1 the stanley gibbons group final results investors presentation 25 march 2011
TRANSCRIPT
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The Stanley Gibbons Group
Final ResultsInvestors Presentation
25 March 2011
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Contents
Pages
1. Financial Highlights 3-5
2. Operating Highlights 6-8
3. Outlook & Strategic Focus 9-10
4. Internet Development Update 11
5. Acquisitions 12
6. Management Team 13
Appendix I Income Statement 14
Appendix II Balance Sheet 15
Appendix III Cashflows 16-17
Appendix IV Contact Details 18
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Financial Highlights
2010 2009 Variance %
Revenue £26.4m £23.4m + 13%
Adjusted profit before tax £4.5m £4.1m + 8%
Statutory profit before tax £4.3m £4.1m + 5%
Adjusted earnings per share 15.69p 14.70p + 7%
Dividend per share 5.50p 5.00p + 10%
Dividend cover (times) 2.85 2.94 - 3%
Net assets per share 83p 72p + 15%
Net cash £1.8m £3.1m - 40%
Inventories £14.8m £9.3m + 59%
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Financial Highlights
• Sales up 13% with key growth areas being philatelic dealing, investment services, auction commissions and rare historical signatures
• Sales stated net of a reduction of £1.55m, with associated profit of £0.31m relating to a sale made to an investment client in 2009 which was repurchased in October 2010. Excluding this exceptional adjustment, sales were 20% up on prior year
• Gross margin% up from 42.9% to 43.8% benefiting from a reduction in previous provisions made against investment products offering guaranteed minimum returns
• Adjusted profit before tax, excluding exceptional charges of £4.5m (2009: £4.1m), up 8%
• Proposed final dividend of 3.25p (2009: 3p), giving a total dividend for the year of 5.5p (2009: 5p), up 10%
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Financial Highlights
• Cash generated in year of £6.3m (2009: £2.4m) reinvested in stockholding of investment grade items
• Stock levels at 31 December 2010 of £14.8m (2009: £9.3m), up 59%
• Reinvestment of surplus cash balances into high quality rare stock items to support future growth and to provide a higher return to shareholders in current low interest rate environment
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Operating Highlights• Completion of the substantial
refurbishment works on our flagship retail premises at 399 Strand in April 2010, presenting the brand image in line with our mission, to become the largest collectibles business in the world
• Strong sales to ultra high net worth clients benefiting from our ability to source exceptional and rare collectible “trophy” items and top quality rare stamps known to be in areas of interest to our clients
• Development into the Chinese rare stamp market generating £1m sales in the year
• Investment office in Jersey generated sales of £0.7m to Jersey residents from the recruitment of new high net worth clients
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Operating Highlights• The Benham Group contributed sales of
£0.6m and profits of £0.2m in the last quarter of the year
• Excellent ROI from our heightened marketing and PR activities directed towards recruiting new high net worth clients
• 24% increase in autograph sales through focus on the sourcing and sale of “trophy” items and key historical documents
• Auction commissions up 22% on the prior year reflecting the growing strength of this area of our business
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Operating Highlights• Poor performance from Publishing
division in year with a 9% drop in profit contribution. Rationalisation programme generating future annual cost savings of £0.15m implemented in first quarter of 2011.
• Online revenues up 5% in year, representing 7% of total sales
• Increase in overheads of £1.2m in year primarily being an investment towards delivering returns in future accounting periods including:
– Benham overheads (£0.2m)
– Salary costs (£0.4m)
– Marketing costs (£0.4m)
– Depreciation charges (0.1m)
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Outlook & Strategic Focus
• Development of online trading platform, similar to the Amazon and eBay models
• Further development of trading in lucrative Chinese stamp market. This includes the sale of rare stamps from China to our client base and the sale of our products to the 20 million (and rising) Chinese collectors
• Building a presence in the US market, representing the biggest collectibles market in the world
• New investment offices in Switzerland and Hong Kong, to replicate success of investment offices in Guernsey and Jersey
• Working with a highly respected financial institution in Jersey towards the launch of a rare stamp investment fund
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Outlook & Strategic Focus
• Delivery of returns from recent acquisitions – Benham Group and M & N Haworth
• Maximising opportunities from Royal Wedding in April through sale of associated first day covers and other commemorative collectible products. Similar benefits expected in 2012 from the London Olympics.
• Diversification into other collectibles possessing similar qualities to rare stamps such as coins, medals and first edition books
• Continued strengthening of our auction division with the aim of becoming the “Number 1” UK stamp auction house within the next three years
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Internet Development Update
• Successful implementation of Digital Asset Management system in 2010, representing a substantial step forward in the management of data for both online and print publishing
• New Fraser’s Autographs website, www.frasersautographs.com launched in February 2011 and has already reported an encouraging uplift in online revenues
• Principal components of our primary website, www.stanleygibbons.com, will be launched shortly
• Online trading platform scheduled for launch in the 2nd quarter of 2011
• Total investment on above projects of £0.6m in 2010, with a further investment of £0.2m forecast for 2011, including the development of the Benham website
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Acquisitions
• Acquisition of the business and certain assets of specialist stamp dealer, M & N Haworth completed on 31 August 2010 for a consideration of £0.3m, financed out of cash resources with an expected payback within 12 months
• Acquisition of the trade and assets of Benham, the leading publisher of high quality first day covers, completed on 20 September 2010 for a consideration of £1.5m with half paid on completion and the balance payable 12 months later. The consideration was financed by a bank loan of £0.75m; the balance to be funded from cash resources. Expected payback within 4 years.
• Target acquisitions in both rare stamps and other collectibles where we believe they would strengthen and compliment our overall brand offering
• Acquisitions to support geographical expansion into new markets also being considered
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Management Team
• Board changes during year:– John Byfield, appointed April 2010 (Non-executive director)– John Wright, resigned May 2010 (Non-executive director)
• Key managerial appointments in year:– Managing Director of Benham Group (Business Development Director)– Compliance & Administration Manager, Investment services– Retail Manager, 399 Strand
• Key target appointments in 2011:– Head of Auctions– Head of E-commerce– Publisher
• Publishing division undergoing rationalisation programme generating cost and efficiency savings as we develop more towards online publishing
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Appendix I - Income StatementYear ended Year ended
31-Dec-10 31-Dec-09
£'000 £'000
Revenue 26,429 23,365
Cost of sales (14,859) (13,345)
Gross profit 11,570 10,020
Gross profit % 43.8% 42.9%
Administrative expenses (2,269) (1,817)
Selling and distribution expenses (4,864) (4,074)
Exceptional operating costs (150) -
Operating profit 4,287 4,129
Finance income 36 2
Finance costs (19) (18)
Profit before tax 4,304 4,113
Taxation (473) (413)
Profit after tax 3,831 3,700
Effective tax rate 11.0% 10.0%
Earnings per share
Basic 15.22p 14.70p
Adjusted (excluding exceptional charges) 15.69p 14.70p
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Appendix II – Balance SheetAt 31 Dec 10 £000 At 31 Dec 09 £000
Intangible assets 1,014 186
Property, plant and equipment 1,862 1,103
Deferred tax asset 32 124
Trade and other receivables - 118
Non-current assets 2,908 1,531
Inventories 14,774 9,289
Trade and other receivables 8,866 9,848
Cash and cash equivalents 1,838 3,062
Current assets 25,478 22,199
Trade and other payables (5,550) (4,014)
Borrowings (252) -
Current tax payable (349) (296)
Current liabilities (6,151) (4,310)
Retirement benefit obligations (114) (442)
Borrowings (435) -
Other provisions for liabilities (698) (821)
Non-current liabilities (1,247) (1,263)
Net assets 20,988 18,157
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Appendix III - CashflowsAt 31 Dec 10 At 31 Dec 09
£'000 £'000
Cash generated from operations 2,211 4,897
Interest paid (19) (4)
Taxes paid (408) (783)
Net cash generated from operations 1,784 4,110
Purchase of property, plant and equipment (871) (275)
Purchase of intangible assets (604) (114)
Acquisition of business (900) -
Interest received 2 2
Net cash used in investing activities (2,373) (387)
Dividends paid to company shareholders (1,322) (1,196)
Proceeds from borrowings 750 -
Repayments of borrowings (63) -
Net cash used in financing activities (635) (1,196)
Net (decrease)/increase in cash and cash equivalents (1,224) 2,527
Cash and cash equivalents at start of year 3,062 535
Cash and cash equivalents at end of year 1,838 3,062
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Appendix III - Cashflows
At 31 Dec 10 At 31 Dec 09
£'000 £'000
Operating profit 4,287 4,129
Depreciation 170 99
Amortisation 32 23
(Decrease)/increase in provisions (95) 140
Cost of share options 81 71
(Increase)/decrease in inventories (4,081) 2,456
Decrease/(increase) in trade and other receivables 1,181 (3,168)
Increase in trade and other payables 636 1,147
Cash generated from operations 2,211 4,897
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Appendix IV – Contact Details
The Stanley Gibbons Group plc,Registered Office
Martin Bralsford, ChairmanDonal Duff, Chief Operating Officer6 Vine StreetSt. Helier, Jersey, JE2 4WBTel: 01534 766711Email: [email protected]
Stanley Gibbons (Guernsey) Limited
Mike Hall, Chief Executive18 Le BordageSt. Peter Port, Guernsey, GY1 1DETel: 01481 708270Email: [email protected]
Stanley Gibbons Limited
Richard Purkis, Corporate Services Director399 StrandLondon, WC2R 0LXTel: 020 78368444Email: [email protected]
Stanley Gibbons Limited
Mark Henley, Finance Director7 Parkside, Christchurch RoadRingwood, Hampshire, BH24 3SHTel: 01425 472363Email: [email protected]
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Questions?
Contact Details:Mike Hall, Chief ExecutiveTel: +44 (0)1481 708273
Mobile: +44 (0)7781134404Email: [email protected]
“…stamps’ day as an alternative asset class has come – and long-term returns can be first class.”
David Stevenson, Financial Times 28 May 2010