TIDMSGI
RNS Number : 5167U
Stanley Gibbons Group PLC
30 July 2020
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF EU REGULATION 596/2014
THE STANLEY GIBBONS GROUP PLC
(the "Group" or "Company")
Annual Results, Posting of Annual Report and Notice of Annual
General Meeting
The Company has today published its Annual Report and Accounts
for the year ended 31 March 2020 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 399 Strand, London WC2R 0LX on
Thursday 10 September 2020 at 11.30 a.m.
In the light of the continued Government guidance in relation to
Covid-19, the Board has regretfully decided that, in order to
protect the health and wellbeing of shareholders and employees,
this year's meeting will take place as a closed meeting and
shareholders and advisers will not be able to attend in person. The
Company will make arrangements so that a minimum quorum of
shareholders is present and the legal requirements to hold a valid
AGM are satisfied.
The Directors consider that the resolutions, as set out in the
Notice of Meeting, are in the best interests of the Company and its
shareholders as a whole and unanimously recommend shareholders to
vote in favour of the resolutions as they intend to do so in
respect of their own beneficial shareholdings. Accordingly we ask
all shareholders to appoint the Chairman of the Meeting as their
proxy to vote on the resolutions. Proxy voting instructions can be
found in the notes following the Notice of Meeting.
Despite these exceptional circumstances, the Board is keen to
maintain engagement with shareholders. In order to facilitate this,
if you are a shareholder and would like to ask the Board a question
on the formal business of the AGM, please email your question to
the Company Secretary, rpurkis@stanleygibbons.com by 11.30am on
Tuesday 8 September 2020. Answers to questions will be published on
our website at: www.stanleygibbonsplc.com/shareholder-information/
as soon as is practicable after the close of the AGM. Additionally
shareholders can also view a live stream of the AGM on
https://bit.ly/stanleygibbons but will not be able to participate
in the meeting or vote using this facility.
We will continue to closely monitor the latest Government
guidance, and how this may affect the arrangements for the AGM.
Consequently, the date of the AGM is subject to change, possibly at
relatively short notice. If it becomes necessary to revise the
current arrangements for the AGM, further information will be made
available on our corporate website at
www.stanleygibbonsplc.com/investor-relations/
Enquiries:
The Stanley Gibbons Group
plc
Harry Wilson
Graham Shircore
Anthony Gee +44 (0)207 836 8444
Liberum Capital Limited (Nomad and Broker) +44 (0)203
100 2000
Andrew Godber
Edward Thomas
Group Annual Report and Financial Statements
for the year ended 31 March 2020
Financial Highlights
Year en ded Year ended
31 March 2020 31 March 2019
------------------------------------------------------------------------- ------------- -------------
Group turnover from continuing operations (GBPm) 13.2 11.7
Trading loss from continuing operations (GBPm) (2.5) (3.3)
Loss before taxation from continuing operations (GBPm) (2.5) (4.3)
Adjusted (loss)/profit before taxation from continuing operations (GBPm) (2.6) (3.5)
Basic earnings per share - continuing operations (p) (0.59) (1.01)
Adjusted earnings per share - continuing operations (p) (0.62) (0.83)
Dividend per share (p) - -
Total borrowings (GBPm) 14.2 11.5
Net assets per share (p) 0.9 1.7
------------------------------------------------------------------------- ------------- -------------
Contents
Page
2 Directors and Advisers
3-4 Chairman's Statement
5-6 Chief Executive's Letter to Shareholders
7-12 Business Review
13-14 Corporate Governance
15-16 Report on Remuneration
17-23 Directors' Report
24-25 S172 Directors statement
26-31 Independent Auditor's Report
32 Consolidated statement of comprehensive income
33 Consolidated statement of financial position
34 Consolidated statement of changes in equity
35 Consolidated statement of cash flows
36-79 Notes to the Financial Statements
80-81 Directors' Biographical Details
82-86 Notice of Annual General Meeting
Financial Calendar
Annual General Meeting Thursday 10 September 2020
Directors and Advisers
Current 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 and incorporated 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
Finsgate
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
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: 0371 664 0300; from overseas +44 (0)37 1664
0300
Website Further financial, corporate and shareholder information
is available in the
Company information section of the Group's website:
www.stanleygibbonsplc.com
Chairman's Statement
Introduction
This report covers the audited results for the year ended 31
March 2020 for The Stanley Gibbons Group plc ("the Group" or "the
Company"). Due to the COVID-19 virus lockdown commencing in late
March 2020, this report includes significantly more comment than
usual on post year-end matters which have clearly had a major
impact on our business in recent months.
The last financial year has been mostly about continuing to
implement the "rebuild" strategy commenced in 2018 following the
financial restructuring of the Group. I am pleased to say that the
results show a progressive improvement while at the same time we
have widened our customer base as confidence in the Group has
grown. Over the last year we have invested significantly in
"improvements" particularly the complete refurbishment of the
Strand shop and our IT services. We still have much to do to
achieve sustainable profitability but the foundations are now in
place.
Over the last year, sales have been affected by the planned
rebalancing of stock to be more in line with our customers'
requirements. Group turnover for the year was GBP13.2m up 13% from
last year (2019: GBP11.7m) including a significant increase in
Philatelic sales as older stock was disposed of. Gross margin was
slightly down at 46% (2019: 51%) largely as a result of reducing
older inventory. The trading loss from continuing operations before
adjustments and exceptional items was further reduced to GBP2.5m
(2019: GBP3.3m) in part due to further cost savings and
efficiencies. The pre-tax loss from continuing operations also
improved to GBP2.5m, which included a positive settlement from a
legal claim, for the year - a drop of GBP1.8m compared to GBP4.3m
in 2019. This resulted in a reduction of net assets to GBP3.7m
(2019: GBP7.3m) although total inventory levels at GBP17.5m were
broadly comparable to last year. Cash at the year-end was GBP2.5m
(2019: GBP2.2m) while borrowings were GBP1.1m less than budget plan
at GBP14.2m (2019: GBP11.5m).
A further reduction in overheads for the year of 17% down to
GBP2.6m (2019 GBP3.1m) was achieved while the headcount saw a small
drop to 71 from (2019: 74). We will continue to look for further
overhead savings, but these are likely to be more modest following
the substantial reductions achieved during the restructuring of the
Group over the last few years. The performance of staff has been
greatly enhanced by the relative stability of teams over the last
year and we intend to build on this. In addition to the major
rebranding exercise and improvements to our websites, significant
advances have been made in the retail and auction departments as
well as publishing and our online presence. Our staff now have a
sharp focus on what needs to be achieved and a clear plan of how to
get there. The Board has remained unchanged since the appointment
of Anthony Gee as CFO for the Group in August last year.
Outlook
The effect of the virus in recent months has been to force
structural changes on businesses like ours where flexibility will
be a key success factor going forward. Some of these changes were
already happening and have been accelerated, such as online
commerce and working from home, while others are new for instance
social distancing and travel restrictions. It is to the great
credit of our staff and management that we have quickly adapted
where necessary and changes to individual working arrangements have
been made without hesitation. While total sales have unsurprisingly
dropped over the first 3 months of the current financial year,
online sales have grown by 67% and now represent around 30% of
total sales. With more time on their hands, we have seen many
clients spending more time & money on their collecting
interests while at the same time new customers are testing the
waters. In summary things could have been worse and we are better
placed now than some of our initial COVID-19 projections
anticipated. However, there is no doubt that COVID-19 does create
uncertainty and our forecast, based on the current trading trends
and without any mitigating actions, indicates we would need to
draw down the remaining GBP2m of our loan funding over the next 12 months.
We have a clear strategy and plan of implementation which our
CEO Graham Shircore sets out later in this report. A key to our
success will be the ability to adapt quickly where necessary while
maintaining a focus on our ultimate goals. The collectibles
business has been remarkably resilient over recent months - both
stamps and coins are making strong prices particularly at the
higher quality end of the market. We see no reason why this should
not continue and with our renowned specialists and brands we are in
a strong position to take advantage of this. Our plan has been
interrupted but we have adapted and remain on course with our
rebuilding of the Company. On behalf of the Board, I would like to
thank all our staff, customers, and shareholders for their ongoing
support through what has been a particularly difficult period
recently. I look forward to being able to update you with more news
of our progress.
Annual General Meeting
As you will see from the Notice at the end of these Report &
Accounts, the Company's Annual General Meeting will be held at 399
Strand, London WC2R 0LX on Thursday 10 th September 2020 commencing
at 11.30am.
In the light of the continued Government guidance in relation to
COVID-19 the Board has regretfully decided that, in order to
protect the health and wellbeing of shareholders and employees,
this year's meeting will take place as a closed meeting and
shareholders and advisers will not be able to attend in person. The
Company will make arrangements so that a minimum quorum of
shareholders is present and the legal requirements to hold a valid
AGM are satisfied.
The Directors consider that the resolutions, as set out in the
Notice of Meeting, are in the best interests of the Company and its
shareholders as a whole and unanimously recommend shareholders to
vote in favour of the resolutions as they intend to do so in
respect of their own beneficial shareholdings. Accordingly we ask
all shareholders to appoint the Chairman of the Meeting as their
proxy to vote on the resolutions. Proxy voting instructions can be
found on page 85 of these Report & Accounts.
Despite these exceptional circumstances, the Board is keen to
maintain engagement with shareholders. In order to facilitate this,
if you are a shareholder and would like to ask the Board a question
on the formal business of the AGM, please email your question to
the Company Secretary, rpurkis@stanleygibbons.com by 11.30am on
Tuesday 8 (th) September 2020. Answers to questions will be
published on our website at:
www.stanleygibbonsplc.com/shareholder-information/ as soon as is
practicable after the close of the AGM. Additionally shareholders
can also view a live stream of the AGM on
https://bit.ly/stanleygibbons but will not be able to participate
in the meeting or vote using this facility.
We will continue to closely monitor the latest Government
guidance, and how this may affect the arrangements for the AGM.
Consequently, the date of the AGM is subject to change, possibly at
relatively short notice. If it becomes necessary to revise the
current arrangements for the AGM, further information will be made
available on our corporate website at
www.stanleygibbonsplc.com/investor-relations/
Harry Wilson
Chairman
29 July 2020
Chief Executive's Letter to Shareholders
Fellow shareholders,
Putting the inevitable mention of COVID-19 to one side, the
twelve month period to the end of March 2020 was focused on
continuing the journey we began the previous year. Much like last
year's report, this gives me an opportunity to update you on the
progress we have made, the early effects of some of our initiatives
and what you can expect from us going forward.
Major Developments
In the last annual report, I noted that we really began moving
forward in terms of proactive implementation of new initiatives and
forward looking projects through the second half of the year.
This year of course, we have had a whole year of doing so,
therefore you should expect that more has been achieved and I am
glad to say that this is the case.
The first half of the year was, in terms of the number of
outwardly visible developments, the busier of the two. Both brands
were given a new look and new websites while there were also
product and service overhauls for Stanley Gibbons.
The majority of these went well but it is fair to say that the
development and implementation of the new SG website did not go as
well as we would have hoped. We have learnt from it and I am
pleased to say that following a significant amount of effort post
launch, it is now making a much more positive contribution. There
is still a lot more we can do to improve the digital shopping
experience for our customers, appreciating and making the most of
the potential of online as both a selling and relationship building
tool remains a major focus for us.
Although there have continuously been several projects running
in the background, the second half of the year will appear to the
outside world to have been quieter with only one development of
note, namely the refurbishment of 399 Strand. I am pleased to say
that this did go to plan. If you haven't come to visit us yet,
please do so, the scale of the change needs to be seen to be
believed.
In addition to the building project, technology continued to be
a big focus. The aforementioned putting right of some of the places
we had erred took up time but we also accelerated the building and
population of our new publications database: an asset that we
believe will not only save us money over time but has the potential
to act as the backbone which will allow us to improve and develop
our digital offering further. More recently, we have begun the
process of upgrading our computer hardware and infrastructure
across the Group as well as making further improvements to our
customer offering.
Cultural Change
While the pace of change and progress has not and cannot be
allowed to slow down, both our customers and colleagues, have for
the first time in many years began to benefit from a degree of
consistency in approach.
Our focus on increasing our leadership in the five key areas we
highlighted in the last annual report is unchanged, the importance
we place on both our customers and our colleagues is unchanged and
the overall long term direction of the Group is unchanged. This
allows everybody to look at what we are doing and how we are doing
it and decide if it is something which suits them - our customers
can choose whether to shop with us and our colleagues can choose
whether to work with us, both with greater clarity of what they can
expect. It also allows us to deepen these elements and their
importance over time and although there remains a lot of work to do
here, again tangible progress is being made. Customer service
levels and how collaboratively we work with each other are both
improving. The benefits of these can be hard to accurately measure
but they are no less valuable for that fact.
COVID-19 and After the Financial Year End
The initial impact on trading of the COVID-19 pandemic began to
be felt just before the financial year end but did not play a
material role in terms of our full year results. We had by this
point however closed the shop - something which even the Blitz was
unable to force us to do - and implemented working practices and
contingency plans which allowed us to keep all elements of the
business trading.
Our aim was to communicate clearly with our customers and
provide them with an unmatched level of service - something which
is always important but even more highly valued at times of stress
and upheaval - and the number of messages of support and thanks we
have received is testament to an appreciation of our efforts which
will be valuable to us as a business well into the future.
For members of staff this period also has the potential to be
one of great uncertainty and concern. Our approach here revolved
around frequent, consistent communication, setting things out
clearly and honestly both in terms of what was expected of
everybody and what they could expect from us. Their response was
nothing short of exceptional and they deserve the thanks of each
and every one of us as shareholders. I also believe that as a team
we have grown stronger as a result and this too is something which
will be of benefit to us in the future.
Despite these positives and the significant cost deferral and
mitigation efforts we made, there is no denying the impact COVID
has had on the wider economy and our business. The COVID-19
pandemic has increased the economic uncertainty that companies and
individuals face and as a Group that puts pressure on our funding
and liquidity, which the auditors have highlighted in their report.
Our forecasts, based on assumptions which include the impact of the
pandemic, show that we will be required to draw down the additional
GBP2m of funding in our facility to meet our short term funding
requirements, without further mitigating actions. Mitigating
actions are available to us if economic conditions become worse,
such as selling down the Group's surplus inventory faster and
reviewing operating costs and our focus is currently making sure
these plans are developed and implemented at the right time.
Nevertheless we have not slowed in progressing further with our
plans and developments for the future, believing that there is an
opportunity to exit the upheaval this has caused in a relatively
far stronger position than we entered it.
Looking Forward
It would be hubristic to say how recent events will impact
consumer behaviour in future. However, we showed at the start of
the crisis that if necessary we are able to be flexible and
adaptable while not losing sight of our longer term direction and
goals. It is this framework which we will take with us into the
coming months, continuing to focus our efforts on driving the
business forward while keeping a keen eye out for challenges coming
over the horizon.
As with every year, our goal is to be able to look back at the
end of the coming year and be able to say that we are a
significantly better business than we were at the start. With this
in mind, every part of the business has explicit initiatives aimed
at delivering sustainable and profitable growth and I look forward
to being able to talk more openly about the progress of these in
the near future.
The dedication of your management team and all of our colleagues
to the business' long term goals is unwavering and on behalf of all
shareholders and the Board, I want to thank everybody at Stanley
Gibbons who has worked so hard over the past few months.
Graham Shircore
Chief Executive Officer
29 July 2020
Business Review
Summary Trading and Operations
Summary results:
-- Turnover from continuing operations of GBP13.2m was GBP1.5m
(12.8%) higher than last year with the majority of the improvement
attributable to the Philatelic Division.
-- Gross margin for the year was 45.9% (2019: 51.0%). Strong
margins on the new and ongoing business were impacted by the
disposal of some older, low value and duplicate inventory.
-- Trading losses from continuing operations, before accounting
adjustments and exceptional costs reduced to GBP2.5m from GBP3.3m,
as the benefit of cost savings and efficiencies continued.
-- Loss for the financial year from continuing operations fell
by GBP1.8m to GBP2.5m compared to GBP4.3m last year.
-- Profit for the financial year from discontinued operations was GBP0.1m.
-- There was a 49% reduction in net assets to GBP3.7m (2019:
GBP7.3m) as a result of the loss incurred in the year.
-- Borrowings at the balance sheet date of GBP14.2m (2019:
GBP11.5m) partially offset by cash of GBP2.5m (2019: GBP2.2m).
Continuing operations
12 months to 31 March 12 months to 31 March
----------------------- -----------------------
2020 2020 2019 2019
Sales Profit Sales Profit
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- ----------- ---------- ----------- ----------
Philatelic 6,459 (90) 4,942 (487)
Publishing 1,946 (99) 2,199 53
A H Baldwin 3,425 553 3,216 538
Legacy interiors property & legal 1,345 222 1,320 161
Other & corporate overheads - (2,555) - (3,086)
Finance charges* - (529) - (497)
--------------------------------------- ----------- ---------- ----------- ----------
Trading sales and losses 13,175 (2,498) 11,677 (3,318)
Amortisation of customer lists - (240) - (220)
Pension service & share option charges - - - (389)
Finance charges related to pensions - (126) - (133)
Exceptional operating income/(charges) - 353 - (203)
--------------------------------------- ----------- ---------- ----------- ----------
Group total sales and loss before tax 13,175 (2,511) 11,677 (4,263)
--------------------------------------- ----------- ---------- ----------- ----------
* Finance charges do not include lease interest charge for
IFRS16. This charge has been included in the relevant division to
make comparative figures consistent.
Overview
Group turnover from continuing operations was GBP13.2m for the
year ended 31 March 2020 compared to GBP11.7m in the prior year.
The turnover increase in the year was primarily driven by the
planned reduction in stock holding in areas where the management
team is rebalancing stock holdings to move away from older,
duplicate and low value holdings to provide fresher stock for our
customers. This stock was sold at reduced margins, through auctions
and trade sales to other dealers. Overall this affected our margins
and is a reason for the lower margin percentage in the year.
However the cash that this generates will be used to renew our
stock in areas where customer interests are higher.
We continued to see a reduction in operating costs from our
actions to restructure and improve efficiency. The trading loss,
for continuing operations, before accounting adjustments including
exceptional operating charges and finance charges related to
pensions, fell from GBP3.3m at 31 March 2019 to GBP2.5m at 31 March
2020.
Philatelic
The Philatelic division contains our stamp dealing and auction
business. Our Philatelic division was the business where the
rebalancing of the stock holding was most focused. As a result
sales increased from GBP4.9m in the year to GBP6.5m. However gross
margins fell from 45% to 36% as some of the inventory was sold
below or near to cost. The dealing business' fresher stock sales
were higher for the year ended 31 March 2020, with the gross
margins maintained at similar percentages to the previous period.
During the final quarter of the year there was some disruption to
sales as initially our building was undergoing refurbishment
leading to some disruption for customers visiting our premises.
Towards the end of the financial year there was the impact of
COVID-19 pandemic, but this had minimal impact on the performance
to March 2020. Our auction business continued its recovery with
commissions up in the year and more importantly increasing on a per
auction basis. This is an area we will continue to focus on, both
with traditional and digital auctions, but has probably been most
affected by the COVID-19 "lockdowns". Our overheads in this
division continue to reduce as we benefited from the decision to
merge auction brands taken previously. Although we will always
challenge our cost base, we are now at a point where savings in
overheads will begin to slow as the majority of the fundamental
reorganisation of the division is complete.
We are aware that our holding of material in this part of the
business is significantly larger than is necessary to support the
business and it is our aim to reduce this over time. Our aim is to
sell through and rebalance our stock holding but we are realistic
and expect this to be achieved over more than one financial period.
We continue to ensure the new stock that is purchased by our teams
is more in line with current customer wants and market trends and
so should turn over faster and produce the volume of sales and
margins necessary to improve divisional profitability further.
Publishing
Sales in this division fell by 11.5% during the year. Some of
this fall was deliberate as we reorganized the albums and
accessories range to focus on a sustainable and cost effective
range. Our previous range had become fragmented and sold a wide
variety of products which we were continually struggling to supply
in the correct quantity and cost. The new range allows us to
deliver quality at an affordable level for collectors in the
future. Gross margin percentages improved during the year but this
division had higher operating costs. This was primarily a result of
updating the technology regarding our catalogue database, resulting
in some duplication of costs. In the longer term the cost base will
be reduced and the database will be an important step in helping
the digital development in this division.
Coins & Medals
Sales increased year on year by 6.5%, with profits improving
from GBP538,000 to GBP553,000. As in the Philatelic division there
were some sales of older material at lower margins which resulted
in the sales growth not flowing through to profits but again the
gross margins from our fresher stock did improve. Overhead costs
were also lower in the year. The division is beginning to build
stock levels to allow it to trade at higher volumes but this will
take time. The coin markets remain strong and the challenge now is
to find new areas of growth to drive profitability in the future.
Baldwin's of St James's, the auction joint venture, generated
GBP50,000, the Group's share of the profit, in the year, compared
to GBP109,000 in the previous period.
Legacy Interiors
The sales from this division all relate to rental income from
the leasehold property in New York which was vacated and sublet by
Mallett in 2016. The costs relate to the rents and other costs in
relation to the property.
Corporate Overheads
Corporate overheads continue to fall declining by a further 17%
to GBP2.6m. A significant proportion of the fall during the year
was a result of lower depreciation and amortisation charges. The
previous lease on our premises in the Strand, London expired in
March 2019, so our leasehold improvements were fully written down
and no depreciation charge incurred during the year.
We continue to identify areas where we can reduce our corporate
overheads further as we recognise that they continue to be too high
in relation to the current size of the trading businesses. The
restructuring over the last few years has significantly reduced the
corporate overheads and each year further savings are more
difficult to achieve. We continue to review all our costs and
renegotiate all our contracts when they fall due and remain
optimistic that further cost savings can be identified.
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 2020 were GBP0.4m (2019: GBP0.7m). In the opinion of
the Directors, such accounting charges do not form part of the
operating performance of the Group.
Exceptional Operating (Income)/Charges
Exceptional operating (income)/charges, can be further analysed
as follows:
Year ended Year ended
31 March 2020 31 March 2019
GBP'000 GBP'000
-------------------------------------------- ------------- -------------
Stock provisions 286 8
Settlement of legal case (850) -
Accelerated impairment of intangible assets 36 -
Loss on disposal of tangible fixed assets 42 -
Impairment of receivables 155 -
Dilapidations on Strand property (26) -
Restructuring and redundancy costs - -
Disposal of leased property - 18
Exceptional legal fees - 39
Legacy wind-down costs of overseas entities 4 138
Release of other payables excess provision - -
-------------------------------------------- ------------- -------------
(353) 203
-------------------------------------------- ------------- -------------
On 14 June 2019 the Group announced that all outstanding claims
involving certain former directors of Mallett plc had now been
resolved, bringing the matter to a full and final conclusion. The
sum of GBP850,000 resulting from this agreement has been received
in full by the Group.
Exceptional stock provisions relating to the discontinuation of
the publication range and a provision against a legacy Interiors
item that was found to be a reproduction and not the original were
charged to exceptional items during the year. Stock provisions are
normally charged in the operating margins of the division unless
they are a result of reorganisation or changes in the overall
collectibles market environment.
Discontinued Operations
There continues to be a long tail of stock items that we
continue to own from our Interiors division which was discontinued
in the year ended 31 March 2018. We continue to sell items through
antique and art auctions, although the levels of stock are now
minimal. The majority of the remaining stock is now fully provided
against but income will still be generated in the next 12
months.
Inventory
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 2020 31 March 2019
GBP'000 GBP'000
------------------------------------- ------------- -------------
Philatelic rarities 14,145 14,178
Philatelic stock (general) 760 1,176
Coins and medals 2,306 1,847
Antiques 19 383
Publications, albums and accessories 283 341
------------------------------------- ------------- -------------
Group owned stock 17,513 17,925
Inventory owned by third parties - 76
------------------------------------- ------------- -------------
17,513 18,001
------------------------------------- ------------- -------------
The Group's management continues to focus on the rebalancing of
inventory to enable the Group to trade in the most profitable areas
of its collectibles businesses. Overall net inventory holding has
decreased by GBP488,000 to GBP17.5m. This has been primarily driven
from the sale of the lower value philatelic stock and the
completion of the range review of the publications, albums and
accessories inventory. We continue to liquidate the holdings of
antiques from the interiors business.
On 21st February 2020 the Group announced that its subsidiary,
Stanley Gibbons Limited ("SGL") had entered in to an agreement with
Phoenix S. G. Limited to acquire approximately 780 items, for an
initial consideration of GBP1.07m, which is payable in cash to
Phoenix S. G. Limited 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. 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 S. G. Limited. To the extent that all of the inventory is
sold and the appropriate payments have been made by SGL to Phoenix
S. G. Limited 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 S. G. Limited and no
further consideration will be due (see note 13).
Notwithstanding the fact that the agreement was written as a
sale from Phoenix S.G. Limited 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 S.G. Limited 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 31 March 2020 of the
initial items totaling GBP1,070,000, all remained unsold.
Cash Resources
As at the balance sheet date the Group had cash balances of
GBP2.5m and a loan of GBP14.2m repayable in March 2023. The loan is
due to Phoenix S. G. Limited, the Group's controlling shareholder.
During the year the Group drew down GBP2m of its remaining loan
facility - headroom of GBP2m remains to draw - to fund the
refurbishment of the premises and the day to day operation of the
business. As at the date of this report no further drawings have
been made.
On 21 November 2017 the directors of Stanley Gibbons (Guernsey)
Limited applied for and were granted an administration order.
Stanley Gibbons (Guernsey) Limited was the entity through which the
Group's Investment division activities had been conducted. The
administration order meant the Group lost control of this business
and its assets and so the Investment division's results were
reclassified as discontinued operations. Stanley Gibbons (Guernsey)
Limited remained in administration during the year ended 31 March
2019. No costs have been incurred in relation to the administration
during the year. On 2 April 2019 the Royal Court of Guernsey
ordered that Stanley Gibbons (Guernsey) Limited enter liquidation,
this process is still ongoing.
On 21 February 2020 the Group signed a deed of release for both
the Company and its subsidiaries that are guarantors to the loan
facility and confirmation with its lender Phoenix S.G. Limited that
releases and discharges Stanley Gibbons (Guernsey) Limited (in
liquidation) of its obligations and future obligations and
liabilities under the loan agreement.
As a result of Stanley Gibbons (Guernsey) Limited no longer
being a guarantor of the Loan Agreement, the Group was no longer in
default of its loan facility
As detailed in note 18, as at 31 March 2020, the Group would
have been in default of its loan facilities as the Group would have
failed to satisfy the financial covenants in the loan
agreements
On 27 March 2020 Phoenix S.G. Limited issued a waiver letter to
the Group for the above defaults so that at the balance sheet date
the Group is no longer in default and the loan facilities are not
repayable on demand.
As at 24 July 2020 the Group had cash balances of GBP1.7m and an
outstanding loan balance of GBP14.2m.
COVID-19
The Group, like all businesses and organisations, has been
affected by the "lockdowns" as a result of the COVID-19 pandemic.
From our premises being closed, to shows and exhibitions being
cancelled the "lockdowns" have affected our ability to meet with
both our customers and our vendors. This has challenged the
business in many different ways but has also lead to some
opportunities for the Group to bring forward actions.
For the first 3 months of the financial year ending 31 March
2021 our sales are 34% lower than the corresponding period last
year. Our auction business has postponed sales, the London
International Stamp show was cancelled and the opening of our new
showroom in the Strand was delayed. However, when the lockdowns
came into force the Group switched its focus to on-line sales. And
despite the overall fall on-line sales have grown by 67% for the
first 13 weeks of the year compared to last year and are now around
30% of sales compared to 12% in 2020.
The Group has taken mitigating actions to protect its cash
position, particularly as the restrictions in place were always
going to affect the Group's sales. The Group has made use of the
help offered by Government schemes including furloughing workers
and deferring VAT payments. The Group has also engaged with its
business partners to defer or waive some costs and has had helpful
discussions with its lenders and the pension trustees.
Expenditure procedures have been tightened further, but all of
this has not stopped the Group progressing projects which will
benefit the future. The Group cash balance remains above our early
forecasts for the impact of the "lockdowns" and we have yet to draw
further on our loan facilities.
The pandemic is having an impact on the properties that the
Group sub-lets in Pall Mall, London and Madison Avenue, New York.
Both properties are sub-let to non-essential retailers which have
been closed during the "lockdowns". The Group's tenants have not
paid rent due during the period which has meant that the Group has
not been able to pay rent to the landlords. The Group is currently
in negotiations with its tenants and landlords to resolve these
matters but there is uncertainty as to the outcome of those
negotiations and to whether the tenants will continue to occupy the
properties in the future. At 31 March 2020 the Group Statement of
financial position included leasehold assets of GBP944,000 and
right of use assets of GBP4,984,000 and lease liabilities of
GBP5,788,000. At 31 March 2020 the Directors believe that these
assets are not impaired, however once the outcome of these
negotiations is known a further impairment review may be
required
Uncertainty remains over the level of future demand and the
Directors are aware that as some of the deferred costs unwind
pressure remains on the cash resources of the Group. They continue
to monitor the changing situation closely so that appropriate and
proportionate actions are taken when required.
Anthony Gee
Chief Finance Officer
29 July 2020
Corporate Governance
The Directors recognise the importance of and are committed to
high standards of corporate governance. The corporate governance
framework within which the Stanley Gibbons Group operates,
including Board leadership and effectiveness, Board remuneration
and internal control is based on practices which the Board believes
are appropriate to the size, risks, complexity and operation of the
business.
The Board continues to adhere to the Quoted Companies Alliance
Corporate Governance Code for small and mid-size quoted companies
(the QCA Code) on the basis that it is most suited to the size and
requirements of the business. The Board will apply the principles
of the QCA Code.
Full details of the application of the code are disclosed on our
corporate website: https://www.stanleygibbonsplc.com/
corporate-governance/.
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.
The Board met 13 times during the year and the Directors
attendance at those Board meetings was as follows:
Attendance
-------------------------------- ----------
H Wilson 12
G Shircore 13
A Gee (appointed 1 August 2019) 8
L Castro 11
M West 11
-------------------------------- ----------
Audit Committee
The Audit Committee comprises only Non-Executive Directors.
The Committee met three times during the period since approval
of the previous financial statements. It has written terms of
reference, which were updated in June 2018, 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, 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. The Committee has
concluded that this is the case and has reported this to the
Board.
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).
The Audit Committee also reviews updates on significant
accounting policies and the impact that this has on the Group and,
during the year, established a Cyber sub-committee with appropriate
in-house expertise to scrutinise this specialist subject.
Members of the Audit Committee at the date of this report were
LE Castro and HG Wilson
Nomination Committee
A separate Nomination Committee is in operation. It has written
terms of reference, which were updated in October 2016, setting out
its responsibilities. It comprises the Non-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 LE Castro.
By order of the Board
RK Purkis
Secretary
29 July 2020
Report on Remuneration
Remuneration Committee
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 West and LE Castro. 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.
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 are
exercisable between the third and tenth anniversaries of the date
of grant.
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
was achieved.
Options issued in 2016 were granted at market value and are not
subject to a performance condition.
Options issued in 2018 were granted at market value and are not
subject to a 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 A Gee to defined contribution personal
pension 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 six months.
Directors' Remuneration
For each Director remuneration for the year to 31 March 2020 can
be analysed as follows:
2020
2020 Performance 2020 2020
Salary & Related Other Pension 2020 2019
Fees Bonus Benefits Contributions Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------- -------- ----------- -------- ------------- ------- -------
H Wilson 60 - - - 60 84
G Shircore - - - - - -
A Gee 123 - - 12 135 -
A Cook - - - - - 158
L Castro 35 - - - 35 35
M West 35 - - - 35 12
----------- -------- ----------- -------- ------------- ------- -------
253 - - 12 265 289
----------- -------- ----------- -------- ------------- ------- -------
The periods each Director served during the year are given on
page 20.
Directors' Share Options
Number Number
Date of Earliest Expiry Exercise Price at 31 March Forfeited at 31 March
grant exercise date date (1p shares) 2019 in period 2020
--------- ---------- -------------- -------- -------------- ----------- --------- -----------
H Wilson 5/10/16** 5/10/19 5/10/26 11p 2,000,000 - 2,000,000
A Gee 5/10/16** 5/10/19 5/10/26 11p 400,000 - 400,000
--------- ---------- -------------- -------- -------------- ----------- --------- -----------
2,400,000 - 2,400,000
-------------------------------------------- -------------- ----------- --------- -----------
** Options granted under Group Share Option Plan 2010.
No Directors options forfeited or lapsed during the period.
The highest paid director, being A Gee, did not exercise any
share options during the year.
The closing market price of the Company's shares at 31 March
2020 was 1.55p and the range of market prices during the twelve
month period was between 1.5p and 3.95p.
By order of the Board
RK Purkis
Secretary
29 July 2020
Directors' Report
for the year ended 31 March 2020
The Directors present their report and the consolidated audited
financial statements for the year ended 31 March 2020.
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; and
-- 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;
-- Each of the Directors has 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;
-- The financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and loss of the
Group; and
-- The management report includes a fair review of the Group's development.
Principal activities
The principal activities of the Group are those of trading in
collectibles, auctioneering, the development and operation of
collectible websites, philatelic publishing, mail order, retailing,
and the manufacture of philatelic accessories.
Business review
Included within the Annual Report is a fair review of the
business of the Group during the year ended 31 March 2020 and the
position of the Group at the end of the year. This review is
contained in the Chairman's Statement on pages 3 to 4 and the
Business Review on pages 7 to 12. 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 below by
the Executives, Senior Management team, Audit Committee and wider
Board and are regularly reviewed throughout the period.
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, focusing on
client service and ensuring that it maintains an inventory of
highly attractive items.
Stock Valuation
The market in rare stamps, coins and other collectibles 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.
Investment Products
The Group was 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 bore the risk in the event that the underlying
assets go down in value during the contract period and continually
monitors it.
On 21 November 2017 the directors of Stanley Gibbons (Guernsey)
Limited applied for and were granted an administration order. This
subsidiary was most exposed to investment product risk and
therefore with the deemed loss of control over the subsidiary the
level of this risk to the Group is now minimised.
Controlling interest
The Group's largest shareholder is also the Group's primary
lender. The Group is aware of the risk that continued support is
required from Phoenix S.G. Limited and ensures it complies with all
requirements of its lending agreement.
Brexit
The Director's do not believe that any of the potential
scenarios of Brexit have a specific risk to the Group. The Group
will be impacted by any changes in the general economic conditions
affecting both the UK and the European Union.
COVID-19
The Directors have been closely reviewing the impact of the
COVID-19 pandemic and the subsequent lockdown on the Group's
trading performance and impact on the Groups rental properties that
it sub-leases to third party retailers. The lockdowns have directly
impacted the Group's trading due to the restrictions on both
employees and customers movement impacting both trading at the
Group's premises and shows and exhibitions in both the UK and
overseas locations. The Directors have been and continue to take
actions to mitigate the impact on trading by minimizing expenditure
through all available options open to them. The risks from the
pandemic continue to create uncertainty which the Directors have
addressed in the going concern review (page 21) and estimates and
assumptions in preparation of financial statements (see note 2).
For further details on the impact of the pandemic to date on the
Group see note 32.
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 recovery plans 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 Business Review on pages 7 to 12.
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 2020 is set out on page 32. The
Directors do not recommend a final dividend for the year ended 31
March 2020 (year ended 31 March 2019: nil).
Directors
The following Directors have held office since 1 April 2019:
H G Wilson (Non-Executive)
G E Shircore
L E Castro (Non-Executive)
M West (Non-Executive)
A M Gee (appointed 1 August 2019)
L Castro and M West are considered to be Independent.
Biographical details of the current Directors are given on pages
80 and 81.
Directors' interests
The interests of the Directors in the shares of the Company, all
of which are beneficial, at 31 March 2020 together with their
interests at 31 March 2019 were:
Ordinary 1p Ordinary 1p
Shares Shares
31 March 2020 31 March 2019
---------------- ------------- -------------
HG Wilson (1) 2,000,000 2,000,000
GE Shircore (2) 705,741 705,741
A Gee* - -
LE Castro - -
M West - -
---------------- ------------- -------------
* On appointment
(1) Held in the name of Park Securities Limited in which H
Wilson is a director and shareholder.
(2) Phoenix Asset Management Partners Limited, Mr Shircore's
ultimate employer, is the investment manager to Phoenix SG Limited
which holds 248,000,000 Ordinary shares representing 58.09% of the
Company's issued share capital.
Details of the Directors' share options are given in the
Remuneration Report on page 16.
Apart from service contracts and the transactions referred to in
note 26 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 10.
Financial Risk Management
The Group principally finances its operations through the
generation of cash from operating activities and through a loan
from its major shareholder, Phoenix S.G. Limited and has no
interest rate exposure on financial liabilities except those
disclosed in note 25. 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 15 (Provision for impairment of receivables and collateral
held) and note 25 (Financial instruments).
Going concern
The Group's forecasts shows 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,
including the impact of the COVID-19 pandemic, 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 COVID-19 pandemic has increased the uncertainty of the
assumptions that the Directors use to forecast future liquidity.
The impact of the pandemic has impacted consumer confidence in the
wider economy, which has directly led to a fall in the Group's
revenue and impacted other areas of the Groups operations. The
Group's forecast indicates that the remaining GBP2m facility will
be drawn down in the next 12 months. The Directors have mitigating
courses of actions which are available to them to limit the impact
of the pandemic including operating cost initiatives, the faster
sell down of Group's large inventory holding and approaching
lenders for further short term funding.
The loan facilities are provided by the Group's controlling
party Phoenix S. G. Limited and are due for repayment in March
2023. The Group would have been in default of the financial
covenants at 31 March 2020, which would result in the loan becoming
payable on demand. On 27 March 2020 the Group sought and was
granted a waiver from Phoenix S.G. Limited for the default. The
forecast, taking into account of the implications on the Group's
demand of the COVID--19 pandemic, shows the Group will fail to meet
its financial covenants in March 2021.
The Directors recognise that Phoenix S. G. Limited has granted
the waiver of the default, stated that it intends to be a long term
investor, is the Group's controlling party with an interest of just
over 58%, granted a waiver of interest for the period March to July
2020, and has given no indication that it would withdraw its
support before March 2023 when the loan facility is repayable.
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 acquisitions, no value is
attributed in the consolidated 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 24 July 2020, the Company had been notified of the
following interests in 3% or more of its issued share capital:
Phoenix SG Limited 58.09%
Lombard Odier Asset Management
(Europe) Limited 4.94%
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.
Capital Structure
Details of the issued share capital are set out in note 20. The
Company has one class of share being Ordinary Shares with a par
value of 1p each. This entitles the holder to participate in
dividends in proportion to the number of shares held. The holder is
also entitled to, on a show of hands of shareholders present at a
general meeting in person or by proxy, one vote and upon a poll
each share is entitled to one vote.
Subject to the Companies (Jersey) Law and the provisions of the
Articles of Association, the Directors are generally and
unconditionally authorised to exercise all powers of the Company to
issue such number of Shares as the Company may from time to time by
Ordinary Resolution determine. The Annual General Meeting held in
2019 authorised the Directors to allot shares in the capital of the
Company within certain limits. A renewal of this authority will be
proposed at the forthcoming Annual General Meeting.
Articles of Association
In accordance with the Companies (Jersey) Law 1991, the
Company's Articles of Association may only be amended by a Special
Resolution of the Company's shareholders.
Political Donations
The Group made no political donations during the current or
previous year.
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 2020 and to the date of approval of the financial
statements.
Independent Auditors
Jeffreys Henry LLP 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:
18 Hill Street
St Helier,
Jersey
JE2 4UA
RK Purkis
Secretary
29 July 2020
S172 Directors statement
A director of a company must act in the way he or she considers,
in good faith, would likely promote the success of the company for
the benefit of the shareholders. In doing so, the director must
have regard, amongst other matters, to the following issues:
-- likely consequences of any decisions in the long term;
-- interests of the Group's employees;
-- need to foster the company's business relationships with suppliers/customers and others;
-- impact of the company's operations on the community and environment;
-- the Group's reputation for high standards of business conduct; and
-- need to act fairly between members of the Group.
Culture
Our values and leadership behaviours are a vital part of our
culture to ensure that through good governance, our conduct and
decision making we do the right thing for the business and our
stakeholders. The Board acknowledges that every decision it makes
may not necessarily result in a positive short-term outcome for all
of the Group's stakeholders. We believe in creating solid
foundations for the future, so there is a balance between short
term success and longer-term prosperity.
Shareholders
The primary mechanism for engaging with our shareholders is
through the Company's AGM and also through the publication of the
Group's financial results for the half year and full year. Further
information is disclosed in the Corporate Governance Statement on
pages 13 to 14. Shareholders showed their support for the Board and
its strategy by passing all resolutions at the AGM. We encourage
our shareholders to ask questions at the AGM and participate in
discussion about our performance and products.
Customers
Understanding our customers and what matters to them is key to
the success of the Group. We listen and talk to them at every
opportunity, including many opportunities to meet with them as we
attend shows around the world. In addition to direct contact we
have increased the flow of digital communications, particularly
during the COVID-19 "lockdown". Many of our philatelic customers
also contribute to our publications using their extensive knowledge
of the hobbies.
Suppliers/Vendors
We operate in a way that safeguards against unfair business
practices and encourages suppliers to adopt reasonable business
practices for mutual benefit. Many of our customers are also our
vendors, whether that is collectors or other collectible dealers.
Relationships are the key to building a successful collectibles
business and vendors are a valued partner in our success.
Employees
We have an experienced, skilled and dedicate workforce which we
recognize as a crucial asset of the Group. A key to the Group's
renewed success has been its engaged workforce. The Group's
Directors, alongside our management teams, work hard to provide a
positive working environment. During the COVID-19 pandemic the
Directors introduced enhanced flexible working. Regular update
emails have been circulated together with online briefings. It is
important for us to provide opportunities for all of our staff to
allow them to grow and achieve their potential.
Community and environment
We are proud to employ people in the communities that we
operate. As a Group we offer the collecting community the assurance
of the authenticity of our products based on our experts knowledge
which enable the collecting community to be confident in the
provenance of material that bears the Group's trading names. We use
environmentally friendly suppliers and products where possible.
Independent Auditor's Report to the Members of The Stanley
Gibbons Group Plc
Opinion
We have audited the financial statements of The Stanley Gibbons
Group Plc (the 'parent company') and its subsidiaries (the 'Group')
for the year ended 31 March 2020 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 notes to the
financial statements, including a summary of significant accounting
policies.
The financial reporting framework that has been applied in the
preparation of the financial statements is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the European Union, and, as in accordance with the provisions of
the Companies (Jersey) Law 1991.
In our opinion:
-- the financial statements give a true and fair view of the
state of the group's affairs as at 31 March 2020 and of the Group's
loss for the year then ended;
-- the Group's financial statements have been properly prepared
in accordance with IFRSs as adopted by the European Union;
-- the financial statements have been prepared in accordance
with the requirements of the Companies (Jersey) Law 1991.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs UK) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the company
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Material uncertainty related to going concern
We draw your attention to the primary statements within these
financial statements, which indicates that the group incurred a
loss after tax of GBP2,368,000 and had net cash outflows from
operating activities of GBP1,064,000 for the year ended 31 March
2020.
We further draw attention to note 2 in the financial statements,
which indicates that the Group will require draw down of the
remaining GBP2m funding in order to continue trading.
As detailed within note 2 and note 32, the Covid-19 pandemic has
increased the uncertainty of the assumptions that the Directors use
to forecast future liquidity. The impact of the pandemic has
impacted consumer confidence in the wider economy, which has
directly led to a fall in the Group's revenue and impacted other
areas of the Groups operations. It remains difficult to assess
reliably whether there will be any material disruption in the
future which could adversely impact the Group's forecast.
As stated in note 2, these events or conditions, along with the
other matters as set forth in note 2, indicate that a material
uncertainty exists that may cast doubt on the Group's ability to
continue as a going concern. Our opinion is not modified in respect
of this matter.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters. This is not a
complete list of all risks identified by our audit.
-- Carrying value of Goodwill and other intangible assets
-- Carrying value of inventories
-- Valuation of defined benefit pension schemes' obligations
-- Going concern assumption
These are explained in more detail below.
Key audit matter
Carrying value of Goodwill and other intangible assets
- The Group held a significant balance of goodwill and other
intangibles as at the year end, with a total carrying value of
GBP5,170,000 (2019: GBP5,600,000).
- Of these a number of balances relate to intangibles with an
indefinite estimated useful life, such as goodwill and publishing
rights and brands.
- The board undertakes impairment assessments annually for all
intangible assets, based on a number of assumptions and forecasts.
These require judgement and so are considered a key audit
matter
Carrying value of inventories
- The Group held a significant balance of inventories as at the
year end, with a total carrying value of GBP17,513,000 (2019:
GBP18,001,000).
- Inventory is held at the lower of cost and net realisable
value. The nature of the inventory, being highly specialist, with
large inventory turnover times, means that the net realisable value
is highly subjective.
- The Group employ experts to value their stock on a regular
basis which are used to establish the net realisable value. Given
the judgement required in arriving at a value, inventories are
considered a key audit matter.
Valuation of defined benefit pension schemes' obligations
- The Group had a net retirement benefit obligation as at the
year-end of GBP6,289,000 (2019: GBP5,523,000).
- The Group employed external, independent actuaries to provide
the value of the obligation for the two defined benefit schemes in
operation.
- The actuaries employed valuation techniques based on a number
of assumptions (which can be seen in note 24). Given the magnitude
of the obligation any change in the assumptions could a have
significant impact on the obligation and so are considered to be a
key audit matter.
Going concern assumption
- The Group is dependent upon its ability to generate sufficient
cash flows to meet continued operational costs and hence continue
trading.
- The Directors have considered the cash requirements of the
business for the following 12 months. As part of this process, they
have taken into account existing liabilities, along with detailed
operating cashflow requirements.
- The key assumptions that impact the conclusions are the levels
of future revenue, the ability to control the operating costs, and
draw down of the balance of the loan facility GBP2m.
- There are therefore inherent risks that the forecasts may
overstate future revenue or understate future costs, and that the
Group will not be able to operate within its cash resources and
continue to operate as a going concern.
- The Group needs to be generating sufficient revenues to
sustain its position. The going concern assumption is dependent on
future growth of the current business. No future capital raises
were being considered to maintain the business.
- The COVID-19 pandemic has created a great deal of uncertainty
regarding the future outlook of the business.
How our audit addressed the key audit matter
Our audit procedures: Carrying value of Goodwill and other
intangible assets
- We discussed with management, and undertook a full review of
the underlying assets, to establish if there was any indication of
impairment.
- We reviewed management's impairment workings such as forecasts
which included their approach and methodology.
- We considered whether management had exercised any bias in
assumptions used or the outputs produced in the forecasts
prepared.
- We considered the appropriateness of the Group's disclosures
in relation to intangibles in the financial statements
Our audit procedures: Carrying value of inventories
- We discussed with management to establish how values were
allocated to individual items of inventory.
- A sample of inventory items have been vouched to expert
valuations to ensure they were being held at the lower of cost and
net realisable value.
- Review of expert evidence undertaken to ensure assumptions
used are reasonable. The majority of valuations were based on
recent similar sales and so appear reasonable.
Our audit procedures: Valuation of defined benefit pension
schemes' obligations
- We undertook a review of the actuaries' qualifications to
ensure that they were suitably competent to undertake the
valuation.
- Work undertaken to ensure the actuaries were independent of the company.
- A review was undertaken on the assumptions used to calculate
the obligations, including with reference to industry benchmarking
and other data available.
Our audit procedures: Going concern assumption
- We obtained and reviewed the directors' assessment, including
challenging the liquidity position;
- We assessed the reliability of forecasts to date by agreeing
historical actuals to budgets, and challenging the current
forecasts;
- We agreed the assumed cash flows to the business plan, walked
through the business planning process and tested the central
assumptions and external data;
- We tested the clerical accuracy of management's forecast;
- We challenged management's forecast assumptions, including
reviewing the forecast revenue and the levels of costs that are
forecast;
- We assessed the sensitivities of the underlying assumptions;
- We considered the appropriateness of the Group's disclosures
in relation to going concern in the financial statements
- We have enquired with management as to the impact of COVID-19
and the steps being taken to limit the impact of the pandemic on
the business. We have reviewed forecasts and latest bank balances
to ensure the group can cover its overheads. The forecasts have
been stress tested by management and the assumptions have been
challenged. However, due to the risks outlined above, a material
uncertainty relating to going concern is highlighted in the
auditor's report.
Our application of materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating
the effect of misstatements, both individually and in aggregate on
the financial statements as a whole.
Based on our professional judgment, we determined materiality
for the financial statements as a whole as follows:
Group financial statements
Overall materiality GBP292,000 (2019: GBP250,000)
How we determined it 2% of revenue.
Rationale for benchmark applied We believe that revenue is the primary measure
used by the shareholders in assessing the performance
of the Group, and is a generally accepted auditing
benchmark.
For each component in the scope of our Group audit, we allocated
a materiality that is less than our overall Group materiality. The
range of materiality allocated across components was between
GBP69,500 and GBP223,400.
We agreed with the Audit Committee that we would report to them
misstatements identified during our audit above GBP14,600 (2019:
GBP12,500) as well as misstatements below those amounts that, in
our view, warranted reporting for qualitative reasons.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made
subjective judgments, for example in respect of significant
accounting estimates that involved making assumptions and
considering future events that are inherently uncertain. As in all
of our audits we also addressed the risk of management override of
internal controls, including evaluating whether there was evidence
of bias by the directors that represented a risk of material
misstatement due to fraud.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the
Group and the Company, the accounting processes and controls, and
the industry in which they operate.
The Group financial statements are a consolidation of numerous
reporting units, comprising the Group's operating businesses and
holding companies.
It is our responsibility for the direction, supervision and
performance of the group audit and we remain solely responsible for
the audit opinion.
We have audited all components within the Group, and no
unaudited components remain.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditor's
report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We
have nothing to report in this regard.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and
parent company and its environment obtained in the course of the
audit, we have not identified material misstatements in the
strategic report or the directors' report.
We have nothing to report in respect of the following matters in
relation to which the Companies (Jersey) Law 1991 requires us to
report to you if, in our opinion:
-- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities
statement set out on page 17, the directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control
as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group's and parent company's ability
to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
A further description of our responsibilities for the audit of
the consolidated financial statements is located on the Financial
Reporting Council's website at:
www.frc.or.uk/auditorsresponsibilities. This description forms part
of our audit report.
Other matters which we are required to address
We were re-appointed by the board of directors on 23 October
2019 to audit the financial statements for the period ending 31
March 2020. Our total uninterrupted period of engagement is two
years, covering the period ending 31 March 2020.
The audit has been designed to detect all material
irregularities, including fraud. We believe our tests are
sufficient in this regard. The engagement team has remained alert
to any indication of fraud or non-compliance with laws and
regulations throughout the audit.
The non-audit services prohibited by the FRC's Ethical Standard
were not provided to the group or the parent company and we remain
independent of the group and the parent company in conducting our
audit.
Our audit opinion is consistent with the additional report to
the audit committee.
Use of this report
This report is made solely to the company's members, as a body,
in accordance 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 auditor's 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.
Sanjay Parmar
Senior Statutory Auditor
For and on behalf of Jeffreys Henry LLP, statutory auditor
Finsgate
5-7 Cranwood Street
London
EC1V 9EE
United Kingdom
Date: 29 July 2020
Consolidated statement of comprehensive income
for the year ended 31 March 2020
Year ended Year ended
31 March 2020 31 March 2019
Notes GBP'000 GBP'000
--------------------------------------------------------------------- ----- ------------- -------------
Revenue 1, 3 13,175 11,677
Cost of sales (7,132) (5,711)
--------------------------------------------------------------------- ----- ------------- -------------
Gross Profit 6,043 5,966
--------------------------------------------------------------------- ----- ------------- -------------
Administrative expenses before defined benefit pension service
costs and exceptional operating costs (4,421) (5,320)
Defined benefit pension service costs 24 (126) (438)
Exceptional operating charges 5 353 (203)
--------------------------------------------------------------------- ----- ------------- -------------
Total administrative expenses (4,194) (5,961)
--------------------------------------------------------------------- ----- ------------- -------------
Selling and distribution expenses (3,480) (3,880)
--------------------------------------------------------------------- ----- ------------- -------------
Operating loss 4 (1,631) (3,875)
Finance income 113 45
Finance costs 25 (1,043) (542)
Share of net profits of joint venture 12 50 109
--------------------------------------------------------------------- ----- ------------- -------------
Loss before tax (2,511) (4,263)
Taxation 8 11 (36)
--------------------------------------------------------------------- ----- ------------- -------------
Loss from continuing operations (2,500) (4,299)
Profit from discontinued operations 27 132 74
--------------------------------------------------------------------- ----- ------------- -------------
Loss for the financial year (2,368) (4,225)
Other comprehensive income:
Amounts which may be subsequently reclassified to profit & loss
Exchange differences on translation of foreign operations 2 -
Amounts which will not be subsequently reclassified to profit & loss
Actuarial (losses)/gains recognised in the pension scheme 24 (1,153) (246)
Tax on actuarial (losses)/gains recognised in the pension scheme (95) (465)
--------------------------------------------------------------------- ----- ------------- -------------
Other comprehensive loss for the year net of tax (1,246) (711)
--------------------------------------------------------------------- ----- ------------- -------------
Total comprehensive loss for the year (3,614) (4,936)
--------------------------------------------------------------------- ----- ------------- -------------
Loss per share from continuing operations
Basic loss per Ordinary share 9 (0.59)p (1.01)p
Diluted loss per Ordinary share 9 (0.59)p (1.01)p
Profit per share from discontinued operations
Basic profit per Ordinary share 9 0.03p 0.02p
Diluted profit per Ordinary share 9 0.03p 0.02p
--------------------------------------------------------------------- ----- ------------- -------------
Total comprehensive loss is attributable to the owners of the
parent.
The notes on pages 36 to 79 are an integral part of these
consolidated financial statements.
Consolidated statement of financial position
as at 31 March 2020
31 March 2020 31 March 2019
Assets Notes GBP'000 GBP'000
------------------------------------------------------ ----- ------------- -------------
Non-current assets
Intangible assets 10 5,170 5,600
Property plant and equipment 11 2,376 2,099
Deferred tax asset 19 158 281
Right of use asset 28 7,762 -
Investments 12 39 95
------------------------------------------------------ ----- ------------- -------------
Total non-current assets 15,505 8,075
------------------------------------------------------ ----- ------------- -------------
Current Assets
Inventories 13 17,513 18,001
Trade and other receivables 14 1,957 2,187
Cash and cash equivalents (excluding bank overdrafts) 17 2,483 2,160
------------------------------------------------------ ----- ------------- -------------
Total current assets 21,953 22,348
------------------------------------------------------ ----- ------------- -------------
Total assets 37,458 30,423
------------------------------------------------------ ----- ------------- -------------
Current liabilities
Trade and other payables 16 4,238 6,040
Lease liability 28 810 -
------------------------------------------------------ ----- ------------- -------------
Total current liabilities 5,048 6,040
------------------------------------------------------ ----- ------------- -------------
Non-current liabilities
Borrowings 18 14,166 11,529
Lease liability 28 7,731 -
Retirement benefit obligations 24 6,289 5,523
Trade and other payables 16 507 -
------------------------------------------------------ ----- ------------- -------------
Total non-current liabilities 28,693 17,052
------------------------------------------------------ ----- ------------- -------------
Total liabilities 33,741 23,092
------------------------------------------------------ ----- ------------- -------------
Net assets 3,717 7,331
------------------------------------------------------ ----- ------------- -------------
Equity
Called up share capital 20 4,269 4,269
Share premium account 22 78,217 78,217
Share compensation reserve 22 2,122 2,148
Capital redemption reserve 22 38 38
Revaluation reserve 22 346 346
Retained earnings 22 (81,275) (77,687)
------------------------------------------------------ ----- ------------- -------------
Equity shareholders' funds 3,717 7,331
------------------------------------------------------ ----- ------------- -------------
The financial statements on pages 32 to 79 were approved by the
board of Directors on 29 July 2020, were authorised for issue on
that date and were signed on its behalf by:
A M Gee
G E Shircore
Directors
The notes on pages 36 to 79 are an integral part of these
consolidated financial statements.
Consolidated statement of changes in equity
for the year ended 31 March 2020
Called up Share Share Capital
share premium compensation Revaluation redemption Retained
capital account reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- --------- ------- ------------ ----------- ---------- -------- -------
At 1 April 2019 4,269 78,217 2,148 346 38 (77,687) 7,331
Loss for the financial year - - - - - (2,368) (2,368)
Amounts which may be subsequently
reclassified to profit & loss
Exchange differences on translation of
foreign operations - - - - - 2 2
Amounts which will not be subsequently
reclassified to
profit & loss
Remeasurement of pension scheme net of
deferred tax - - - - - (1,248) (1,248)
---------------------------------------- --------- ------- ------------ ----------- ---------- -------- -------
Total comprehensive loss - - - - - (3,614) (3,614)
Cost of share options - - (26) - - 26 -
---------------------------------------- --------- ------- ------------ ----------- ---------- -------- -------
At 31 March 2020 4,269 78,217 2,122 346 38 (81,275) 3,717
---------------------------------------- --------- ------- ------------ ----------- ---------- -------- -------
At 1 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
Exchange differences on translation - - - - - - -
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)
Share issue - - - - - - -
Cost of share options - - 84 - - - 84
---------------------------------------- --------- ------- ------------ ----------- ---------- -------- -------
At 31 March 2019 4,269 78,217 2,148 346 38 (77,687) 7,331
---------------------------------------- --------- ------- ------------ ----------- ---------- -------- -------
The notes on pages 36 to 79 are an integral part of these
consolidated financial statements.
Consolidated statement of cash flows
for the year ended 31 March 2020
Year ended Year ended
31 March 2020 31 March 2019
Notes GBP'000 GBP'000
Cash outflow from operating activities 23 (67) (3,361)
Interest paid (1,043) (542)
Taxes received 46 -
-------------------------------------------------------- ----- ------------- -------------
Net cash outflow from operating activities (1,064) (3,903)
-------------------------------------------------------- ----- ------------- -------------
Investing activities
Purchase of property, plant and equipment (541) (1)
Purchase of intangible assets (computer software) (155) (124)
Investment in joint venture 56 18
Proceeds from sale of property plant & equipment 123 -
Interest received 113 45
-------------------------------------------------------- ----- ------------- -------------
Net cash (decrease)/generated from investing activities (404) (62)
-------------------------------------------------------- ----- ------------- -------------
Financing activities
Principal elements of lease payments (845) -
Proceeds from new borrowing 2,636 1,529
-------------------------------------------------------- ----- ------------- -------------
Net cash generated from financing activities 1,791 1,529
-------------------------------------------------------- ----- ------------- -------------
Net (decrease)/increase in cash and cash equivalents 323 (2,436)
-------------------------------------------------------- ----- ------------- -------------
Cash and cash equivalents at start of year 2,160 4,596
-------------------------------------------------------- ----- ------------- -------------
Cash and cash equivalents at end of year 17 2,483 2,160
-------------------------------------------------------- ----- ------------- -------------
The notes on pages 36 to 79 are an integral part of these
consolidated financial statements.
Notes to the Financial Statements
for the year ended 31 March 2020
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's shares are admitted to 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 Companies (Jersey) 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 Company's functional
currency.
Amounts are rounded to the nearest thousand, unless otherwise
stated.
New and amended statements adopted by the Group
This year, the IFRS 16 standard on leases came into effect,
which had a material effect on the Group. The Group had to change
accounting policies as a result of adopting IFRS 16. The Group
elected to adopt the new rules retrospectively but not adjust prior
periods (see note 28).
The following new standards, amendments to standards and
interpretations have been issued, but are not effective for the
financial period beginning 1 April 2019 and have not been early
adopted. The Directors anticipate that the adoption of these
standard and the interpretations in future periods will have no
material impact, unless disclosed below, on the financial
statements of the Company.
The new standards include:
IFRS 3 Business Combinations (1)
IFRS 17 Insurance Contracts (2)
IAS 1 Presentation of Financial Statements (1)
Accounting Policies, Changes in Accounting
IAS 8 Estimates and Errors (1)
Improvements Annual Improvements 2015-2017 Cycle1: Amendments
to IFRSs to 2 IFRSs and 2 IASs
Revised conceptual framework for Financial
reporting
1 Effective for annual periods beginning on or after 1 January 2020
2 Effective for annual periods beginning on or after 1 January 2021
The directors anticipate that the adoption of these standards
and interpretations in future periods will have no material effect
on the financial statements of the group.
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
consolidated 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 intangible assets with
indefinite useful economic lives are undertaken annually at the
financial year end or more frequently if events or changes in
circumstances indicate that they might be impaired. 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
Goodwill
Goodwill is measured as the excess of the costs of a business
combination over the total acquisition date fair value of the
identifiable assets, liabilities and contingent liabilities
acquired. 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.
Goodwill on acquisitions of subsidiaries is included in
intangible assets. Goodwill is not amortised but it is tested for
impairment annually, or more frequently if events or changes in
circumstances indicate that it might be impaired, and is carried at
cost less accumulated impairment losses. Gains and losses on the
disposal of an entity include the carrying amount of goodwill
relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose
of impairment testing. The allocation is made to those
cash-generating units or groups of cash-generating units that are
expected to benefit from the business combination in which the
goodwill arose. The units or groups of units are identified at the
lowest level at which goodwill is monitored for internal management
purposes, being the operating segments (note 3).
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.
Computer software
Costs associated with maintaining software programs are
recognised as an expense as incurred. In accordance with IAS 38,
purchased computer software that will generate economic benefit
beyond one year is capitalised as an intangible asset.
Development costs that are directly attributable to the design
and testing of identifiable and unique software products controlled
by the group are recognised as intangible assets when management
intends to use the software for its business operations, the
development costs can be reliably measured and that it is
technically feasible for the Group to complete the software so that
it will be available for use. The Group would also only recognise
the software as an intangible asset if it can be demonstrated that
the software will generate probable future economic benefits.
Directly attributable costs that are capitalized, as part of the
software, include employee costs and an appropriate portion of
relevant overheads. These development costs are recorded as an
intangible asset.
Capitalised software costs are amortised over its expected
useful economic life. For purchased computer software assets
impairment is charged to the consolidated statement of
comprehensive income on a straight-line basis over four years. The
purchase and development of software related to the Group's
websites and Digital Asset Management system is capitalised and
amortised over its expected useful economic life of between three
and ten years on a straight line basis.
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.
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. They are subsequently carried at
cost less accumulated amortisation and 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, with
the revaluation amount being recognised in other comprehensive
income.
Leased assets
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.
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.
These items 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.
Financial Instruments
Financial assets and financial liabilities are recognised on the
consolidated statement of financial position when the Group becomes
a party to the contractual provisions of the instrument.
Financial assets
Trade and other receivables and assets held for sale are
measured at initial recognition at fair value and are subsequently
measured at amortised cost using the effective interest method less
provision for impairment. 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
consolidated 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 Group 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
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. Fees paid on the establishment of loan
facilities are recognised as transaction costs of the loan to the
extent that it is probable that some or all of the facility will be
drawn down. In this case, the fee is deferred until the draw down
occurs. To the extent there is no evidence that it is probable that
some or all of the facility will be drawn down, the fee is
capitalised as a prepayment and amortised over the period of the
facility to which it relates.
Borrowings are removed from the consolidated statement of
financial position when the obligation specified in the contract is
discharged, cancelled or expired. The difference between the
carrying amount of the financial liability that has been
extinguished or transferred to another party and the consideration
paid, including any non-cash assets transferred or liabilities
assumed, is recognised in profit or loss as other income or finance
costs.
Borrowings are classified as current liabilities unless the
Group has an unconditional right to defer settlement of the
liability for at least 12 months after the reporting period.
Any investment income earned on the temporary investment of
specific borrowings pending their expenditure on qualifying assets
is deducted from the borrowing costs eligible for
capitalisation.
Other borrowing costs are expensed in the period in which they
are incurred.
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.
Taxation
The tax expense represents the sum of the tax currently payable
and any deferred tax movements.
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 consolidated
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
of foreign operations are recognised in the consolidated statement
of comprehensive income as other comprehensive income which may be
reclassified to profit and loss.
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 consolidated 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 consolidated 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 or 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 employee benefits
expense with a corresponding increase in equity. The total amount
to be apportioned is determined by reference to the fair value of
the options granted including the Group's share price, the impact
of the group's trading performance, the grantee remaining an
employee over a specified time period and any impact of non-vesting
conditions.
The total expense is recognised over the vesting period, which
is the period over which all of the specified vesting conditions
are to be satisfied. At the end of each period, the Group revises
its estimates of the number of options that are expected to vest
based on the Group's profitability and the number of remaining
employees in each grant. It recognises the impact of the revision
of original estimates, if any, in profit and loss, with a
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 recognition
Revenue comprises the fair value of the consideration received
or receivable in relation to the proceeds of the sale of goods and
services provided during the year. Revenue is shown net of
value-added tax, returns, rebates and discounts and after
eliminating sales within the group. When a contract is entered into
with a customer, the contract value is allocated to specific
performance obligations. The criteria of allocating performance
obligations for different revenue streams are discussed below.
Revenue is recognised when these performance obligations are
satisfied. Standard payment terms are that payments are required
within 30 days of invoicing. The Group does not consider that any
contract assets or liabilities arise from the revenue recognition
policy.
The directors consider that there are four revenue generating
segments, being the sale of philatelic goods, publishing goods,
coins and medals, and rental income. Revenue from the sale of goods
are recognised in two separate ways, depending on transaction.
Sale of goods - retail
The Group sells assets from its retail premises, by mail order
and online. 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 and the Group has delivered or the customer has
collected the goods. The Group sells philatelic and numismatic
goods to customers with a guarantee of authenticity of inventory
sold. The Group has been doing this for a number of years and has
details of returns. The returns the Group receives under this
guarantee are minimal and as a result no provision is currently
made. The performance obligation of the sale of retail goods is
considered satisfied when substantially all the risks and rewards
of ownership of goods have transferred to the customer. The
contract value is derived from the selling price of the assets
sold.
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 (vendor's
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 vendor's
commissions. Therefore, both buyer's premium and vendor's
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.
The performance obligation for the sale of auction goods is
considered satisfied when substantially all the risks and rewards
of ownership of goods have transferred to the customer. The
contract value is derived from the buyer's premium adjusted for by
the selling price of the assets sold.
Further detail of the Group's revenue streams can be found in
the Business Review on pages 7 to 12.
Rental income
The Group sublets some of its properties that it occupies. Lease
income from leases where the group is a lessor is recognised in the
Income Statement on a straight-line basis over the lease term. The
Directors consider this in line with when the Company's performance
obligation is satisfied. The contract value is derived from gross
rental income over the terms of the leases.
Provisions
Provisions are recognised when the Group has a present legal or
constructive obligation to transfer economic resources as a result
of past events and the amount can be reliably estimated. 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.
Joint ventures
The Group accounts for joint ventures using the equity method of
accounting. The initial investment is recognised at cost and
adjusted thereafter to recognise the Group's share of
post-acquisition profits or losses and the Group's share of the
movements in other comprehensive income in the entity. Dividends
received or receivable from the joint ventures are recognised as a
reduction in the carrying amount of the investment. When the
Group's share of losses in an equity-accounted investment equals or
exceeds its interest in the entity the Group does not recognise
further losses, unless it incurs obligations or make payments on
behalf of the entity.
The carrying amount of equity-accounted investment is tested for
impairment in accordance with the Group's impairment policy.
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.
COVID-19 Pandemic and "lockdowns"
With the declaration that COVID-19 was a pandemic on 11 March
2020 and the UK "lockdown" being announced on 24 March 2020 falling
before the 31 March 2020 the Directors have adopted that COVID-19
pandemic is a current period event. As a result the Directors have
considered the impact of the COVID-19 (see note 32) pandemic on all
areas of judgment that impact the current accounting period
including all the areas of judgment included in note 2. Where
appropriate to do so the Directors have made adjustments to
estimates as a result of COVID-19 as a post balance sheet adjusting
event and considered this in all areas requiring review of
impairment including property, plant and equipment, intangibles
assets, trade receivables and inventory carrying values. The impact
of the pandemic has also been considered in the preparation of the
forecast for the review of the going concern assumptions.
Going concern
The Group's forecasts shows 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,
including the impact of the COVID-19 pandemic, 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 COVID-19 pandemic has increased the uncertainty of the
assumptions that the Directors use to forecast future liquidity.
The impact of the pandemic has impacted consumer confidence in the
wider economy, which has directly led to a fall in the Group's
revenue and impacted other areas of the Groups operations. The
Group's forecast indicates that the remaining GBP2m facility will
be drawn down in the next 12 months. The Directors have mitigating
courses of actions which are available to them to limit the impact
of the pandemic including operating cost initiatives, the faster
sell down of Group's large inventory holding and approaching
lenders for further short term funding.
The loan facilities are provided by the Group's controlling
party Phoenix S. G. Limited and are due for repayment in March
2023. The Group would have been in default of the financial
covenants at 31 March 2020, which would result in the loan becoming
payable on demand. On 27 March 2020 the Group sought and was
granted a waiver from Phoenix S.G. Limited for the default. The
forecast, taking into account of the implications on the Group's
demand of the COVID--19 pandemic, shows the Group will fail to meet
its financial covenants in March 2021.
The Directors recognise that Phoenix S. G. Limited has granted
the waiver of the default, stated that it intends to be a long term
investor, is the Group's controlling party with an interest of just
over 58%, granted a waiver of interest for the period March to July
2020, and has given no indication that it would withdraw its
support before March 2023 when the loan facility is repayable.
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.
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 24. 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 consolidated 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
buyer's 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 is 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.
Goodwill impairment
Determining whether goodwill is impaired requires an estimation
of the value in use of the cash-generating units to which goodwill
has been allocated. The value in use calculation requires the
Directors to estimate the future cash flows expected to arise from
the cash-generating units and a suitable discount rate in order to
calculate present value. The carrying amount of goodwill at 31
March 2020 was GBP2,310,000 (2019: GBP2,310,000). There was no
impairment provision made in the year (2019: GBPnil). Details of
the carrying value of goodwill and the impairment losses are set
out in note 10.
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, re-assessing useful life of
the assets and the discount rate used.
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.
-- Philatelic trading and retail operations;
-- Publishing and philatelic accessories;
-- Coins and medals; and
-- Legacy Interiors property & legal
Legacy Interiors includes continuing items from the discontinued
Interiors operation, specifically the leasehold property in New
York and legal matters related to the Mallett entities. The
activities, products and services of the reportable segments are
detailed in the Business Review on pages 7 to 12.
Coins & Legacy
Philatelic Publishing medals interiors Unallocated Total
Segmental income statement GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ---------- ---------- ------- --------- ----------- --------
Year ended 31 March 2020
Sale of goods 5,493 1,501 3,425 - - 10,419
Sale of services (inc Commissions) 944 403 - - - 1,347
Other income 22 42 - 1,345 - 1,409
----------------------------------- ---------- ---------- ------- --------- ----------- --------
Revenue 6,459 1,946 3,425 1,345 - 13,175
Operating costs (6,549) (2,045) (2,872) (829) (2,814) (15,109)
Exceptional (197) (162) (4) 691 25 353
Net finance cost - - - (693) (237) (930)
----------------------------------- ---------- ---------- ------- --------- ----------- --------
Profit/(loss) before tax (287) (261) 549 514 (3,026) (2,511)
Tax 9 - 2 - - 11
----------------------------------- ---------- ---------- ------- --------- ----------- --------
Profit/(loss) for the year
from continuing operations (278) (261) 551 514 (3,026) (2,500)
----------------------------------- ---------- ---------- ------- --------- ----------- --------
Segmental balance sheet
As at 31 March 2020
Total assets 21,435 250 8,888 4,745 2,140 37,458
Total liabilities (14,522) - (575) (4,351) (14,293) (33,741)
----------------------------------- ---------- ---------- ------- --------- ----------- --------
Net assets/(liabilities) 6,913 250 8,313 394 (12,153) 3,717
----------------------------------- ---------- ---------- ------- --------- ----------- --------
Other segmental items
Depreciation 4 - - 127 - 131
Amortisation of intangible items 331 - 14 - 240 585
Capital expenditure 149 22 - - 525 696
----------------------------------- ---------- ---------- ------- --------- ----------- --------
Coins & Legacy
Philatelic Publishing medals interiors Unallocated Total
Segmental income statement GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ---------- ---------- ------- --------- ----------- --------
Year ended 31 March 2019
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 - - (53) 61 (211) (203)
Net finance cost - - - (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)
----------------------------------- ---------- ---------- ------- --------- ----------- --------
Segmental balance sheet
As at 31 March 2019
Total assets 20,004 - 8,464 1,719 236 30,423
Total liabilities (9,388) - (752) (939) (12,013) (23,092)
----------------------------------- ---------- ---------- ------- --------- ----------- --------
Net assets/(liabilities) 10,616 - 7,712 780 (11,777) 7,331
----------------------------------- ---------- ---------- ------- --------- ----------- --------
Other segmental items
Depreciation 334 - 1 131 37 503
Amortisation of intangible items 281 - - - 220 501
Capital expenditure - 124 - - 1 125
----------------------------------- ---------- ---------- ------- --------- ----------- --------
Geographical information
Analysis of revenue by origin and destination
Year ended Year ended Year ended Year ended
31 March 2020 31 March 2020 31 March 2019 31 March 2019
Sales by Sales by Sales by Sales by
destination origin destination origin
GBP'000 GBP'000 GBP'000 GBP'000
------------------ ------------- ------------- ------------- -------------
Channel Islands 35 - 172 -
United Kingdom 7,806 12,018 7,130 10,553
Europe 1,290 - 796 -
North America 2,593 1,157 2,331 1,124
Asia 952 - 743 -
Rest of the World 499 - 505 -
------------------ ------------- ------------- ------------- -------------
13,175 13,175 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.
There were no customers in either 2020 or 2019 from which the
Group earned more than 10% of its revenues.
Property, plant and equipment of GBP1,432,000 was held in the UK
(2019: GBP978,000 in the UK) and GBP944,000 (2019: GBP1,121,000)
was held in the USA. No assets were held in other countries.
Intangible assets of GBP5,170,000 (2019: GBP5,600,000) are all
held in the UK. Rights-of-use assets of GBP3,501,000 are held in
the USA with GBP4,261,000 being held in the UK.
4 Operating loss
The following table shows the material costs by nature charged
to cost of sales, administrative expenses and selling and
distribution costs for the continuing operations for year ending 31
March 2020 and the comparative figures for the prior year.
Year ended Year ended
31 March 2020 31 March 2019
GBP'000 GBP'000
---------------------------------------------------------------------------------------- ------------- -------------
Cost of inventories recognised as an expense 7,132 5,711
Employee benefit costs expensed (see note 7) 2,903 3,625
Depreciation of property plant and equipment 131 503
Amortisation of intangible assets 585 501
Depreciation of IFRS16 Right of Use Asset 890 -
Advertising & marketing expenses 496 466
Distribution & transport costs 171 153
Operating lease charges - leased premises 50 1,254
IT operating expenses 554 537
Other property operating costs 819 803
Impairment of trade receivables 15 13
Other administrative expenses 375 1,254
Fees payable to the Group's auditor for the audit of the Group's annual accounts,
including
subsidiaries 65 65
Fees payable to the Group's auditor for other advisory services 13 10
Other professional fees 607 658
---------------------------------------------------------------------------------------- ------------- -------------
14,806 15,553
---------------------------------------------------------------------------------------- ------------- -------------
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 of the continuing operation for
the year ended 31 March 2020 and the comparative figures for the
prior year.
Year ended Year ended
31 March 2020 31 March 2019
GBP'000 GBP'000
-------------------------------------------- -------------- --------------
Stock provisions 286 8
Settlement of legal case (850) -
Accelerated impairment of intangible assets 36 -
Loss on disposal of tangible fixed assets 42 -
Impairment of receivables 155 -
Dilapidations on Strand property (26) -
Disposal of leased property - 18
Exceptional legal fees - 39
Legacy wind-down costs of overseas entities 4 138
-------------------------------------------- -------------- --------------
(353) 203
-------------------------------------------- -------------- --------------
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, net of
fees and release of pension accruals relating to one of the
directors.
6 Directors' emoluments
The remuneration paid to the Directors of The Stanley Gibbons
Group plc was:
Year ended Year ended
31 March 2020 31 March 2019
GBP'000 GBP'000
----------------------------------------------------------------------------- -------------- --------------
Fees - -
Salaries 253 256
----------------------------------------------------------------------------- -------------- --------------
Short-term employee benefits 253 256
Post-employment benefits 12 8
Share-based payment - 25
----------------------------------------------------------------------------- -------------- --------------
Key management personnel compensation 265 289
----------------------------------------------------------------------------- -------------- --------------
Number of Directors included in the defined benefit pension scheme (note 24) - -
----------------------------------------------------------------------------- -------------- --------------
The detailed numerical analysis of Directors' remuneration is
included in the Report on Remuneration on page 16. The charge to
profit in respect of share options and awards issued to the
Directors was GBPnil (2019: GBP25,000).
During the year the Group made payments into the personal
pension schemes of A Gee. Total cost of these pension contributions
to the Group were GBP12,000 (2019: GBP8,000 into the scheme of
then-current director A Cook).
Details of share options forfeited by Directors during the
period are disclosed in the Report on Remuneration on page 17.
Management considers that the key management personnel comprise
the Directors.
GE Shircore's ultimate employer is Phoenix Asset Management
Partners Limited which is the investment manager to Phoenix SG
Limited which holds 248,000,000 Ordinary shares representing 58.09%
of the Company's issued share capital. Mr Shircore received no
remuneration from the Group.
7 Employee information
The average number of persons (including executive Directors)
employed by the Group during the period was 71 (2019: 74).
Year ended Year ended
------------------------------
31 March 2020 31 March 2019
------------------------------ ------------- -------------
Management and Administration 23 30
Sales 23 22
Production and Editorial 22 21
Marketing 3 1
------------------------------ ------------- -------------
71 74
------------------------------ ------------- -------------
Staff costs relating to those persons during the year amounted
to:
Year ended Year ended
31 March 2020 31 March 2019
GBP'000 GBP'000
------------------------------------------------- ------------- -------------
Wages and salaries 2,451 2,714
Social security costs 252 278
Pension costs - defined benefit scheme (note 24) 126 438
Pension costs - defined contribution scheme 74 111
Share option cost - 84
------------------------------------------------- ------------- -------------
2,903 3,625
------------------------------------------------- ------------- -------------
8 Taxation
UK corporation tax and overseas tax on profits for the year
Year ended Year ended
31 March 2020 31 March 2019
Current tax: GBP'000 GBP'000
-------------------------------------------------------- -------------- --------------
UK corporation tax at 19% - -
Overseas tax - -
Deferred taxation (note 19) 28 36
-------------------------------------------------------- -------------- --------------
Current year tax charge/(credit) 28 36
Adjustment relating to earlier periods (39) -
-------------------------------------------------------- -------------- --------------
Tax charge/(credit) (11) 36
-------------------------------------------------------- -------------- --------------
Income tax attributable to:
Profit from continuing operations (11) 36
Profit from discontinued operations - -
-------------------------------------------------------- -------------- --------------
(11) 36
------------------------------------------------------- -------------- --------------
The Company is registered in the Channel Islands and has
subsidiaries in the Channel Islands, the UK, Hong Kong 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 2020 31 March 2019
% %
----------------------------------------------- ------------- -------------
The standard rate of corporation tax in the UK 19.0 19.0
Effects of:
Disallowable items (0.1) (2.9)
Overseas profits taxable at lower rates (1.6) (1.1)
Losses for which no deferred asset recognised (21.9) (12.0)
Capital amortisation and provisions (1.9) (1.0)
Other permanent differences 6.9 (2.9)
----------------------------------------------- ------------- ---------------
Effective rate of corporation tax for year 0.4 (0.9)
----------------------------------------------- ------------- -------------
The main rate of corporation tax in the UK was 19% for financial
years starting on or after 1 April 2017. The Group has recognized a
deferred tax asset of GBP158,000 (2019: GBP152,000) relating to
unutilised tax losses. At the year end the usable tax losses within
the Group are GBP19,916,000 (2019: GBP16,698,000)
9 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.
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 2020 31 March 2019
----------------------------------------------------------------- ------------- ---------------
Weighted average number of ordinary shares in issue (No.) 426,916,643 426,916,643
Dilutive potential ordinary shares: Employee share options (No.) - -
----------------------------------------------------------------- ------------- ---------------
Continuing operations
Loss after tax (GBP) (2,500,000) (4,299,000)
Pension service cost (net of tax) 102,000 355,000
Cost of share options (net of tax) - 68,000
Amortisation of customer lists (net of tax) 194,000 178,000
Exceptional operating (income)/costs (net of tax) (442,000) 168,000
----------------------------------------------------------------- ------------- -------------
Adjusted loss after tax (GBP) (2,646,000) (3,530,000)
----------------------------------------------------------------- ------------- -------------
Basic loss per share - pence per share (p) (0.59)p (1.01)p
----------------------------------------------------------------- ------------- -------------
Diluted loss per share - pence per share (p) (0.59)p (1.01)p
----------------------------------------------------------------- ------------- -------------
Adjusted loss per share - pence per share (p) (0.62)p (0.83)p
----------------------------------------------------------------- ------------- -------------
Adjusted diluted loss per share - pence per share (p) (0.62)p (0.83)p
----------------------------------------------------------------- ------------- -------------
Discontinued operations
Profit after tax (GBP) 132,000 74,000
----------------------------------------------------------------- ------------- -------------
Basic earnings per share - pence per share (p) 0.03p 0.02p
----------------------------------------------------------------- ------------- -------------
Diluted earnings per share - pence per share (p) 0.03p 0.02p
----------------------------------------------------------------- ------------- -------------
Net assets per share, as disclosed in the financial highlights,
are calculated using the net assets per the consolidated statement
of financial position divided by the number of shares at 31 March
2020 per note 20.
10 Intangible assets
Publishing Computer Customer Brands &
Goodwill rights Software Lists trademarks Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- -------- ---------- -------- -------- ---------- -------
Cost
At 1 April 2018 16,332 19 2,542 2,207 2,528 23,628
Additions - internally developed - - 124 - - 124
---------------------------------------- -------- ---------- -------- -------- ---------- -------
At 31 March 2019 16,332 19 2,666 2,207 2,528 23,752
---------------------------------------- -------- ---------- -------- -------- ---------- -------
Additions - internally developed - - 155 - - 155
---------------------------------------- -------- ---------- -------- -------- ---------- -------
At 31 March 2020 16,332 19 2,821 2,207 2,528 23,907
---------------------------------------- -------- ---------- -------- -------- ---------- -------
Accumulated amortisation and impairment
At 1 April 2018 14,022 19 1,923 1,413 274 17,651
Amortisation charge - - 281 220 - 501
---------------------------------------- -------- ---------- -------- -------- ---------- -------
At 31 March 2019 14,022 19 2,204 1,633 274 18,152
---------------------------------------- -------- ---------- -------- -------- ---------- -------
Amortisation charge - - 345 240 - 585
---------------------------------------- -------- ---------- -------- -------- ---------- -------
At 31 March 2020 14,022 19 2,549 1,873 274 18,737
---------------------------------------- -------- ---------- -------- -------- ---------- -------
Net book value
At 31 March 2020 2,310 - 272 334 2,254 5,170
---------------------------------------- -------- ---------- -------- -------- ---------- -------
At 31 March 2019 2,310 - 462 574 2,254 5,600
---------------------------------------- -------- ---------- -------- -------- ---------- -------
The carrying value of goodwill of GBP2,310,000 related to the
acquisition of the Noble Investments Group (GBP2,200,000 - original
cost GBP15,746,000), the acquisition of the magazine 'Philatelic
Exporter' (GBP87,000 - carrying value and original cost), the album
producer 'Frank Godden' (GBP23,000 - carrying value and original
cost).
The carrying value of brands and trademarks of GBP2,254,000 is
the value of the brands purchased in the acquisition of Noble
Investment Group (GBP2,391,000 - original cost).
The Group carries out a review at each year end date to
establish the economic value of each asset in the portfolio. If the
economic value of the asset is believed to be lower than the
carrying value, the carrying value is reduced accordingly. The
economic value is based on estimated future income potential
considering risks and external information on the likely impact on
market demand.
Goodwill and brands have 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 8.8% (2019: 7.8%), 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 0% and 3% (2019: 1% to 3%) over the period in question.
These assumptions are based on past experiences of management. The
forecasts have also been adapted to take account on the trading
trends seen during the "lockdown" for the COVID-19 pandemic.
11 Property, plant and equipment
Fixtures,
Freehold Leasehold fittings, Vehicles,
Reference land and property and tools and plant and
collection buildings improvements equipment machinery Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ---------- --------- ------------ --------- --------- -------
Cost
At 1 April 2018 1,195 162 4,422 444 876 7,099
Additions - - - 1 - 1
Disposals - - (313) (71) (19) (403)
Exchange differences - - 198 - - 198
------------------------- ---------- --------- ------------ --------- --------- -------
At 31 March 2019 1,195 162 4,307 374 857 6,895
------------------------- ---------- --------- ------------ --------- --------- -------
Additions - - 525 16 - 541
Disposals - (162) - (33) - (195)
Exchange differences - - - - - -
------------------------- ---------- --------- ------------ --------- --------- -------
At 31 March 2020 1,195 - 4,832 357 857 7,241
------------------------- ---------- --------- ------------ --------- --------- -------
Accumulated depreciation
At 1 April 2018 380 - 2,880 433 871 4,564
Charge for the year - - 475 24 4 503
Exchange differences - - 127 - - 127
Depreciation on disposal - - (292) (84) (22) (398)
------------------------- ---------- --------- ------------ --------- --------- -------
At 31 March 2019 380 - 3,190 373 853 4,796
------------------------- ---------- --------- ------------ --------- --------- -------
Charge for the year - - 127 - 4 131
Exchange differences - - (29) - - (29)
Depreciation on disposal - - - (33) - (33)
------------------------- ---------- --------- ------------ --------- --------- -------
At 31 March 2020 380 - 3,288 340 857 4,865
------------------------- ---------- --------- ------------ --------- --------- -------
Net book value
At 31 March 2020 815 - 1,544 17 - 2,376
------------------------- ---------- --------- ------------ --------- --------- -------
At 31 March 2019 815 162 1,117 1 4 2,099
------------------------- ---------- --------- ------------ --------- --------- -------
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 for the collection in London and in July 2017 by D R
Seaby Philatelic Consultant for the Ringwood collection. The basis
of the revaluation used was replacement value. The surplus of
GBP70,000 was transferred to the revaluation reserve.
The revalued element of the reference collection is GBP436,000
(2019: GBP436,000). All other fixed assets are stated at historic
cost less depreciation. If the reference collection had not been
revalued it would have been included at a net book value based on
historic cost of GBP379,000 (2019: GBP379,000).
During the year the Group sold its freehold property in Axbridge
Somerset for GBP123,000. After fees related to the sale a loss of
GBP42,000 was incurred.
Fully written down Property, Plant and Equipment with a cost of
GBP3,672,000 (2019: GBP3,602,000) remains in use by the Group.
12 Investments
On 6 January 2017, the Group launched a corporate joint-venture
with St James's Auctions, the well-established numismatic auction
house, named Baldwin's of St James's Limited. Baldwin's of St
James's Limited auctions coins, medals, medallions, bank notes,
tokens and other related items owned by the parties or by 3rd
parties wishing to auction material. The Group owns 50 A shares,
50% of the total issued A ordinary shares in Baldwin's of St
James's for a consideration of GBP50. The joint venture is
accounted for under the equity method as the Group does not have
control of the entity. Baldwin's of St James's is incorporated in
England and trades from a location in London. The company's
accounting date is 30 April 2020, as per the joint venture
agreement.
The investment in the joint venture is shown below:
31 March 31 March
2020 2019
GBP'000 GBP'000
------------------------------------------ -------- --------
As at 1 April 95 113
Share of profit retained by joint venture 50 109
Dividend paid by joint venture (106) (127)
------------------------------------------ -------- --------
39 95
------------------------------------------ -------- --------
The share of profit retained by the joint venture is an estimate
based on the management accounts at 30 April 2020. Based on the
audited financial statement at 30 April 2019 Baldwin's of St
James's generated GBP1,298,000 (2018: GBP1,400,000) of revenue and
GBP232,000 (2018: GBP277,000) of profit. The company had net assets
of GBP100 with current assets of GBP2,780,601 and current
liabilities of GBP2,780,501.
13 Inventories
31 March 2020 31 March 2019
GBP'000 GBP'000
------------------------------------ ------------- -------------
Work in progress 1,777 1,086
Finished goods and goods for resale 15,736 16,915
------------------------------------ ------------- -------------
17,513 18,001
------------------------------------ ------------- -------------
As at 31 March 2020 GBPnil (2019 - GBP76,000) of the above
inventories were owned by third parties. As at 31 March 2020
GBP17,513,000 (2019: GBP17,858,000) of the above inventories were
part of the security given in relation to the borrowings detailed
in note 18.
At 31 March 2020 the carrying value of the inventory held at
fair value was GBP3,258,000 (2019: GBP3,928,000).
On 10th September 2018 the Group announced that its subsidiary,
Stanley Gibbons Limited ("SGL") had entered in to an agreement with
Phoenix S. G. Limited to acquire approximately 1,900 items, for an
initial consideration of GBP5.20m, which is payable in cash to
Phoenix S. G. Limited 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 S. G. Limited 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 S. G. Limited.
To the extent that all of the inventory is sold and the appropriate
payments have been made by SGL to Phoenix S. G. Limited 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 S. G. Limited and no further consideration will
be due.
Notwithstanding the fact that the agreement was written as a
sale from Phoenix S.G. Limited 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 S.G. Limited 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 31 March 2020 of the
initial items totaling GBP5.20m, GBP4,623,000 (2019: GBP5,060,000)
remained unsold.
On 21st February 2020 the Group announced that its subsidiary,
Stanley Gibbons Limited ("SGL") had entered in to an agreement with
Phoenix S. G. Limited to acquire approximately 780 items, for an
initial consideration of GBP1.07m, which is payable in cash to
Phoenix S. G. Limited 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. 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 S. G. Limited. To the extent that all of the inventory is
sold and the appropriate payments have been made by SGL to Phoenix
S. G. Limited 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 S. G. Limited and no
further consideration will be due.
Notwithstanding the fact that the agreement was written as a
sale from Phoenix S.G. Limited 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 S.G. Limited 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 31 March 2020 of the
initial items totaling GBP1.07m, GBP1,070,000 remained unsold.
The cost of inventory recognised as an expense in the year was
GBP7,132,000 (2019: GBP5,711,000)
14 Current trade and other receivables
31 March 31 March
2020 2019
GBP'000 GBP'000
------------------------------- -------- --------
Trade receivables 1,480 1,446
Provision for impairment (437) (724)
------------------------------- -------- --------
Net trade receivables 1,043 722
Other receivables 321 797
Prepayments and accrued income 593 668
------------------------------- -------- --------
1,957 2,187
------------------------------- -------- --------
Trade receivables are amounts due from customers for goods sold
or services performed in the ordinary course of business. Other
receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. If
collection of the amounts is expected in one year or less they are
classified as current assets. If not, they are presented as
non-current assets. Trade receivables are generally due for
settlement within 30 days and therefore are all classified as
current. The Group's impairment and other accounting policies for
trade and other receivables are outlined in note 1.
15 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
Relating to debt over 6 months past due
31 March 31 March
2020 2019
GBP'000 GBP'000
----------------------------- -------- --------
Opening provision 724 593
Impairments in the year 73 235
Amounts utilised in the year (360) (104)
----------------------------- -------- --------
Closing provision 437 724
----------------------------- -------- --------
As at 31 March 2020, excluding balances due under extended
payment terms and those provided for by the impairment provision,
GBP526,000 (2019: GBP210,000) of trade receivables, were past their
due settlement date but not impaired. The ageing analysis of these
trade receivables is as follows:
31 March 2020 31 March 2019
GBP'000 GBP'000
------------------------ ------------- -------------
Up to 3 months past due 110 138
3 to 6 months past due 186 52
Over 6 months past due 230 20
------------------------ ------------- -------------
526 210
------------------------ ------------- -------------
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.
16 Trade and other payables
31 March 2020 31 March 2019
GBP'000 GBP'000
-------------------------------- ------------- -------------
Trade payables 2,888 2,918
Other payables 624 344
Other taxes and social security 45 189
Accruals and deferred income 681 2,589
-------------------------------- ------------- -------------
4,238 6,040
-------------------------------- ------------- -------------
These amounts represent liabilities for goods and services
provided to the Group prior to the end of financial year which are
unpaid. The amounts are unsecured and are usually paid within 30
days of recognition. Trade and other payables are presented as
current liabilities unless payment is not due within 12 months
after the reporting period.
An amount of trade payables of GBP507,000 (2019: GBPnil) is not
due within 12 months and has been classified as a long term
liability. The Group has agreed extended credit terms for a
collection that it purchased in December 2020 to be paid by
installment, over the next 24 months. The profile of payment is
disclosed in note 25.
17 Cash and cash equivalents
31 March 2020 31 March 2019
GBP'000 GBP'000
-------------------------- ------------- -------------
Cash at bank and in hand 2,483 2,160
Bank overdrafts - -
-------------------------- ------------- -------------
Cash and cash equivalents 2,483 2,160
-------------------------- ------------- -------------
18 Borrowings
31 March 2020 31 March 2019
GBP'000 GBP'000
---------------------------- ------------- -------------
Long term liabilities
Loan - Facility A 11,045 10,518
Loan - Facility C 3,121 1,011
---------------------------- ------------- -------------
Total long term liabilities 14,166 11,529
---------------------------- ------------- -------------
The Facility A loan outstanding at 31 March 2020 of GBP11.0m is
due to Phoenix S. G. Limited, the controlling party of the Group.
Interest on the loan is 5% per annum added to the loan. The loan is
due for repayment in March 2023, provided there is no event of
default in the meantime.
On the 21 December 2018 the Group announced it had agreed an
additional GBP5m of funding (Facility C) in the form of an
extension to the existing loan facility with Phoenix S. G. Limited.
The terms of the extension are the same as the existing facility
and the intention is that it will be drawn down by the Group in
several tranches as needed.
On 21 February 2020 the Group signed a deed of release for both
the Company and its subsidiaries that are guarantors to the loan
facility and confirmation with its lender Phoenix S.G. Limited that
releases and discharges Stanley Gibbons (Guernsey) Limited (in
liquidation) of its obligations and future obligations and
liabilities under the loan agreement.
As a result of Stanley Gibbons (Guernsey) Limited no longer
being a guarantor of the Loan Agreement, the Group was no longer in
default of its loan facility.
In relation to the Phoenix S. G. Limited loan, the Group is
required to satisfy financial conditions relating to cashflow and
EBITDA. Commencing for the year ended 31 March 2020, the cashflow
and EBITDA each need to exceed GBP1.5m, increasing to, GBP2.0m for
the year to 2021 and GBP2.5m for the year to 2022.
On 27 March 2020 Phoenix S. G. Limited issued a waiver letter to
the Group for the failure to satisfy the financial conditions and
as a result at 31 March 2020 the Group was not in default and the
loan has been classified as a long term liability.
During the year the Group paid arrangement facility fees of
GBPnil (2018: GBPnil) for the above facilities. The borrowings are
secured by a full fixed and floating charge debenture over the core
assets of the group.
19 Deferred tax assets and liabilities
Assets Liabilities
------------------------- -----------------------
31 March 31 March 31 March 31 March
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- -------- --------------- ------------- --------
Defined benefit pension scheme (note
24) - 95 - -
Other timing differences - 34 - -
Unutilised tax losses 158 152 - -
------------------------------------- -------- --------------- ------------- --------
Full provision 158 281 - -
------------------------------------- -------- --------------- ------------- --------
(Charge)/credit
to Comprehensive
31 March Profit and 31 March
2019 loss income 2020
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- -------- --------------- ------------- --------
Defined benefit pension scheme (note
24) 95 - (95) -
Other timing differences 34 (34) - -
Unutilised tax losses 152 6 - 158
------------------------------------- -------- --------------- ------------- --------
Full provision 281 (28) (95) 158
------------------------------------- -------- --------------- ------------- --------
The Directors reviewed the carrying value of the deferred tax
asset in relation to the defined benefit pension scheme. Based on
the prior trading history and taking in to account the anticipated
profits in foreseeable future, the carrying value of the asset was
reduced to GBPnil (2019: GBP95,000), resulting in a charge to other
comprehensive income of GBP95,000 (2019: GBP465,000).
20 Called up share capital
31 March 2020 31 March 2019
GBP'000 GBP'000
----------------------------------------------------------- ------------- -------------
Authorised
500,000,000 (2019: 500,000,000) Ordinary Shares of 1p each 5,000 5,000
Allotted, issued and fully paid (all equity):
426,916,643 (2019: 426,916,643) Ordinary Shares of 1p each 4,269 4,269
----------------------------------------------------------- ------------- -------------
The Company has one class of share being Ordinary Shares with a
par value of 1p each. This entitles the holder to participate in
dividends and repayment of capital in proportion to the number of
shares held. The holder is also entitled to, on a show of hands of
shareholders present at a meeting in person or by proxy, one vote
and upon a poll each share is entitled to one vote.
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
consolidated statement of financial position. Notes 21 and 22
provide details on equity. Details of loans at the year-end are
disclosed on page 11 in the Business Review and further disclosure
can be found in note 18 and note 25. The external capital
requirements imposed on the Group in relation to borrowings are
disclosed in note 18. Further detail on capital risk management can
be found in the Directors' Report on pages 17 to 23.
21 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 Group Share Option Plan 2010 are exercisable between the
third and tenth anniversaries of the date of grant.
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
was achieved.
Options issued in 2016 and 2018 were granted at market value and
are not subject to performance condition.
All options are settled with the issue of equity.
Excluding the Directors' share options disclosed in the Report
on Remuneration on page 17, detailed below are options which have
been granted to employees together with the periods in which they
may be exercised:
Earliest Exercise Number at Number at
exercise Expiry price 31 March Granted in Forfeited in 31 March
Date of grant date date (1p shares) 2019 year year 2020
-------------- --------- --------- ----------- --------- ---------- ------------ ---------
06/5/11 06/5/14 05/5/21 179.0p 34,999 - - 34,999
05/10/16 05/10/19 05/10/26 11.0p 8,385,000 - (100,000) 8,285,000
03/04/18 03/04/21 03/04/28 4.4p 500,000 - (500,000) -
-------------- --------- --------- ----------- --------- ---------- ------------ ---------
8,919,999 - (600,000) 8,319,999
---------------------------------- ----------- --------- ---------- ------------ ---------
The weighted average remaining contractual life of options
outstanding at 31 March 2020 is 4.7 years (2019: 5.7 years)
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
2020 2020 2019 2019
Average exercise Options Average exercise Options
price per price per
share (thousands) share (thousands)
----------------- ---------------- ----------- ---------------- -----------
At 1 April 12p 11,320 12p 13,062
Granted - - 4p 500
Forfeited/lapsed 6p (600) 12p (2,242)
Exercised - - - -
----------------- ---------------- ----------- ---------------- -----------
At 31 March 12p 10,720 12p 11,320
----------------- ---------------- ----------- ---------------- -----------
Share options outstanding at the end of the period have the
following expiry date and exercise price:
Stochastic and Black-Scholes models have been used to value the
awards. The awards issued and still outstanding in the year ended
31 March 2020 are set out below:
Date of grant 06/05/2011 05/10/2016
---------------------------------------- ---------- ----------
Number of options granted 593,710 14,950,000
Weighted average fair value at date of
grant (per share) 48.45p 5.20p
Weighted average share price on date of
grant 175p 11.25p
Weighted average exercise price 179p 11.00p
Expected term (from date of grant) 6.5 years 6.5 years
Expected volatility 36.6% 46.77%
Expected dividend yield 3.15% 0.00%
Risk-free interest rate 2.67% 0.42%
---------------------------------------- ---------- ----------
Expected volatility was determined by calculating historical
volatility of the Group's share price over a minimum 10 year
period.
22 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 represent the accumulated profits not
distributed to shareholders.
23 Cash outflows from operating activities
Year ended Year ended
31 March 31 March
2020 2019
GBP'000 GBP'000
--------------------------------------------------- ---------- ----------
Operating loss (including discontinued operations) (1,499) (3,802)
Loss on sale of property, plant and equipment 38 -
Depreciation of tangible assets 131 503
Amortisation of intangible assets 585 501
Depreciation on IFRS16 Right of Use Asset 890 -
Decrease in provisions (387) (52)
Income from joint venture 50 109
Cost of share options - 84
Decrease in inventories 488 302
Decrease in trade and other receivables 236 1,424
Decrease in trade and other payables (less
deferred consideration) (561) (2,364)
Net exchange differences (38) (66)
--------------------------------------------------- ---------- ----------
Cash outflows from operating activities (67) (3,361)
--------------------------------------------------- ---------- ----------
24 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. The scheme
is exposed to the following risks:
- Financial risks from changing economic conditions e.g. inflation and interest rate risks
- Longevity, i.e. the risk of benefits costing more due to members living longer
- Additional liabilities arising from the unknown factors such
as ineffective Scheme documentation or Regulatory change.
Under UK pensions legislation the Group subsidiary is
responsible for funding the Scheme benefits and for paying
contributions to make up any shortfall between the assets and the
liabilities of the Scheme. The Scheme liabilities are assessed at
least every three years by the Scheme Actuary. It is the Group's
subsidiary funding policy to annually contribute an amount agreed
between the Group's subsidiary and the Trustees of the Scheme in
accordance with UK legislative requirements if a funding deficit
exists. The amount of contributions required depends on the
assumptions used by the actuary and can therefore be volatile
between actuarial valuations. The volatility of contribution
amounts can be to the detriment of the Group's cashflows. The
volatility of the Scheme's liabilities against these assets held
impacts on the Group's balance sheet.
The assets of the scheme are held under the provisions of a
trust deed and are invested in a range of different asset classes
including equities, a diversified growth fund, property, corporate
bonds, absolute return bond funds and liability driven investment
funds. These funds are managed by different investment managers and
are all held on the Mobius Life Investment Platform. This
investment policy mitigates the actuarial risks that the scheme is
exposed to such as longevity, interest rate, inflation and
investment risks.
A full actuarial valuation was carried out at 30 June 2018. 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 2020 are based on
the results of the actuarial valuation as at 30 June 2018.
Scheme assets are stated at their market value at 31 March 2020.
The Group paid GBP282,240 (payable monthly) in the year to 31 March
2020. From 1 April 2020, the Group pays contributions of GBP296,352
per annum (payable monthly), increasing at 5% per annum, until 1
November 2029, as noted in the Recovery Plan dated 29 March 2019,
agreed as part of the actuarial valuation at 30 June 2018.
Following the recently published legal judgment in the UK the
scheme has to equalize Guaranteed Minimum Pensions built up after
17 May 1990. An estimate of the likely additional reserve was
provided in the accounts at 31 March 2019.
(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 scheme is exposed to the following risks:
- Financial risks from changing economic conditions e.g. inflation and interest rate risks
- Longevity, i.e. the risk of benefits costing more due to members living longer
- Additional liabilities arising from the unknown factors such
as ineffective Scheme documentation or Regulatory change.
A full actuarial valuation was carried out as at 30 June 2018
and the funding of the plan is agreed between the Company and the
trustees in line with those requirements.
Under UK pensions legislation the Group subsidiary is
responsible for funding the Scheme benefits and for paying
contributions to make up any shortfall between the assets and the
liabilities of the Scheme. The Scheme liabilities are assessed at
least every three years by the Scheme Actuary. It is the Group's
subsidiary funding policy to annually contribute an amount agreed
between the Group's subsidiary and the Trustees of the Scheme in
accordance with UK legislative requirements if a funding deficit
exists. The amount of contributions required depends on the
assumptions used by the actuary and can therefore be volatile
between actuarial valuations. The volatility of contribution
amounts can be to the detriment of the Group's cashflows. The
volatility of the Scheme's liabilities against these assets held
impacts on the Group's balance sheet.
The Group paid annual contributions of GBP231,233 in the year to
31 March 2020. From 1 April 2020, the Group will pay contributions
of GBP224,910 p.a. (payable monthly), increasing by 5% p.a. until 1
May 2028, in line with the
Recovery Plan dated 20 March 2019. In addition to this, the
Company also pays administration expenses and levies to the Pension
Protection Fund.
The IAS19 disclosures for the year to 31 March 2020 are based on
the actuarial valuation as at 30 June 2018.
Following the recently published legal judgment in the UK the
scheme has to equalize Guaranteed Minimum Pensions built up after
17 May 1990. An estimate of the likely additional reserve was
provided in the accounts at 31 March 2019.
The amounts recognised in the statement of financial position
for both schemes are as follows:
31 March 2020 31 March 2019
GBP'000 GBP'000
------------------------------------------------------------------------------- ------------- ---------------
Present value of funded obligation (20,298) (19,612)
Fair value of scheme assets 14,009 14,089
------------------------------------------------------------------------------- ------------- -------------
Net obligation (6,289) (5,523)
Deferred tax asset (see note 19) - 95
------------------------------------------------------------------------------- ------------- -------------
Retirement benefit obligation (6,289) (5,428)
------------------------------------------------------------------------------- ------------- -------------
GBP'000 GBP'000
------------------------------------------------------------------------------- ------------- -------------
Cumulative amount of actuarial losses recognised in other comprehensive income (3,850) (2,697)
------------------------------------------------------------------------------- ------------- -------------
The amounts recognised in other comprehensive income are as
follows:
31 March 2020 31 March 2019
GBP'000 GBP'000
---------------------------------------------------------------------------- ------------- -------------
Actuarial gains/(losses) on scheme obligations from financial assumptions 518 (812)
Actuarial gains/(losses) on scheme obligations from demographic assumptions (53) 66
Actuarial gains/(losses) on scheme obligations from experience (1,352) 739
Actuarial (losses)/gains on fair value of scheme assets (266) (239)
---------------------------------------------------------------------------- ------------- -------------
Remeasurement (losses)/gains (1,153) (246)
---------------------------------------------------------------------------- ------------- -------------
Changes in the present value of the defined benefit obligation
are as follows:
31 March 31 March
2020 2019
GBP'000 GBP'000
--------------------------------------------------- -------- --------
Present value of obligations at start of year 19,612 19,685
Current service cost - 5
Interest cost 462 500
Contributions by employees - -
Remeasurement losses/(gains) on scheme obligations 870 8
Charges paid - (5)
Benefits paid (646) (881)
Allowance for GMP equalisation - 300
--------------------------------------------------- -------- --------
Present value of obligations at end of year 20,298 19,612
--------------------------------------------------- -------- --------
Changes in the fair value of scheme assets are as follows:
31 March 31 March
2020 2019
GBP'000 GBP'000
------------------------------------------------ -------- --------
Fair value of scheme assets at start of year 14,089 14,356
Assets acquired at fair value - -
Expected return on scheme assets 336 369
Actuarial losses on fair value of scheme assets (283) (239)
Contributions by employees - -
Contributions by company 513 489
Charges paid - (5)
Benefits paid (646) (881)
------------------------------------------------ -------- --------
Fair value of scheme assets at end of year 14,009 14,089
------------------------------------------------ -------- --------
The Group currently expects to contribute GBP521,000 to its
defined benefit schemes in the financial year to 31 March 2021.
The amounts recognised in the statement of comprehensive income
for the period are as follows:
31 March 2020 31 March 2019
GBP'000 GBP'000
----------------------------------------- ------------- -------------
Current service cost - 5
Interest cost on net benefit obligations 126 133
Allowance for GMP equalisation - 300
----------------------------------------- ------------- -------------
Total included in employee benefit
expense 126 438
----------------------------------------- ------------- -------------
Actual return on scheme assets 53 129
----------------------------------------- ------------- -------------
The major categories of scheme assets as a percentage of the
fair value of total scheme assets are as follows:
31 March 2020 31 March 2019
% %
---------------------------------------- ------------- -------------
Assets with a quoted market price in an
active market
Equities 16.7% 15.3%
Corporate bonds 7.0% 12.3%
LLDI 18.7% 9.1%
Multi Asset Credit 22.7% 18.4%
Diversified growth funds 12.0% 22.8%
Gilts/cash 1.0% 1.1%
Other
Insurance policies 13.4% 13.0%
Property 8.5% 7.1%
Insured Annuitants 10% 1.0%
---------------------------------------- ------------- -------------
Principal actuarial assumptions at the reporting date:
31 March 2020 31 March 2019
----------------------------------------- ------------- -------------
Future salary increases 1.81% 2.30%
Price inflation - RPI 2.81% 3.30%
Price inflation - CPI 1.81% 2.30%
Revaluation of deferred pensions 1.81% 2.30%
Pension Increase - Non Directors
Pre 1988 GMP 0.00% 0.00%
Post 1988 GMP 3.00% 3.00%
Pre 1997 0.00% 0.00%
Post 1997 1.81% 2.30%
Post 2005 1.81% 2.30%
Pension Increase - Directors
Pre 1997 3.00% 3.00%
Post 1997 3.00% 3.30%
Post 2005 3.00% 3.30%
Discount rate 2.24% 2.40%
Equities (long term expected rate of
return) 2.24% 2.40%
Corporate bonds (long term expected
rate of return) 2.24% 2.40%
Fixed interest gilts (long term expected
rate of return) 2.24% 2.40%
Cash (long term expected rate of return) 2.24% 2.40%
----------------------------------------- ------------- -------------
The mortality assumptions adopted at 31 March 2020 imply the
following life expectations:
The Stanley Gibbons Holdings PLC Pension and Assurance
Scheme
31 March 2020 31 March 2019
In years In years
----------------------------------- ------------- -------------
Retiring at 65 at reporting date
Male 21.8 21.7
Female 24.1 23.9
----------------------------------- ------------- -------------
Retiring at 65 at reporting date +
20 years
Male 22.8 22.7
Female 25.2 25.0
----------------------------------- ------------- -------------
The Mallett Retirement Benefits Scheme
31 March 2020 31 March 2019
In years In years
----------------------------------- ------------- -------------
Retiring at 65 at reporting date
Male 21.8 21.7
Female 24.1 23.9
----------------------------------- ------------- -------------
Retiring at 65 at reporting date +
20 years
Male 22.8 22.7
Female 25.2 25.0
----------------------------------- ------------- -------------
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 PLC Pension and Assurance
Scheme
Change in
the benefit (Deficit)
Obligation - % GBP'000s
---------------------------------------------------------------- -------------- ---------
Assumption as per IAS 19 disclosures n/a (3,468)
0.25% p.a. reduction in discount rate 3.3% (3,582)
0.25% increase in CPI inflation (1.9%) (3,402)
Pensions payable for 1 year longer due to mortality assumptions 3.4% (3,586)
---------------------------------------------------------------- -------------- ---------
The Mallett Retirement Benefits Scheme
Change in
the benefit (Deficit)
Obligation - % GBP'000s
--------------------------------------- -------------- ---------
Assumption as per IAS 19 disclosures n/a (2,821)
0.25% p.a. reduction in discount rate 4.3% (2,943)
0.25% increase in inflation 2.1% (2,763)
Pensions payable for 1 year longer due
to mortality assumptions* 3.9% (2,932)
--------------------------------------- -------------- ---------
* The change to the mortality assumption increase member's life
expectancy by assuming each member was born one year later and
therefore has the life expectancy of someone aged one year
younger.
The sensitivities show the effects of a change in the
significant actuarial assumptions used to measure the Scheme's
Defined Benefit Obligation. Limitations to the sensitivities are in
line with the limitations on actuarial assumptions, being that they
are estimates.
The average duration of the Schemes Obligation is approximately
14 years.
The weighted average duration of the Stanley Gibbons Holdings
Plc Pension and Assurance Scheme and the Mallett Retirement Benefit
scheme is 15.5 years.
Amounts for the current and previous four periods are as
follows:
31 March 31 March 31 March 31 March 31 March
2020 2019 2018 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------- -------- -------- -------- -------- ----------
Present value of defined benefit obligations (20,298) (19,612) (19,685) (20,390) (18,232)
Fair value of scheme assets 14,009 14,089 14,356 14,304 13,010
--------------------------------------------- -------- -------- -------- -------- ----------
Deficit (6,289) (5,523) (5,329) (6,086) (5,222)
--------------------------------------------- -------- -------- -------- -------- ----------
Experience adjustments on scheme assets (283) (239) (2) 895 (527)
--------------------------------------------- -------- -------- -------- -------- ----------
Effects of changes in the demographic
and
financial assumptions in the underlying
scheme
liabilities
- Amount 482 (746) 199 (2,456) 659
- Percentage of benefit obligation 2.4% -3.8% 1.0% -12.0% 3.6%
--------------------------------------------- -------- -------- -------- -------- ----------
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 GBP3,775,000 at 31 March 2019 to GBP3,468,000 at 31
March 2020 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
increased from GBP1,749,000 at 31 March 2019 to GBP2,821,000 at 31
March 2020 principally arising from changes in scheme data and a
change from the approximate methodology used in previous
disclosures.
25 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 loan facilities and various items such as trade
receivables and trade payables which arise directly from
operations. The Group financed its operations until 16 March 2018
with a bank loan and overdrafts. Following the refinancing the
Group is financed by a fixed interest loan provided by Phoenix SG
Limited, details of the loan facility can be found in note 18. 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 Business Review on pages 7 to 12.
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 2020 31 March 2019
GBP'000 GBP'000
------------------------------------------------- ------------- -------------
Financial assets - Loans and receivables
Trade and other receivables 1,364 1,519
Cash at bank 2,483 2,160
------------------------------------------------- ------------- -------------
3,847 3,679
------------------------------------------------- ------------- -------------
Financial liabilities measured at amortised cost
Trade and other payables 4,745 6,040
Borrowings 14,166 11,529
Lease liability 8,541 -
------------------------------------------------- ------------- -------------
27,452 17,569
------------------------------------------------- ------------- -------------
(23,605) (13,890)
------------------------------------------------- ------------- -------------
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 consolidated 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 consolidated statement of
financial position dates under review are of a good credit quality,
including those past due settlement dates. See note 15 for more
information on financial assets that are past due settlement
dates.
Interest rate risk
The Group finances its operations through a combination of loans
(see note 18), and through the generation of cash from operating
activities.
The finance charge of the Group for the year to 31 March 2020 of
GBP1,043,000 (2019: GBP542,000) comprised loan interest &
charges of GBP636,000 (2019: GBP512,000), and lease finance charges
of GBP401,000 (2019: GBPnil).
The loans provided by Phoenix SG Limited from 16 March 2018 are
a fixed interest loan (5% per annum).
Foreign exchange risk
The Group had no material exposure to foreign exchange risk in
the year ended 31 March 2020. The Group did have assets and
liabilities denominated in foreign currencies relating to USA
activities of Mallett Inc. This was deemed as a material exposure
to foreign currency risk for the Group. Liabilities that arise 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.
After the discontinuation of the Mallett trading business the
only significant foreign asset is a lease on a New York property.
The property is sub-let and generates income to cover associated
costs and therefore the foreign exchange risk is minimal.
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 current cash balance to meet liabilities as
they fall due. The forecasts are dependent upon the liabilities 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 these liabilities increased
or trading deteriorated the Group may require access to additional
liquidity.
The Group's financial liabilities have contractual maturities
(representing undiscounted contractual cash flows) as summarised
below:
Within Between Between
6 months 6 and 12 months 1 and 5 years Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------- -------- --------------- ------------- -------
At 31 March 2020
Trade and other payables 4,023 215 507 4,745
Borrowings - - 14,166 14,166
Lease liability 403 407 7,731 8,541
------------------------- -------- --------------- ------------- -------
4,426 622 22,404 27,452
------------------------- -------- --------------- ------------- -------
At 31 March 2019
Trade and other payables 6,040 - - 6,040
Borrowings - - 11,529 11,529
------------------------- -------- --------------- ------------- -------
6,040 - 11,529 17,569
------------------------- -------- --------------- ------------- -------
Included within trade and other payables is an amount of GBPnil
(2019: GBP155,000) relating to previous customers of certain
investment plans which will be payable if the customer chooses not
to hold their collectibles or reinvest in other collectibles.
26 Identity of related parties
The Company has a controlling related party relationship with
its subsidiary companies (see note 30). The Group also has a
related party relationship with its Directors.
Transactions between parent and subsidiaries
The parent company charged management fees of GBP550,000 in the
year to 31 March 2020 (2019: GBP835,000) to its subsidiaries.
Transactions between controlling party, parent and
subsidiaries
On 10th September 2018 the Group announced that its subsidiary,
Stanley Gibbons Limited had entered into an agreement with Phoenix
S.G. Limited (the Group's controlling party) to acquire
approximately 1,900 items, for an initial consideration of
GBP5.20m, which is payable in cash to Phoenix SG Limited 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. (see note
13)
On 21st February 2020 the Group announced that its subsidiary,
Stanley Gibbons Limited had entered into an agreement with Phoenix
S.G. Limited to acquire approximately 780 items, for an initial
consideration of GBP1.07m, which is payable in cash to Phoenix SG
Limited 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. (see note 13)
Details of the loan facility between the Group, its subsidiaries
and Phoenix S. G. Limited are disclosed in note 18.
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.
G E Shircore was appointed a Director on 19 March 2018 and Chief
Executive Officer on 4 June 2018. He does not receive any
remuneration from the Group. Phoenix Asset Management Partners
Limited, Mr Shircore's ultimate employer, is the investment manager
to Phoenix S.G. Limited which holds 248,000,000 Ordinary shares
representing 58.09% of the Company's issued share capital.
Year ended 31 March 2020
H G Wilson, the Group's Chairman, made purchases during the year
to the value of GBP68,530; he had a sales ledger balance of
GBP9,390. Mr Wilson is owed an amount of GBP4,023 and the net
amount outstanding at 31 March 2020 of GBP5,367. The net amount
outstanding at the date of this report was GBPnil.
G E Shircore made purchases of GBP768 during the year. There
amount outstanding was GBPnil at 31 March 2020.
M West, a non-Executive director, purchased GBP277 of goods from
the Group during the year. No amount was outstanding at 31 March
2020.
Year ended 31 March 2019
H G Wilson made purchases during the year to the value of
GBP49,052; he had a sales ledger balance of GBP11,333 at the year
end.
27 Discontinued Operations
During the year ended 31 March 2018 the company began to dispose
of various assets of its Interiors division resulting in the
cessation of trading in this segment. As a result the financial
information relating to the Interiors division has been reported as
a discontinued operation and that information is presented in the
note below.
Financial performance and cash flow information
During the year ended 31 March 2020, the Group sold down further
some of the remaining inventory balance from the Interiors
division, which offset some of the costs associated in closing the
remainder of the division. The financial performance is shown
below:
31 March 31 March
2020 2019
GBP'000 GBP'000
---------------------------------- -------- --------
Revenue 180 250
Expenses (48) (176)
---------------------------------- -------- --------
Profit/(loss) before income tax 132 74
Income tax credit - -
---------------------------------- -------- --------
Profit/(loss) after income tax of
discontinued operation 132 74
Gain on disposal of assets - -
---------------------------------- -------- --------
Profit/(loss) from
discontinued operation 132 74
---------------------------------- -------- --------
Net cash outflow from
operating activities 132 74
Net cash - sales proceeds - -
---------------------------------- -------- --------
Net decrease in cash from
discontinued operations 132 74
---------------------------------- -------- --------
28 Leases
Right of use assets and lease liability
This note explains the impact of the adoption of IFRS 16 Leases
on the Group's financial statements and the new accounting policies
that have been applied from 1 April 2019 can be found in note 1.
The Group has adopted IFRS 16 retrospectively from 1 April 2019,
but has not restated comparatives for the year ended 31 March 2019,
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.
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%, the discount rate on the Group's borrowings. In the Directors
opinion this is the discount rate that the Group would obtain any
further borrowings, as this is the discount rate applied to the
Phoenix loan (see note 18). Phoenix has secured these borrowings
against the Group's assets. Without further security available the
Group would be unlikely to secure funding from other sources and
therefore the Directors believe the 5% rate applied is the most
appropriate basis on which to base the IFRS 16 calculations.
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.
31 March 31 March
2020 2019
GBP'000 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 6,425
Additions to leases in period 2,962 -
Lease payments (846) -
--------------------------------------------------------------------------- -------- --------
Lease liability recognized in statement of financial position 8,541 6,425
--------------------------------------------------------------------------- -------- --------
Of which:
--------------------------------------------------------------------------- -------- --------
Current lease liabilities 810 591
Non-current lease liabilities 7,731 5,834
--------------------------------------------------------------------------- -------- --------
8,541 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 March 1 April
2020 2019
GBP'000 GBP'000
----------- -------- -------
Properties 7,762 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
0LX, on that date a liability and right-of-use 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
Impact on segment disclosures and earnings per share
Adjusted EBITDA, segment assets and segment liabilities for
March 2020 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 Segment. Segment
EBITDA assets liabilities
GBP'000 GBP'000 GBP'000
----------- -------- -------- -----------
Philatelic 333 2,733 2,713
Publishing 29 45 40
Interiors 861 4,984 5,788
----------- -------- -------- -----------
1,223 7,762 8,541
----------- -------- -------- -----------
Right of use asset depreciation of GBP890,000 was charged in the
year. As a result of the adoption of IFRS 16, Earnings per share
decreased by 0.04p per share for the year to 31 March 2020.
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.
Minimal future rental payments for sub-let properties
The Group sub-lets two of its properties in Pall Mall, London
and Madison Avenue, New York. At 31 March 2020 the Group had future
minimum rental payments receivable under non-cancellable operating
leases as follows:
Land and Land and
Buildings Buildings
31 March 31 March
2020 2019
Receivable: GBP'000 GBP'000
--------------------------- --------- ---------
Within one year 1,230 1,200
Between two and five years 4,623 4,664
In five years or more 2,339 3,527
--------------------------- --------- ---------
8,192 9,391
--------------------------- --------- ---------
29 Contingent liabilities
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 a significant contingent liability, approximately
GBP54,150,000 at 31 March 2017 (the last accounting date prior to
administration), relating to these guarantees and undertakings,
which have 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 and the winding up
process is continuing but has been delayed by the COVID-19
pandemic.
30 Principal subsidiaries
The principal subsidiary undertakings of the Company, all of
which are 100% owned are as follows:
Country Description of
Name of incorporation shares held Principal activity
---------------------------- ----------------- ----------------------- --------------------------------
Stanley Gibbons (Guernsey) Philatelic dealer and dealer
Limited Guernsey Ordinary GBP1 shares in
(in liquidation)** memorabilia
Stanley Gibbons (Jersey) Jersey Ordinary GBP1 shares Philatelic dealer and dealer
Limited in memorabilia
Stanley Gibbons Holdings
Limited England Ordinary GBP0.25 shares Holding Company
Stanley Gibbons Limited* England Ordinary GBP1 shares Philatelic dealer and retailer,
and dealer in memorabilia
Stanley Gibbons (Asia) Philatelic dealer and dealer
Limited Hong Kong Ordinary HK$1 shares in
memorabilia
Minden House Limited Jersey Ordinary GBP1 shares First day cover dealer
Concept Court Limited England Ordinary GBP1 shares First day cover dealer
Murray Payne Limited England Ordinary GBP1 shares Philatelic dealer and auctioneer
Noble Investments (UK)
Limited England Ordinary 1p shares Holding Company
AH Baldwin & Sons Limited* England Ordinary GBP1 shares Dealer in rare coins and
other collectibles
Auctioneer of works on
Greenfield Auctions Limited* England Ordinary GBP1 shares paper
The Fine Art Auction Group
Limited* England Ordinary GBP0.45 shares Auctioneer and valuer of
Preferred GBP1 shares art, antiques and collectibles
Preferred GBP0.25
shares
Deferred GBP0.25 shares
Dover Street Limited* England Ordinary GBP0.05 shares Holding company
(formerly Mallett Limited)
Milsom Street Limited*
(formerly England Ordinary GBP1 shares Antique dealers
Mallett & Son (Antiques)
Limited)
Mallett, Inc* United States Common stock US$1 Antique dealers
Stanley Gibbons Finance
Limited* England Ordinary GBP1 shares Loan finance
---------------------------- ----------------- ----------------------- --------------------------------
* Indirect holding
** Not controlled due to being in liquidation
31 Controlling party
In the opinion of the directors the controlling party of the
Group after the 19 March 2018 was Phoenix UK Fund Limited and after
27 March 2018 was Phoenix S. G. Limited. There was no controlling
party prior to 19 March 2018.
32 Impact of COVID-19 pandemic and global "lockdown" post
balance sheet date
The COVID-19 pandemic impact on the Group has been significant.
As a result of the "lockdown" imposed in the UK, the Group's retail
premises in London were closed. A considerable part of our
interaction with customers is face-to-face so the closing of our
premises and the cancellation of a number of exhibitions and shows
significantly reduced our opportunities to meet with both customers
and vendors.
The "lockdowns" also resulted in our employees in both our
office locations, London and Hampshire, having to work from
home.
To mitigate the impact of the pandemic, the Group adapted its
marketing and selling strategy for its dealing and publications
operations to focus more on distance selling through its webstore
and direct communication with its customers. With the flexible
approach of its employees the Group has improved it's on-line and
distance selling revenue considerably during the first part of
2020. Our dealing business has a significant inventory from which
to trade and has also been able to continue to source material from
on-line auctions and its regular dealer network.
However, the impact on the business' retail store and auctions
business has been significant. Our retail store remained closed
from 24 March to 29 June 2020 and apart from one "stay at home"
on-line auction no other auctions will be held until the end of
July.
Our sales by nature are volatile as we have a small number of
large value transactions where timings can impact on reporting, but
there is no doubt that the pandemic has impacted revenue. The
Group's revenue from its philatelic, publications and coins
business at 12 July 2020 was 34% lower than for the same period in
the previous financial year.
The Group has taken mitigating actions to reduce the impact of
the lower demand on its operating results and its liquidity. They
include:
-- Use of the UK government furlough scheme for a number of employees.
-- Business rates holiday for a year on the retail premises in London.
-- Delayed VAT payments.
-- Interest holiday for 4 months to end of July 2020 negotiated with our lender.
-- Deferment of pension contributions until August 2020.
-- Deferment and some sacrifice of employees and Directors salaries to June 2020.
All of these mitigating actions have resulted in the Group's
liquidity position not deteriorating further and not having to
drawdown further on its borrowing facilities during this period.
The Group has also been able to maintain its long term investment
in its digital strategy.
Depending on the duration of the COVID-19 pandemic and the
continued negative impact on economic activity the Group might
experience further negative impact on its operating results,
liquidity position and impairment of its assets. The pandemic is
having an impact on the properties that the Group sub-lets in Pall
Mall, London and Madison Avenue, New York. Both properties are
sub-let to non-essential retailers which have been closed during
the "lockdowns". The Group's tenants have not paid rent due during
the period which has meant that the Group has not been able to pay
rent to the landlords. The Group is currently in negotiations with
its tenants and landlords to resolve these matters but there is
uncertainty to the outcome of those negotiations and to whether the
tenants will continue to occupy the properties in the future. At 31
March 2020 the Group Statement of financial position included
leasehold assets of GBP944,000 and right of use assets of
GBP4,984,000 and lease liabilities of GBP5,788,000. At 31 March
2020 the Directors believe that these assets are not impaired,
however once the outcome of these negotiations is known a further
impairment review may be required.
With the ongoing uncertainties in the general economy and the
impact on demand for the Group and the implications for its sub-let
properties the exact impact on the Groups liquidity is uncertain
(see note 2 Going Concern). The Group has GBP2m of headroom
remaining in its facility at 24 July 2020 but will continue to be
reliant on the support of its lender. The Group's forecasted
performance is likely to see it breach its loan covenants when
tested in March 2021.
Directors' Biographical Details
Henry George Wilson, Director and Non-executive Chairman
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. Following completion of the
debt restructuring and subscription for new shares by Phoenix he
resumed his role as Non-Executive Chairman on 19 March 2018. He is
Chairman of the Nomination Committee and member of the Audit
Committee.
Graham Elliott Shircore, Chief Executive Officer
Date of Appointment as Director: 19 March 2018.
Graham Shircore graduated from Bath University with a BSc
(Hons.) degree in Business Administration in 2005. During his time
at University he completed internships with Fidelity, Principal
Investment Management and Motorola Finance as well as passing the
IMC exam.
Following graduation he joined Aviva Investors, subsequently
becoming a UK Equity Analyst there. Having passed all three levels
of the CFA exam he became a UK Equity Fund Manager in 2008 and
later also managed European funds before moving to Rothschild
Wealth Management in 2013 as a Senior Equity Analyst. There he
helped shape and implement the equity research process.
Graham joined Phoenix Asset Management Partners in January 2017
and was heavily involved in the due diligence process which
ultimately led to Phoenix taking a 58% equity stake in The Stanley
Gibbons Group.
Graham was appointed a Director on 19 March 2018 and Chief
Executive Officer on 4 June 2018.
Anthony Michael Gee FCA, Chief Finance Officer
Date of Appointment as Director: 1 August 2019.
Anthony Gee graduated in 1990 with a BSc in Accountancy and
qualified as a Chartered Accountant with Ernst & Young.
He joined the Stanley Gibbons Group in 2012 and has since held a
variety of finance and operational roles, most recently as Group
Chief Operating Officer. He was appointed Interim CFO on 29 March
2019 and joined the Board as Chief Finance Officer on 1 August
2019.
Mr Gee is an experienced finance executive having previously
held senior positions at Hilton International and latterly at
Flying Brands, where he became finance director.
Louis Emmanuel Castro BSc, BComm (Hons), FCA, Non- Executive
Director - Independent
Date of Appointment as Director: 3 October 2016.
Louis has over 30 years' experience in investment banking and
broking both in the UK and overseas. Most recently he has been the
Chief Financial Officer at Eland Oil & Gas, a publicly quoted
company where he was one of two executive board directors.
Previously he was Chief Executive of Northland Capital Partners in
London and before this he was Head of Corporate Finance at Matrix
Corporate Capital and at Insinger de Beaufort. He started his
career by qualifying as a Chartered Accountant with Coopers &
Lybrand (now PwC).
Louis has widespread international experience having advised the
Boards of companies worldwide including companies in the retail
sector. He has led on numerous public listings and has been a
non-executive director of several quoted companies.
Mr Castro is a Fellow of the Institute of Chartered Accountants
in England and Wales. He graduated in 1980 from Birmingham
University with a BSc & BComm (Hons) in Engineering Production
& Economics. He is Chairman of the Audit Committee and a member
of the Remuneration and Nomination Committees.
Mark West, MBA, Non-Executive Director - Independent
Date of Appointment as Director: 3 December 2018.
Mark is an experienced retail executive with a proven track
record of delivery across a range of product categories and
business disciplines. Most recently until June 2018 he was Chief
Technology Officer for JAB Luxury GmbH (LABELUX), a European
private luxury group, the former owner of Jimmy Choo and Belstaff
and shareholder of Bally.
Prior to this, Mark worked for more than 24 years in various
senior management and director roles at Harrods as well as working
as a Consultant/Advisor for a number of retail brands such as
Aquascutum, Burberry, Liberty, Hamleys and Fat Face. He is Chairman
of the Remuneration Committee.
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting ("AGM")
of The Stanley Gibbons Group plc ("Company") will be held at 399
Strand, London WC2R 0LX on Thursday 10 September 2020 at 11.30 a.m.
for the purpose of considering and, if thought fit, adopting the
following resolutions relating to the ordinary and special business
of the Company at the AGM or any adjournment thereof.
NB: In the light of the continued Government guidance in
relation to Covid-19 this year's meeting will take place as a
closed meeting and shareholders will not be able to attend in
person.
You will not receive a form of proxy for the AGM in the post.
Instead, you will receive instructions to enable you to vote
electronically and how to register to do so. You may request a hard
copy proxy form directly from the registrars, Link Asset Services,
34 Beckenham Road, Beckenham, Kent BR3 4TU (telephone number: 0371
664 0391).
Ordinary Business
To consider, and if thought fit, to pass the following
resolutions as Ordinary Resolutions:
1. "THAT the Company's audited accounts for the year ended 31
March 2020 and the Directors' and Auditors' Reports thereon be
approved and adopted."
2. "THAT HG Wilson, who retires in accordance with the Articles
of Association of the Company, and, being eligible, be re-elected
as a Director of the Company."
3. "THAT GE Shircore, who retires in accordance with the
Articles of Association of the Company, and, being eligible, be
re-elected as a Director of the Company."
4. "THAT AM Gee, who retires in accordance with the Articles of
Association of the Company, and, being eligible, be re-elected as a
Director of the Company."
5. "THAT LE Castro, who retires in accordance with the Articles
of Association of the Company, and, being eligible, be re-elected
as a Director of the Company."
6. "THAT M West, who retires in accordance with the Articles of
Association of the Company, and, being eligible, be re-elected as a
Director of the Company."
7. "TH AT Jeffreys Henry LLP be appointed as Auditors of the
Company to hold office until the conclusion of the next Annual
General Meeting and to authorise the Directors to fix the Auditors'
remuneration."
Special Business
To consider, and if thought fit, to pass the following
resolution as a Special Resolution:
Authority to purchase own Ordinary Shares
8. "THAT the Company be generally and unconditionally authorised
to make one or more market purchases of its own Ordinary Shares,
such purchases to be of Ordinary Shares of one pence (1p) each in
the capital of the Company ("Ordinary Shares"), provided that:
(a) the maximum number of Ordinary Shares authorised to be
purchased shall be 64,000,000 Ordinary Shares, being approximately
15 per cent of the issued capital of the Company; and
(b) the minimum price which may be paid for any such Ordinary
Shares shall be 1p per Ordinary Share (exclusive of expenses);
and
(c) the maximum price (exclusive of expenses) which may be paid
for such Ordinary Shares shall be an amount equal to 5 per cent
above the average middle market quotations of an Ordinary Share as
derived from the Daily Official List of the UKLA for the five
business days immediately preceding the day on which any such
Ordinary Shares are purchased or contracted to be purchased;
(d) unless otherwise varied renewed or revoked the authority
hereby conferred shall expire at the earlier of the expiry of 15
months from the date of this Resolution and the conclusion of the
Annual General Meeting of the Company to be held in 2021; and
(e) prior to expiry of the authority hereby conferred the
Company may enter into a contract or contracts for the purchase of
Ordinary Shares which may be executed in whole or in part after
such expiry and may purchase Ordinary Shares pursuant to such
contract or contracts as if the authority hereby conferred had not
so expired."
To consider, and if thought fit, to pass the following
resolution as an Ordinary Resolution:
Authority to allot Ordinary Shares
9. "THAT the Directors be generally and unconditionally
authorised to exercise all powers of the Company to issue or grant
equity securities (as defined in the articles of association of the
Company (the "Articles")) in accordance with article 2.2(b) of the
Articles:
(a) up to a maximum number of 73,083,357 Ordinary Shares (such
number to be reduced by the number of Ordinary Shares allotted
pursuant the authority in sub-paragraph (b) below) in connection
with an offer by way of a rights issue:
(1) to holders of Ordinary Shares in proportion (as nearly as
may be practicable) to their respective holdings; and
(2) to holders of other equity securities as required by the
rights of those securities or as the Directors otherwise consider
necessary,
but subject to such exclusions or other arrangements as the
Directors may deem necessary or expedient to deal with fractional
entitlements, record dates, legal or practical problems in or under
the laws of any territory or the requirements of any regulatory
body or stock exchange; and
(b) in any other case, up to a maximum of 142,000,000 Ordinary
Shares (such number to be reduced by the number of any Ordinary
Shares allotted pursuant to the authority in sub-paragraph (a)
above in excess of 142,000,000),
(d) provided that this authority shall, unless renewed, varied
or revoked by the Company, expire at the earlier of the expiry of
15 months from the date of this Resolution and the conclusion of
the Annual General Meeting of the Company to be held in 2021, save
that the Company may, before such expiry, make offers or agreements
which would or might require equity securities to be issued or
granted and the Directors may issue or grant equity securities in
pursuance of such offer or agreement notwithstanding that the
authority conferred by this resolution has expired."
To consider, and if thought fit, to pass the following
resolution as a Special Resolution:
Disapplication of pre-emption rights
10. "THAT, subject to the passing of the ordinary resolution
numbered 9 in this notice of Annual General Meeting, the Directors
be given the general power to issue or grant equity securities (as
defined in the Articles) for cash either pursuant to the authority
conferred by the ordinary resolution numbered 9 in this notice of
Annual General Meeting or by way of a sale of treasury shares, as
if the pre-emption rights contained in article 2.7 of the Articles
did not apply to any such issue or grant, provided that this power
shall be limited to:
(a) the allotment or grant of equity securities in connection
with an offer of equity securities (but, in the case of the
authority granted under sub-paragraph (a) of the ordinary
resolution numbered 9 in this notice of Annual General Meeting, by
way of a rights issue only):
(1) to the holders of Ordinary Shares in proportion (as nearly
as may be practicable) to their respective holdings; and
(2) to holders of other equity securities as required by the
rights of those securities or as the Directors otherwise consider
necessary,
but subject to such exclusions or other arrangements as the
Directors may deem necessary or expedient to deal with fractional
entitlements, record dates, legal or practical problems in or under
the laws of any territory or the requirements of any regulatory
body or stock exchange; and
(b) the allotment or grant (otherwise than pursuant to
sub-paragraph (a) above) of equity securities up to a maximum of
106,500,000 Ordinary Shares.
The power granted by this resolution will expire at the earlier
of the expiry of 15 months from the date of this Resolution and the
conclusion of the Annual General Meeting of the Company to be held
in 2021 (unless renewed, varied or revoked by the Company prior to
or on such date) save that the Company may, before such expiry make
offers or agreements which would or might require equity securities
to be allotted or granted after such expiry and the Directors may
allot or grant equity securities in pursuance of any such offer or
agreement notwithstanding that the power conferred by this
resolution has expired."
by order of the board of Directors of
The Stanley Gibbons Group plc
RK Purkis, Secretary
Dated: 29 July 2020
Registered Office Address: 18 Hill Street, St Helier, Jersey JE2
4UA, Channel Islands.
NOTES:
1. The AGM will take place as a closed meeting and shareholders
will not be able to attend the meeting in person. The Company will
make arrangements so that a minimum quorum of shareholders is
present and the legal requirements to hold a valid AGM are
satisfied.
2. A member of the Company entitled to attend and vote at the
meeting convened by the notice set out above is entitled to appoint
a proxy to exercise all or any of your rights to vote on your
behalf at a general meeting of the Company.
Given the restrictions on attendance, in order to ensure that
your vote is exercised shareholders who wish to appoint a proxy are
encouraged to appoint the Chairman of the meeting as their proxy,
rather than a named person who will not be permitted to attend.
You can vote either:
-- online, by logging on to www.signalshares.com and following the instructions;
-- by requesting a hard copy form of proxy directly from the
registrars, Link Asset Services by calling tel: 0371 664 0391.
Calls are charged at the standard geographic rate and will vary by
provider. Calls outside the United Kingdom will be charged at the
applicable international rate. Lines are open between 09:00 -
17:30, Monday to Friday excluding public holidays in England and
Wales;
-- in the case of CREST members, by utilising the CREST
electronic proxy appointment service in accordance with the
procedures set out below.
In order for a proxy appointment to be valid a proxy instruction
must be completed. In each case the proxy instruction must be
received by Link Asset Services at 34 Beckenham Road, Beckenham,
Kent BR3 4ZF by 11.30 am on 8(th) September 2020.
3. In the case of joint holders, where more than one of the
joint holders purports to appoint a proxy, only the appointment
submitted by the most senior holder will be accepted. Seniority is
determined by the order in which the names of the joint holders
appear in the Company's register of members in respect of the joint
holding (the first-named being the most senior).
4. In the case of a member which is a company, your proxy form
must be executed under its common seal or signed on its behalf by a
duly authorised officer of the Company or an attorney for the
Company.
5. Any power of attorney or any other authority under which your
proxy form is signed (or a duly certified copy of such power or
authority) must be included with your proxy form.
6. If you submit more than one valid proxy appointments, the
appointment received last before the latest time for the receipt of
proxies will take precedence.
7. You may not use any electronic address provided in your proxy
form to communicate with the Company for any purposes other than
those expressly stated.
8. CREST members who wish to appoint a proxy or proxies through
the CREST electronic proxy appointment service may do so for the
General Meeting to be held on 10 September 2020 and any
adjournment(s) thereof by using the procedures described in the
CREST Manual. CREST personal members or other CREST sponsored
members, and those CREST members who have appointed a voting
service provider should refer to their CREST sponsors or voting
service provider(s), who will be able to take the appropriate
action on their behalf. In order for a proxy appointment or
instruction made by means of CREST to be valid, the appropriate
CREST message (a "CREST Proxy Instruction") must be properly
authenticated in accordance with Euroclear UK & Ireland
Limited's specifications and must contain the information required
for such instructions, as described in the CREST Manual. The
message must be transmitted so as to be received by the Company's
agent, Link Asset Services (CREST Participant ID: RA10), no later
than 48 hours before the time appointed for the meeting. For this
purpose, the time of receipt will be taken to be the time (as
determined by the time stamp applied to the message by the CREST
Application Host) from which the Company's agent is able to
retrieve the message by enquiry to CREST in the manner prescribed
by CREST.
CREST members and, where applicable, their CREST sponsor or
voting service provider should note that Euroclear UK & Ireland
Limited does not make available special procedures in CREST for any
particular messages. Normal system timings and limitations will
therefore apply in relation to the input of CREST Proxy
Instructions. It is the responsibility of the CREST member
concerned to take (or, if the CREST member is a CREST personal
member or sponsored member or has appointed a voting service
provider, to procure that his CREST sponsor or voting service
provider takes) such action as shall be necessary to ensure that a
message is transmitted by means of the CREST system by any
particular time. In this connection, CREST members and, where
applicable, their CREST sponsor or voting service provider are
referred in particular to those sections of the CREST Manual
concerning practical limitations of the CREST system and
timings.
The Company may treat as invalid a CREST Proxy Instruction in
the circumstances set out in Article 34 of the Companies
(Uncertified Securities) (Jersey) Order 1999.
9. Pursuant to Article 40 of the Companies (Uncertificated
Securities) (Jersey) Order 1999, the Company specifies that only
those members entered on the register of members of the Company as
at close of business on 8 September 2020 or, if the meeting is
adjourned, 48 hours before the time fixed for the adjourned meeting
shall be entitled to attend and vote at the meeting in respect of
the number of Ordinary Shares registered in their name at that
time. Changes to entries on the register of members after close of
business on 8 September 2020 or, if the meeting is adjourned, on
the register of members 48 hours before the time fixed for the
adjourned meeting shall be disregarded in determining the rights of
any person to attend or vote at the meeting.
10. Any corporation which is a member can appoint one or more
corporate representatives who may exercise on its behalf all of its
powers as a member provided that they do not do so in relation to
the same Ordinary Shares.
11. Any member attending the meeting has the right to ask
questions. The Company has to answer any questions raised by
members at the meeting which relate to the business being dealt
with at the meeting unless:
-- to do so would interfere unduly with the preparation for the
meeting or involve the disclosure of confidential information;
-- the answer has already been given on a website in the form of
an answer to a question, or;
-- it is undes irable in the interests of the company or the
good order of the meeting to answer the question.
As this year's meeting will take place as a closed meeting,
shareholders will not be able to attend in person. If you are a
shareholder and wish to ask the Board a question on the formal
business of the AGM, please email your question to the Company
Secretary, rpurkis@stanleygibbons.com by 11.30am on Tuesday 8 (th)
September 2020. Answers to questions will be published on our
website at: www.stanleygibbonsplc.com/shareholder-information/ as
soon as is practicable after the close of the AGM. Additionally
shareholders can also view a live stream of the AGM on
https://bit.ly/stanleygibbons but will not be able to participate
in the meeting or vote using this facility.
12. Copies of the directors' service contracts and letters of
appointment are available for inspection at the registered office
of the Company during normal business hours on any business day
from the date of this Notice up to the conclusion of the AGM. Due
to restrictions, if shareholders wish to inspect any of these
documents they should email rpurkis@stanleygibbons.com.
EXPLANATORY NOTES
Resolutions 2 - 6: Directors seeking re-election
The entire Board of Directors comprising Harry Wilson, Graham
Shircore, Anthony Gee, Louis Castro and Mark West will retire from
office and offer itself for re-election, at this year's Annual
General Meeting.
Biographical details of the Directors seeking re-election are
contained in the Annual Report 2020.
Resolution 7: Appointment of auditor
At each general meeting at which the accounts are laid before
the members, the Company is required to appoint an auditor to serve
until the next such meeting. The resolution also authorises the
Board to determine the remuneration of the Company's auditor.
Resolution 8: Authority for Company to purchase its own Ordinary
Shares
The previous authority granted by the shareholders to the
Directors for the Company to purchase its own Ordinary Shares will
shortly expire and the Directors recommend that a further authority
in this respect be obtained. The authority, if renewed at the
Annual General Meeting, would permit the Company to purchase up to
approximately 15% of its issued Ordinary Shares for a price
(exclusive of expenses) which is not less than the nominal value of
an Ordinary Share and not more than 5% above the average market
value of an Ordinary Share for the five business days prior to the
day the purchase is made. The authority granted by this resolution
will expire at the earlier of the expiry of 15 months from the date
of this Resolution and the conclusion of the next Annual General
Meeting of the Company.
The Board would only authorise such purchases after careful
consideration, taking account of other investment opportunities,
appropriate gearing levels, the overall financial position of the
group and whether the effect would be an increase on earnings per
share and in the best interests of shareholders generally.
Resolution 9: Authority to allot Ordinary Shares
This resolution deals with the Directors' authority to allot
Ordinary Shares in accordance with article 2.2 of the Articles and
will, if passed, authorise the Directors to allot: (a) in relation
to a pre-emptive rights issue only, up to a maximum of 73,083,357
Ordinary Shares (which represents the Company's unissued Ordinary
Shares as at the date of this notice). This maximum is reduced by
the number of Ordinary Shares allotted under the authority referred
to in sub-paragraph (b) below; and (b) in any other case, up to a
maximum of 142,000,000 Ordinary Shares (which represents
approximately one-third of the Company's issued Ordinary Shares as
at the date of this notice). This maximum is reduced by the number
of Ordinary Shares allotted under the authority referred to in
sub-paragraph (a) above in excess of 142,000,000 Ordinary Shares.
Therefore, the maximum number of Ordinary Shares which may be
allotted under this resolution is 73,083,357 Ordinary Shares. The
authority granted by this resolution will expire at the earlier of
the expiry of 15 months from the date of this Resolution and the
conclusion of the next Annual General Meeting of the Company.
Resolution 10: Disapplication of pre-emption rights
This resolution will, if passed, give the Directors power,
pursuant to the authority to allot granted by resolution 9, to
allot Ordinary Shares or sell treasury shares for cash up to a
maximum of 106,500,000 of Ordinary Shares (which represents
approximately 25% of the Company's issued Ordinary Shares as at the
date of this notice) without first offering them to existing
shareholders in proportion to their existing holdings. The power
granted by this resolution will expire at the earlier of the expiry
of 15 months from the date of this Resolution and the conclusion of
the next Annual General Meeting of the Company.
The Stanley Gibbons Group plc
18 Hill Street, St Helier,
Jersey JE2 4UA, Channel Islands
Tel: 01534 766711
and
399 Strand,
London WC2R 0LX
Tel: 020 7836 8444
Email: info@stanleygibbons.com
www.stanleygibbons.com
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
FR KKCBNQBKDKOB
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