RNS Number:4022B
Stanley Gibbons Group Limited
30 July 2004
THE STANLEY GIBBONS GROUP LIMITED
INTERIM REPORT FOR SIX MONTHS ENDED 30 JUNE 2004
The Company today announces its Interim Results for the six months to 30 June
2004. Highlights include:
* Profit before tax up 86% at #603,000 (2003: #324,000)
* Earnings per share up 84% to 1.75p (2003: 0.95p)
* Sales up 20.4% to #4,607,000 (2003: #3,825,000)
* #788,000 cash balances at 30 June 2004, enhanced by a further #2,208,000
received on 9 July 2004 from the sale of our stake in Provide Commerce, Inc.
which had a book value of #223,000
* Maiden dividend of 0.5p net per share and a special dividend of 8p net
per share. An announcement will follow shortly providing details of the date
these dividends will be proposed and paid to shareholders
* Repurchase of 1,322,394 shares for #1,060,000 on 15 March 2004
* Full integration of our Internet sites, producing over 10 million hits
per month
Commenting on current trading, Paul Fraser, Chairman said:
"We continue to make excellent progress with our strategy, and the momentum in
our Investment Department should bear further fruit in the second half. The
second half is the most important for the release of our main stamp catalogues
and attendance at the top shows around the world, including Singapore, Moscow
and Monaco. We are also building relationships with independent financial
advisers to develop the sales of stamps as an alternative investment.
We look forward to an exciting second half and the further development of
Stanley Gibbons as an international brand."
For further information, contact:
The Stanley Gibbons Group Limited
Paul Fraser, Chairman 020 7836 8444
Michael Hall, Chief Executive 01425 472363
Seymour Pierce Limited
Louise Carpenter 020 7107 8000
Jonathan Wright 020 7107 8000
Interim Report for the 6 months ended 30 June 2004
Chairman's Statement
I am very pleased to report a profit before tax of #603,000 (2003: #324,000),
representing an increase of 86% on the same period last year. Turnover increased
by 20.4% to #4,607,000 (2003: #3,825,000).
Earnings per Ordinary Share for the six months ended 30 June 2004 were 1.75p
compared with 0.95p for the same period to 30 June 2003. Net assets per share
have increased to 36p (including the proceeds of the sale of the holding in
Provide Commerce, Inc which were received in July), compared to 27p per share at
30 June 2003.
As at 30 June 2004, the Company had a cash balance of #788,000 which has since
increased by #2,208,000 received on 9 July 2004, from the sale of our stake in
Provide Commerce, Inc. which had a book value of #223,000. On 15 March 2004 we
purchased 1,322,394 Ordinary shares for cancellation at a price of 80p per
share, in line with the commitment to return surplus cash to shareholders.
We are intending to pay a maiden dividend of 0.5p per share and a special
dividend of 8p per share (to distribute funds from the sale of our investment in
Provide Commerce, Inc). An announcement will follow shortly providing details of
the date these dividends will be proposed and paid to shareholders.
The newly-formed Investment Department has attracted substantial interest, with
record sales of top-grade stamp material being achieved during the period. There
is now a growing momentum which reflects the realisation that classic material
is becoming scarcer (with recent high profile donations to museums further
reducing availability in the market) and squeezing the prices higher. There are
longer lead times on large individual sales which are more difficult to budget
accurately. In July we have seen the largest sale to date of one portfolio
valued at #175,000, which gives us a head-start for the second half of the year.
The SG 100 Stamp Index is up a further 3.7% in 2004 which, added to the 15%
increase enjoyed during the previous year, demonstrates the buoyancy and
consistency in the market.
The Group's Internet sites now receive over 10 million hits a month (2003: 8
million). The full integration of our websites is now completed and we look
forward, with confidence, to the opportunity to increase advertising sales,
affiliates and strategic online partnerships.
I would like to thank all our staff for another sterling performance and
stepping up to meet the Group's objectives to facilitate the continued growth in
earnings.
We remain committed to the implementation of our long-term strategy of putting
Stanley Gibbons in the forefront of the stamp market worldwide and building
sales and profits for the benefit of all stakeholders.
Paul Fraser
Chairman
30 July 2004
Operating Review
Operating results for the 6 months ended 30 June
2004 2004 2003 2003 2002 2002
Sales Profit Sales Profit Sales Profit
#000 #000 #000 #000 #000 #000
Philatelic trading and
retail operations 3,122 787 2,384 534 2,374 366
Publishing and philatelic
accessories 1,146 286 1,055 226 1,249 303
Dealing in autographs,
records and 332 115 380 111 388 95
related memorabilia
------ ------ ------ ------ ------ ------
4,600 1,188 3,819 871 4,011 764
Corporate overheads (510) (426) (417)
New business development 7 (96) 6 (128) 4 (143)
Interest 21 7 (1)
------ ------ ------ ------ ------ ------
4,607 603 3,825 324 4,015 203
------ ------ ------ ------ ------ ------
Sales
Overall group turnover increased by 20.4% compared to the same period last year.
Sales growth has largely been achieved through a concentration of effort on
securing high value sales to both existing and new philatelic collectors as well
as to new investors in stamps. The impact of our improved focus on high value
customers is demonstrated by a 19% increase in the average order value and a 65%
increase in the value of spend from new customers compared to the same period
last year.
Philatelic trading and retail sales increased by 31% against the same period
last year, with sales growth achieved in all key areas of trading. The Company
benefited from prevailing strong philatelic market conditions and high levels of
demand continuing to put pressure on the scarcity of supply driving stamp prices
further upwards. We have supported the growth in philatelic sales with a
substantial investment in stock through the purchase of high value collections
and rare stamps during the period (stock levels of rare stamps were #2.2m at 30
June 2004 compared to #1.8m at 30 June 2003). The Investment Department has
focused on finding the most effective channels of communication and publicity
and has been successful in securing a number of new investment clients during
the period.
Following our return to Public Auctions in November last year, commissions were
up 63.9% during the first six months of 2004 and provided an acceptable return
on capital employed.
Publishing and philatelic accessory sales increased by 8.6% from the same period
last year, despite experiencing a number of delays in the publication dates of
catalogues. The growth in sales was a result of improved returns from direct
mailings and an increase in catalogue sales. Catalogue sales benefited from our
colour catalogues released for the first time last year together with the
successful release of new titles this year, including 'Collect British Coins'
and new colour one-country Commonwealth titles.
Autographs and memorabilia sales were 12.6% below the same period last year. The
reduction in sales is partly as a result of reduced marketing activity during
the period to deliberately reduce marketing costs which were yielding an
insufficient return. This has been demonstrated by the increased profit
contribution from the division, despite lower sales. Focus will continue in the
second half of the year on improving the quality of our stockholding in key
rarities, with a bias towards items of historical importance and exceptional
examples of the most popular autographs, which historically have provided higher
returns and will be suitable for inclusion within investment portfolios.
Gross Margins
The gross margin for the six months ended 30 June 2004 was 57.3% compared to
60.1% for the same period last year. The reduction in the gross margin
percentage is attributable to reduced margins from philatelic trading,
especially in specialist philatelic dealing. Lower gross margins in specialist
dealing are due to the scarcity of stock items which we have been required to
source for key collectors and for investment portfolios attracting premiums on
our normal purchase prices which further highlights the investment potential of
such material.
Stock levels at 30 June 2004 are 17.4% up on the previous year in line with our
objective of increasing our stockholding in high value specialist philatelic
material. Specialist stamp stock represents an appreciating asset, which is
valued in the balance sheet at cost (with a provision applied to aged stock
items). We have maintained a consistent return on capital through our investment
in stock demonstrated by a 51.2% conversion of our average stockholding into
profit during the period (2003: 51.3%).
Profitability
The profit before tax for the period of #603,000 compares to a profit for the
same period last year of #324,000, representing an increase of 86%. The increase
in profitability against the prior period was achieved through growth in
turnover, although at a lower gross margin percentage, with overheads maintained
broadly in line with the prior year. Overheads were up by only 3.8% against a
14.8% increase in gross profit. We have continued to enjoy the benefits from the
cost-cutting work on fixed overheads carried out over the previous three
accounting periods.
Salary overhead increased by #85,000 (8.3%) compared to the same period last
year. Increased salary costs are primarily due to the payment of sales and
profit related bonuses totalling #108,000, in line with the improved
performance. Underlying fixed salary overhead has been reduced, with a permanent
staff headcount at 30 June 2004 of 88 compared to 96 at 30 June 2003.
Establishment costs benefit from the rental income now being received from the
sub-letting of the 2nd and 3rd floors of 399 Strand and 5 Parkside, Ringwood,
with total rental income in the six months to 30 June 2004 of #71,000.
New Business Development
Direct sales generated through our web sites increased by 9.5%. The improved
internet section on Investment is proving to be a valuable source of new
prospects and direct sales for the stamp investment department.
The redesign and integration of our websites is ready to go live, which will
include much improved navigation and search functions. Our ability to perform
such work in-house provides substantial savings on external consultancy fees.
Cashflow
The Company held #788,000 cash in the bank at 30 June 2004 (2003: #1,048,000).
The reduction in cash during the period included #1,060,000 cash paid out for
the repurchase of our own shares to enhance earnings for shareholders. We have
further reinvested cash generated from operating activities back into stock to
ensure that sufficient stock of the right quality is available to support the
second half performance targets.
Consolidated Profit and Loss Account
6 months to 6 months to Year ended
30 June 30 June 31 December
2004 2003 2003
(unaudited) (unaudited) (audited)
Notes #'000 #'000 #'000
---------- -------- --------
Turnover 4,607 3,825 8,622
Cost of sales (1,966) (1,525) (3,398)
--------------------- ------ ---------- -------- --------
Gross Profit 2,641 2,300 5,224
Administration expenses (692) (604) (1,183)
Selling and distribution
expenses (1,367) (1,379) (2,834)
--------------------- ------ ---------- -------- --------
Operating Profit 582 317 1,207
Interest receivable and
similar 22 11 27
income
Interest payable and similar
charges (1) (4) (7)
--------------------- ------ ---------- -------- --------
Profit on ordinary activities
before taxation 603 324 1,227
Tax on profit on ordinary
activities 1 (175) (93) (346)
--------------------- ------ ---------- -------- --------
Profit for the financial 428 231 881
period ------ ---------- -------- --------
---------------------
Earnings per Ordinary Share 2 1.75p 0.95p 3.61p
Diluted earnings per Ordinary
Share 2 1.72p 0.93p 3.49p
Continuing operations: all items dealt with in arriving at the operating profit
above relate to continuing operations.
Share premium and reserves
Share Capital Profit and
Premium Revaluation Redemption Loss
Account Reserve Reserve Account Total
#'000 #'000 #'000 #'000 #'000
At 1 January 2004 5,834 169 25 1,027 7,055
Repurchase of own (1,045) - 13 (15) (1,047)
shares
Premium on shares
issued
on exercise of share 211 - - - 211
options
Profit for the
financial - - 428 428
period -------- -------- -------- -------- ------
----------------
At 30 June 2004 5,000 169 38 1,440 6,647
---------------- -------- -------- -------- -------- ------
Consolidated Balance Sheet
30 June 30 June 31
December
2004 2003 2003
(unaudited) (unaudited) (audited)
Notes #'000 #'000 #'000
--------- -------- --------
Fixed Assets
Tangible assets 1,235 1,360 1,307
Investments 223 223 223
---------------------- ------ --------- -------- --------
1,458 1,583 1,530
Current Assets
Stocks 5,262 4,484 4,878
Debtors: amounts falling due
after 192 273 259
more than one year
Debtors: amounts falling due
within 1,241 731 1,079
one year
Cash at bank and in hand 788 1,048 1,885
---------------------- ------ --------- -------- --------
7,483 6,536 8,101
Creditors: amounts falling due
within one year (1,873) (1,272) (2,097)
---------------------- ------ --------- -------- --------
Net current assets 5,610 5,264 6,004
---------------------- ------ --------- -------- --------
Total assets less current
liabilities 7,068 6,847 7,534
Creditors: amounts falling due
after more than one year - (103) (47)
Provision for liabilities and
charges (177) (95) (188)
---------------------- ------ --------- -------- --------
Net assets 6,891 6,649 7,299
---------------------- ------ --------- -------- --------
Capital and reserves
Called up share capital 244 244 244
Share premium account 5,000 5,834 5,834
Capital redemption reserve 38 25 25
Revaluation reserve 169 169 169
Profit and loss account 1,440 377 1,027
---------------------- ------ --------- -------- --------
Equity shareholders' funds 6,891 6,649 7,299
---------------------- ------ --------- -------- --------
Consolidated Cash Flow Statement
6 months to 6 months to Year
ended
30 June 30 June 31
December
2004 2003 2003
(unaudited) (unaudited) (audited)
Notes #'000 #'000 #'000
-------- -------- ---------
Net cash (outflow)/inflow from
operating activities 3 (179) 402 1,373
--------------------- ------ -------- -------- ---------
Returns on investments and
servicing of finance
Interest received 22 11 27
Interest paid (1) (4) (7)
--------------------- ------ -------- -------- ---------
21 7 20
Taxation
UK corporation tax paid - - (12)
Jersey tax paid (10) - -
--------------------- ------ -------- -------- ---------
(10) - (12)
Capital expenditure and
financial investments
Payments to acquire tangible
fixed assets (46) (55) (134)
--------------------- ------ -------- -------- ---------
Net cash (outflow)/inflow before
financing (214) 354 1,247
--------------------- ------ -------- -------- ---------
Financing
Purchase of own ordinary shares (1,060) - -
Shares issued 224 - -
Repayment of Eagle Star Mortgage - - (55)
Repayment of Loan notes (47) (15) (16)
--------------------- ------ -------- -------- ---------
Net cash outflow from financing (883) (15) (71)
--------------------- ------ -------- -------- ---------
--------------------- ------ -------- -------- ---------
(Decrease)/increase in cash (1,097) 339 1,176
--------------------- ------ -------- -------- ---------
Analysis of changes in cash during the period
6 months to 6 months to Year ended
30 June 30 June 31 December
2004 2003 2003
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Net cash at the beginning of the
period 1,885 709 709
Net cash (outflow)/inflow (1,097) 339 1,176
--------------------- -------- -------- ---------
Net cash at the end of the period 788 1,048 1,885
--------------------- -------- -------- ---------
Notes to the unaudited interim report
Notes to the un
1 Taxation
The tax charge is based on the expected full year tax rate together with the
movement in the provision for deferred taxation.
2 Earnings per ordinary share
The calculation of basic earnings per ordinary share is based on the weighted
average number of shares in issue during the period.
For diluted earnings per share, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all dilutive potential ordinary
shares. The Group has only one category of dilutive ordinary shares: those share
options granted to employees where the exercise price is less than the average
market price of the Company's ordinary shares during the period.
6 months to 6 months to Year ended
30 June 2004 30 June 2003 31 December 2003
(unaudited) (unaudited) (audited)
Weighted average number of
ordinary shares in issue (No) 24,406,570 24,376,736 24,376,736
Dilutive potential ordinary
shares: Employee share
options 536,579 559,132 865,251
Profit after tax (#) 428,000 231,000 881,000
Basic earnings per share -
pence per share (p) 1.75p 0.95p 3.61p
Diluted earnings per share -
pence per share (p) 1.72p 0.93p 3.49p
----------------------- --------- --------- ----------
3 Reconciliation of operating profit to net cash inflow from operating
activities
6 months to 6 months to Year ended
30 June 2004 30 June 2003 31 December 2003
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Operating profit 582 317 1,207
Depreciation 118 150 282
(Increase)/decrease in stocks (384) 63 (331)
(Increase)/decrease in
debtors (95) 134 (228)
(Decrease)/increase in
creditors (400) (262) 443
----------------------- --------- --------- ----------
Net cash (outflow)/inflow
from operating activities (179) 402 1,373
----------------------- --------- --------- ----------
4 Financial information
The financial information in this report does not comprise full financial
statements. Full financial statements for the year ended 31 December 2003, on
which the auditors gave an unqualified report, have been delivered to the Jersey
Registrar of Companies.
5 Further copies of this statement
Copies of the statement are being sent to shareholders. Further copies are
available on request from: The Company Secretary, The Stanley Gibbons Group
Limited, 399 Strand, London, WC2R 0LX.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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