| Company |
Stanley Gibbons Group Limited |
| TIDM |
SGI |
| Headline |
Interim Results |
| Released |
07:00 27-Jul-06 |
| Number |
7977G |
RNS Number:7977G
Stanley Gibbons Group Limited
27 July 2006
The Stanley Gibbons Group Ltd
Interim report for six months ended 30 June 2006
The Company today announces its Interim Results for the six months to 30 June 2006. Highlights include:
• Profit before tax up 92% at £1,361,000 (2005: £710,000)
• Earnings per share up 80% to 3.97p (2005: 2.20p)
• Sales up 44% to £7,623,000 (2005: £5,278,000)
• Cash balances of £3,386,000 (2005: £1,517,000)
• Interim dividend declared of 1.5p net per Ordinary Share (2005: 1p net per Ordinary Share), representing an increase of 50%, payable on 4 September
2006 to all holders on the Register at the close of business on 4 August
2006.
• Internet sales increased 18% compared to the prior period
• Strong customer recruitment with a 15% increase in new customers recruited compared to the prior period
• Demand for quality rare stamps and autographs still outstripping supply, with increasing premiums to current catalogue prices
Commenting on current trading, Paul Fraser, Chairman said:
"I am delighted to be able to report yet another record result achieved in our 150th year as a stamp company. Trading during July 2006 has been particularly strong with consistent high levels of demand. We recognise that, in order to continue to achieve the high levels of growth experienced over the past three years, we will need to fully implement a more aggressive buying strategy which enables us to follow market prices more closely and to ensure that we are the biggest international buyer of rare stamps and autographs. The relocation of our investment activities to Guernsey at the end of July gives us the opportunity to develop our existing business model, increasing our worldwide supply chain, and stepping up to the next level to facilitate the full realisation of our growth potential."
For further information, contact:
The Stanley Gibbons Group Limited
Paul Fraser, Chairman 020 7836 8444
Michael Hall, Chief Executive 01425 472363
Seymour Pierce Limited
Jonathan Wright 020 7107 8000
Chairmans Statement
I am very pleased to report another record result for The Stanley Gibbons Group Limited. Profit before tax was £1,361,000 (2005: £710,000) representing an increase of 92% on the same period last year. Turnover increased by 44% to £7,623,000 (2005: £5,278,000).
Earnings per Ordinary Share for the six months ended 30 June 2006 were 3.97p compared with 2.20p for the same period to 30 June 2005, representing an increase of 80%.
As at 30 June 2006, the Company has cash balances of £3,386,000 (2005: £1,517,000). The Company paid a final dividend of 2p net per Ordinary Share, in respect of the year ended 31 December 2005, on 18 April 2006. Your Board is pleased to declare an interim dividend of 1.5p net per Ordinary Share (2005: 1p), representing an increase of 50%, payable on 4 September 2006 to holders of Ordinary Shares on the Register at the close of business on the record date of 4 August 2006. The proposed dividend of 1.5p net per Ordinary Share is expected to result in a distribution to shareholders of £376,000.
Internet sales continue their momentum, up 18% on the prior period. We are recruiting an ever-increasing amount of new customers through the Internet and are continuing to attract new customers by traditional methods, strengthening our global reach and underlining the value of the brand.
Good quality rare stamps continue to be in short supply, resulting in strong prices at auctions, often exceeding catalogue prices. Collectors are prepared to pay an ever-increasing premium for the very best material, with an extra premium for larger blocks and strips of rare stamps.
The SG 100 Stamp Index is up 7.3% (2005: 6%) in the first six months and we continue to see an appreciation by collectors and investors of the true scarcity and rarity of many classic issues of stamps and early autograph material. Our Investment Department's growth is now the engine room for the whole Group and is only tempered by the opportunity to source sufficient material of quality and acceptable price.
All areas of the business have performed well but special mention should be given to the Auction, Specialist Stamp and Fraser's Autographs departments.
The Auction Department has performed well across each of its auction types - postal, Internet and public - and produced a particularly good result for the public auction in June, including the individual auction of Indian States.
The Specialist Stamp Department is sourcing larger amounts of material but is also selling an ever-greater amount, so locating material of the right quality remains the key objective, an essential for success in the second half.
Fraser's Autographs has achieved a better result than for a long time and reflects the continuing move to the quality rare end of the market.
We open our Guernsey office at the end of July and look forward to reporting on how that is developing at the year-end.
We are celebrating our 150th year as a stamp company and I am sure that Stanley Gibbons himself would be proud of the progress and the success that the Group is now enjoying.
In conclusion, I thank once again all my colleagues at Stanley Gibbons for their hard work as we continue to push the Group onto higher ground for the benefit of all stakeholders.
Paul Fraser
Chairman
26 July 2006
Operating Review
6 months 6 months 6 months 6 months Year ended Year ended
to 30 to 30 to 30 to 30 31 31
June June June June December December
2006 2006 2005 2005 2005 2005
Sales Profit Sales Profit Sales Profit
£000 £000 £000 £000 £000 £000
Philatelic
trading and
retail
operations 5,634 1,373 3,709 885 10,076 2,789
Publishing and
philatelic
accessories 1,201 270 1,262 362 2,818 871
Dealing in
autographs,
records and 773 350 301 70 748 205
related
memorabilia
------------------ ------ ------ ------ ------ ------ ------
7,608 1,993 5,272 1,317 13,642 3,865
Corporate
overheads (691) (562) (1,045)
New business
development 15 (24) 6 (8) 33 (2)
Interest and
similar
income/charges 83 53 95
------------------ ------ ------ ------ ------ ------ ------
Before
exceptional
items 7,623 1,361 5,278 800 13,675 2,913
Exceptional
operating
costs - (90) (94)
------------------ ------ ------ ------ ------ ------ ------
Group total
sales and
profit before
tax 7,623 1,361 5,278 710 13,675 2,819
------------------ ------ ------ ------ ------ ------ ------
Sales
Overall group turnover increased by £2,345,000 (44%) compared to the same period last year. Sales growth continues to be driven primarily by the Investment Department although strong growth was also achieved in the sale of specialist stamps to collectors and in all auction activity. As a result of our continued move to the quality rare end of the market, average order values have increased by 31% compared to the same period last year. The increasing number of new collectors entering the market and our global presence through our Internet site has ensured an ongoing expansion in the size of our customer database. New customers recruited were 15% up on the same period last year.
Philatelic trading and retail sales increased by 52% against the same period last year. Demand from high spending collectors continues to be strong and quality stock acquired in rare British stamps and stamps from the most popularly collected Commonwealth countries have been converted to sales with ease.
Sales to investors include guaranteed minimum return investment contracts, for which demand has exceeded our ability to supply; both by reason of the scarcity in supply of rare stamps and as a result of our internal restrictions placed on the sale of this product in order to limit our overall exposure to the future financial obligations. Out of approximately 3,000,000 stamps in stock, 142 items are currently being recommended as investment grade highlighting the exclusivity of our investment material and the quality controls which we have in place.
Sales from our Auction Department were 41% above the same period last year. The public auction held in June delivered an exceptional result assisted by a stronger range of material and the individual auction sale of an Indian States collection which achieved a 100% realisation with all lots being sold. More private individuals are taking this opportunity, based on strong market conditions prevailing, to sell material through auction where prices realised are in some cases higher than catalogue prices.
Publishing and philatelic accessory sales fell by 5% from the same period last year. A weaker publishing schedule in the first half of this year has limited our ability to achieve any growth in sales. Sales to the various wholesalers and distributors of our products were 16% down whereas direct sales to retail customers were increased by 10% and accounted for 62% of total publication sales compared to 56% in the prior period. We will be focussing on increasing our direct marketing to retail customers in the second half.
Autographs and memorabilia sales were 157% increased from the same period last year. The improved performance is mainly a result of our success in developing sales of investment grade autograph material. Autograph investment sales include the sale of one investment portfolio during the period of £250,000. Auction and online autograph sales increased as focus has been moved towards the clearance of lower value items through auction in line with our strategy put in place last year together with the benefit of design and functionality improvements made to the website.
Gross Margins
The gross margin for the six months ended 30 June 2006 was 48% compared to 54% for the same period last year. Cost of sales includes a provision of £121,000 made in the period against guaranteed minimum return investment contracts. The guaranteed minimum return offered on investment contracts of between 4% and 7% per annum is being fully provided for against cost of sales over the length of the contract term. Excluding the impact of this provision, gross margins would have been 50%. The remaining reduction in the gross margin percentage was in line with expectations and is attributable to the increased investment sales compared to the prior period which attract lower gross margins.
Profitability
The profit before tax for the period of £1,361,000 compares to a profit for the same period last year of £710,000, representing an increase of 92%. The historic weighting of profits to the second half of the year, a consequence of the seasonality of stamp collecting, is being reduced by the increased proportion of profits now derived from investment activities which are less seasonal in nature.
Group overheads were 10% higher than in the same period last year mainly as a result of increased salary and bonus payments which have increased in line with the improved performance of the Group.
Salary overhead was up 15% although permanent staff headcount at 30 June 2005 was 99, unchanged from the prior period. Salaries represented 17.4% of sales compared to 21.8% for the same period last year demonstrating an improved return on staff.
Other overheads were 5% up on the prior period relating mainly to increases in variable costs associated with the rise in sales including publicity and mailing, freight and packing and credit card charges. Marketing costs have increased mainly to support the publicity and advertising of investment services which provides the highest return in sales. The implementation of our marketing plan in this area will result in extended advertising during the second half in mediums already proven to deliver a strong return.
New Business Development
Direct sales generated through our web sites increased by 18%. We continue to receive over 2,000,000 visitors to our websites each year, representing 7% of the total estimated number of stamp collectors worldwide.
We continue to sell new subscriptions for our online service "My Collection" and are currently working on the automation of pricing updates from our catalogue database together with the uploading of GB Concise catalogue data. Current data available on British stamps is of a simplified format only and we expect the demand to increase substantially once this information is available.
We have secured premises in Guernsey and our relocation of investment activities will take place at the end of July. The key aim of the relocation is to increase our supply chain outside of normal trading activities to improve our ability to meet the high levels of demand being experienced for our investment products.
Corporate Overheads
Corporate overheads were £129,000 (23%) higher than the same period last year due mainly to increased central salary and bonus payments as a result of the higher levels of profitability of the Group.
Consolidated Profit and Loss Account
6 months to 6 months to Year ended
30 June 30 June 31 December
2006 2005 2005
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
---------- -------- --------
Turnover 7,623 5,278 13,675
Cost of sales (3,946) (2,451) (6,679)
--------------------- ------ ---------- -------- --------
Gross Profit 3,677 2,827 6,996
Administration expenses (845) (730) (1,393)
Selling and distribution
expenses (1,554) (1,351) (2,785)
Exceptional operating costs - (90) (94)
--------------------- ------ ---------- -------- --------
Operating Profit 1,278 656 2,724
Interest receivable and
similar 83 53 95
income
Interest payable and similar
charges - 1 -
--------------------- ------ ---------- -------- --------
Profit on ordinary activities
before taxation 1,361 710 2,819
Tax on profit on ordinary
activities 2 (369) (166) (590)
--------------------- ------ ---------- -------- --------
Profit for the financial 992 544 2,229
period
--------------------- ------ ---------- -------- --------
Earnings per Ordinary Share 3 3.97p 2.20p 9.03p
Diluted earnings per Ordinary
Share 3 3.96p 2.17p 8.95p
Continuing operations: all items dealt with in arriving at the operating profit above relate to continuing operations.
There is no material difference between the profit on ordinary activities before taxation and the profit for the financial period stated above and their historical cost equivalents.
Statement of total recognised gains and losses
6 months to 6 months to Year ended
30 June 2006 30 June 2005 31 December 2005
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Profit for the financial
period 992 544 2,229
Actuarial gains recognised in
the pension scheme (note 1) - 226 1
Deferred tax attributable to
actuarial gains - (67) -
Prior period adjustment (note
1) - 27 27
----------------------- -------- -------- ----------
Total gains and losses
recognised since last
financial statements 992 730 2,257
----------------------- -------- -------- ----------
Consolidated Balance Sheet
30 June 30 June 31 December
2006 2005 2005
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
--------- -------- --------
Fixed Assets
Tangible assets 1,076 1,195 1,117
---------------------- ------ --------- -------- --------
Current Assets
Stocks 5,882 5,588 5,949
Debtors: amounts falling due
within 2,382 2,312 2,949
one year
Cash at bank and in hand 3,386 1,517 2,585
---------------------- ------ --------- -------- --------
11,650 9,417 11,483
Creditors: amounts falling due
within one year (2,596) (2,725) (3,200)
---------------------- ------ --------- -------- --------
Net current assets 9,054 6,692 8,283
---------------------- ------ --------- -------- --------
Total assets less current
liabilities 10,130 7,887 9,400
Provision for liabilities and
charges (261) (105) (133)
---------------------- ------ --------- -------- --------
Net assets excluding pension
liabilities 9,869 7,782 9,267
Pension liabilities (net of
deferred taxation) (278) (78) (258)
---------------------- ------ --------- -------- --------
Net assets including pension
liabilities 9,591 7,704 9,009
---------------------- ------ --------- -------- --------
Capital and reserves
Called up share capital 251 247 248
Share premium account 5,134 5,038 5,056
Capital redemption reserve 38 38 38
Revaluation reserve 206 206 206
Profit and loss account 3,962 2,175 3,461
---------------------- ------ --------- -------- --------
Equity shareholders' funds 9,591 7,704 9,009
---------------------- ------ --------- -------- --------
Consolidated Cash Flow Statement
6 months to 6 months to Year ended
30 June 30 June 31 December
2006 2005 2005
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
-------- -------- ---------
Net cash inflow/(outflow) from
operating activities 4 1,698 (43) 1,897
--------------------- ------ -------- -------- ---------
Returns on investments and
servicing of finance
Interest received 49 29 49
Interest paid - 1 -
--------------------- ------ -------- -------- ---------
49 30 49
Taxation
UK corporation tax paid (471) (3) (636)
Jersey tax paid (1) - (4)
--------------------- ------ -------- -------- ---------
(472) (3) (640)
Capital expenditure and
financial investments
Payments to acquire tangible
fixed assets (54) (72) (97)
Equity dividends paid (501) (366) (614)
--------------------- ------ -------- -------- ---------
Net cash inflow/(outflow) before
financing 720 (454) 595
--------------------- ------ -------- -------- ---------
Financing
Shares issued 81 41 60
--------------------- ------ -------- -------- ---------
Net cash inflow from financing 81 41 60
--------------------- ------ -------- -------- ---------
Increase/(decrease) in cash 801 (413) 655
--------------------- ------ -------- -------- ---------
Analysis of changes in cash during the period
6 months to 6 months to Year ended
30 June 30 June 31 December
2006 2005 2005
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Net cash at the beginning of the
period 2,585 1,930 1,930
Net cash inflow/(outflow) 801 (413) 655
--------------------- -------- -------- ---------
Net cash at the end of the period 3,386 1,517 2,585
--------------------- -------- -------- ---------
Reconciliation of movements in equity shareholders' funds
6 months to 6 months to Year ended
30 June 2006 30 June 2005 31 December 2005
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Profit for the financial
period 992 544 2,229
Dividends (501) (366) (614)
----------------------- -------- -------- ----------
Retained profit for the
financial period 491 178 1,615
Shares issued on exercise of
share options 81 41 60
Actuarial gains in pension
scheme net of tax - 159 1
Adjustment to cost of share
options 10 10 17
----------------------- -------- -------- ----------
Net increase in shareholders'
funds 582 388 1,693
Opening equity shareholders'
funds as previously stated 9,009 7,289 7,289
Prior period adjustment - 27 27
----------------------- -------- -------- ----------
Opening equity shareholders'
funds as restated 9,009 7,316 7,316
----------------------- -------- -------- ----------
Closing equity shareholders'
funds 9,591 7,704 9,009
----------------------- -------- -------- ----------
The proposed dividend of 1.5p net per Ordinary Share is expected to result in a distribution from reserves of £376,000.
Notes to the unaudited interim report
1 Accounting policies and presentation
The results for the six months ended 30 June 2006 and 30 June 2005 are unaudited and have been prepared using accounting policies consistent with those set out in the Annual Report and Accounts for the year ended 31 December 2005. The financial information in this report does not comprise full financial statements. Full financial statements for the year ended 31 December 2005, on which the auditors gave an unqualified report, have been delivered to the Jersey Registrar of Companies. These interim financial statements were approved by the board of directors on 26 July 2006.
The 2005 results included the adoption, for the first time, of FRS 17 (Retirement Benefits), FRS 20 (Share-based Payment) and FRS 21 (Events after the Balance Sheet date) and the prior period results for 2004 were restated accordingly.
The FRS 17 operating and financing costs of the pension scheme are recognised in the profit and loss account for the six months ended 30 June 2006 based on the estimated charge provided by a qualified actuary. An FRS 17 valuation to assess the liabilities of the pension scheme at 30 June 2006 was not carried out. In the opinion of the Directors there would be no material impact on the reported results if an actuarial valuation had been performed as at 30 June 2006.
2 Taxation
The tax charge is based on the expected full year tax rate together with the movement in the provision for deferred taxation.
3 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. 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.
6 months to 6 months to Year ended
30 June 2006 30 June 2005 31 December 2005
(unaudited) (unaudited) (audited)
Weighted average number of
ordinary shares in issue 24,975,737 24,737,896 24,682,753
Dilutive potential ordinary
shares: Employee share
options 46,754 298,784 218,617
Profit after tax (£) 992,000 544,000 2,229,000
Add: exceptional operating
costs net of tax (£) - 62,000 66,000
----------------------- --------- --------- ----------
Adjusted profit after tax (£) 992,000 606,000 2,295,000
----------------------- --------- --------- ----------
Basic earnings per share -
pence per share (p) 3.97p 2.20p 9.03p
Add: exceptional operating
costs net of tax (p) - 0.25p 0.27p
----------------------- --------- --------- ----------
Adjusted earnings per share -
pence per share (p) 3.97p 2.45p 9.30p
----------------------- --------- --------- ----------
Diluted earnings per share -
pence per share (p) 3.96p 2.17p 8.95p
----------------------- --------- --------- ----------
4 Reconciliation of operating profit to net cash inflow/(outflow) from
operating activities
6 months to 6 months to Year ended
30 June 2006 30 June 2005 31 December 2005
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Operating profit 1,278 656 2,724
Depreciation 95 116 219
Increase in provisions 198 56 137
Cost of share options 10 10 17
Decrease/(increase) in stocks 67 - (361)
Decrease/(increase) in
debtors 567 (692) (1,329)
(Decrease)/increase in
creditors (517) (189) 490
----------------------- --------- --------- ----------
Net cash inflow/(outflow)
from operating activities 1,698 (43) 1,897
----------------------- --------- --------- ----------
5 Further copies of this statement
Copies of this 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.
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