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The Stanley Gibbons Group plc
Annual Report and Accounts
for the year ended 31 March 2016
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Group Annual Report and Financial Statements
for the year ended 31 March 2016
Year ended
31 March 2016
Year ended
31 March 2015
restated
59.1
(10.1)
(28.9)
(4.9)
(62.17)
(10.06)
–
20.4
81.5
22.0
60.0
5.4
1.8
5.1
1.54
10.28
5.0
11.7
143.2
n/a
Financial Highlights
Group Turnover (£m)
Trading profits (£m)
(Loss)/Profit before taxation (£m)
Adjusted (loss)/profit before taxation (£m)
Basic earnings per share (p)
Adjusted earnings per share (p)
Dividend per share (p)
Net borrowings (£m)
Net assets per share (p)
Adjusted Net assets per share (p)*
*(as at 1 April 2016)
Contents
Page
2
3-5
Directors and Advisers
Chairman’s Statement
6-13
Business Review
14-16
Operating Review
17-18
Financial Review
19-20
Corporate Governance
21-23
Report on Remuneration
24-29
Directors’ Report
30
32
33
34
35
Independent Auditors’ Report
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
36-77
Notes to the Financial Statements
78-79
Directors’ Biographical Details
80-84
Notice of Annual General Meeting
Financial Calendar
Annual General Meeting
27 October 2016
The Stanley Gibbons Group plc
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Directors
Company Secretary
Registered Office
Company Registration
Nominated Adviser and
Broker
Auditors
Legal Advisers
Bankers
Registrars
Directors and Advisers
Executive Chairman
Chief Finance Officer
Director
Non-Executive Director*
Non-Executive Director
H G Wilson
A Cook
C P Whiley
M P Magee
H A J Turcan
* Independent
R K Purkis
2nd Floor
Minden House, Minden Place
St. Helier
Jersey JE2 4WQ
Tel: 01534 766711
Registered in Jersey
Number 13177
finnCap Limited
60 New Broad Street
London EC2M 1JJ
BDO Limited
Windward House
La Route de la Liberation
St Helier
Jersey JE1 1BG
Mourant Ozannes
22 Grenville Street
St Helier
Jersey JE4 8PX
Gowling WLG (UK) LLP
4 More London Riverside
London SE1 2AU
NatWest
71 Bath Street
St Helier
Jersey JE4 8PJ
The Royal Bank of Scotland Group PLC
3 Hampshire Corporate Park
Templars Way
Chandlers Ford
SO53 3RY
Capita Registrars (Jersey) Limited
Shareholder Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Tel: 0871 664 0300; from overseas +44 20 8639 3399
Website
Further financial, corporate and shareholder information is available in the
investor relations section of the Group’s website: www.stanleygibbons.com
The Stanley Gibbons Group plc
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Chairman’s Statement
Introduction
As the newly appointed Chairman of Stanley Gibbons this is my first annual report for the Group. I joined the Board
in May 2016 during a very difficult period for the Group which encompassed the appointment of corporate
restructuring specialists to undertake a comprehensive review of all operational aspects of the Group, a subsequent
profit warning and a fundraising designed to nurse the Group through a liquidity squeeze. In short, things had gone
badly adrift and urgent action was required to recover the situation. The 43% fall in net asset value, reflected in the
table in the Financial Review on page 17, has resulted from a combination of both the inadequately integrated and
managed acquisitions and internet development activities of recent years alongside the more pervasive impact of
the reinvestment profile of the Groups investment contracts which had an element of contractual buy-back. These
contracts were sold between 2005 and 2013 and have resulted in a restatement of prior year earnings relating to all
open contracts as at 1 April 2014. Although much remains to be done, substantial progress has been made over the
last nine months with a reconstituted Board and relocation of Executive Directors to the UK, together with significant
operational changes which are described in detail in the Business Review below.
Trading and Operations
As announced today trading conditions have remained difficult since we forecast an adjusted loss before tax of
between £1m and £2m, for the year ended 31 March 2016, on 23 February 2016, with:
•
•
•
•
a 43% reduction in net assets as a result of a restatement of prior years’ results and a significant reduction in
the carrying value of certain other assets.
Turnover at £59.1m, being 28% below budget and 15% lower than the prior year;
Gross Margin at 40% (2015: 52%) was also lower, partly due to high margins on major collections in the previous
year and a reduced auction schedule in both Baldwin’s and Dreweatts;
the adjusted loss before tax, excluding exceptional charges, was £4.9m (after a prior year adjustment of £1.2m)
largely attributable to a loss of £2.0m at The Marketplace and a loss of £1.3m at Mallett;
As a consequence of the poor performance outlined above bank debt rose over the year to £21.9m (31 March 2015:
£11.7m), with actual debt peaking at £24m in March 2016 and currently at £18m. The intention is to reduce the
long-term gearing of the business through a sharp focus on increasing sales and in particular reducing the level of
stock held which has grown disproportionately in recent years.
Following the appointment in February 2016 of our new auditors, BDO Limited (“BDO”), the Board has revisited the
accounting treatment previously adopted in connection with certain transactions and has concluded that it was not
in accordance with the applicable accounting standards. Accordingly the Board has decided to adopt the appropriate
accounting policies in these accounts. This has resulted in a restatement of prior years’ results and a substantial
write-down of balance sheet assets. These changes stem largely from fundamental errors in the accounting treatment
previously adopted, most notably of investment product sales in previous years, and adjust for all open contracts in
existence as of 1 April 2014. Although the underlying products were conceived in 2005, these changes do not affect
the reported cash position at 31 March 2016 and we have not sought to restate earlier accounting periods. In addition
to these adjustments, the Board has also reduced the carrying value of certain other assets, in particular goodwill
relating to the acquisition of Noble Investments and capitalised IT costs relating to the development of The
Marketplace which, following a decision that it was not economically viable, was closed on 7 September 2016.
Furthermore, given the distorting effect of the March fundraising completed on 1 April 2016, we have shown
adjusted loss per share and net asset per share figures too.
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Chairman’s Statement
continued
The restructuring programme, initiated in late December 2015, is progressing to plan with annualised operating cost
savings of some £10m identified to date where full benefits will be seen in the financial year to 31 March 2018. The
main elements of the cost rationalisation have involved the reduction of office/retail premises, a dramatic down-
sizing of the Interiors division together with a relocation of the remaining website development activities for the
on-line trading from the USA to the UK. Cessation of the development of The Marketplace accounts for £1.5m of
the identified cost savings. The Board remains confident that the Group is now on track to deliver further progress
in accordance with the restructuring plan following a year of substantial transition.
Dividend
Given the results for the year, the Board is not recommending the payment of a final dividend for the year to 31 March
2016 (12 months ended 31 March 2015: 5.00p inclusive of a final dividend of 1.75p paid on 17 August 2015). The
Board will review the dividend policy regularly taking into account trading conditions, opportunities for reinvestment
in future growth and working capital requirements.
Management and Board Changes
The restructuring review identified the need for dramatic changes across the Group which were long overdue and
have now been initiated. We remain committed to providing a top quality service to our customers primarily through
our world-class experts in their respective fields. Within the internationally recognised brand names the specialists
differentiate us from our peers and we will look to grow these teams.
All Executive Directors are now London based where they can provide ongoing support to the individual teams as
we rebuild the business. As part of the review, there has been a significant reduction in the head-count at both the
Interiors division and The Marketplace with further initiatives underway to reduce central overheads. At Baldwins
we have recently appointed a new managing director to galvanise the restoration of the coins division following the
departure of a number of staff.
In light of the above I would like to thank all of our staff, on behalf of the Board, for their hard work and support over
what has been a difficult time for the Group. The Group is fortunate to have a dedicated workforce, with a great
depth of historic knowledge, commitment and expertise, and it is our intention to recognise this contribution and
loyalty through the issue of share options to staff to align their interests with our shareholders.
There has been an almost complete change in the Board over the last year. Martin Bralsford, Mike Hall, Donal Duff,
Simon Perrée and Clive Jones have all stepped down whilst Clive Whiley, Henry Turcan, Andrew Cook and I have
joined the Board. I would particularly like to thank Martin Magee who has remained on the Board during this
transitional period and has chaired the Audit Committee very diligently. Martin has indicated that he plans to step
down at the AGM.
Strategy for the Future
The objectives of our revised strategy are to ensure that we build long-term relationships with our clients across a
wide range of international markets where we can provide differentiated offerings and build brand recognition. By
focusing investment on our core businesses and providing premium service to our customers we will seek to deliver
long-term value to shareholders in the process. We have already achieved significant progress with the integration
of the acquisitions made in recent years, to derive the benefits which should have been gained. This will be a key
part of our plans over the coming months as we endeavour to establish a sustainable and profitable business model
for the Group.
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Chairman’s Statement
continued
The Board believes that only by re-focusing on Stanley Gibbons core branded activities, whilst maintaining disciplined
capital allocation, will the fortunes of the Group be restored and along with it shareholder value. Investment
customers will continue to be a key customer focus for our business, but we will also build on the collector part of
our trade which has historically been the foundation of the Company.
Outlook
The market for rare collectibles and fine art remains buoyant for collectors and given the low interest rate environment
continues to offer an attractive alternative for investment. The Brexit vote has added a degree of uncertainty over
the macro environment but quality collectibles have traditionally maintained their value and appeal over the long-
term and particularly in times of uncertainty.
The restructuring of Stanley Gibbons has been unsettling for all concerned with the business, and the Directors
would like to thank all our stakeholders for their ongoing support during this transitional period. There will inevitably
be more challenges ahead but we have taken definitive action with a view to restoring the business and reputation
of the Group.
Harry Wilson
Chairman
3 October 2016
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Business Review
The March 2016 fundraising Circular highlighted that the year to 31 March 2016 had been an exceptionally difficult
year for the business with a marked downturn in like-for-like revenue, gross margin and trading profits which,
amongst other factors, had led to a severely constricted cash position. In late December 2015, the Board had
appointed corporate restructuring specialists to undertake an assessment of the banking and fundraising options
and to oversee a root and branch review of every facet of the Group’s business, targeting annualised operating cost
savings of £5m. Clive Whiley, who has been overseeing the restructuring programme, joined the Board as a director
following the successful conclusion of the fundraising on 31 March 2016.
The net proceeds of £12.4m, raised in March, were used to repay a temporary bank overdraft, which had been
taken out in January 2016 to support the rationalisation exercise, to facilitate the integration of previous acquisitions
and to provide additional working capital.
Restructuring Update
Summary
The restructuring process has required a number of difficult decisions including a reduction in headcount,
rationalisation of premises and other overhead costs, the closure of cash-consuming business lines and the down-
sizing of non-core businesses in order to concentrate resources on supporting activities deemed core to the Group’s
future. There have also been changes to the senior Board executives.
Harry Wilson was appointed as Chairman, in a non-executive capacity, in May 2016 and as an executive following
the board departures in July 2016 of Mike Hall (Chief Executive) and Donal Duff (Chief Financial Officer). At the
same time, Andrew Cook, who had been recruited to be the London-based Managing Director, joined the board as
Chief Financial Officer.
Significant progress has been made with the restructuring plan including the closure of The Marketplace and the
re-scoping and scaling back of our Interiors division, with a view to better aligning revenue and costs before the end
of the current financial year, as we completed the rationalisation and integration of the Noble and Mallett acquisitions.
As a result, annualised operating cost reductions already exceed the initial target of £5m, with a total of £10m of
cost savings now identified. The full cash benefit will be seen in the full year results to March 2018. The projects
requiring wholesale change have either been completed or are currently underway however the rationalisation and
continued drive for more efficient correlation between costs and revenue growth will be an ongoing process.
The dramatic changes were necessary and overdue and, notwithstanding the continuing challenges confronting the
business, there has been strong internal recognition of the need for change.
Significant accounting changes and balance sheet adjustments
Revenue Recognition
On 30 June 2016 we announced our intention to release results for the year ended 31 March 2016 later than in
previous years, reflecting the additional complexity of the audit due to the ongoing restructuring and the
appointment of new auditors. There have been some significant adjustments in this year’s accounts and these
are summarised below:
The Board has revisited the accounting treatment previously adopted in connection with certain transactions and
has concluded that it was not in accordance with the applicable accounting standards. Accordingly the Board has
decided to adopt some, significantly changed, accounting policies in the presentation of the accounts. These have
resulted in a restatement of prior years’ results and a substantial write-down of balance sheet assets. These changes
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Business Review
continued
stem largely from fundamental errors in the accounting treatment previously adopted, most notably of investment
product “sales” recognised in previous years.
In conjunction with the audit the Board has reviewed its accounting policy and past accounting treatment with regard
to the recognition of revenue in the philatelic trading business, specifically in relation to the contractual terms of
certain of the investment plans which had been offered by the Group in earlier years and the requirements of
International Financial Reporting Standards. The Board concluded that the recognition of revenue in relation to
certain of the investment plans had not been in accordance with accounting standards and elected to adopt a new
policy in the 31 March 2016 financial statements and to correct the accounting treatment in the financial statements
for the period from 1 April 2014 through to 31 March 2016 by way of a prior year adjustment (“PYA”). The
consequences of this correction of accounting policy for revenue recognition have been:
•
•
•
an increase in the amount of creditors at 31 March 2015, by £33.5m, to reflect the revenues that have been
written back but some of which is expected to be recognised in future years upon maturity of the plans, and
an increase in stock by £18.6m to include those items where the Group has a contractual obligation to
repurchase them from clients at the end of the investment plan term (notwithstanding that, historically, the
majority of clients have not exercised this option at the end of their contract);
a reduction of £3.6m in the carrying value of stock, in order to reflect stock which has previously been
repurchased from maturing investment plans at original cost instead of at its repurchase price;
depending on subsequent events, the value of outstanding investment plans, which offer clients an option at
the end of the contract term to sell back to Stanley Gibbons (Guernsey) Limited, will fall to be recognised as
revenue in later financial periods, including £7.0m in the year ended 31 March 2016;
It is emphasised that there has been no change to the cash position of the Group as a result of the above change in
accounting policy and consequential PYA’s.
Whilst these and other accounting adjustments discussed elsewhere have resulted in a reduction in the Group’s
underlying net asset value, to £38.4m, as at 31 March 2016, the Board considers that it is fundamental to the future
of the Group that all sales efforts are focused on selling stock on a profitable basis and reducing the average
stockholding period. The above changes ensure that the historic inflated carrying value of certain stock items is
reversed and will hopefully provide a new basis from which to generate profitable cash sales going forward.
Impairment of Goodwill and intangibles
In addition to the revenue recognition adjustments, the Board has also reviewed the carrying value of certain other
assets, in particular goodwill relating to some of its recent investments and capitalised IT costs. This has resulted in
a write down, of £13.9m, against the value of intangible assets during the year ended 31 March 2016 although,
again, it is emphasised that this has had no impact on the reported cash position of the Group.
Provisions against trade Debtors and Stock
Similarly, following a review of the trade debtor balances, which amount to £12.9m and some of which originate
from over 2 years ago, the Board has considered that it would be prudent to make some provision against these
amounts due to the Group. Accordingly, it has taken a total provision of £3.0m in the year ended 31 March 2016
but has commenced an active debt collection programme designed to both validate the substance of the debtors
and generate cash for the Group.
Additionally, following a review of the stock carrying values certain items had been carried at above their net realisable
value, while it should be stressed that this was limited to a small group of items. There was also an issue in physically
locating certain stock items particularly within the interiors division, which had accumulated within stocks over
several years. The total impact of these provisions was £1.4m
The Stanley Gibbons Group plc
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Business Review
continued
The Marketplace
Notwithstanding the substantial allocation of Group resource since its inception, a full review of the E-Commerce
strategy, initiated in February 2016, determined that The Marketplace had failed to deliver the platform hoped for
at the outset and was still someway short of doing so.
Accordingly, having consumed £10m over the last three years, in order to significantly reduce the cash-burn, the
Board took the decision to:
•
•
cease development in the USA, as per the transition plan outlined earlier, and to decouple all links between
The Marketplace and the continuing Stanley Gibbons website, which was transferred contemporaneously to
a new UK based platform in September
the Board continues to believe there is an opportunity to grow online revenues and will now refocus resources
upon selling the Group’s own proprietary assets of high quality collectibles and world renowned publications.
The closure of The Marketplace on 7 September finally brings to an end an ill conceived, badly managed project
which was allowed to severely over-run budgeted expenditure. We will now seek to retrieve as much of the
embedded development IP as possible to kick-start our revitalised E-Commerce strategy at Stanley Gibbons.
Litigation
Following its acquisition of Mallett plc in October 2014, the Company learned that government regulators in the
United States were investigating transactions that had occurred since 1 January 2010 involving a former client of
Mallett Inc., Mallett’s New York-based subsidiary. The former client is not a related person or affiliate of the Group.
This issue had not been disclosed to the Company by the directors of Mallett plc during the due diligence process
prior to the acquisition.
The Group continues to cooperate fully with the U.S. Securities and Exchange Commission (the “SEC”) and the
Department of Justice (“DOJ”), including responding to a subpoena from the SEC requesting documents and
providing information to the Government regulators as requested. Both the SEC and DOJ are aware that Mallett’s
new owners were not involved in the events underlying the investigation, and there have been discussions with the
SEC regarding resolution of these matters.
On 25 August 2015, the DOJ filed criminal charges against the former client, arising in part out of his dealings with
Mallett Inc. As it relates to the Group, the former client was alleged to have conspired with a then unnamed New
York based employee of Mallett Inc. to defraud a court-appointed receiver and to obstruct the administration of
justice in the United States. On 19 May 2016, the DOJ filed criminal charges against Henry Neville, a former director
of Mallett plc and the previously unnamed New York based employee of Mallett Inc., arising out of his dealings with
the former client, the court-appointed receiver, and the Government’s investigation into his conduct. On the same
date, Mr Neville pleaded guilty to all criminal charges against him. Mr Neville awaits sentencing, as does the former
client who has also pleaded guilty to certain charges against him.
Whilst the investigations are ongoing, no criminal or civil charges have been filed against Mallett Inc. or any Mallett
group company to date. The Group continues to retain the services of US legal counsel to advise it in these matters.
The investigations are not being conducted in public, and the Directors cannot predict with certainty whether Mallett
Inc. or any other company or person in the Mallett group will be named in civil or criminal claims or litigation as a
result of the investigations.
Though the transactions pre-dated the acquisition there was no provision in the financial accounts of Mallett plc or
its subsidiaries for any costs relating to them. A fair value adjustment was made subsequent to the acquisition as at
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Business Review
continued
that point the costs in responding to the subpoena from the SEC and/or assisting the US authorities with their
investigations were unavoidable. The estimate made at the time was £0.9m. Subsequently, with the involvement of
the DOJ, this estimate has proved to be inadequate.
At present the Board’s best estimate of the subsequent costs as at 31 March 2016 total an additional £1.1m. This
amount is the total accrual at the year end. Any further potential costs cannot be estimated with any degree of
accuracy and could have a material adverse effect on the Group.
Funding
The existing borrowings and facilities, all of which are secured and guaranteed by various members of the Group,
comprise:
•
a £8.3m loan facility, originally £10m, taken out to enable the acquisition of Noble in 2013 and currently
benefitting from a moratorium on capital repayments, which will recommence at £500,000 per quarter from
31 March 2017 but subject to earlier part-repayment in the event of a major asset disposal; and
•
a £10m revolving credit/overdraft facility, which is available until 31 May 2018.
The Group’s bank continues to be supportive as reflected in both the moratorium on loan repayments and in the
revision of the ongoing banking covenants, at the time of the fundraising, in order to accommodate the sharp decline
in trading performance. Furthermore on 20 September 2016 the bank agreed a variation in the asset cover covenants,
necessary as a result of the PYA, whilst the restructuring programme is given time to take effect.
What went wrong?
Shareholders deserve an explanation of the combination of events leading to the severely disappointing trading
result and significant diminution in shareholder value reflected in these financial statements.
The commercial logic behind the acquisition of Noble, for £46m in November 2013, appeared compelling:
•
•
•
the creation of a group of companies offering synergistic goods and services;
integration and diversification opportunities;
a complementary, experienced management team with highly incentivised key executives.
The subsequent build-up of debt, from a net cash position post the Noble acquisition, peaked at some £22m in
March 2016 and included a number of significant outflows, as follows:
•
•
•
a £10m loan taken out to fund the acquisition of Mallett in October 2014;
£10m of cash spend incurred in developing The Marketplace on-line trading platform, a significantly higher
amount than budgeted, over the last 3 years; and
some £8m of additional working capital build-up in the business, partly offset by the receipt of over £4m from
the post-acquisition sale of Noble’s London premises, at a time when trading was slowing down.
In fact, whilst the new management team has already acted swiftly to resolve the first two cash outflows detailed
above, it is the last element which has both proved more complex to isolate and represents a more fundamental
deterioration in the Groups core business. It is now clear that the non-cash sale/reinvestment profile of the Stanley
Gibbons Investment division’s investment contracts, sold between 2005 and 2013, which also retained an element
of contractual buy-back, also fuelled the worsening net debt position.
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continued
The Group no longer offers investment plans with contractual buy back options of any kind.
Current management believes that the integration process, following the acquisitions of Noble and Mallett, was
poorly managed and as a result failed to instil a cohesive, UK based management structure with adequate challenge
and competition for capital. In our opinion this in turn led to:
•
•
•
•
•
a failure to integrate and derive synergies and opportunities from the acquisitions;
an over-investment in an the e-trading platform with no tangible return;
an over-dependence on too few clients;
an over-investment in illiquid assets as management time was diverted;
a Group increasingly leveraged as a consequence of retaining existing customers by novating the customer
from one investment product into another alongside the recognition of non-cash revenue;
resulting in a loss of confidence in the management and brands, client and earnings erosion, cash outflows and a
materially impaired balance sheet.
In consequence, the rationale for the relocation of the Executive Directors to London, in July 2016, as reinforced
with specialist directors with change management, financial, retail and collectibles experience, was to introduce a
robust, cash-driven, UK based backbone to the business.
Restructuring Timeline
The key actions addressed in the implementation of the restructuring plan, which encompassed a wide
bandwidth, were:
•
•
January: commencement of a 90 day review of the Interiors division, alongside stabilization of the financial
position, where £6m of additional bank facilities were needed to bridge liquidity through to bank covenant
tests due on 31 March 2016;
February: initiation of a review of The Marketplace, based in the USA, and addressing the vacuum created
by the untimely resignation of the former auditors, necessitating the appointment of new auditors and
professional advisors ahead of a fundraising;
• March: issued Circular to shareholders seeking to raise additional funds through the issue of new equity, to
allow us to extinguish the £6m temporary bank overdraft and agree a lending package consistent with the
difficult trading conditions, extending the bank facilities through to 31 May 2018;
•
April: receipt of £12.4m (net of costs) from the fundraising, repayment of the temporary bank overdraft,
implementation of the restructuring of the Interiors division in parallel with completing the protracted
integration of the Noble and Mallett acquisitions;
• May: appointments of Harry Wilson, Henry Turcan and Andrew Cook and exchange of contracts for the sale
of the Group’s Mayfair property leases (net consideration of £2.4m) as well as the sub-letting of a substantial
part of the Manhattan, New York premises at a premium;
•
June: commencement of a review of the investment plans offered by Stanley Gibbons (Guernsey) Limited
in earlier years. We also announced a delay in the publication of the preliminary results for the year ended
31 March 2016 owing to the additional complexity of the audit due to the ongoing restructuring and the
appointment of new auditors;
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Business Review
continued
•
•
•
July: announcement of the relocation of the Executive Directors to London, the departure of Mike Hall (CEO),
Donal Duff (CFO), Martin Bralsford & Simon Perrée as directors and that the Board was reviewing its accounting
policy and past accounting treatment with regard to the recognition of revenue in the philatelic trading business,
specifically in relation to certain of the investment plans offered in earlier years;
August: the phased closure of the US based activities associated with The Marketplace, together with the
decoupling of all links to the continuing Stanley Gibbons website, which was transferred contemporaneously
to a new, UK based, e-commerce platform. We also completed on the lease of new premises, in Pall Mall,
London for the Interiors division, providing a fulcrum from which the business can resume growth;
September: commencement of the restructuring of the philatelic and coin businesses, announcement of the
departure of Clive Jones as a director, consolidation of the security available to support bank facilities and the
start to the unwinding of the working capital squeeze. Finally, following the successful completion of the initial
phase of the restructuring plan a formal independent review of the business over recent years has been initiated
to identify potential avenues of redress for the Group.
Whilst significant progress has been made over the last nine months, as highlighted above, there is no room for
complacency as the new management team seeks to:
•
•
•
•
complete the realignment of total operating overheads to our sustainable, brand-driven, revenue streams, to
ensure that the Company becomes both cash-generative and profitable, providing a financially secure platform
upon which to build the less predictable, but incrementally profitable, one-off high value sales or major
auction consignments;
actively manage the investment plan profile in a manner which generates sound returns for both the customer
and company;
exploit product gaps, within the core stamp and coin divisions, alongside harnessing any increased interest in
rare collectibles as an alternative investment; and
identify a capital-light method of tapping into the increasing interest in collectibles in parts of the world outside
of the Group’s existing areas of operation, principally the UK and the USA, in particular the growing interest
from the Asian markets, in all types of high quality collectibles.
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continued
Current Corporate Structure
As part of the rationalisation and repositioning of the business the Board is reconsidering the benefits of off-shore
status for the Group as a whole, recognising that a majority of the Group’s activities, following the acquisitions of
recent years, and the closure of the US activities in September, are located in the UK. The above diagram highlights
the business entities within our Group structure, as at 30 September, which:
•
•
•
•
preserves the Interiors division as a standalone legal entity and aggregates the UK activities associated with
the investment business within the philatelic and coins head office at The Strand, London;
recognises that the UK philatelic and numismatic businesses should remain separate from the Interiors division
in order to provide a well-balanced allocation of executive resource;
protects the current location of the Channel Islands based, client investment plan activities which are ring-
fenced in Guernsey; and
consolidates the Group assets in order to optimise the security available to support the UK based bank facilities.
Operating Structure
Whilst the Group’s registered office remains in Jersey, the decision was taken to relocate the Executive Directors to
the London head office. This decision was driven by the detailed review of the businesses which identified that
performance had deteriorated with an absence of executive direction at the London head office. The new operating
structure will enable:
•
•
•
more effective and cohesive use of existing executives and see Board and Executive Committee costs reduced
by over 40%;
the proposed flat management structure which will see a move to a separate Interiors division operating board,
alongside an SG Executive Committee, including embedded stamps/coins representation co-opted from within
the business, based in London; and
marketing support, to be formed on an ad hoc basis, across the various disciplines to support high-level,
targeted pitches for large estates, specialist collections and other opportunities.
Finally the Board has elected to follow best practice with all Directors to be re-elected annually.
The Stanley Gibbons Group plc
12
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Business Review
continued
Interiors Division
The interiors division was formed from the acquisitions of Noble and Mallett, in 2013 and 2014 respectively, and
comprises The Fine Art Auction Group (“TFAAG”), the holding company for the sub-group, Dreweatt and
Bloomsbury, both auction companies for paintings, books, jewellery, decorative arts, etc and Mallett (UK and US),
which is a historically respected firm of fine and decorative art and antiques dealers specialising in 18th Century
English Furniture.
There were several senior level departures in 2015, as a result of both management friction and the ongoing
Regulatory matters in the USA, and the division was comprehensively restructured in the first half of 2016.
Accordingly, of the initial £5m of annualised operating cost savings, most were achieved by premises and staffing
rationalisation in this division leading to a significantly reduced cost base, including the disposal of the leasehold
interests in New York and London in order to accommodate a more realistic sales budget.
Interiors was first to enter the restructuring phase, in January 2016, and the division has recently stabilised at the
operating level, will move into the new Pall Mall premises before the end of the year and management is hopeful
that, as the effects of the cost-cutting come through, it will be better positioned to trade profitability by the end of
the financial year.
The Stanley Gibbons Group plc
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Operating Review
Investments
Philatelic
Publishing
AH Baldwin
Interiors
Other
Corporate overheads
Finance charges
Trading sales and Profits
Amortisation of customer lists
Pension service and share option charges
Finance charges related to pensions
Exceptional operating charges
Group total sales and (loss)/profit before tax
12 months to 31 March
2016
2016
Profit
Sales
£’000
22,447
7,545
3,039
8,213
16,961
932
–
–
59,137
–
–
–
–
59,137
£’000
1,151
(113)
320
1,987
(7,545)
(1,819)
(3,734)
(392)
(10,145)
(364)
(437)
(176)
(17,769)
(28,891)
12 months to 31 March
2015
2015
Profit
Sales
restated
restated
£’000
£’000
20,628
9,394
2,937
9,204
14,861
3,022
–
–
60,046
–
–
–
–
60,046
4,604
984
773
2,532
1,135
(1,146)
(3,228)
(255)
5,399
(360)
(518)
(170)
(2,530)
1,821
Overview
Group turnover for the year ended 31 March 2016 was £59.1m (2015: £60.0m as restated) turnover was £0.9m,
2% lower than the prior year.
The gross margin percentage for the year ended 31 March 2016 was 40.3% (2015: 51.5% as restated).
Trading losses, before accounting adjustments including exceptional operating charges and finance charges related
to pensions, were £10.1m for the year ended 31 March 2016 (2015: trading profit of £5.4m as restated). The
substantial decline in trading profits compared to the prior year was the result of a decline in trading performance
in all trading divisions in the Group, particularly investments, philatelic trading and retail operations and the Interiors
division (comprising Mallett Antiques and Dreweatts & Bloomsbury Auctions).
Philatelic and investment trading performance suffered from a material reduction in revenues generated from sales
of high value philatelic rarities to high net worth clients compared to the prior year. The Interiors division experienced
a very challenging second half trading during a period of substantial restructuring and reorganisation.
Loss before tax for the year ended 31 March 2016 was £28.9m (2015: profit before tax of £1.8m as restated). Losses
incurred in the year can broadly be attributed to the expenditure on the development of the online marketplace of
£2.0m and exceptional charges of £24.0m relating primarily to the write-off of The Marketplace and the impairment
of goodwill arising from historic acquisitions.
Investments
Investments sales were £1.8m (9%) higher than last year with profit contribution down by £3.5m (75%).
Our offices in Asia (Hong Kong and Singapore) experienced a strong second half performance following a difficult
first half contributing sales for the year of £3.4m (2015: £2.3m). The recovery in trading performance in the second
half of the year vindicates our strategy to continue to focus on high-value investment sales business.
The Stanley Gibbons Group plc
14
242519 Stanley Gibbons RA pp01-pp23 05/10/2016 23:25 Page 15
Operating Review
continued
Philatelic Trading and Retail Operations
Philatelic trading and retail sales were £1.8m (20%) lower than last year with profit contribution down by
£1.1m (111%).
The decline in sales was primarily in the GB stamp market where sales continue to be sluggish.
Publishing and Philatelic Accessories
Publishing and philatelic accessory sales for the year ended 31 March 2016 were £0.1m (3%) higher although profit
contribution was down by £0.5m (59%).
The reduction in profit contribution, despite increased sales, was due to lower gross margins, following the decision
to outsource distribution of a substantial proportion of our catalogues, albums and accessory stock ranges at the
beginning of the financial year. The full cost savings from outsourcing have not yet been fully realised and further
overhead reductions planned will increase profit contribution in subsequent financial periods. As a result of
outsourcing, the cost of inventories of catalogues, albums and accessories reduced from £1.2m at 31 March 2015
to £0.3m at 31 March 2016.
A H Baldwin
Sales of coins and military medals, through Baldwin’s, for the year ended 31 March 2016 were £1.0m (11%) lower
and profit contribution was down by £0.5m (22%).
The second half trading performance of Baldwin’s suffered to some extent as a result of the unexpected resignation
of its Managing Director, who left the business in November 2015 and has now been replaced. Trading performance
was specifically held back by lower levels of auction consignments compared to the prior year, but still delivered a
reasonable trading performance through stronger retail and trade sales, reflecting the strength of the market for
rare coins at this time.
Interiors
Sales of antiques and other collectibles for the year ended 31 March 2016 were £17.0m (2015: £14.9m) incurring
a loss of £7.5m (2015: profit of £1.1m). This deterioration was mainly caused by restructuring and exceptional costs
mainly through the areas highlighted below.
Dreweatts & Bloomsbury results were lower than anticipated during a period of substantial restructuring and the
departure of senior executives within the team. As part of the fundamental review of this part of the business, the
fixed cost base has been substantially reduced in terms of salary and property costs to enable the business to operate
profitably on reduced forecast revenue assumptions.
The Mallett business underwent a fundamental restructuring in the year, including the departure of the executives
and senior management team. Similarly to Dreweatts & Bloomsbury, the fixed cost base has been substantially
reduced and there is now a credible business plan in place, which is based on a significantly scaled back business
and revenue assumptions.
Corporate Overheads
Corporate overheads for the year ended 31 March 2016 were £3.7m (2015: £3.2m). Corporate overheads include
Board costs, executive management and support functions in managing the Group including Finance, HR, Marketing
The Stanley Gibbons Group plc
15
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Operating Review
continued
and Customer Services. Corporate overheads will be materially lower going forward following completion of
restructuring plans.
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 2016 were £0.9m (2015: £1.0m). In the opinion of the Directors, such accounting
charges do not form part of the operating performance of the Group.
Exceptional Operating Charges
Exceptional operating charges/(income) can be further analysed as follows:
Impairment of intangible assets
Marketplace intangible asset written off
Loss on sale of business
Pension scheme (recovery)/costs
Professional fees for corporate activity
Restructuring costs
Stock provisions
Profit on disposal of tangible fixed assets
Deferred consideration
Impairment of tangible fixed assets
Impairment of receivables
Other exceptional operating charges
Legal costs in relation to SEC investigation
Year ended
31 March 2016
£’000
Year ended
31 March 2015
£’000
13,895
5,986
–
(1,968)
819
1,156
1,373
(189)
–
230
1,618
–
1,074
23,994
–
–
2,331
895
1,161
–
225
(1,543)
(363)
–
500
49
–
3,255
The exceptional income of £2.0m recognised in the year relates to the net recovery settlement in respect of legal
action against the professional advisers of the Company’s defined benefit pension scheme.
The impairment of intangibles comprises Baldwins (£11.0m), Apex (£1.5m goodwill, £0.1m brands and £0.1m
customer list) Bid for Wine (£0.2m) and Mallett customer lists and computer software (£0.8m).
As an integral element of the fund raising completed in March 2016, the Board initiated a rationalisation exercise as
part of a review of the Group’s fixed cost base and effective utilisation of properties and other resources. Exceptional
one-off restructuring costs incurred in the year were £1.2m.
Clive Whiley
Director
3 October 2016
The Stanley Gibbons Group plc
16
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Financial Review
Statement of Financial Position
As previously highlighted, there have been several historic and current year accounting adjustments required to be
processed in these accounts. The impact of these adjustments on the consolidated net assets is summarised below.
Adjustment due to incorrect revenue recognition – previous years
Adjustment due to incorrect revenue recognition – current year
Adjustment to correct incorrect fair value calculation for Mallett
Impairment of goodwill and customer list of Noble Group
Marketplace intangible asset written off
Stock higher than net realisable value, and written off
Provisions against historic bad debts
Consolidated net assets before adjustment listed above
Final consolidated net assets as at 31 March 2016
31 March 2016
£’000
(15,892)
679
974
(13,895)
(5,986)
(1,373)
(1,618)
(37,111)
75,503
38,392
The total adjustments of £37.1m include £19.9m of intangible assets write-downs. The net assets at the balance
sheet date of £38.4m equates to 81p per share. On the 1 April, immediately after the issue of new shares and the
receipt of the net proceeds of £12.4m, the net assets per share were 22p.
Despite these adjustments 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.
Philatelic rarities
Philatelic stock (general)
Coins and medals
Autographs, historical documents and related memorabilia
Antiques
Publications, albums and accessories
31 March 2016
£’000
44,019
4,973
6,987
3,027
2,472
326
61,804
31 March 2015
restated
£’000
50,839
4,226
6,553
5,397
4,807
1,226
73,048
Cash Resources
As at the balance sheet date the Group had a net overdraft facility of £6.0m, a short term loan of £0.1m, a revolving
credit facility of £10.0m (the “RCF”) and an additional loan facility of £9.0m, totalling £25.1m. At the same date the
utilised amounts were £5.0m, £0.1m, £8.0m and £9.0m respectively totalling £22.1m.
On the 1 April 2016 the Company received net proceeds from the issue of new shares of £12.4m and £5.0m was
applied in repaying the overdraft facility that was subsequently cancelled.
In June 2016 the Group sold a leasehold property for £2.5m and part of these proceeds were used to repay the
£9.0m loan facility, which subsequently remained at £8.3m.
As at 27 September 2016 the Group had £1.1m of headroom on the £10.0m revolving credit facility and the loan A
Facility was £8.3m.
The Stanley Gibbons Group plc
17
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Financial Review
continued
Following the reduction in the Group’s net assets as detailed above the bank covenant relating to net assets, which
was a minimum of £75.0m has now been reduced to £40.0m. Whilst the net assets in the balance sheet as at
31 March were £38.4m, the share issue in April 2016 increased this figure by approximately £12.4m so this covenant
will be met. The other covenants in the bank facilities relate to stock cover ratios and our forecast show these will
continue to be met for the foreseeable future.
Finance costs
Finance costs of £611,000 (2015: £428,000) comprise loan interest and charges on the finance facilities with RBS of
£435,000 (2015: £258,000) plus a cost of £176,000 (2015: £170,000), representing the interest on net defined
benefit liabilities under IAS19 (Amendment) “Employee Benefits”.
Taxation
The tax charge for the year to 31 March 2016 (excluding deferred taxation & capital gains tax) was £0.3m (2015:
£0.4m) incurred on UK and overseas profits. Profits from Channel Island trading companies are currently subject to
tax at 0%.
Dividend
In light of current trading and liquidity considerations, the Board is not proposing the payment of a dividend in
respect of the year ended 31 March 2016 (2015: 5.00p).
Prior year adjustment
These financial statements reflects two prior year adjustments, one in respect of the incorrect fair value exercise on
the acquisition of Mallett reflected in the previous year’s financial statements and one in respect of the previously
highlighted issues regarding the treatment of revenue for some investment products. Details of these prior year
adjustments are detailed in note 31 a and b.
Accounting Policies
Accounting policies are detailed in Note 1 to the Financial Statements on pages 36 to 44.
Andrew Cook
Chief Finance Officer
3 October 2016
The Stanley Gibbons Group plc
18
242519 Stanley Gibbons RA pp01-pp23 05/10/2016 23:25 Page 19
Corporate Governance
So far as is appropriate, the Board aims to apply the underlying principles of the UK Corporate Governance Code,
having regard to the size of the Group. The principal areas where these are applied in the running of the Group are
set out below.
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.
Audit Committee
The Audit Committee comprises only independent Non-Executive Directors. Following the resignation of C S Jones
as a Director on 13 September 2016 the Board has resolved to vest, as a temporary measure, the powers of the
Audit Committee in M P Magee, the sole independent Non-Executive Director and Chairman of the Audit
Committee, until further non-executive appointments to the Committee are made.
The Committee met four times during the period since approval of the previous financial statements. It has written
terms of reference, which were updated in March 2014, 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, following the publication of the revised version of the UK Corporate Governance Code, 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. M P Magee has concluded that this is the case and has
reported this to the Board.
As announced on 23 February 2016, BDO Limited were appointed as auditors following the resignation of Smith &
Williamson Audit Limited because they considered the risks and uncertainties associated with the audit to exceed
the level that they were willing to accept.
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).
A number of significant accounting policy changes and balance sheet adjustments were applied in arriving at the
final figures in the financial statements and these have been extensively covered elsewhere in this document.
The Stanley Gibbons Group plc
19
242519 Stanley Gibbons RA pp01-pp23 05/10/2016 23:25 Page 20
Corporate Governance
continued
Nomination Committee
A separate Nomination Committee is in operation. It comprises the 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 M P Magee.
The Stanley Gibbons Group plc
20
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Report on Remuneration
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 P Magee and HAJ Turcan.
M P Magee is a shareholder and H A J Turcan is employed by Henderson Group plc, a significant shareholder in the
Company. 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.
The Committee has given full consideration to the provisions of Schedule A of the UK Corporate Governance Code.
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, Inland Revenue approved 2000 UK Executive Share
Option Scheme and the 2000 Jersey Executive Share Option Scheme are exercisable between the third and tenth
anniversaries of the date of grant. Options granted are not normally exercisable unless the performance target
is satisfied.
Options issued in 2010 had the target of a minimum EPS of 17.3 pence for the year ended 31 December 2012. 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 21.5 pence is achieved.
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 is achieved.
Options issued in 2012 had the target of a minimum EPS of 21.8 pence for the year ended 31 December 2014. 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 25.7 pence is achieved.
Options issued in 2014 require that the Company’s compound average Total Shareholder Return (“TSR”) growth
over the performance period must match or exceed 8% per annum. The options shall vest over a number of shares
determined as follows:
Compound average annual TSR growth
over the performance period
Less than 8%
8%
15% or more
Percentage of Option which vests
(with straight line vesting between each point)
0%
25%
100%
The Stanley Gibbons Group plc
21
242519 Stanley Gibbons RA pp01-pp23 05/10/2016 23:25 Page 22
Report on Remuneration
continued
On 30 September 2014 the following members of the Company’s Board were granted nil cost options awards over
ordinary shares of 1 pence each (“Ordinary Shares”) under the Stanley Gibbons Group plc Value Creation Plan (the
“VCP”) as noted below:
Executive Director
Michael Hall
John Byfield
Donal Duff
Maximum number of Ordinary Shares under option
559,174
559,174
372,782
Under the terms of the VCP, the number of Ordinary Shares comprised within the awards that shall vest (if any) will
ordinarily be determined based on the level of total shareholder return (“TSR Growth”) achieved over a three year
performance period (that commenced on the grant of the awards) in excess of a threshold level of TSR Growth of
7% per annum.
To the extent an award vests it shall be deemed to comprise three distinct tranches (“Tranche A”, “Tranche B” and
“Tranche C”) each relating to a distinct one-third of the total number of vested Ordinary Shares (if any) determined
for the award. The earliest dates from which each tranche may ordinarily become exercisable are as follows:
•
•
•
in respect of Tranche A, the later of the date on which the number of vested Ordinary Shares subject to the
award is determined and the third anniversary of the grant date;
in respect of Tranche B, the fourth anniversary of the grant date; and
in respect of Tranche C, the fifth anniversary of the grant date.
Once a tranche becomes exercisable, it shall ordinarily remain exercisable until the eve of the sixth anniversary of
the grant date of the awards.
Awards shall ordinarily be forfeited prior to vesting in the event of the grantee’s departure from the Company, subject
to the terms of the VCP.
No consideration was paid for the grant of the awards and no consideration is due on the vesting and/or exercise
of the awards.
An incentive plan for certain senior executives within the Interiors Division (defined as The Fine Art Auction Group
Limited and its subsidiaries) was adopted by the Board on 2 February 2015 with grants subsequently made on
4 February 2015. Vesting of awards is dependent on the achievement of a performance condition over a performance
period commencing on 1 April 2015 and ending on 31 March 2020 or under shorter period as may apply under the
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 M Hall and D Duff to defined contribution schemes.
Benefits also include the provision of family private healthcare insurance and death in service insurance.
The Stanley Gibbons Group plc
22
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Report on Remuneration
continued
Service contracts
No Director has a notice period exceeding twelve months.
Directors’ Remuneration
For each Director remuneration for the year to 31 March 2016 can be analysed as follows:
2016
Salary &
Fees
£’000
2016
Performance
Related
Bonus
£’000
2016
Other
Benefits
£’000
2016
Pension
Contributions
£’000
–
1
3
3
–
–
–
–
7
–
27
18
10
–
–
–
–
55
M Bralsford
M Hall
D Duff
J Byfield*
M Magee
S Perreé
C Jones
I Goldbart*
60
275
182
88
35
35
35
–
710
* Relates to period of employment as a Director.
Directors’ Share Options
Date of
grant
Earliest
exercise
date
–
–
–
–
–
–
–
–
–
Expiry
Exercise
Number
at
Price 31 March
2015
date (1p shares)
M Hall
D Duff
I Goldbart*
J Byfield*
27/1/17
10/4/17
4/5/15
27/1/17
10/4/17
3/5/22
4/5/12**
26/1/24
27/1/14**
10/4/24
10/4/14**
30/9/14*** See Pg 18 See Pg 18
26/1/24
27/1/14**
10/4/14**
10/4/24
30/9/14*** See Pg 18 See Pg 18
26/1/24
27/1/14**
10/4/14**
10/4/24
30/9/14*** See Pg 18 See Pg 18
27/1/14**
26/1/24
10/4/24
10/4/14**
30/9/14*** See Pg 18 See Pg 18
27/1/17
10/4/17
27/1/17
10/4/17
227.50p
363.00p
316.50p
See Pg18
363.00p
316.50p
See Pg18
363.00p
316.50p
See Pg18
363.00p
316.50p
See Pg18
144,736
137,741
157,977
559,174
97,796
112,164
372,782
110,192
126,382
372,782
90,909
104,265
559,174
2,946,074
Granted Exercised
in period
in period
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2016
Total
£’000
60
303
203
101
35
35
35
–
772
2015
Total
£’000
59
296
202
283
35
44
35
184
1,138
Number
at
Forfeited 31 March
2016
in period
(144,736)
–
–
–
–
–
–
(110,192)
(126,382)
(372,782)
–
–
–
–
137,741
157,977
559,174
97,796
112,164
372,782
–
–
–
90,909
104,265
559,174
(754,092) 2,191,982
* Relates to period of employment as a Director.
** Options granted under Group Share Option Plan 2010.
*** Options granted under the Stanley Gibbons plc Value Creation Plan
The market price of the Company’s shares at 31 March 2016 was 18.5p and the range of market prices during the
twelve month period was between 15.5p and 273p.
The Stanley Gibbons Group plc
23
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Directors’ Report
for the year ended 31 March 2016
The Directors present their report and the consolidated audited financial statements for the year ended
31 March 2016.
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;
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; and
Each of the Directors have 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.
Principal activities
The principal activities of the Group are those of trading in collectibles, dealing in antiques and works of art,
auctioneering, the development and operation of collectible websites, philatelic publishing, mail order, retailing,
and the manufacture of philatelic accessories.
The Stanley Gibbons Group plc
24
242519 Stanley Gibbons RA pp24-pp31 05/10/2016 23:23 Page 25
Directors’ Report
continued
Business review
Included within this report is a fair review of the business of the Group during the year ended 31 March 2016 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
5 and the Operating and Financial Review on pages 14 to 18. 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
by the Executives, Senior Management team, Audit Committee and wider Board and are regularly reviewed
throughout the period.
Investment Products
The Group is 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 bears the risk in
the event that the underlying assets go down in value during the contract period and continually monitors it. Based
on the level of quality and rarity of the assets held under such contracts, and from historic pricing evidence over the
past 50 years, the Directors are of the opinion that the risk of the assets going down materially in value in the future
is slight.
Further details on investment products containing buy back guarantees is provided in note 1 ‘Accounting policies
and presentation’ in the Revenue section.
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, focussing on client service and ensuring that it maintains
an inventory of highly attractive items.
Stock Valuation
The market in rare stamps, coins, other collectibles and antiques 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.
The Stanley Gibbons Group plc
25
242519 Stanley Gibbons RA pp24-pp31 05/10/2016 23:23 Page 26
Directors’ Report
continued
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 a recovery plan 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 Operating Review on pages 14 to 16.
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 2016 is set out on
page 32. The Directors do not recommended a final dividend for the year ended 31 March 2016 (year ended
31 March 2015: 1.75p).
Directors
The following Directors have held office since 1 April 2015:
D M Bralsford
M R M Hall
D P J Duff
J Byfield
M P Magee (Non-Executive)
S Perrée (Non-Executive)
C S Jones (Non-Executive)
C P Whiley
H G Wilson
H A J Turcan (Non-Executive)
A Cook
(resigned 14 July 2016)
(resigned 14 July 2016)
(resigned 14 July 2016)
(resigned 17 September 2015)
(resigned 14 July 2016)
(resigned 13 September 2016)
(appointed 31 March 2016)
(appointed 16 May 2016)
(appointed 23 May 2016)
(appointed 14 July 2016)
M Bralsford, M Magee, S Perrée & C Jones were/are considered to be Independent in accordance with the principles
of the UK Corporate Governance Code.
Biographical details of the current Directors are given on pages 78 and 79.
The Stanley Gibbons Group plc
26
242519 Stanley Gibbons RA pp24-pp31 05/10/2016 23:23 Page 27
Directors’ Report
continued
Directors’ interests
The interests of the Directors in the shares of the Company, all of which are beneficial, at 31 March 2016 together
with their interests at 31 March 2015 were:
D M Bralsford
M R M Hall
D P J Duff
M P Magee
S Perreé
CS Jones
CP Whiley
Ordinary 1p
Shares
31 March 2016
182,800
227,648
100,000
9,456
52,400
Nil
Nil
Ordinary 1p
Shares
31 March 2015
182,800
227,648
100,000
9,456
52,400
Nil
Nil
Since the year end Zodiac Executive Pension Scheme, of which C P Whiley is a beneficiary, acquired 500,000 ordinary
shares on 1 April 2016 under the Firm Placing.
HG Wilson held 2,000,000 ordinary shares in the name of Park Securities Limited for Roselea Limited, both companies
in which he is a director and shareholder, at his appointment as a Director on 16 May 2016.
HAJ Turcan does not have any beneficial interest in the ordinary shares of the Company. Henderson Group plc,
Mr Turcan’s ultimate employer, holds 52,173,987 ordinary shares, representing 29.16% of the Company’s issued
share capital.
Details of the Directors’ share options are given in the Remuneration Report on page 23.
Apart from service contracts and the transactions referred to in note 29 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 11.
Financial Risk Management
The Group principally finances its operations through the generation of cash from operating activities and has no
interest rate exposure on financial liabilities except those disclosed in note 28. 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 16 (Provision for impairment of receivables and collateral held) and note 28
(Financial instruments).
Going concern
The Group’s business activities, together with the factors likely to affect its future development, performance and
position are set out in the Operating Review on pages 14 to 16. The financial position of the Group, its cash resources
and borrowing facilities are described in the Financial Review on page 17. In addition note 21 and note 28 in the
financial statements include the Group’s objectives, policies and processes for managing its capital, its financial risk
management objectives, and its exposure to credit risk and liquidity risk.
The Stanley Gibbons Group plc
27
242519 Stanley Gibbons RA pp24-pp31 05/10/2016 23:23 Page 28
Directors’ Report
continued
The Group’s forecasts shows that it will remain in compliance with its banking covenants for the foreseeable period
and that it will have access to sufficient liquidity. However the forecasts are dependent upon the liabilities and
contingent liabilities, particularly in relation to investment plans redemption profiles, 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 liabilities increased or trading failed to improve, it is likely that the Group would find itself in breach
or likely breach of its banking covenants and require access to additional liquidity.
The Directors acknowledge that the above risks may be considered material uncertainties which could cast significant
doubt on the Group’s ability to continue as a going concern. However the Directors have anticipated a number of
mitigating courses of actions, including accelerated asset sales, further cost cutting measures, actively pursuing
overdue debt and ultimately they believe that if necessary the company would have the support of alternative capital
providers whether it be equity or debt or a combination of both.
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 & Mallett acquisitions, no value is attributed in the 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 28 September 2016, the Company had been notified of the following interests in 3% or more of its issued share
capital:
Henderson Group plc
Richard Griffiths and controlled undertakings
29.16%
6.71%
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.
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.
The Stanley Gibbons Group plc
28
242519 Stanley Gibbons RA pp24-pp31 05/10/2016 23:23 Page 29
Directors’ Report
continued
Secretary
Mr R K Purkis has been secretary for the entire year ended 31 March 2016.
Auditors
Nexia Smith & Williamson Audit Limited resigned as auditors on 10 February 2016 and BDO Limited were appointed
by the Directors in their place. BDO Limited 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
R K Purkis
Secretary
3 October 2016
Registered office:
2nd Floor
Minden House,
Minden Place
St Helier, Jersey
JE2 4WQ
The Stanley Gibbons Group plc
29
242519 Stanley Gibbons RA pp24-pp31 05/10/2016 23:23 Page 30
Independent Auditor’s Report to the Members of
The Stanley Gibbons Group Plc
We have audited the consolidated financial statements (the “financial statements”) of The Stanley Gibbons Group plc for the year
ended 31 March 2016 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 the related
notes 1 to 33. The financial reporting framework that has been applied in their preparation is applicable law and International Financial
Reporting Standards as adopted by the European Union.
This report is made solely to the Company’s members, as a body, in accordance with 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 auditors’ 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.
Respective responsibilities of directors and auditors
As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion
on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Financial Reporting Council’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable
assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an
assessment of: whether the accounting policies are appropriate to the Group’s circumstances and have been consistently applied
and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation
of the financial statements.
In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the
audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent
with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements
or inconsistencies we consider the implication for our report.
Basis for qualified opinion on the consolidated financial statements
In seeking to form an audit opinion on the financial statements, the audit evidence available to us was limited due to us being unable
to obtain the necessary information prior to the date of signing the financial statements in accordance with management’s imposed
deadline:
•
•
•
In respect of stock, we were unable to obtain sufficient appropriate audit evidence over the completeness and accuracy of
stock with a carrying value of £1.0 million consisting of all of the stock at Murray Payne Limited with a carrying value of
£0.6 million and Mallett Inc. with a carrying value of £0.4 million, within the total carrying value of stock of £61.8 million.
In respect of trade receivables, we were unable to obtain sufficient appropriate audit evidence in respect of the recoverability
of trade receivables with a carrying value of £1.9 million. This consists of trade receivables in The Fine Art Auction Group
Limited with a carrying value of £1.2 million, trade receivables in Mallett & Son (Antiques) Limited with a carrying value of
£0.5 million and trade receivables in H J Hatfield & Sons Limited with a carrying value of £0.2 million, within the total carrying
value of trade receivables of £12.9m.
In respect of prepayments and accrued income having a total carrying value of £1.7 million, we were unable to obtain sufficient
appropriate audit evidence over the recoverability of an amount of £0.2m within Mallett & Son (Antiques) Limited.
The Stanley Gibbons Group plc
30
242519 Stanley Gibbons RA pp24-pp31 05/10/2016 23:23 Page 31
Independent Auditor’s Report to the Members of
The Stanley Gibbons Group Plc
continued
•
•
•
In respect of revenue, we were unable to obtain sufficient appropriate audit evidence over the completeness and accuracy of
£7 million of revenue recorded in The Fine Art Auction Group Limited and £0.5 million recorded in Stanley Gibbons Limited,
within the total Group revenue of £59.1 million.
In respect of Bid for Wine Limited, which was acquired by the Group during the year, we were unable to obtain sufficient
appropriate audit evidence to support the completeness and accuracy of the amounts disclosed in note 30 in respect of the
assets and liabilities acquired and the revenue and expenditure in the period to 31 March 2016.
In respect of the contingent liabilities arising from investment products that were sold previously as disclosed in note 27a, we
were unable to obtain sufficient appropriate audit evidence to support the completeness and accuracy of the Director’s
assessment of the contingent liability being £64.3m.
Emphasis of matter – Going concern
In forming our opinion on the financial statements, we have considered the adequacy of the disclosure made in note 2 to the financial
statements concerning the Group’s ability to continue as a going concern. The Group has reported a net loss for the financial year
of £29.3 million. This, together with the other matters explained in note 2 to the financial statements, indicates the existence of a
material uncertainty which may cast significant doubt about the Group’s ability to continue as a going concern. The financial
statements do not include the adjustments that would result if the Group was unable to continue as a going concern.
Qualified opinion on the financial statements
In our opinion, except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph, the financial
statements:
•
•
•
give a true and fair view of the state of the Group’s affairs as at 31 March 2016 and of the Group’s loss for the year then ended;
have been properly prepared in accordance with International Financial Reporting Standards as adopted by the European
Union; and
have been prepared in accordance with the requirements of the Companies (Jersey) Law, 1991.
Matters on which we are required to report by exception
In respect solely of the limitation on our work relating to the matters identified above in the Basis of Qualified opinion paragraph:
•
•
we have not received all the information and explanations we require for our audit; and
we were unable to determine whether proper accounting records have been kept.
We have nothing to report in respect of the following matters where the Companies (Jersey) Law 1991 requires us to report to you
if, in our opinion:
•
•
proper returns adequate for our audit have not been received from branches not visited by us; and
the financial statements are not in agreement with the accounting records and returns.
Philip Braun
For and on behalf of BDO Limited
Chartered Accountants
Jersey, Channel Islands
3 October 2016
The Stanley Gibbons Group plc
31
242519 Stanley Gibbons RA pp32-pp35 05/10/2016 23:25 Page 32
Consolidated statement of comprehensive income
for the year ended 31 March 2016
Revenue
Cost of sales
Gross Profit
Administrative expenses before defined benefit
pension service costs and exceptional operating costs
Defined benefit pension service costs
Exceptional operating charges
Total administrative expenses
Selling and distribution expenses
Operating (loss)/profit
Finance income
Finance costs
(Loss)/profit before tax
Taxation
(Loss)/profit for the financial year
Other comprehensive income:
Amounts which may be subsequently reclassified to profit & loss
Exchange differences on translation of foreign operations
Revaluation of financial assets for sale
Reclassification of realised loss on disposal
Amounts which will not be subsequently reclassified to profit & loss
Revaluation of reference collection
Actuarial gains/(losses) recognised in the pension scheme
Tax on actuarial gains/(losses) recognised in the pension scheme
Other comprehensive income/(loss) for the year net of tax
Total comprehensive (loss)/income for the year
Basic earnings per Ordinary share
Diluted earnings per Ordinary share
Total comprehensive income is attributable to the owners of the parent.
Notes
1, 3
26
5
4
28
8
12
26
10
10
Year ended
31 March 2016
£’000
59,137
(35,304)
23,833
(4,808)
194
(23,994)
(28,608)
(23,544)
(28,319)
39
(611)
(28,891)
(403)
(29,294)
89
(58)
68
22
132
121
374
(28,920)
(62.17)p
(62.17)p
Year ended
31 March 2015
Restated
£’000
60,046
(29,108)
30,938
(3,768)
(368)
(3,255)
(7,391)
(21,302)
2,245
4
(428)
1,821
(1,099)
722
(165)
(109)
–
–
(1,074)
178
(1,170)
(448)
1.54p
1.47p
The notes on pages 36 to 77 are an integral part of these consolidated financial statements.
The Stanley Gibbons Group plc
32
242519 Stanley Gibbons RA pp32-pp35 05/10/2016 23:25 Page 33
Consolidated statement of financial position
as at 31 March 2016
31 March 2016
Notes
£’000
31 March 2015
Restated
£’000
1 April 2014
Restated
£’000
Non-current assets
Intangible assets
Property, plant and equipment
Deferred tax asset
Available for sale financial assets
Current Assets
Inventories
Trade and other receivables
Assets held for sale
Current tax receivable
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Deferred consideration
Borrowings
Current tax payable
Non-current liabilities
Other payables
Retirement benefit obligations
Borrowings
Deferred tax liabilities
Total liabilities
Net assets
Equity
Called up share capital
Share premium account
Shares to be issued
Share compensation reserve
Capital redemption reserve
Revaluation reserve
Retained earnings
Equity shareholders’ funds
11
12
20
13
14
15
17
19
18
26
19
20
21
23
23
23
23
23
19,631
4,916
1,929
–
26,476
61,804
15,574
2,545
–
1,542
81,465
107,941
30,409
–
5,159
392
35,960
9,802
5,222
16,788
1,777
33,589
69,549
38,392
471
63,682
–
1,448
38
276
(27,523)
38,392
37,846
7,974
2,120
1,364
49,304
73,048
19,604
1,800
–
–
94,452
143,756
31,991
–
2,522
569
35,082
24,368
5,816
9,173
1,831
41,188
76,270
67,486
471
63,682
–
798
38
244
2,253
67,486
32,571
6,294
1,016
1,473
41,354
63,999
14,144
–
135
9,499
87,777
129,131
19,858
2,153
276
–
22,287
33,546
3,285
528
760
38,119
60,406
68,725
466
62,565
209
648
38
353
4,446
68,725
The financial statements on pages 32 to 77 were approved by the board of Directors on 3 October 2016, were
authorised for issue on that date and were signed on its behalf by:
H G Wilson
A Cook
Directors
The notes on pages 36 to 77 are an integral part of these consolidated financial statements.
The Stanley Gibbons Group plc
33
242519 Stanley Gibbons RA pp32-pp35 05/10/2016 23:25 Page 34
Consolidated statement of changes in equity
for the year ended 31 March 2016
9
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The Stanley Gibbons Group plc
34
242519 Stanley Gibbons RA pp32-pp35 05/10/2016 23:25 Page 35
Consolidated statement of cash flows
for the year ended 31 March 2016
Cash outflow from operating activities
Interest paid
Taxes paid
Net cash outflow from operating activities
Investing activities
Purchase of property, plant and equipment
Purchase of intangible assets (computer software)
Overdraft acquired with subsidiary
Acquisition of business
Sale of financial asset
Sale of freehold property
Interest received
Net cash used in investing activities
Financing activities
Proceeds from issue of ordinary share capital
Dividends paid to company shareholders
Net borrowings
Net cash generated from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year
Notes
24
9
Year ended
31 March 2016
£’000
Year ended
31 March 2015
£’000
(5,208)
(611)
(322)
(6,141)
(888)
(2,450)
–
(218)
1,306
466
39
(1,745)
–
(824)
6,455
5,631
(2,255)
(1,239)
(3,494)
(7,400)
(258)
(367)
(8,025)
(1,442)
(2,692)
(1,190)
(8,615)
–
4,411
4
(9,524)
544
(3,385)
9,652
6,811
(10,738)
9,499
(1,239)
The notes on pages 36 to 77 are an integral part of these consolidated financial statements.
The Stanley Gibbons Group plc
35
242519 Stanley Gibbons RA_pp36-imp 05/10/2016 23:24 Page 36
Notes to the Financial Statements
for the year ended 31 March 2016
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 is listed on 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 Jersey Company 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 Group’s
functional currency.
Amounts are rounded to the nearest thousand, unless otherwise stated.
Accounting standards and interpretations adopted during the period
The following Standards and amendments have been adopted by the Group for the first time for the financial year
beginning on or after 1 April 2015:
IFRS 10 ‘Consolidated Financial Statements’
IFRS 11 ‘Joint Arrangements’
IFRS 12 ‘Disclosure of Interests in Other Entities’
IAS 12 (amended) ‘Deferred Tax: Recovery of Underlying Assets’
IAS 27 (revised) ‘Separate Financial Statements’
IAS 28 (revised) ‘Investments in Associates and Joint Ventures’
The adoption of the amendments did not have any impact on the financial statements of the Group for the current
period of any prior period and is not likely to affect future periods.
Standards, amendments and interpretations that are effective for periods beginning on or after 1 April
2015 for standards, amendments subject to EU endorsement:
IFRS 9, Financial Instruments, effective for annual periods beginning on or after 1 January 2018, subject to
EU endorsement. The standard is part of a wider project to replace IAS 39, Financial Instruments: Recognition
and Measurement
IFRS 15, Revenue from contracts with customers (effective for periods beginning on or after 1 January 2017, subject
to EU endorsement)
IFRS 16, Leases ( effective for periods beginning on or after 1 January 2019)
IAS 16 and IAS 38 (amended) ‘Clarification of Acceptable Methods of Depreciation and Amortisation’ – effective
for accounting periods beginning on or after 1 January 2016
The Directors do not expect that the adoption of the standards listed above will have a material impact on the financial
statements of the Group in future periods, except that IFRS 9 will impact the measurement of financial instruments,
IFRS 15 may have an impact on revenue recognition and related disclosures and IFRS 16 will have an impact on
operating leases. Beyond the information above, it is not practicable to provide a reasonable estimation of the effect
of IFRS 9, IFRS 15 and IFRS 16 until a detailed review has been completed.
The Stanley Gibbons Group plc
36
242519 Stanley Gibbons RA_pp36-imp 05/10/2016 23:24 Page 37
Notes to the Financial Statements
continued
1 Accounting policies and presentation continued
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 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 other intangible assets with indefinite useful economic lives are undertaken
annually at the financial year end. 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
Computer software
In accordance with IAS 38, purchased computer software that will generate economic benefit beyond one year is
capitalised as an intangible asset and amortised over its expected useful economic life of four years on a straight-
line basis. This charge is allocated to administrative expenses in the consolidated statement of comprehensive
income. The purchase and development of software related to the Group’s websites and the Digital Asset
Management system is capitalised and amortised over its expected useful economic life of between five and ten
years on a straight line basis.
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.
The Stanley Gibbons Group plc
37
242519 Stanley Gibbons RA_pp36-imp 05/10/2016 23:24 Page 38
Notes to the Financial Statements
continued
1 Accounting policies and presentation continued
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.
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.
Goodwill
Goodwill represents the excess of the costs of a business combination over, in the case of business combinations
completed prior to 1 January 2010, the Group’s interest in the fair value of intangible assets, liabilities and contingent
liabilities acquired and, in the case of business combinations completed on or after 1 January 2010, the total
acquisition date fair value of the identifiable assets, liabilities and contingent liabilities acquired.
For business combinations completed prior to 1 January 2010, cost comprised the fair value of assets given, liabilities
assumed and equity instruments issued, plus any direct costs of acquisition. Changes in the estimated value of
contingent consideration arising on business combinations completed by this date were treated as an adjustment to
cost and, in consequence, resulted in a change in the carrying value of goodwill.
For business combinations completed on or after 1 January 2010, cost comprises the fair value of assets given,
liabilities assumed and equity instruments issued, plus the amount of any non-controlling interests in the acquire
plus, if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree.
Contingent consideration is included in cost at its acquisition date fair value and, in the case of contingent
consideration classified as a financial liability, remeasured subsequently through profit or loss. For business
combinations completed on or after 1 January 2010, direct costs of acquisition are recognised immediately as
an expense.
Goodwill is capitalised as an intangible assets with any impairment in carrying value being charged to the consolidated
statement of comprehensive income. 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.
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.
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:
The Stanley Gibbons Group plc
38
242519 Stanley Gibbons RA_pp36-imp 05/10/2016 23:24 Page 39
Notes to the Financial Statements
continued
1 Accounting policies and presentation continued
Freehold buildings
Vehicles, plant and machinery
Fixtures, fittings, tools and equipment
Leasehold improvements
Freehold land is not depreciated.
2%
20-25%
10-25%
Over period of lease
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.
Leased assets
When substantially all of the risks and rewards incidental to ownership are not transferred to the Group (an “operating
lease”), the total rentals payable under the lease are charged to the consolidated statement of comprehensive income
on a straight-line basis over the lease term. The aggregate benefit of lease incentives is recognised as a reduction of
the rental expense over the lease term on a straight-line basis.
Available for sale financial assets
Available for sale financial assets comprise investments in quoted equity instruments and are measured at level 1 of
the fair value hierarchy, as outlined in note 2 below. Purchases and sales of financial assets are recognised on the
trade date, the date on which the Group commits to buy or sell the asset. Investments are initially recognised at fair
value plus transaction costs. Financial assets are derecognised when the rights to receive cash flows have expired
or have been transferred and the Group has transferred substantially all risks and rewards of ownership.
Available for sale financial assets are subsequently carried at fair value. The fair values of quoted investments are
determined based upon current bid price.
Changes in the value of securities classified as available for sale are recognised within other comprehensive income.
The balance as at 31 March 2015 relates to an investment in Avarae Global Coins Plc which was disposed of on
18 May 2015.
Assets and businesses classified as held for sale
Assets and businesses classified as held for sale are measured at the lower of carrying amount and fair value less
costs to sell. Impairment losses on initial classification as held for sale and gains or losses on subsequent
re-measurements are included in the statement of comprehensive income. No depreciation is charged on assets
and businesses classified as held for sale.
Assets and businesses are classified as held for sale if their carrying amount will be recovered or settled principally
through a sale transaction rather than through continuing use. The asset or business must be available for immediate
sale and the sale must be highly probable within one year.
The Stanley Gibbons Group plc
39
242519 Stanley Gibbons RA_pp36-imp 05/10/2016 23:24 Page 40
Notes to the Financial Statements
continued
1 Accounting policies and presentation continued
The balance held at 31 March 2016 relates to leasehold properties held with Mallett that were disposed of in June
2016. The balance as at 31 March 2015 relates to the assets of the Benham first day cover business, the Plastic Wax
retail business and the general auction business of Dreweatts that were disposed of in May 2016.
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. This 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 and therefore is unavailable for sale at the balance sheet date.
Financial Instruments
Financial assets and financial liabilities are recognised on the consolidated statement of financial position when the
company becomes a party to the contractual provisions of the instrument.
Financial assets
Trade and other receivables are measured at initial recognition at fair value and are subsequently measured at
amortised cost using the effective interest method. 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 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 company 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
Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost using
the effective interest rate method.
The Stanley Gibbons Group plc
40
242519 Stanley Gibbons RA_pp36-imp 05/10/2016 23:24 Page 41
Notes to the Financial Statements
continued
1 Accounting policies and presentation continued
Financial liabilities issued by the Group are classified in accordance with the contractual arrangements entered into
and the definitions of a financial liability.
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.
Taxation
The tax expense represents the sum of the tax currently payable and any deferred tax.
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
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 at opening comprehensive income.
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 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
The Stanley Gibbons Group plc
41
242519 Stanley Gibbons RA_pp36-imp 05/10/2016 23:24 Page 42
Notes to the Financial Statements
continued
1 Accounting policies and presentation continued
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 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 of 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 expense.
The total amount to be apportioned over the vesting period of the benefit is determined by reference to the fair
value of the options and awards determined at the grant date. The performance conditions (other than market
conditions) are reflected in assumptions about the number of options and awards that are expected to become
exercisable. The estimate is revised at each reporting date and any adjustments are charged or credited to profit or
loss, with the 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
Revenue represents amounts invoiced by the Group in respect of goods sold and services provided during the year
falling within the Group’s ordinary activities, excluding intra-group sales, estimated and actual sales returns, trade
discounts and any applicable value added tax. Revenue from the provision of all goods and services is only
recognised when the amounts to be recognised are fixed or determinable and collectability is reasonably assured.
Sale of goods retail
Revenue from the provision of goods is recognised when substantially all the risks and rewards of ownership of
goods have transferred to the customer. 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.
Sale of goods – Investment contracts
In respect of certain investment products offered by the Group, income is recognised at the point of customer
commitment in line with the normal course of trade but not when there is a contractual buyback commitment on
the Company as part of the transaction to buy back the products at the full sale price or higher amount. These
contracts do not pass the risk or reward of ownership to the customer until the customer accepts stock at the end
The Stanley Gibbons Group plc
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Notes to the Financial Statements
continued
1 Accounting policies and presentation continued
of the initial contract term (between 5 and 10 years). At the point where the contract matures the client has options
to take a guaranteed cash sum, keep or auction the assets of the contract or reinvest in another of the Group’s
investment contracts. Until the point of maturity the contractual buyback amount is shown in other payables on the
Group’s balance sheet and the stock contained in these contracts is reported in the Group’s inventory numbers. At
maturity, if the customer reinvests or decided to keep the collectible assets the contract is recognised in revenue
and the inventory released form the balance sheet.
A number of the Groups previous investment contracts, Guaranteed Minimum Return Contract (“GMRC” and the
Capital Protection Growth Plan (“CPGP”) both were contracts that had an element of contractual buyback. The
contractual buy backs within the CPGPs were at a level of the original purchase price and within the GMRCs were
above the purchase price to include a finance charge. This finance charge is recognised in the profit and loss
throughout the period of the contract. These contracts were sold between 2005 and 2013 and have resulted in a
restatement of prior year earnings relating to open contracts as at April 2014, as described in note 31b). The GMRC
and CPGP contracts ceased to be sold in April 2011 and December 2013 respectively.
Investment contracts which transfer the risk and rewards of ownership with the customer are recognised as revenue
on completion of the contract. These investment contracts do not offer a full guaranteed return or protection of the
principal invested.
Investment products sold in the year under review include Capital Growth Plans (CGP), Flexible Trading Portfolios
(FTP), Portfolio Builders (PB) and Personal Managed Funds (PMF). The FTPs and CGPs also include a buy back
option of 75% of the Stanley Gibbons catalogue value where appropriate or otherwise market value. The Directors
consider that the likelihood of these investment plan holders exercising this right to accept a value lower than market
value to be remote.
Investment plans including contractual buy back options at any level ceased to be sold in July 2016.
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
(vendors 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 seller’s commissions. Therefore both
buyer’s premium and vendors 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 Stanley Gibbons Group plc
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Notes to the Financial Statements
continued
1 Accounting policies and presentation continued
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.
Further detail of the Group’s revenue streams can be found in the operating review on pages 14 to 16.
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation to transfer economic
resources as a result of past events. 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.
Rental Income
The Group sublets some of its property that it occupies under operating leases. The rental income is recognised on
an accruals basis.
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.
Going concern
The Group’s business activities, together with the factors likely to affect its future development, performance and
position are set out in the Operating Review on pages 14 to 16. The financial position of the Group, its cash resources
and borrowing facilities are described in the Financial Review on page 17. In addition note 28 in the financial
statements include the Group’s objectives, policies and processes for managing its capital, its financial risk
management objectives, and its exposure to credit risk and liquidity risk.
The Group’s forecasts shows that it will remain in compliance with its banking covenants for the foreseeable period
and that it will have access to sufficient liquidity. However the forecasts are dependent upon the liabilities and
contingent liabilities, particularly in relation to investment plans redemption profiles, 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 liabilities increased or trading failed to improve, it is likely that the Group would find itself in breach
or likely breach of its banking covenants and require access to additional liquidity.
The Directors acknowledge that the above risks may be considered material uncertainties which could cast significant
doubt on the Group’s ability to continue as a going concern. However the Directors have anticipated a number of
mitigating courses of actions, including accelerated asset sales, further cost cutting measures, actively pursuing
overdue debt and ultimately they believe that if necessary the company would have the support of alternative capital
providers whether it be equity or debt or a combination of both.
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
The Stanley Gibbons Group plc
44
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Notes to the Financial Statements
continued
2 Critical Accounting Estimates and Judgements continued
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.
Revenue recognition
Within the investment sales are a number of different products. These include GMRCs and CPGPs. One of the
options within these products is a contractual buy back option to re-acquire at a level equal to or above the original
purchase price. These transactions are considered by management not to meet the criteria for a sale until such time
as the underlying items are irrevocably sold. This is because insufficient risk and reward is considered to have passed
to the client. For all other sales, including investment plans with guarantee buy-back options at 75% of catalogue or
market value, revenue is recognised immediately as the risks and rewards of ownership are deemed to have passed
to the buyer.
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
26. 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 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 buyers 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
will be 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.
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 and the discount rate used.
The Stanley Gibbons Group plc
45
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Notes to the Financial Statements
continued
2 Critical Accounting Estimates and Judgements continued
Trade receivables – investment sales
Included within trade receivables are £4.1m (2015 – £5.7m) of investment sales that are on credit terms which expire
within the next 12 months. The largest investment balance outstanding at the year end was £1.7m (2015 – £3.6m).
In most cases, the recoverability of these balances is dependent on the ability of the investors to realise these or
other investment portfolios. The directors are confident that these balances are recoverable but the timing and value
of these portfolio sales is currently uncertain. Should the investors be unable to realise their portfolios within the
credit period the balances may not be recoverable when they fall due.
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.
Segmental Analysis
3
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. The operating units have
changed from those disclosed in previous years to ensure they meet this basis and the previous year comparative
has been amended accordingly.
•
•
•
•
•
•
Sale of investment contracts;
Sale of investment contracts;
Philatelic trading and retail operations;
Publishing and philatelic accessories;
Coins and medals
Interiors
Interiors encompasses autographs, historical documents, memorabilia, rare books, records, antiques, watches, fine
wine, jewellery and Benham first day covers. The activities, products and services of the reportable segments are
detailed in the Operating Review on pages 14 to 16.
The Stanley Gibbons Group plc
46
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Notes to the Financial Statements
continued
3
Segmental Analysis continued
Segmental income statement
Year ended 31 March 2016
Revenue
Operating costs
Exceptional costs
Net finance costs
Profit/(loss) before tax
Tax
Profit/(loss) for the year
Segmental balance sheet
as at 31 March 2016
Total assets
Total liabilities
Net assets
Investments
£’000
Philatelic Publishing
£’000
£’000
22,447
(19,281)
(2,015)
–
1,151
–
7,545
(7,658)
–
–
(113)
(37)
3,039
(2,669)
(50)
–
320
–
Coins &
Medals
£’000
8,213
(6,074)
(152)
–
1,987
(36)
Interiors Unallocated
£’000
£’000
Total
£’000
16,961
(21,041)
(3,225)
(240)
(7,545)
(201)
932
(6,740)
(18,552)
(331)
(24,691)
(129)
59,137
(63,463)
(23,994)
(571)
(28,891)
(403)
1,151
(150)
320
1,951
(7,746)
(24,820)
(29,294)
28,479
(24,994)
3,485
17,975
(10,867)
7,108
168
–
168
29,682
(7,632)
22,050
25,974
(24,928)
1,046
5,663
(1,128)
4,535
107,941
(69,549)
38,392
Other segmental items
Depreciation
Amortisation of other intangible assets
Capital expenditure
–
–
–
331
–
119
43
–
–
Investments
£’000
Philatelic Publishing
£’000
£’000
94
–
–
Coins &
Medals
£’000
409
–
847
34
1,002
2,590
Interiors Unallocated
£’000
£’000
911
1,002
3,556
Total
£’000
Segmental income statement
Year ended 31 March 2015
Restated
Revenue
Operating costs
Exceptional costs
Net finance cost
Profit/(loss) before tax
Tax
Profit/(loss) for the year
Segmental balance sheet
as at 31 March 2015
Total assets
Total liabilities
Net assets
20,628
(15,524)
(500)
–
4,604
–
9,394
(8,185)
(225)
–
984
–
2,937
(2,164)
–
–
773
–
9,204
(6,672)
–
–
2,532
(943)
14,861
(13,623)
–
(103)
1,135
(203)
3,022
(8,378)
(2,530)
(321)
(8,207)
47
60,046
(54,546)
(3,255)
(424)
1,821
(1,099)
4,604
984
773
1,589
932
(8,160)
722
35,343
(33,010)
2,333
23,365
(16,107)
7,258
(153)
–
(153)
26,235
(6,137)
20,098
26,678
(17,886)
8,792
32,288
(3,132)
29,156
143,756
(76,270)
67,486
Other segmental items
Depreciation
Amortisation of other intangible assets
Capital expenditure
–
–
–
348
–
1,455
–
–
–
91
–
24
300
69
485
39
692
2,170
778
761
4,134
The Stanley Gibbons Group plc
47
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Notes to the Financial Statements
continued
3
Segmental Analysis continued
Geographical information
Analysis of revenue by origin and destination
Channel Islands
United Kingdom
Hong Kong
Europe
North America
Singapore
Rest of Asia
Rest of the World
Year ended
31 March 2016
Year ended
31 March 2016
Sales by
destination
£’000
2,062
34,549
3,115
4,063
10,678
1,257
474
2,939
59,137
Sales by
origin
£’000
19,930
36,562
2,645
–
–
–
–
–
59,137
Year ended
31 March 2015
Restated
Sales by
destination
£’000
Year ended
31 March 2015
Restated
Sales by
origin
£’000
2,491
32,577
2,686
4,172
10,208
3,149
2,157
2,606
60,046
18,111
39,586
2,349
–
–
–
–
–
60,046
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 other customers in either 2016 or 2015 from which the Group earned more than 10% of its revenues.
Property, plant and equipment of £4,916,000 was split between the UK £4,766,000 (2015 : £7,786,000) and the
Channel Islands £150,000 (2015: £188,000).
Intangible assets and available for sale financial assets of £19,631,000 were split between the UK £19,631,000 (2015:
£34,310,000) and the Channel Island £nil (2015: £3,536,000).
The Stanley Gibbons Group plc
48
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Notes to the Financial Statements
continued
4 Operating (loss)/profit
The following table shows the material costs by nature charged to cost of sales, administrative expenses and selling
and distribution costs.
Cost of inventories recognized as an expense
Employee benefit costs expensed (see note 7)
Depreciation of property plant and equipment
Amortisation of intangible assets
Advertising & marketing expenses
Distribution & transport costs
Operating lease charges – leased premises
IT operating expenses
Other property operating costs
Fees payable to the Group’s auditor for the audit of the Group’s annual accounts,
including subsidiaries
Fees payable to the Group’s auditor for tax compliance & advisory services
Fees payable to the Group’s auditor for other advisory services
Other professional fees
Foreign exchange losses
Year ended
31 March 2016
£’000
35,304
13,920
911
1,002
4,592
511
2,685
936
1,213
420
–
30
636
170
Year ended
31 March 2015
Restated
£’000
29,108
13,169
778
761
3,524
254
1,827
522
605
171
1
12
416
18
Fees paid to the auditors in respect of non-audit work in the year to 31 March 2016 are in respect of a review of
inventory valuations regarding a specific project commissioned by the Company’s bankers. These services are
reviewed by the Directors to ensure that the independence of the auditors is not compromised.
Exceptional operating charges
5
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.
Impairment of intangible assets
Marketplace intangible asset written off
Loss on sale of business
Pension scheme (recovery)/costs
Professional fees for corporate activity
Restructuring costs
Stock provisions
Profit on disposal of tangible fixed assets
Deferred consideration
Impairment of tangible fixed assets
Impairment of receivables
Other exceptional operating charges
Legal costs in relation to SEC investigation
The Stanley Gibbons Group plc
49
Year ended
31 March 2016
£’000
Year ended
31 March 2015
£’000
13,895
5,986
–
(1,968)
819
1,156
1,373
(189)
–
230
1,618
–
1,074
23,994
–
–
2,331
895
1,161
–
225
(1,543)
(363)
–
500
49
–
3,255
242519 Stanley Gibbons RA_pp36-imp 05/10/2016 23:24 Page 50
Notes to the Financial Statements
continued
6 Directors’ emoluments
The remuneration paid to the Directors of The Stanley Gibbons Group plc was:
Fees
Salaries
Benefits
Short-term employee benefits
Post-employment benefits
Share-based payment
Key management personnel compensation
Number of Directors included in the defined benefit pension scheme (note 26)
Year ended
31 March 2016
£’000
Year ended
31 March 2015
£’000
165
546
6
717
55
140
912
–
173
895
7
1,075
63
71
1,209
–
The detailed numerical analysis of Directors’ remuneration is included in the Report on Remuneration on page 23.
The charge to profit in respect of share options and awards issued to the Directors was £140,000 (2015: £71,000).
M Hall and D Duff are members of the Company’s defined contribution pension scheme which they joined in 2010.
The company made payments into a personal pension plan of J Byfield which came into effect in 2012. Total cost of
these pension contributions to the company were £55,000 (2015: £63,000). The Company made no other pension
contributions in respect of any Directors in the period or the preceding year.
Details of share options forfeited by Directors during the period are disclosed in the Report on Remuneration on
page 23.
Management consider that the key management personnel comprise the Directors.
Employee information
7
The average number of persons (including executive Directors) employed by the Group during the period was
252 (2015: 293).
Management and Administration
Sales
Production and Editorial
Distribution
Marketing
Year ended
31 March 2016
No.
Year ended
31 March 2015
No.
92
115
17
16
12
252
108
119
46
9
11
293
The Stanley Gibbons Group plc
50
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Notes to the Financial Statements
continued
7
Employee information continued
Staff costs relating to those persons during the year amounted to:
Wages and salaries
Social security costs
Pension costs – defined benefit scheme (note 26)
Pension costs – defined contribution scheme
Share option cost
8
Taxation
UK corporation tax and overseas tax on profits for the year
Current tax:
UK corporation tax at 20% (2015: 21%)
Capital gains tax on sale of property
Overseas tax
Adjustment relating to earlier periods
Deferred taxation
Deferred taxation movement on pension scheme liability
Tax charge
Year ended
31 March 2016
£’000
Year ended
31 March 2015
£’000
11,868
1,284
(18)
486
300
13,920
10,969
1,047
538
465
150
13,169
Year ended
31 March 2016
£’000
30
–
115
–
145
258
–
403
Year ended
31 March 2015
restated
£’000
348
500
66
5
919
227
(47)
1,099
The Company is registered in the Channel Islands and has subsidiaries in the Channel Islands, the UK, Hong Kong,
Singapore 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
The standard rate of corporation tax in the UK
Effects of:
Item subject to capital gains tax
Disallowable exceptional items
Overseas profits taxable at lower rates
Losses for which no deferred asset recognised
Adjustments relating to prior years charge
Other
Effective rate of corporation tax for year/period
Year ended
31 March 2016
%
Year ended
31 March 2015
%
20.0
–
(4.1)
(16.2)
(0.3)
–
(0.8)
(1.4)
21.0
15.9
4.6
15.3
2.4
0.1
1.1
60.4
The main rate of corporation tax in the UK was 21% for financial year starting on 1 April 2014 and it was 20% from
1 April 2015.
The Stanley Gibbons Group plc
51
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Notes to the Financial Statements
continued
9 Dividends
Amounts recognised as distribution to equity holders in the period/year:
Dividend declared and paid in respect of prior year
Dividend paid per share
Dividend proposed but not paid at balance sheet date
Dividend proposed per share
Year ended
31 March 2016
£’000
Year ended
31 March 2015
£’000
824
1.75p
–
–
3,385
7.25p
825
1.75p
10 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.
Indicative new issue earnings per share, is purely an indicative measure and simply increases the number of shares
by those issued on the 1 April 2016 and makes no adjustment to earnings.
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.
Weighted average number of ordinary shares in issue (No.)
Dilutive potential ordinary shares: Employee share options (No.)
(Loss)/profit after tax (£)
Pension service cost (net of tax)
Cost of share options (net of tax)
Amortisation of customer lists
Exceptional operating costs (net of tax)
Adjusted (loss)/profit after tax (£)
Basic earnings per share – pence per share (p)
Diluted earnings per share – pence per share (p)
Adjusted earnings per share – pence per share (p)
Adjusted diluted earnings per share – pence per share (p)
Weighted average number of ordinary shares in issue (No.)
Dilutive potential ordinary shares: Employee share options (No.)
Number of ordinary shares issued 1 April 2016 (No.)
Indicative new issue basic earnings per share – pence per share (p)
Indicative new issue diluted earnings per share – pence per share (p)
Year ended
31 March 2016
47,120,357
1,770,977
(29,294,000)
(14,220)
650,000
360,000
23,556,710
(4,741,510)
(62.17)p
(62.17)p
(10.06)p
(10.06)p
47,120,357
1,770,977
131,796,286
(16.37)p
(16.37)p
Year ended
31 March 2015
restated
46,774,755
2,293,308
722,000
425,020
150,000
360,000
3,152,014
4,809,034
1.54p
1.47p
10.28p
9.80p
46,774,755
2,293,308
131,796,286
0.40p
0.40p
Net assets per share, as disclosed in the financial highlights, are calculated using the net assets per the statement of
financial position divided by the number of shares at 31 March 2016 per note 21.
The Stanley Gibbons Group plc
52
242519 Stanley Gibbons RA_pp36-imp 05/10/2016 23:24 Page 53
Notes to the Financial Statements
continued
11 Intangible assets
Goodwill
£’000
Publishing
rights
£’000
Computer
Software
£’000
Customer
Lists
£’000
Brands &
trademarks
£’000
Cost
At 1 April 2014
Additions – internally developed
Additions – business combinations
Disposals
At 31 March 2015
Additions – internally developed
Additions – business combinations
Disposals
At 31 March 2016
Accumulated amortisation and
impairment
At 1 April 2014
Amortisation charge
At 31 March 2015
Impairment losses
Amortisation charge
At 31 March 2016
Net book value
At 31 March 2016
At 31 March 2015
At 31 March 2014
24,306
–
–
(256)
24,050
–
218
–
24,268
–
–
–
13,003
–
13,003
11,265
24,050
24,306
19
–
–
–
19
–
–
–
19
–
–
–
–
–
–
19
19
19
3,752
2,692
162
–
6,606
2,450
–
–
9,056
1,584
380
1,964
6,202
538
8,704
352
4,642
2,168
2,765
–
828
–
3,593
–
–
–
3,593
127
360
487
676
447
1,610
1,983
3,106
2,638
3,442
–
2,610
–
6,052
–
–
–
6,052
2
21
23
–
17
40
6,012
6,029
3,440
Total
£’000
34,284
2,692
3,600
(256)
40,320
2,450
218
–
42,988
1,713
761
2,474
19,881
1,002
23,357
19,631
37,846
32,571
The brought forward goodwill of £24,050,000 related to the acquisition of the Noble Investments Group
(£23,682,000), the acquisition of Murray Payne (£221,000), the acquisition of the magazine ‘Philatelic Exporter’
(£87,000), the album producer ‘Frank Godden’ (£23,000), the trade of an independent stamp dealer (£10,000) and
the acquisition of Stampwants.com (£36,000). On 29 May 2015 the Group, through its wholly owned subsidiary,
The Fine Art Auction Group Limited, (“TFAAG”) purchased 100% of Bid For Wine Ltd . Details of the acquisition are
outlined in note 30.
Goodwill has 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 8.7% (2015: 5.8%), 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 2% to 3% (2015: 2% to 3%) over the period in question.
The forecasted levels of profits used in the impairment tests are lower than in the past due to recent trading
performance, which coupled with the application of a higher cost of capital has resulted in an impairment of goodwill
relating to the Noble Investments Group of £13,003,000 as at 31 March 2016. For these reasons an impairment test
was performed on the remaining intangible assets, which resulted in an impairment of customer lists relating to the
Noble Group of £676,000 as at 31 March 2016.
Publishing rights represent the cost paid to third parties to acquire copyright of publications.
The net book value of internally generated intangible assets as at 31 March 2016 was £nil (2015: £3,536,000)
The Stanley Gibbons Group plc
53
242519 Stanley Gibbons RA_pp36-imp 05/10/2016 23:24 Page 54
Notes to the Financial Statements
continued
12 Property, plant and equipment
Reference
collection
£’000
Freehold
Leasehold
land and property and
buildings improvements
£’000
£’000
Fixtures,
fittings,
tools and
equipment
£’000
Vehicles,
plant and
machinery
£’000
Cost or valuation
At 1 April 2014
Acquired on acquisition
Additions
Disposals
Assets written off in the year
At 31 March 2015
Additions
Revaluation
Disposals
Assets written off in the year
Transferred to current assets
At 31 March 2016
Accumulated depreciation
At 1 April 2014
Charge for the year
Depreciation on disposal
At 31 March 2015
Charge for the year
Impairment for year
Depreciation on disposal
Transferred to current assets
At 31 March 2016
Net book value
At 31 March 2016
At 31 March 2015
At 31 March 2014
1,527
–
38
–
–
1,565
–
22
–
–
–
1,587
150
–
–
150
–
230
–
–
380
1,207
1,415
1,377
3,187
–
79
(2,904)
–
362
–
–
(362)
–
–
–
56
56
(36)
76
3
–
(79)
–
–
–
286
3,131
1,849
3,925
1,049
–
–
6,823
323
–
–
(210)
(2,672)
4,264
935
362
–
1,297
639
–
(193)
(127)
1,616
2,648
5,526
914
1,327
8
241
–
–
1,576
163
–
–
(320)
–
1,419
654
272
–
926
114
–
(338)
–
702
717
650
673
Total
£’000
8,857
3,954
1,442
(2,904)
(70)
11,279
888
22
(362)
(582)
(2,672)
967
21
35
–
(70)
953
402
–
–
(52)
–
1,303
8,573
768
88
–
856
155
–
(52)
–
959
344
97
199
2,563
778
(36)
3,305
911
230
(662)
(127)
3,657
4,916
7,974
6,294
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. The basis of the revaluation used was replacement value. The surplus of £22,000 was
transferred to the revaluation reserve.
The revalued element of the reference collection is £366,000 (2015: £344,000). All other fixed assets are stated at
historic cost. If the reference collection had not been revalued it would have been included at a net book value
based on historic cost of £841,000 (2014: £1,071,000).
A leasehold property was transferred to current assets as it was sold after the balance sheet date, as disclosed in
note 15.
Fully written down Property, Plant and Equipment with a cost of £568,000 (2015: £835,000) remains in use by the Group.
The Stanley Gibbons Group plc
54
242519 Stanley Gibbons RA_pp36-imp 05/10/2016 23:24 Page 55
Notes to the Financial Statements
continued
13 Inventories
Raw materials and consumables
Work in progress
Finished goods and goods for resale
31 March 2016
£’000
–
3,155
58,649
61,804
31 March 2015
restated
£’000
–
3,465
69,583
73,048
Included within the above inventories as at 31 March 2016 is £14,719,000 owned by third parties (2015:
£22,225,000). As at 31 March 2016 £38,557,000 (2015: £40,479,000) of the above inventories were part of the
security given in relation to the borrowings detailed in note 19.
During the year £1,373,000 was charged to P&L for the write down of inventories (2015:£225,000) following a
review of the Group’s carrying value of its inventories, as a result of comparison to net realisable value and checks
for physical existence.
The impact of the prior year adjustments on inventories are given in note 31 a and b.
14 Current trade and other receivables
Amounts falling due within one year
Trade receivables
Other receivables
Prepayments and accrued income
15 Current assets held for sale
Leasehold property
Stock
Fixed assets
Intangibles
31 March 2016
£’000
31 March 2015
£’000
12,935
972
1,667
15,574
15,685
1,042
2,877
19,604
31 March 2016
£’000
31 March 2015
£’000
2,545
–
–
–
2,545
–
1,630
70
100
1,800
Included within the leasehold property at 31 March 2016 is a property that was sold on the in June 2016
for £2,500,000.
The Stanley Gibbons Group plc
55
242519 Stanley Gibbons RA_pp36-imp 05/10/2016 23:24 Page 56
Notes to the Financial Statements
continued
16 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 2016
£’000
31 March 2015
£’000
1,323
515
As at 31 March 2016, excluding balances due under extended payment terms detailed below, £2,249,000 (2015:
£1,894,000) of trade receivables, excluding those provided for by the impairment provision, were past their due
settlement date but not impaired. The ageing analysis of these trade receivables is as follows:
Up to 3 months past due
3 to 6 months past due
Over 6 months past due
31 March 2016
£’000
31 March 2015
£’000
644
926
679
2,249
843
718
333
1,894
The Group retains possession of the material sold under extended payment terms, thus limiting credit risk from
entering into such arrangements to the margin achieved on the transaction. In most cases the customers sign a
formal credit agreement and pay a minimum 10% non-refundable deposit. The balances fall due a maximum of
24 months in the future although the option to settle early does exist. There was an outstanding balance of
£3,588,000 at 31 March 2016 (31 March 2015: £6,763,000) in respect of such extended payment plans. Of the
outstanding balance, £2,908,000 was past their settlement date (31 March 2015: £923,000) but not impaired.
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.
17 Current trade and other payables
Trade payables
Other payables
Other taxes and social security
Accruals and deferred income
Provisions
31 March 2016
£’000
10,424
15,741
1,246
1,924
1,074
30,409
31 March 2015
restated
£’000
13,373
12,991
1,681
3,946
–
31,991
The Stanley Gibbons Group plc
56
242519 Stanley Gibbons RA_pp36-imp 05/10/2016 23:24 Page 57
Notes to the Financial Statements
continued
18 Non-current other payables
Non-current
Due between 1 and 2 years
Due between 2 and 5 years
Due > 5 years
31 March 2016
£’000
5,105
4,598
99
9,802
31 March 2015
restated
£’000
14,117
10,060
191
24,368
The above amounts, together with £9,322,000 (2015: 3,930,000) within current payables are the amounts credited
following the de-recognition (see note 31b) of revenue on certain investment plans. These total amounts represent
the value of the relevant extant investment plans and will be payable if the plan holder chooses either not to hold
their collectibles nor to reinvest in other collectibles on expiry of the investment scheme.
19 Borrowings
Current
Bank loans
Bank overdraft
Non-current
Bank loans
Bank overdraft
31 March 2016
£’000
31 March 2015
£’000
123
5,036
5,159
9,000
7,788
16,788
1,283
1,239
2,522
9,173
–
9,173
The bank loans outstanding at 31 March 2016 are repayable as follows:
Facility A loan with The Royal Bank of Scotland plc
Amount
£’000
9,000
Due < 1 year
£’000
Due > 1 year
£’000
–
9,000
Murray Payne acquisition loan with The Royal
Bank of Scotland plc
123
9,123
123
123
–
9,000
Rate
Libor + margin
varying
between 1.3%
and 2.75%
Libor + 1.5%
The Facility A loan was increased to £9.5m in April 2016 and there is a moratorium on capital repayments until May
2017 unless there is a disposal of a fixed asset, in which case 50% of the proceeds will be applied in reducing the
loan balance, subject to any repayments being restricted to not more than £2.5m before May 2017. Amortisation of
this loan commences at £0.5m per quarter from May 2017 until May 2018 when the facilities are due for review.
The Group also has a £10m revolving credit facility with The Royal Bank of Scotland PLC repayable in May 2018.
Interest is charged at margins over LIBOR ranging between 1.3% and 2.75%. The Group is required to satisfy stock
cover and net asset cover covenants until May 2017. The stock covenant is to maintain 2 times cover for total stock
to the combined total of the Facility A loan and the revolving credit facility and 1.5 times cover for both the philatelic
stock and stock held by UK entities. The net asset covenant is to maintain Group consolidated net assets of at least
The Stanley Gibbons Group plc
57
242519 Stanley Gibbons RA_pp36-imp 05/10/2016 23:24 Page 58
Notes to the Financial Statements
continued
19 Borrowings continued
£40,000,000, after the share issue on the 1 April 2016. Thereafter, there are also fixed cost cover and interest cover
covenants to be calculated by reference to the Group’s budget for the year ended 31 March 2018.
Additionally the Group had an overdraft facility of £6m on the 31 March 2016, the balance as at 31 March 2016 was
£5,036,000, which was repaid with part of the proceeds from the shares issued on 1 April 2016 and the overdraft
facility was cancelled.
During the year the Group paid arrangement facility fees of £210,000 (2015: £200,000) for the above facilities
The borrowings are secured by a full fixed and floating charge debenture over the core assets of the group.
20 Deferred tax assets and liabilities
Defined benefit pension scheme (note 26)
Other timing differences
Unutilised tax losses
Deferred tax on revalued fixed assets
Accelerated capital allowances
Full provision
21 Called up share capital
Assets
Liabilities
2016
£’000
940
238
751
–
–
1,929
2015
restated
£’000
981
238
901
–
–
2,120
2016
£’000
–
–
–
941
836
1,777
2015
restated
£’000
–
–
–
941
890
1,831
Authorised
250,000,000 (2015: 75,000,000) ordinary shares of 1p each
Allotted, issued and fully paid (all equity):
47,120,357 (2015: 47,120,357) ordinary shares of 1p each
31 March 2016
£’000
31 March 2015
£’000
2,500
471
750
471
During the year ended 31 March 2015, 304,650 ordinary shares were issued at £1.79 to satisfy the exercise
of options.
91,588 ordinary shares were issued at £2.28p on 15 October 2014 to satisfy deferred consideration obligations
following the acquisition of Stampwants.com Inc on 31 October 2012.
126,260 ordinary shares were issued at £2.95p on 1 December 2014 to satisfy deferred consideration of Noble
Investments (UK) Limited following the acquisition of the The Fine Art Group Limited on 18 December 2012.
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 Statement of Financial Position. Notes 21 and 22 provide details on equity. Details of
loans and overdrafts at the year end are disclosed on page 17 in the Financial Review and further disclosure can be
found in note 19 and note 28. There are no externally imposed capital requirements on the Group. Further detail on
capital risk management can be found in the Operating and Financial reviews on pages 14 to 18.
The Stanley Gibbons Group plc
58
242519 Stanley Gibbons RA_pp36-imp 05/10/2016 23:24 Page 59
Notes to the Financial Statements
continued
22 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 Inland Revenue approved UK Executive Share Option Scheme and the Jersey
Executive Share Option Scheme are exercisable between the third and tenth anniversaries of the date of grant.
Options granted are not normally exercisable unless the performance target is satisfied.
Options issued in 2010 had the target of a minimum EPS of 17.3 pence for the year ended 31 December 2012. 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 21.5 pence is achieved.
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 is achieved.
Options issued in 2012 had the target of a minimum EPS of 21.8 pence for the year ended 31 December 2014. 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 25.7 pence is achieved.
Options issued in 2014 require that the Company’s compound average Total Shareholder Return (TSR) growth over
the performance period must match or exceed 8% per annum. The options shall vest over a number of shares
determined as follows:
Compound average annual TSR growth over the
performance period
Less than 8%
8%
15% or more
Percentage of Option which vests (with straight line
vesting between each point)
0%
25%
100%
In addition to the Directors’ share options disclosed in the Report on Remuneration, detailed below are options
which have been granted to employees together with the periods in which they may be exercised:
Date of grant
01/6/10
06/5/11
06/12/11
04/5/12
06/11/12
27/01/14
10/04/14
18/12/14
Earliest
exercise
date
Expiry
Exercise Number at
price 31 March
2015
Granted Exercised Forfeited Number at
In 31 March
2016
in
Year
in
Year
Year
Date (1p shares)
123.5p
01/6/13 31/5/20
179.0p
06/5/14 05/5/21
165.0p
06/12/14 05/12/21
227.5p
04/5/15 03/5/22
220.5p
06/11/15 05/11/22
27/01/17 26/01/24
363.0p
10/04/17 10/01/24 316.50p
294.5p
18/12/14 18/12/24
22,830
116,398
4,774
172,334
170,493
504,856
129,855
97,530
1,219,070
–
–
–
–
–
–
–
–
–
–
–
22,830
– 116,398
–
4,774
–
–
–
– (172,334)
– (170,493)
–
– (168,501) 336,355
56,554
–
–
73,968
– (608,191) 610,879
(73,301)
(23,562)
The Stanley Gibbons Group plc
59
242519 Stanley Gibbons RA_pp36-imp 05/10/2016 23:24 Page 60
Notes to the Financial Statements
continued
22 Options in shares of The Stanley Gibbons Group plc continued
Movements in the number of share options outstanding including Directors share options and their related weighted
average exercise prices are as follows:
At 1 April
Granted
Forfeited/lapsed
Exercised
At 31 March
31 March 2016
Average exercise
price per share
31 March 2016
Options
(thousands)
31 March 2015
Average exercise
price per share
31 March 2015
Options
(thousands)
169p
–
206p
–
151p
4,165
–
(1,362)
–
2,803
276p
92p
269p
177p
169p
2,154
2,638
(244)
(383)
4,165
Share options outstanding at the end of the period have the following expiry date and exercise price:
Expiry date
31 May 2020
5 May 2021
5 December 2021
3 May 2022
5 November 2022
26 January 2024
10 April 2024
30 September 2020
18 December 2024
Exercise
price per share
Options
(thousands)
31 March 2016
Options
(thousands)
31 March 2015
123.5p
179.0p
165.0p
227.5p
220.5p
363.0p
316.5p
nil
294.5p
23
116
5
–
–
663
431
1,491
74
2,803
23
116
5
317
170
941
631
1,864
98
4,165
Binomial and Black-Scholes models have been used to value the awards. The awards issued in the year ended 31
March 2016 and the year ended 31 March 2015 are set out below:
Dates of grant
Number of options granted
Weighted average fair value at date of grant (per share)
Weighted average share price on date of grant
Weighted average exercise price
Expected term (from date of grant)
Expected volatility
Expected dividend yield
Risk-free interest rate
18/12/14
97,530
30.03
295.5p
294.5p
6.5 years
20.4%
2.68%
1.22%
30/09/14
1,863,912
nil
277.5p
nil
3 years
22.5%
2.52%
1.22%
10/04/14
676,653
22.01p
314.0p
316.5p
6.5 years
18.95%
2.68%
1.22%
Expected volatility was determined by calculating historical volatility of the Group’s share price over a minimum
10 year period.
On 2 February 2015 the Board approved the adoption by the Company of an incentive plan for senior executives
within the Interiors Division (The Fine Art Auction Group Limited and its subsidiaries). Awards were subsequently
made on 4 February 2015. Under the terms of the plan participants share in the growth in value of the Interiors
Division measured over the period 1 April 2015 to 31 March 2020. Pay out under the plan, which can be in cash or
shares, requires the value of the Interiors Division to achieve a minimum compound annual growth rate of 10% above
£28.5m. Participants are entitled to share in a plan pool determined as a percentage of the growth in value in excess
The Stanley Gibbons Group plc
60
242519 Stanley Gibbons RA_pp36-imp 05/10/2016 23:24 Page 61
Notes to the Financial Statements
continued
22 Options in shares of The Stanley Gibbons Group plc continued
of this minimum requirement. The value at payout is referred to in the plan as the “End Value”. The minimum
requirement is referred to as the “Threshold Value”. The maximum number of shares which can be issued under
the plan when added to the number of shares which can be issued under any other plan operated by the Company
cannot exceed 10% of the Company’s issued share capital. Any additional entitlement would be paid in cash. Payouts
are subject to appropriate deductions for tax and national insurance.
If all or part of the Interiors Division is sold during the performance period or the Company is subject to a change of
control then there can be an earlier payout under the plan. The maximum payout under the plan is £12.5m. Vesting
other than following a sale or change of control is in two tranches.
The plan pool will be calculated as follows:
On or before 31 March 2016 – 18% of the End Value minus the Threshold Value
On or before 31 March 2020 – 14% of the End Value minus the Threshold Value
On or after 1 April 2020 – 13% of the End Value minus the Threshold Value.
The fair value of awards granted under this scheme has been calculated at 9.6p based on an assumed maximum
share number of 4,610,042 and the following assumptions:
Weighted average share price on grant date – 292p
Weighted average exercise price –nil
Expected term – 5 years
Expected volatility – 20%
Expected dividend yield – 2.00%
Risk free interest rate – 0.984%
23 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 represents the accumulated profits not distributed to shareholders.
The Stanley Gibbons Group plc
61
242519 Stanley Gibbons RA_pp36-imp 05/10/2016 23:24 Page 62
Notes to the Financial Statements
continued
24 Cash outflows from operating activities
Operating (loss)/profit
Profit on sale of property
Impairment of tangibles assets
Depreciation
Amortisation
Loss on sale of financial asset
Impairment of intangible assets
Impairment of tangible assets
Decrease in provisions
Cost of share options
Decrease/(increase) In inventories
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables (less deferred consideration)
Net exchange differences
Cash outflows from operating activities
25 Capital and other commitments
Year ended
31 March
2016
£’000
(28,319)
(183)
–
911
1,002
58
19,881
230
(462)
650
11,244
5,830
(16,139)
89
(5,208)
Year ended
31 March
2015
Restated
£’000
2,245
(1,613)
70
778
761
–
156
–
(375)
150
(7,170)
(3,250)
848
–
(7,400)
Lease commitments
At 31 March 2016 the Group had future minimum lease payments under non-cancellable operating leases as follows:
Payable:
Within one year
Between two and five years
In five years or more
Land and Buildings Land and Buildings
31 March 2015
£’000
31 March 2016
£’000
2,552
6,691
7,145
16,388
2,501
6,313
7,112
15,926
These figures represent the aggregate payable until expiration of all non-cancellable operating leases.
At 31 March 2016 the Group had future minimum rental payments receivable under non-cancellable operating
leases as follows:
Receivable:
Within one year
Between two and five years
In five years or more
Land and Buildings Land and Buildings
31 March 2015
£’000
31 March 2016
£’000
907
4,395
6,501
11,803
129
388
–
517
These operating leases are all sub leases and the lease terms are coterminous with those of the company. The above
rentals relate to the sub lease at premises in Strand, London and Hill Street, Jersey.
The Stanley Gibbons Group plc
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Notes to the Financial Statements
continued
26 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. All employer costs are borne by Stanley Gibbons Limited. The assets of the scheme are held under the
provisions of a trust deed and are invested in AAA rated Corporate Bonds and unitised equity funds managed by
two UK institutions. This investment policy mitigates the actuarial risks that the scheme is exposed to such as
longevity, interest rate, inflation and investment risks. The contributions are determined by a qualified actuary on
the basis of triennial valuations using the projected unit method. 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 2016 are based on the results of the actuarial valuation as at 30 June
2012 which also encompassed the cleansing of member data. The actuarial valuation of the Scheme as at 30 June
2015 is close to being finalised. Previous valuations were based on a roll forward of the Scheme’s actuarial valuation
as at 30 June 2009 as adjusted to reflect benefit and data changes which subsequently came to light.
Scheme assets are stated at their market value at 31 March 2016. The Group currently pays deficit reduction
contribution of £250,000 per annum under a Recovery Plan agreed in June 2015.
(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 plan is subject to the funding legislation outlined in the Pensions Act 2004 which came into force on 30 December
2005. This, together with documents issued by the Pensions Regulator, and Guidance Notes adopted by the Financial
Reporting Council, set out the framework for funding defined benefit occupational pension plans in the UK.
The trustees of the plan are required to act in the best interest of the plan’s beneficiaries. The appointment of the
trustees is determined by the plan’s trust documentation.
A full actuarial valuation was carried out as at 1 May 2013 and the funding of the plan is agreed between the company
and the trustees in line with those requirements. This actuarial valuation showed a deficit of £1,602,000. The
company agreed with the trustees that it will aim to eliminate the deficit over a period of 9 years and 10 months from
1 June 2014 by the payment of monthly contributions of £17,033 in respect of the deficit which includes an allowance
of £1,200 towards Friends Life’s expenses of administration. The company will also meet expenses of the plan and
levies to the Pension Protection Fund.
The IAS19 disclosures for the year to 31 March 2016 are based on the actuarial valuation as at 1 May 2013 and
updated on an approximate basis to 31 March 2016.
The Stanley Gibbons Group plc
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Notes to the Financial Statements
continued
26 Retirement benefits continued
The amounts recognised in the statement of financial position are as follows:
Present value of funded obligation
Fair value of scheme assets
Net obligation
Deferred tax asset
Retirement benefit obligation
Cumulative amount of actuarial losses recognised in other comprehensive income
31 March 2016
£’000
31 March 2015
£’000
(18,232)
13,010
(5,222)
940
(4,282)
£’000
(1,748)
(18,946)
13,130
(5,816)
981
(4,835)
£’000
(1,880)
The amounts recognised in the statement of comprehensive income for the period are as follows:
Current service cost
Interest cost on net benefit obligations
Total included in employee benefit expense
Actual return on scheme assets
The amounts recognised in other comprehensive income are as follows:
Actuarial gains/(losses) on scheme obligations from financial assumptions
Actuarial (losses)/gains on fair value of scheme assets
Remeasurement (losses)/gains
31 March 2016
£’000
31 March 2015
£’000
(194)
176
(18)
(106)
368
170
538
322
31 March 2016
£’000
31 March 2015
£’000
659
(527)
132
(2,052)
978
(1,074)
Changes in the present value of the defined benefit obligation are as follows:
Present value of obligations at start of year/period
Liabilities acquired at fair value
Current service cost
Interest cost
Contributions by employees
Remeasurement losses/(gains)
Charges paid
Benefits paid
Present value of obligations at end of year/period
31 March 2016
£’000
31 March 2015
£’000
18,946
–
(194)
596
–
(659)
194
(651)
18,232
10,579
6,114
368
563
5
2,052
(324)
(411)
18,946
The Stanley Gibbons Group plc
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Notes to the Financial Statements
continued
26 Retirement benefits continued
Changes in the fair value of scheme assets are as follows:
Fair value of scheme assets at start of year/period
Assets acquired at fair value
Expected return on scheme assets
Remeasurement gains/(losses)
Contributions by employees
Contributions by company
Charges paid
Benefits paid
Fair value of scheme assets at end of year/period
31 March 2016
£’000
31 March 2015
£’000
13,130
–
420
(527)
–
444
194
(651)
13,010
7,294
4,971
393
978
5
224
(324)
(411)
13,130
The Group currently expects to contribute £474,000 to its defined benefit schemes in the financial year to
31 March 2017.
The major categories of scheme assets as a percentage of the fair value of total scheme assets are
as follows:
Equities
Corporate bonds
Diversified growth funds
Insurance policies
Gilts/cash/other
Principal actuarial assumptions at the reporting date:
Future salary increases
Price inflation – RPI
Price inflation – CPI
Future pension increases – pension accrued before 6 April 1997 (per annum)
Future pension increases – pension accrued after 6 April 1997 (per annum)
Discount rate
Equities (long term expected rate of return)
Corporate bonds (long term expected rate of return)
Fixed interest gilts (long term expected rate of return)
Cash (long term expected rate of return)
31 March 2016
%
31 March 2015
%
26.4%
33.9%
13.3%
20.8%
5.6%
31.1
28.9
12.2
21.1
5.7
31 March 2016
31 March 2015
2.00%
2.80%
1.80%
0.00%
1.80%
3.40%
3.40%
3.40%
3.40%
3.40%
2.00%
2.80%
1.80%
0.00%
1.80%
3.20%
3.20%
3.20%
3.20%
3.20%
Mortality Assumptions
The mortality trends of the scheme were assessed at 31 March 2016 by the actuary using the mortality tables SAPS
projected by birth year, with an allowance for medium cohort mortality improvements, and an underpin of 1%. The
Directors consider that, statistically, this table gives the best indicators of the life expectancy of pension scheme
members taking into account their employment history, lifestyle and job location.
The mortality assumptions imply the following life expectation:
The Stanley Gibbons Group plc
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Notes to the Financial Statements
continued
26 Retirement benefits continued
The Stanley Gibbons Holdings PLC Pension and Assurance Scheme
Retiring at 60 at reporting date
Male
Female
Retiring at 60 at reporting date + 20 years
Male
Female
The Mallett Retirement Benefits Scheme
Retiring at 65 at reporting date
Male
Female
Retiring at 65 at reporting date + 20 years
Male
Female
31 March 2016
In years
31 March 2015
In years
26.7
29.4
28.8
31.4
26.6
29.3
28.7
31.3
31 March 2016
In years
31 March 2015
In years
21.9
24.5
23.8
26.3
21.5
24.1
23.4
26.0
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
Assumption as per IAS 19 disclosures
0.25% p.a. reduction in discount rate
0.25% increase in CPI inflation
Pensions payable for 1 year longer due to mortality assumptions
The Mallett Retirement Benefits Scheme
Assumption as per IAS 19 disclosures
0.25% p.a. reduction in discount rate
0.25% increase in inflation
Pensions payable for 1 year longer due to mortality assumptions
Change in
the benefit
Obligation – %
n/a
3.8%
2.1%
2.0%
Change in
the benefit
Obligation – %
n/a
4.4%
1.9%
3.0%
(Deficit)
£’000s
(3,911)
(4,355)
(4,165)
(4,142)
(Deficit)
£’000s
(1,311)
(1,541)
(1,427)
(1,400)
The Stanley Gibbons Group plc
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Notes to the Financial Statements
continued
26 Retirement benefits continued
Amounts for the current and previous four periods are as follows:
Present value of defined benefit obligations
Fair value of scheme assets
Deficit
Experience adjustments on scheme assets
Effects of changes in the demographic and
financial assumptions underlying scheme
liabilities
– Amount
– Percentage of benefit obligation
31 March
2016
£’000
(18,232)
13,010
(5,222)
(527)
31 March
2015
£’000
(18,946)
13,130
(5,816)
978
31 March
2014
£’000
(10,579)
7,294
(3,285)
544
31 December
2012
£’000
restated
31 December
2011
£’000
(9,941)
6,780
(3,161)
544
(8,942)
6,181
(2,761)
(492)
659
3.6%
(2,077)
-10.9%
(297)
-2.80%
(664)
-6.68%
(342)
-3.83%
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 £4,285,000 at 31 March 2015 to £3,911,000 at 31 March 2016 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 decreased from £1,531,000 at 31 March 2015 to £1,311,000 at 31 March 2016 principally arising
from changes in scheme data and a change from the approximate methodology used in previous disclosures.
27 a Contingent liability – Investment Plans
The Group’s wholly owned subsidiary Stanley Gibbons (Guernsey) Ltd, has potential liabilities that would be due to
customers of certain previously sold investment products still extant. They will become payable if the customer
chooses to exercise a guarantee or undertaking within their contracts to require the Group to buy back their
collectibles at 75% of the latest Stanley Gibbons catalogue price where appropriate, or otherwise at 75% of the market
value. As at 31 March 2016 the maximum potential liability was £64,300,000 (2015: £51,400,000). These amounts
will not become due if the customer chooses to either hold their collectibles, reinvest in other collectibles or sell
their collectibles to a third party at above these discounted levels. Any payments made in relation to this liability
would mean that the collectibles would be returned to stock and could be resold at full market value at a profit. It is
expected that once the collectible item is resold the long term impact to assets and particularly cash would be
significantly lower.
The Stanley Gibbons Group plc
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Notes to the Financial Statements
continued
27 b Contingent liability – Litigation
Following its acquisition of Mallett plc in October 2014, the Company learned that government regulators in the
United States were investigating transactions that had occurred since 1 January 2010 involving a former client of
Mallett Inc., Mallett’s New York-based subsidiary. The former client is not a related person or affiliate of the Group.
This issue had not been disclosed to the Company by the directors of Mallett plc during the due diligence process
prior to the acquisition.
The Group continues to cooperate fully with the U.S. Securities and Exchange Commission (the “SEC”) and the
Department of Justice (“DOJ”), including responding to a subpoena from the SEC requesting documents and
providing information to the government regulators as requested. Both the SEC and DOJ are aware that Mallett’s
new owners were not involved in the events underlying the investigation, and there have been discussions with the
SEC regarding resolution of these matters.
Whilst the investigations are ongoing, no criminal or civil charges have been filed against Mallett Inc. or any Mallett
group company to date. The Group continues to retain the services of special legal counsel to advise it in these
matters. The investigations are not being conducted in public, and the Directors cannot predict with certainty
whether Mallett Inc. or any other company or person in the Mallett group will be named in civil or criminal claims or
litigation as a result of the investigations.
Though the transactions pre-dated the acquisition there was no provision in the financial accounts of Mallett plc or
its subsidiaries for any costs relating to them. A fair value adjustment was made subsequent to the acquisition as at
that point the costs in responding to the subpoena from the SEC and/or assisting the US authorities with their
investigations were unavoidable.
The estimate made at the time was £0.9m. Subsequently, with the involvement of the DOJ, this estimate has proved
to be inadequate. At the year end the Group had an accrual of £1.1m, which represents the Board’s best estimate
for subsequent costs. There is a possibility that costs may exceed this level, though they may be covered by insurance
or counter claims. The Board consider the likelihood of additional costs to be both remote and difficult to measure
so are unable to meaningfully quantify.
28 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 banking facilities and various items such as trade receivables and trade payables which
arise directly from operations. The Group financed its operations with a bank loan, details of the loan facility can be
found in note 19. 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 Financial Review on pages 17 to 18.
The Stanley Gibbons Group plc
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Notes to the Financial Statements
continued
28 Financial instruments continued
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:
Financial assets – Loans and receivables
Available for sale financial assets (see below)
Trade and other receivables
Cash at bank
Financial liabilities measured at amortised cost
Trade and other payables
Borrowings
31 March 2016
£’000
31 March 2015
£’000
(restated)
–
15,574
1,542
17,116
40,211
21,947
62,158
(45,042)
1,364
19,604
–
20,968
56,359
11,695
68,054
(47,086)
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 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 statement of financial
position dates under review are of a good credit quality, including those past due settlement dates. See note 16 for
more information on financial assets that are past due settlement dates.
Interest rate risk
The Group finances its operations through a combination of bank loans and overdraft (see note 19), and through
the generation of cash from operating activities and has no interest rate exposure on any other financial liabilities.
The finance charge of the Group for the year to 31 March 2016 of £611,000 (2015: £428,000) comprised loan interest
& charges of £435,000 (2015: £258,000) and net finance costs from its defined benefit pension scheme liabilities of
£176,000 (2015: £170,000).
The bank loans are linked to LIBOR. A 0.05% (5 basis point movement) movement in LIBOR would have resulted in
an additional interest charge of £8,000 (2015: £3,000).
The Stanley Gibbons Group plc
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Notes to the Financial Statements
continued
28 Financial instruments continued
Foreign exchange risk
The Group had no material exposure to foreign exchange risk in the year ended 31 March 2016. The Group did
have assets and liabilities denominated in foreign currencies relating to its USA activities for both the internet and
Mallett. Neither of these activities was deemed as a material risk of foreign currency exposure to the group. Liabilities
that arises 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.
Following the closure of the USA marketplace activities and the significant reduced USA Mallett activities post
31 March 2016 the exchange rate risk to the Group has diminished further.
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 cash
facilities to meet liabilities as they fall due. The Group’s forecasts shows that it will remain in compliance with its
banking covenants throughout the foreseeable period and that it will have access to adequate resources to continue
operations and to meet its liabilities, as and when they fall due. However the forecasts are dependent upon the
liabilities and contingent liabilities, particularly in relation to investment plans redemption profiles, not materialising
at a level greater than forecast and trading improving from its current level in line with management’s expectations.
The Group’s financial liabilities have contractual maturities (representing undiscounted contractual cash flows) as
summarised below:
At 31 March 2016
Trade and other payables
Borrowings
At 31 March 2015 (restated)
Trade and other payables
Borrowings
Within
6 months
£’000
Between
6 and 12 months
£’000
Between
1 and 5 years
£’000
21,986
5,431
27,417
24,642
577
25,219
8,423
271
8,694
7,349
1,394
8,743
9,802
17,726
27,528
24,368
10,937
34,855
Total
£’000
40,211
23,428
63,639
56,359
12,908
68,817
Included within trade and other payables is an amount of £23,918,000 (£33,546,000 – 31 March 2015) relating to
previous customers of certain investment plans and will be payable if the customer chooses not to hold their
collectibles or reinvest in other collectibles. During the year ended 31 March 2016 £9,628,000 of these contracts
fell due and off these contracts £1,450,000 was paid to customers who chose not to hold or reinvest.
The Directors monitor these liabilities as they fall due and have procedures in place to ensure that the liquidity risk
from these maturing investments in minimised.
A further liquidity risk is disclosed in note 27 and relates to investment plans which the Group has a £64,300,000
(2015: £51,400,000) contingent liability exposure. The Director’s current opinion is that an event to crystalise this
liability is remote.
The Stanley Gibbons Group plc
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Notes to the Financial Statements
continued
29 Identity of related parties
The Company has a controlling related party relationship with its subsidiary companies (see note 33). The Group
also had a related party relationship with its Directors.
Transactions between parent and subsidiaries
The parent company charged management fees of £3,239,000 in the year to 31 March 2016 (2015: £3,231,000) to
its subsidiaries.
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.
Year ended 31 March 2016
M Hall forfeited share options during the year to 31 March 2016 as follows:
M Hall
Shares forfeited
No
144,736
Price
227.50p
M Hall, Director, made purchases during the year to the value of £17,657. He had a net sales ledger balance of
£13,359 at the year end.
H G Wilson had a purchase ledger balance of £21,415 at the year end.
The Group received rental income of £21,600 during the year from Marbral Limited, a company 100% owned by
Mr Bralsford.
During the year the Group paid £75,000 to Evolution Securities China Ltd for corporate consultancy services.
C P Whiley is the Managing Director of this company.
Year ended 31 March 2015
M Hall & D Duff exercised share options during the year to 31 March 2015 as follows:
M Hall
D Duff
Shares acquired
Shares disposed
No
112,000
70,000
Price
179.0p
179.0p
No
112,000
70,000
Price
310.0p
310.0p
M Hall, Director, had a purchase ledger balance of £865 at the year end.
J Byfield, Director, redeemed portfolios to the value of £409,777 during the year and there was £8,786 due to him
at the year end.
I Goldbart, former Director, purchased and sold coins from/to A H Baldwin & Sons Limited to the value of £3,750
and £1,550 respectively during the year. Relatives of I Goldbart, former Director, purchased and sold coins from/to
A H Baldwin & Sons Limited to the value of £8,333 and £1,030 during the year. There was £2,118 owed by
AH Baldwin & Sons Limited to relatives of Mr Goldbart at the year end.
On 21 November 2014, I Goldbart sold 122,853 Ordinary 1p shares at £3.00.
The Stanley Gibbons Group plc
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Notes to the Financial Statements
continued
30 Acquisitions
On 29 May 2015, the Group, through its wholly owned subsidiary, The Fine Art Auction Group Limited, (“TFAAG”)
purchased 100% of the share capital of Bid for Win e Limited for £217.500. A further £300,000 of consideration is
deferred depending on the business achieving gross merchandise value of £1,500,000 per annum.
Bid for Wine Limited is a peer to peer wine sales platform with auction capabilities. The Group has used the auction
capability to hold on line auctions for its Dreweatts business.
The provisional fair values of the assets acquired at the time along with the final fair values determined in the current
year are as follows:
At date of acquisition
Intangible assets
Inventories
Trade debtors
Loan
Book and fair value of net assets at acquisition date
Goodwill
Consideration paid
Bid for Wine
£000
12
36
43
(91)
–
218
218
After completion the Loan which was with the previous Directors of Bid for Wine Limited was repaid.
In the period from acquisition to 31 March 2016 Bid for Wine contributed £62,000 of revenue and a loss of £300,000.
At 31 March 2016 the Directors reviewed the carrying value of the business based on its performance since 29 May
2015 and its predicted future profits. As a result of this review the Directors required a full impairment (£218,000)
against the carrying value of goodwill.
As a result of this review it is the Directors opinion that the deferred consideration is unlikely to be paid and therefore
no provision has been made in the Group accounts.
31 a Prior year adjustment – fair value on acquisition
On 20 October 2014, the Group, through its wholly owned subsidiary, The Fine Art Auction Group Limited, (“TFAAG”)
purchased 100% of Mallett plc (“Mallett”). Provisional fair values were calculated for inclusion in 31 March 2015.
A review of the provisional fair value adjustments was conducted at 31 March 2016. From this review the Directors
concluded that the interpretation of fair value accounting adjustments at the date of acquisition had been incorrectly
applied and a number of the assets and liabilities were misstated.
As a result the Directors felt that it was appropriate to restate net assets of the acquired company, fair value
adjustments and goodwill on acquisition by way of a prior year adjustment. The following amendments to net assets
and fair value at acquisition have been applied.
The Stanley Gibbons Group plc
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Notes to the Financial Statements
continued
31 a Prior year adjustment – fair value on acquisition continued
At date of acquisition
Property, plant & equipment
Intangible assets
Financial assets
Inventories
Trade debtors
Other debtors
Cash
Trade payables
Tax
Accruals
Pensions
Book value of net assets at acquisition date
Fair value adjustments
Customer relationships
Brands
Property
Inventory
Debtors
Deferred tax asset
Deferred tax liability
Accruals
Pensions
Fair value of net assets acquired
Goodwill
Consideration paid
Mallett
Net assets
at acquisition
as stated
in 31 March
2015 Financial
Statements
£’000
Net assets at
acquisition
restated
31 March 2016
£000
2,508
162
6
11,252
1,182
335
(1,190)
(945)
6
(2,104)
(1,417)
9,795
2,508
162
6
8,305
1,182
335
(1,190)
(945)
6
(2,104)
(1,417)
6,848
Fair value
adjustments
as at
31 March 2015
Final FV
adjustments
as at
31 March 2016
828
2,610
–
(5,805)
(175)
3,147
(687)
(1,304)
212
8,621
–
8,621
828
2,610
1,446
(324)
(175)
1,087
(976)
(1,304)
212
10,252
(1,631)
8,621
Impact on the financial statements of the fair value prior year adjustment
The correction of net assets and fair values on acquisition results in negative goodwill of £1,631,000 as a result of
net assets being higher than consideration.
As the business was acquired at 20 October 2014 there is no impact on opening reserves at 1 April 2014. However,
there is an impact on both the statement of comprehensive income and the statement of financial position at
31 March 2015.
The Stanley Gibbons Group plc
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Notes to the Financial Statements
continued
31 a Prior year adjustment – fair value on acquisition continued
Impact on Statement of Comprehensive income
As a result of the changes in stock fair value provision there is an impact on comprehensive income for the year
ending 31 March 2015. The previous year’s financial statements included a fair value stock provision release of
£655,000 and a deferred tax asset release associated with this of £98,000.
The impact of this prior year adjustment on the statement of comprehensive income and statement of financial
position as at 31 March 2015 shown in the table at the end of note 31 b.
31 b Prior year adjustment – revenue recognition
As part of the audit process the Board reviewed its accounting policy and past accounting treatment with regard to
the recognition of revenue in relation to certain of the investment plans which were offered by the Group in earlier
years. This review was undertaken in light of the contractual terms of those investment plans and the appropriate
accounting standards.
The Board considers that the previous recognition of revenue related to certain of the investment plans was not in
line with appropriate accounting standards and this has been corrected by way of a prior year adjustment.
The review of the accounting policy impacts the opening net assets of the Group at 31 March 2014 as explained
below. The net impact of the review is to reduce net assets at 31 March 2014 by £15,220,000.
Revenue recognition on investment plans – The Group offered investment plans to clients which included at
the end of the contract term an option to sell back the items at the original purchase price (Capital Protected Growth
Plan “CPGP”) and in some cases with a guaranteed return (Guaranteed Minimum Return Contract “GMRC”), to Stanley
Gibbons. These contracts were over a fixed period between 1-10 years, with the majority being 5 year contracts.
At the end of the contract the buyback is one option open to clients, along with other options such as where the
client chooses to sell the item at market value, reinvests in other items or retains the item. On reviewing the
appropriate accounting standards against the contractual terms of these plans it was the Directors opinion that the
recognizing the revenue from these investment plans at the contract inception was incorrect and that revenue that
had been recognised in previous accounting periods relating to the CPGP and GMRC products should be reversed.
Depending on subsequent events (the decision that the client makes at the end of the contract term), the value of
outstanding the CPGP and GMRC investment plans, would fall to be recognised as revenue in later financial periods,
if the buyback option is not chosen. Although the trading results of later years are likely to be beneficially effected,
the historic reported revenue and profit have been materially reduced as a consequence of the unwinding of a
material part of the previously reported investment plan revenues and profits.
The accounting adjustment applied to the opening balance sheet at 1 April 2014 brings back into stock those items
where the Group retains a contractual obligation to repurchase the items from clients at the end of the investment
plan term and the value of the potential obligations are recorded as a liability on the balance sheet. Therefore a
creditor was created for the potential obligations to clients of £37,101,000. Inventory brought back into stock as a
result of these investment plans was £24,930,000.
During the year ended March 2015, holders of these plans that chose to retain their collectible items after their
GMRC or GPGP expired, would result in revenue being now being recognised in that year that previously would
have been recognised in previous years.
The Stanley Gibbons Group plc
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Notes to the Financial Statements
continued
31 b Prior year adjustment – revenue recognition continued
The Group’s exposure to such contracts is limited to those contracts still extant and the GMRC and CPGP ceased to
be sold in April 2011 and December 2013, respectively.
Stock repurchased on expired plans – Additionally in the past where guarantees were exercised, the transaction
was recorded as a purchase of stock at the guaranteed value . As the original transaction is no longer recognised as
a sale, the item should have remained in stock at its original purchase price, albeit the exercise of the guarantee
would have passed legal title back to the Stanley Gibbons.
The accounting adjustment, relating to the items exercised under the guarantee, is for the carrying value of the
related element of stock to be reduced from the price at which it was repurchased back to original cost and results
in a decrease in the Group’s inventory of £3,049,000 at 1 April 2014.
The net adjustment to the Group’s inventory as a result of the two transactions is an increase in stock of £21,881,000.
The impact of this prior year adjustment on the statement of comprehensive income and statement of financial
position as at 31 March 2015 was as follows:
Statement of comprehensive income (extract)
Sales
Cost of sales
Profit before tax
Taxation
(Loss)/profit before tax
31 March 2015
(previously
stated)
£’000
Increase/
(Decrease)
note 31a
£’000
Increase/
(Decrease)
note 31b
£’000
31 March 2015
(Restated)
£’000
56,865
(24,600)
3,148
(1,197)
1,951
(655)
(655)
98
(557)
3,181
(3,853)
(672)
(672)
60,046
(29,108)
1,821
(1,099)
722
Statement of financial
position (extract)
Property, plant & equipment
Deferred tax assets
Inventories
Total assets
Trade and other
payables – current
Other payables – non current
Deferred tax liabilities
Total liabilities
Net assets
Retained earnings
Total equity
shareholders funds
31 March
2015
(previously
stated)
31 March
2015
£’000
6,528
4,063
53,822
125,027
22,363
756
1,424
42,623
82,404
17,171
Increase/
Increase/
(Decrease) (Decrease)
note 31b
£’000
note 31a
£’000
31 March
1 April
2014
2015 (previously
stated
£’000
(Restated)
£’000
Increase/
(Decrease)
note 31b
£’000
1 April
2014
(restated)
£’000
1,446
(1,943)
1,878
1,381
6,528
7,974
–
1,016
2,120
–
17,348
42,118
73,048
17,348 143,756 107,250
6,528
–
1,016
–
21,881
63,999
21,881 129,131
–
–
407
407
974
974
9,628
23,612
–
33,240
(15,892)
(15,892)
31,991
24,368
1,831
76,270
67,486
2,253
15,928
375
1,424
23,305
83,945
19,666
3,930
33,171
–
37,101
(15,220)
(15,220)
19,858
33,546
1,424
60,406
68,725
4,446
82,404
974
(15,892)
67,486
83,945
(15,220)
68,725
The Stanley Gibbons Group plc
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Notes to the Financial Statements
continued
32 Post Balance Sheet Events
Issue of share capital
On 1 April 2016, the Company issued 131,796,286 Ordinary Shares at an issue price of 10p a share. These shares
were admitted to the Alternative Investment Market on that date. 129,996,286 shares were issued to shareholders
by way of a fundraising exercise and 1,800,000 shares were issued to Evolution Securities China Limited (ESCL) for
consultancy services supplied by ESCL to the Company. Clive Whiley is managing director of ESCL. The net proceeds
of this issue were £12,350,000
At the date of this report the Company’s issued and fully paid share capital stands at 178,916,643 ordinary shares
of 1p each with a value of £1,789,166.
Sale of lease
During May 2016 the Group sold its leases over Ely House, Dover Street, London and an adjacent property for
£2.5m. After costs, this reduced the Group’s indebtedness by £2.4, The Group also sublet a substantial part of its
New York premises.
Resignation of Directors
On 14 July 2016 D M Bralsford, S Perrée, M R M Hall and D P J Duff resigned as Directors of the company. On
13 September 2016 C S Jones resigned as a Director of the company.
33 Principal subsidiaries
The principal subsidiary undertakings of the Company, all of which are 100% owned are as follows:
Name
Stanley Gibbons (Guernsey) Limited Guernsey
Country of
incorporation
Description of
shares held
Ordinary £1 shares
Stanley Gibbons (Jersey) Limited
Jersey
Ordinary £1 shares
Stanley Gibbons E-commerce Limited Jersey
Stanley Gibbons Holdings Limited
Stanley Gibbons Limited*
England
England
Ordinary £1 shares
Ordinary £0.25 shares
Ordinary £1 shares
Stanley Gibbons (Asia) Limited
Hong Kong
Ordinary HK$1 shares
Stanley Gibbons (SEA) Pte Limited
Singapore
Ordinary S$1 shares
Principal activity
Philatelic dealer and dealer in
memorabilia
Philatelic dealer and dealer in
memorabilia
E-commerce retailing
Holding Company
Philatelic dealer and retailer,
and dealer in memorabilia
Philatelic dealer and dealer in
memorabilia
Philatelic dealer and dealer in
memorabilia
Stanley Gibbons US, Inc*
Minden House Limited
Concept Court Limited
Murray Payne Limited
United States
Jersey
England
England
Common stock US$0.0001 Web development
Ordinary £1 shares
Ordinary £1 shares
Ordinary £1 shares
First day cover dealer
First day cover dealer
Philatelic dealer and
auctioneer
Holding Company
Dealer and auctioneer in rare
coins and other collectibles
Auctioneers of works on paper
Noble Investments (UK) Limited
AH Baldwin & Sons Limited*
England
England
Ordinary 1p shares
Ordinary £1 shares
Greenfield Auctions Limited*
England
Ordinary £1 shares
The Stanley Gibbons Group plc
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Notes to the Financial Statements
continued
33 Principal subsidiaries continued
Name
The Fine Art Auction Group Limited* England
Country of
incorporation
Mallett Limited*
Mallett & Son (Antiques) Limited*
Mallett Overseas Limited*
Mallett, Inc*
H J Hatfield & Sons Limited* (1)
Masterpiece London Limited* (2)
* Indirect holding
1 60% holding
2 23.75% holding
Description of
shares held
Ordinary £0.45 shares
Preferred £1 shares
Preferred £0.25 shares
Deferred £0.25 shares
Ordinary £0.05 shares
Ordinary £1 shares
Ordinary £1 shares
England
England
England
United States Common stock US$1
England
England
Ordinary £1 shares
Ordinary £1 shares
Principal activity
Auctioneers and valuers of art,
antiques and collectibles
Holding company
Antique dealers
Antique dealers
Antique dealers
Restorers
Exhibition organiser
The Stanley Gibbons Group plc
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Directors’ Biographical Details
Henry George Wilson, Director and Executive Chairman
Date of Birth: 18 September 1952. 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. He is a member
of the Nomination Committee.
Andrew Cook, Chief Financial Officer
Date of Birth: 24 March 1963. Date of Appointment as Director: 14 July 2016.
Andrew Cook, who was appointed Group Managing Director on 31 May 2016, joined the Board as Chief Financial
Officer on 14 July 2016.
Andrew is an experienced finance executive having previously held the position of Group Finance Director at
Orchard & Shipman Group plc and at Medina Dairy Ltd. Prior to this Andrew held senior finance, commercial and
executive roles for various companies including Kelly Services, The Body Shop and The Virgin Group.
Clive Peter Whiley, Director
Date of Birth: 16 June 1960. Date of Appointment as Director: 31 March 2016.
Clive Whiley became a Member of The London Stock Exchange in 1983 and a Fellow of the Securities Institute in
1995. He has extensive main board executive director experience across a broad range of financial services,
engineering, manufacturing, distribution & leisure businesses covering the UK, Europe, North America, Australasia
and the People’s Republic of China.
Mr Whiley is currently Managing Director of Evolution Securities China Limited, and Chief Executive of Camper &
Nicholsons Marinas Ltd and a Director of Camper & Nicholsons Marina Investments Limited.
He is also Chairman of China Venture Capital Management Limited, First China Venture Capital Limited and Y-Lee Limited.
Martin Paul Magee, Non-Executive – Independent
Date of birth: 26 June 1960. Date of appointment as Director: 1 August 2012
Martin qualified as a Chartered Accountant in Scotland in 1984. Following qualification he worked for nine years
with Stakis plc, (now part of the Hilton Hotels Group) and then with Scottish Power plc in a variety of senior finance
roles. In 2002 he was appointed Finance Director of Jersey Electricity plc.
The Stanley Gibbons Group plc
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Directors’ Biographical Details
continued
He is also Non-Executive Chairman of the Standard Life Offshore Strategy Fund Limited, Chairman of Jersey Deep
Freeze Limited and a Director of the Channel Islands Electricity Grid Limited. Additionally, Martin was a member of
the States of Jersey Public Accounts Committee for five years until 2011.
He is Chairman of the Audit Committee and a member of the Remuneration and Nomination Committees.
Henry Arthur John Turcan, Non-Executive
Date of Birth: 31 January 1974. Date of Appointment as Director: 23 May 2016.
Henry Turcan is an experienced corporate financier based in London, having worked in the City for approaching
two decades. In 2015, he joined Henderson Volantis Capital as a director of UK Smaller Companies. Before joining
Henderson Volantis Capital, he was a director of Novum Securities, an independent UK based stockbroking house
which he cofounded in 2006. Prior to this, Henry was a corporate finance director at Evolution Group.
His focus areas are corporate finance advice and broking within equity capital markets and he has extensive
experience on a broad range of transactions including IPOs on the Main Market and AIM, rights issues, takeovers
and corporate finance advice to unquoted companies. Henry is Chairman of the Remuneration Committee.
The Stanley Gibbons Group plc
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Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of The Stanley Gibbons Group plc (“Company”) will be
held at Banjo Jersey, 8 Beresford Street, St Helier, Jersey JE2 4WN on Thursday 27 October 2016 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 Annual General Meeting or any adjournment thereof:
To consider, and if thought fit, to pass the following resolutions as Ordinary Resolutions:
Ordinary Business
1.
2.
3.
4.
5.
6.
“THAT the Company’s audited accounts for the year ended 31 March 2016 and the Directors’ and Auditors’
Reports thereon be approved and adopted.”
“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.”
“THAT A Cook, who retires in accordance with the Articles of Association of the Company, and, being eligible,
be re-elected as a Director of the Company.”
“THAT CP Whiley, who retires in accordance with the Articles of Association of the Company, and, being
eligible, be re-elected as a Director of the Company.”
“THAT HAJ Turcan, who retires in accordance with the Articles of Association of the Company, and, being
eligible, be re-elected as a Director of the Company.”
“THAT BDO Limited 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.”
To consider, and if thought fit, to pass the following resolution as a Special Resolution:
Special Business
Authority to purchase own Ordinary Shares
7.
“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)
(b)
(c)
(d)
(e)
the maximum number of Ordinary Shares authorised to be purchased shall be 26,000,000 Ordinary
Shares, being approximately 15 per cent of the issued capital of the Company; and
the minimum price which may be paid for any such Ordinary Shares shall be 1p per Ordinary Share
(exclusive of expenses); and
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;
unless otherwise varied renewed or revoked the authority hereby conferred shall expire at the earlier of
31 January 2018 and the conclusion of the Annual General Meeting of the Company to be held in 2017; and
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
The Stanley Gibbons Group plc
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Notice of Annual General Meeting
continued
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
8.
“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 71,083,357 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)
(2)
to holders of Ordinary Shares in proportion (as nearly as may be practicable) to their respective
holdings; and
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 59,000,000 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 59,000,000),
provided that this authority shall, unless renewed, varied or revoked by the Company, expire on the earlier of
31 January 2018 and the conclusion of the Annual General Meeting of the Company to be held in 2017, 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
9.
THAT, subject to the passing of the ordinary resolution numbered 8 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 8 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 8 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
The Stanley Gibbons Group plc
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Notice of Annual General Meeting
continued
(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 44,500,000 Ordinary Shares.
The power granted by this resolution will expire on the earlier of 31 January 2018 and the conclusion of the
Annual General Meeting of the Company to be held in 2017 (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: 3 October 2016
Registered Office Address: 2nd Floor, Minden House, Minden Place, St Helier, Jersey JE2 4WD, Channel Islands.
NOTES:
1.
2.
3.
4.
5.
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 attend, speak (with permission of the Chairman) and vote on your behalf at a general
meeting of the Company.
An instrument for the purposes of appointing a proxy is enclosed. A proxy does not need to be a member of the Company but must
attend the meeting to represent you. To appoint a person other than the Chairman of the meeting as your proxy, insert their full name
in the box on your proxy form. If you sign and return your proxy form with no name inserted in the box, the Chairman of the meeting
will be deemed to be your proxy. Where you appoint as your proxy someone other than the Chairman, you are responsible for
ensuring that they attend the meeting and are aware of your voting intentions. If you wish your proxy to make any comments on
your behalf, you will need to appoint someone other than the Chairman and give them the relevant instructions directly.
You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different Ordinary Shares. In
the event of a conflict between a blank proxy form and a proxy form which states the number of Ordinary Shares to which it applies,
the specific proxy form shall be counted first, regardless of whether it was sent or received before or after the blank proxy form, and
any remaining Ordinary Shares in respect of which you are the registered holder will be apportioned to the blank proxy form. You
may not appoint more than one proxy to exercise rights attached to any one Ordinary Share. To appoint more than one proxy you
must complete a separate Form of Proxy for each proxy or, if appointing multiple proxies electronically, follow the instructions given
on the relevant electronic facility. Members can copy their original Form of Proxy, or additional Forms of Proxy can be obtained from
Capita Registrars (Jersey) Limited, PXS1, 34 Beckenham Road, Beckenham, Kent, BR3 4ZF.
The return of a completed proxy form, other such instrument or any CREST proxy instruction (as described in paragraph 13 below)
does not preclude you from attending the meeting and voting in person. If you have appointed a proxy and attend the meeting in
person, your proxy appointment will automatically be terminated.
To direct your proxy how to vote on the resolutions mark the appropriate box on your proxy form with an ‘X’. To abstain from voting
on a resolution, select the relevant “Vote withheld” box. A vote withheld is not a vote in law, which means that the vote will not be
counted in the calculation of votes for or against the resolution. If no voting indication is given, your proxy will vote or abstain from
voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which
is put before the meeting.
The Stanley Gibbons Group plc
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Notice of Annual General Meeting
continued
6.
7.
8.
9.
completed and signed;
sent or delivered to Capita Registrars (Jersey) Limited, PXS1, 34 Beckenham Road, Beckenham, Kent, BR3 4ZF; and
received by Capita Registrars (Jersey) Limited no later than 11.30 am on 25 October 2016.
To be valid any proxy form or other instrument appointing a proxy must be:
•
•
•
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).
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.
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.
10. As an alternative to completing your hard-copy proxy form, you can appoint a proxy electronically at www.capitashareportal.com. For
11.
12.
an electronic proxy appointment to be valid, your appointment must be received by no later than 11.30 am on 25th October 2016.
If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies
will take precedence.
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.
13. 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 27 October 2016 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, Capita 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.
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 25 October 2016 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 25 October 2016 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.
14.
15. Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of its
16.
powers as a member provided that they do not do so in relation to the same Ordinary Shares.
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 undesirable in the interests of the company or the good order of the meeting to answer the question.
17. 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 and will be available for inspection at the place where the meeting is being held
from 15 minutes prior to and during the meeting.
EXPLANATORY NOTES
Resolutions 2 – 5: Directors seeking re-election
Harry Wilson, Andrew Cook, Clive Whiley and Henry Turcan, each of whom was appointed as a Director by the Board after the last Annual
General Meeting of the Company, will retire from office, and offer himself for re-election, at this year’s Annual General Meeting in
accordance with the Company’s Articles of Association. Martin Magee will retire, and will not seek re-election as a Director at the Annual
General Meeting.
Biographical details of the Directors seeking re-election are contained in the Annual Report 2016.
The Stanley Gibbons Group plc
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Notice of Annual General Meeting
continued
Resolution 6: 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 7: 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 on the earlier of 31 January
2018 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 8: 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 71,083,357 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 59,000,000
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
59,000,000 Ordinary Shares. Therefore, the maximum number of Ordinary Shares which may be allotted under this resolution is 71,083,357
Ordinary Shares. The authority granted by this resolution will expire on the earlier of 31 January 2018 and the conclusion of the next Annual
General Meeting of the Company.
Resolution 9: Disapplication of pre-emption rights
This resolution will, if passed, give the Directors power, pursuant to the authority to allot granted by resolution 8, to allot Ordinary Shares
or sell treasury shares for cash up to a maximum of 44,500,000 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 on the earlier of 31 January 2018 and the conclusion of the next Annual General
Meeting of the Company.
The Stanley Gibbons Group plc
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242519 Stanley Gibbons RA Cover 05/10/2016 23:22 Page 1
The Stanley Gibbons Group plc
2nd Floor, Minden House, Minden Place,
St Helier, Jersey JE2 4WQ, Channel Islands
Tel: 01534 766711
and
399 Strand,
London WC2R 0LX
Tel: 020 7836 8444
Email: info@stanleygibbons.com
www.stanleygibbons.com