
subsequently reclassified
to profit & loss Amounts
which will not be subsequently
reclassified to profit
& loss
Remeasurement of pension
Scheme net of deferred
tax - - - - - (711) (711)
------------------------------- --------- -------- ------------------ ----------- ----------- --------- -------
Total comprehensive loss - - - - - (4,936) (4,936)
Cost of share options - - 84 - - - 84
------------------------------- --------- -------- ------------------ ----------- ----------- --------- -------
At 31 March 2019 4,269 78,217 2,148 346 38 (77,687) 7,331
------------------------------- --------- -------- ------------------ ----------- ----------- --------- -------
Condensed statement of cash flows
for the 6 months ended 30 September 2019
6 months 6 months 12 months
to 30 Sep to 30 Sep to 31 Mar
2019 2018 2019
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
-------------------------------------------- ----- ------------ ------------ ----------
Cash outflow from operating activities 6 (50) (2,755) (3,361)
Interest paid (496) (300) (542)
Taxes paid - - -
-------------------------------------------- ----- ------------ ------------ ----------
Net cash outflows from operating activities (546) (3,055) (3,903)
-------------------------------------------- ----- ------------ ------------ ----------
Investing activities
Purchase of property, plant and equipment - (2) (1)
Purchase of intangible assets (135) - (124)
Investment in joint venture - - 18
Interest received 15 - 45
-------------------------------------------- ----- ------------ ------------ ----------
Net cash (used in)/generated from investing
activities (120) (2) (62)
-------------------------------------------- ----- ------------ ------------ ----------
Financing activities
Principal elements of lease elements (515) - -
Net borrowings 1,313 250 1,529
-------------------------------------------- ----- ------------ ------------ ----------
Net cash generated from/(used in) financing
activities 798 250 1,529
-------------------------------------------- ----- ------------ ------------ ----------
Net increase/(decrease) in cash and
cash equivalents 132 (2,807) (2,436)
-------------------------------------------- ----- ------------ ------------ ----------
Cash and cash equivalents at start of
period 2,160 4,596 4,596
-------------------------------------------- ----- ------------ ------------ ----------
Cash and cash equivalents at end of
period 2,292 1,789 2,160
-------------------------------------------- ----- ------------ ------------ ----------
Notes to the Condensed Financial Statements
for the 6 months ended 30 September 2019
1 Basis of preparation
The interim financial information in this report has been
prepared using accounting policies consistent with IFRS as approved
for use in the European Union applied in accordance with the
provisions of Companies (Jersey) Law 1991 on a historical basis
except where otherwise indicated.
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Chief Executive's Report above. The Group's
forecasts show that it will remain within current loan facility
limits for the foreseeable future. Although the Directors have
built the forecast based on current trading trends and historical
knowledge of the business, the Directors recognise that forecasts
are dependent on the underlying assumptions and that trading
conditions can always be affected by unforeseen events.
The loan facilities are provided by the Group's controlling
party Phoenix S. G. Limited and due for repayment in March 2023.
The Group remains in default of the facilities due to Stanley
Gibbons (Guernsey) Limited (in liquidation), being in liquidation.
During periods of default, the loan becomes payable on demand. In
the event that Phoenix S.G. Limited requests repayment of the loan
the Group would require access to additional liquidity. The
Directors acknowledge that this risk casts doubt on the Group's
ability to continue as a going concern. However the Directors
recognise that Phoenix S. G. Limited has granted a waiver for a
number of defaults at 31 March 2019, and continues to state that it
intends to be a long term investor, is the Group's controlling
party with an interest of just over 58% and has given no indication
that it would withdraw its support before March 2023 when the loan
facility is repayable.
In previous years the Group had significant uncertainty
resulting from investment contract guarantees and undertakings
given by its subsidiary Stanley Gibbons (Guernsey) Limited. The
granting of the administration order on 21 November 2017 for
Stanley Gibbons (Guernsey) Limited resulted in the Group's loss of
control of the business and its assets and liabilities. This
resulted in significant contingent liability, approximately
GBP54,150,000 at 31 March 2017 (the last accounting date prior to
administration), relating to guarantees and undertakings having
been removed from the Group and fundamentally limited the exposure
of the Group to the related buyback liabilities and associated cash
outflows. On 2 April 2019 the Royal Court of Guernsey ordered that
Stanley Gibbons (Guernsey) Limited enter liquidation, this process
is still ongoing. The Directors have made enquiries to establish
whether there are any uncertainties that would materially impact
the Group's cash flow over the foreseeable future and from the
review have not identified any such uncertainties.
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.
2 Significant accounting policies
The accounting policies applied by the Group in this interim
report are the same as those applied by the Group in the
consolidated financial statements for the year ended 31 March 2019,
with the exception of the adoption of the new leasing standard IFRS
16 Leases, see note 8.
3 Segmental analysis
As outlined in the Operating Review the company has four main
business segments, as shown below. This is based upon the Group's
internal organisation and management structure and is the primary
way in which the Board of Directors is provided with financial
information.
Coins & Legacy
Philatelic Publishing Medals Interiors Unallocated Total
Segmental income statement GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ---------- ---------- ------- ---------- ----------- --------
6 months to 30 September 2019
(unaudited)
Sale of goods 3,056 692 1,705 - - 5,453
Sale of services (inc Commissions) 345 243 - - - 588
Other income 15 - 29 659 - 703
----------------------------------- ---------- ---------- ------- ---------- ----------- --------
Revenue 3,416 935 1,734 659 - 6,744
Operating costs (3,338) (938) (1,576) (422) (1,317) (7,591)
Exceptional costs 26 - - 687 (46) 667
Net finance costs (39) - - (145) (297) (481)
----------------------------------- ---------- ---------- ------- ---------- ----------- --------
Profit/(loss) before tax 65 (3) 158 779 (1,660) (661)
Tax - - - - - -
----------------------------------- ---------- ---------- ------- ---------- ----------- --------
Profit/(loss) for the period
from continuing operations 65 (3) 158 779 (1,660) (661)
----------------------------------- ---------- ---------- ------- ---------- ----------- --------
6 months to 30 September 2018
(unaudited)
Sale of goods 1,550 708 1,623 - - 3,881
Sale of services (inc Commissions) 286 228 - - - 514
Other income 5 - 10 616 - 631
----------------------------------- ---------- ---------- ------- ---------- ----------- --------
Revenue 1,841 936 1,633 616 - 5,026
Operating costs (2,222) (986) (1,415) (607) (1,744) (6,974)
Exceptional costs (2) - (17) - (99) (118)
Net finance costs - - - - (300) (300)
----------------------------------- ---------- ---------- ------- ---------- ----------- --------
Profit/(loss) before tax (383) (50) 201 9 (2,143) (2,366)
Tax - - - - - -
----------------------------------- ---------- ---------- ------- ---------- ----------- --------
Profit/(loss) for the period
from continuing operations (383) (50) 201 9 (2,143) (2,366)
----------------------------------- ---------- ---------- ------- ---------- ----------- --------
12 months to 31 March 2019
(audited)
Sale of goods 4,064 1,779 3,149 - - 8,992
Sale of services (inc Commissions) 869 420 - - - 1,289
Other income 9 - 67 1,320 - 1,396
----------------------------------- ---------- ---------- ------- ---------- ----------- --------
Revenue 4,942 2,199 3,216 1,320 - 11,677
Operating costs (5,429) (2,146) (2,678) (1,159) (3,828) (15,240)
Exceptional costs - - (53) 61 (211) (203)
Net finance costs - - - (394) (103) (497)
----------------------------------- ---------- ---------- ------- ---------- ----------- --------
Profit/(loss) before tax (487) 53 485 (172) (4,142) (4,263)
Tax 34 - 17 - (87) (36)
----------------------------------- ---------- ---------- ------- ---------- ----------- --------
Profit/(loss) for the year
from continuing operations (453) 53 502 (172) (4,229) (4,299)
----------------------------------- ---------- ---------- ------- ---------- ----------- --------
Geographical Information
Analysis of revenue by origin and destination
6 months 12 months 12 months
6 months 6 months 6 months to to to
to to to 30 Sep 30 Sep 31 Mar 31 Mar
30 Sep 2019 30 Sep 2019 2018 2018 2019 2019
Sales by Sales by Sales by Sales by Sales by Sales by
destination origin destination origin destination origin
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ------------ ------------ ----------- -------- ----------- ---------
United Kingdom 3,915 6,178 3,202 4,459 7,130 10,553
Channel Islands 26 - 59 - 172 -
Europe 793 - 287 - 796 -
North America 1,343 566 1,018 567 2,331 1,124
Asia 310 - 302 - 743 -
Rest of the World 357 - 158 - 505 -
------------------ ------------ ------------ ----------- -------- ----------- ---------
6,744 6,744 5,026 5,026 11,677 11,677
------------------ ------------ ------------ ----------- -------- ----------- ---------
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.
4 Taxation
Taxes on income in the interim periods are accrued using the tax
rate that would be applicable to expected total annual earnings.
The charge for taxation is based on the results for the period and
takes into account taxation deferred because of timing differences
between the treatment of certain items for taxation and accounting
purposes. Deferred tax is recognised on a full provision basis in
respect of all temporary differences which have originated, but not
reversed at the balance sheet date.
5 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.
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.
6 months 6 months 12 months
to to to
30 Sep 2019 30 Sep 2018 31 Mar 2019
(unaudited) (unaudited) (audited)
-------------------------------------------- ----------- ----------- -----------
Weighted average number of ordinary shares
in issue (No.) 426,916,643 426,916,643 426,916,643
Dilutive potential ordinary shares:
Employee share options (No.) - 931,956 -
-------------------------------------------- ----------- ----------- -----------
Continuing operations
Loss after tax (GBP'000) (661) (2,366) (4,299)
Pension service costs (net of tax) - - 355
Cost of share options (net of tax) 25 90 68
Amortisation of customer lists (net of tax) 120 120 178
Exceptional operating costs (net of tax) (538) 118 168
-------------------------------------------- ----------- ----------- -----------
Adjusted loss after tax (GBP'000) (1,054) (2,038) (3,530)
-------------------------------------------- ----------- ----------- -----------
Basic loss per share - pence per share (0.16)p (0.55)p (1.01)p
Diluted loss per share - pence per share (0.16)p (0.55)p (1.01)p
Adjusted loss per share - pence per share (0.25)p (0.48)p (0.83)p
Adjusted diluted loss per share - pence per
share (0.25)p (0.48)p (0.83)p
-------------------------------------------- ----------- ----------- -----------
Discontinued operations
Profit/(loss) after tax (GBP'000) 29 (30) 74
Basic loss per share - pence per share (p) 0.01p (0.01)p 0.02p
Diluted loss per share - pence per share
(p) 0.01p (0.01)p 0.02p
-------------------------------------------- ----------- ----------- -----------
6 Cash outflows from operating activities
6 months 6 months 12 months
to to to
30 Sep 2019 30 Sep 2018 31 Mar 2019
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
--------------------------------------------------- ----------- ----------- -----------
Operating loss (including discontinued operations) (151) (2,096) (3,802)
Depreciation of tangible assets 65 231 503
Depreciation of right of use assets 407 - -
Amortisation of intangible assets 269 270 501
Income from joint venture - - 109
Decrease in provisions (265) (102) (52)
Net exchange differences 3 (32) (66)
Cost of share options 25 90 84
Decrease in inventories 563 161 302
Decrease/(increase) in trade and other receivables 596 750 1,424
Decrease in trade and other payables (1,562) (2,027) (2,364)
--------------------------------------------------- ----------- ----------- -----------
Cash outflows from operating activities (50) (2,755) (3,361)
--------------------------------------------------- ----------- ----------- -----------
7 Transactions with Phoenix S. G. Limited ("Phoenix SG")
On 10 September 2018 the Company announced that its subsidiary,
Stanley Gibbons Limited ("SGL") had entered in to an agreement with
Phoenix SG to acquire approximately 1,900 items, for an initial
consideration of GBP5.20m, which is payable in cash to Phoenix SG
over the term of the agreement, as and when sales of the items are
made to third parties and will be the net proceeds, after deduction
of a commission payment to be made to SGL, on completed sales.
Phoenix SG had acquired the items from the administrators of
Stanley Gibbons (Guernsey) Limited. The agreement is for a total
term of 10 years and any sale at a value that is less than the base
cost of an inventory item can only be made with the specific
permission of Phoenix SG. To the extent that all of the inventory
is sold and the appropriate payments have been made by SGL to
Phoenix SG no further consideration will be due. To the extent that
items remain to be sold at the end of the agreement the relevant
items will be returned to Phoenix SG and no further consideration
will be due.
Notwithstanding the fact that the agreement was written as a
sale from Phoenix SG to SGL, the substance of the transaction is
that of a consignment stock arrangement and so has been accounted
for as such. The acquired items have therefore not been included
within inventories and there is no related creditor due to Phoenix
SG within the balance sheet. The commission due to SGL is
recognised as revenue in the accounting period of the sale to a
third party. As at 30 September 2019 of the initial items totalling
GBP5.20m, GBP4.41m remained unsold (31 March 2019: GBP5.06m
unsold).
In April 2019 a further GBP1.0m of funds was drawn down on the
Facility C loan, GBP2.0m of GBP5.0m has now been drawn on this
facility. The total amount owing at 30 September 2019 to Phoenix SG
is GBP12.8m
8 Changes in accounting policies
This note explains the impact of the adoption of IFRS 16 Leases
on the group's financial statements and discloses the new
accounting policies that have been applied from 1 April 2019 in
note 18(b) below.
The group has adopted IFRS 16 retrospectively from 1 April 2019,
but has not restated comparatives for the 2018 reporting period, as
permitted under the specific transitional provisions in the
standard. The reclassifications and the adjustments arising from
the new leasing rules are therefore recognised in the opening
balance sheet on 1 April 2019.
8(a) Adjustments recognised on adoption of IFRS 16
On adoption of IFRS 16, the group recognised lease liabilities
in relation to leases which had previously been classified as
'operating leases' under the principles of IAS 17 Leases. These
liabilities were measured at the present value of the remaining
lease payments, discounted using the lessee's incremental borrowing
rate as of 1 April 2019. The weighted average lessee's incremental
borrowing rate applied to the lease liabilities on 1 April 2019 was
5%.
For leases previously classified as finance leases the entity
recognised the carrying amount of the lease asset and lease
liability immediately before transition as the carrying amount of
the right of use asset and the lease liability at the date of
initial application. The measurement principles of IFRS 16 are only
applied after that date.
2019
GBP'000
--------------------------------------------------------------- -------
Operating lease commitments disclosed as at 31 March 2019 8,075
Discounted using incremental borrowing rate at date of initial
application 6,425
--------------------------------------------------------------- -------
Lease liability recognised as at 1 April 2019 6,425
--------------------------------------------------------------- -------
Of which:
Current lease liabilities 591
Non-current lease liabilities 5,834
--------------------------------------------------------------- -------
6,425
--------------------------------------------------------------- -------
Right-of use assets were measured at the amount equal to the
lease liability, adjusted by the amount of any prepaid or accrued
lease payments relating to that lease recognised in the balance
sheet as at 31 March 2019. There were no onerous lease contracts
that would have required an adjustment to the right-of-use assets
at the date of initial application. The recognised right-of-use
assets relate to the following types of assets:
31 September
2019 1 April 2019
GBP'000 GBP'000
----------- ------------ ------------
Properties 8,246 5,691
----------- ------------ ------------
On 4 July 2019, a new lease was signed on the group's main
trading address, Basement to 1st Floor, 399 Strand, London, WC2R,
on that date a liability and asset of GBP2,962,000 was
recognised.
The change in accounting policy affected the following items in
the balance sheet on 1 April 2019:
-- Right-of-use assets - Increased by GBP5,691,000
-- Accruals and deferred income - Decreased by GBP734,000
-- Lease liabilities - Increased by GBP6,425,000
There was no impact on retained earnings on 1 April 2019
(i) Impact on segment disclosures and earnings per share
Adjusted EBITDA, segment assets and segment liabilities for
September 2019 all increased as a result of the change in
accounting policy. Lease liabilities are now included in segment
liabilities, whereas finance lease liabilities were previously
excluded from segment liabilities. The following segments were
affected by the change in policy:
Adjusted EBITDA Segment assets Segment liabilities
GBP'000 GBP'000 GBP'000
----------- --------------- -------------- -------------------
Philatelic 111 2,886 2,793
Publishing 14 58 51
Interiors 322 5,302 6,028
----------- --------------- -------------- -------------------
447 8,246 8,872
----------- --------------- -------------- -------------------
At 30 September 2019 the lease liabilities of GBP8,872,000 were
split between current liabilities GBP774,000 and non-current
liabilities of GBP8,098,000.
Earnings per share decreased by 0.02p per share for the six
months to 31 September 2019 as a result of the adoption of IFRS
16.
(ii) Practical expedients applied
In applying IFRS 16 for the first time, the group has used the
following practical expedients permitted by the standard:
- the use of a single discount rate to a portfolio of leases
with reasonably similar characteristics
- reliance on previous assessments on whether leases are onerous
- the accounting for operating leases with a remaining lease
term of less than 12 months as at 1 April 2019 as short-term
leases
- the exclusion of initial direct costs for the measurement of
the right-of-use asset at the date of initial application, and
- the use of hindsight in determining the lease term where the
contract contains options to extend or terminate the lease.
The group has also elected not to reassess whether a contract
is, or contains a lease at the date of initial application.
Instead, for contracts entered into before the transition date the
group relied on its assessment made applying IAS 17 and IFRIC 4
Determining whether an Arrangement contains a Lease.
8(b) The group's leasing activities and how these are accounted
for
The group leases various offices and equipment. Rental contracts
are typically made for fixed periods of 3 to 12 years but may have
extension options as described in (i) below. Lease terms are
negotiated on an individual basis and contain a wide range of
different terms and conditions. The lease agreements do not impose
any covenants, but leased assets may not be used as security for
borrowing purposes.
Until the 2019 financial year, leases of property, plant and
equipment were classified as either finance or operating leases.
Payments made under operating leases (net of any incentives
received from the lessor) were charged to profit or loss on a
straight-line basis over the period of the lease.
From 1 April 2019, leases are recognised as a right-of-use asset
and a corresponding liability at the date at which the leased asset
is available for use by the group. Each lease payment is allocated
between the liability and finance cost. The finance cost is charged
to profit or loss over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the liability
for each period. The right-of-use asset is depreciated over the
shorter of the asset's useful life and the lease term on a
straight-line basis.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
- fixed payments (including in-substance fixed payments), less
any lease incentives receivable
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be determined, the
lessee's incremental borrowing rate is used, being the rate that
the lessee would have to pay to borrow the funds necessary to
obtain an asset of similar value in a similar economic environment
with similar terms and conditions.
Right-of-use assets are measured at cost comprising the
following:
- the amount of the initial measurement of lease liability
- any lease payments made at or before the commencement date
less any lease incentives received
- any initial direct costs, and
- restoration costs
Payments associated with short-term leases and leases of
low-value assets are recognised on a straight-line basis as an
expense in profit or loss. Short-term leases are leases with a
lease term of 12 months or less. Low-value assets comprise
IT-equipment and small items of office furniture.
(i) Extension and termination options
Extension and termination options are included in a number of
property and equipment leases across the group. These terms are
used to maximise operational flexibility in terms of managing
contracts. The majority of extension and termination options held
are exercisable only by the group and not by the respective lessor.
None of the total lease payments made in 2019 were optional.
In determining the lease term, management considers all facts
and circumstances that create an economic incentive to exercise an
extension option, or not exercise a termination option. Extension
options (or periods after termination options) are only included in
the lease term if the lease is reasonably certain to be extended
(or not terminated). Potential future cash outflows have not been
included in the lease liability because it is not reasonably
certain that the leases will be extended (or not terminated), the
amount of these cash flows is uncertain as several rounds of rent
reviews are due before this extension date.
9 Further copies of this statement
Copies of this statement are being sent to shareholders and can
be viewed on the Company's website at www.stanleygibbonsplc.com.
Further copies are available on request from: The Company
Secretary, The Stanley Gibbons Group plc, 399 Strand, London WC2R
0LX.
-Ends-
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR DDLFLKFFZFBK
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